EXHIBIT 10.2
AGREEMENT
This Agreement ("Agreement"), which includes Exhibits "A", "B", "C" and
"D" hereto, which are incorporated herein by reference, is made as of June 12,
2000, by and between Osicom Technologies, Inc., a New Jersey corporation
(hereinafter the "Company"), and Par Xxxxxx (hereinafter "Xxxxxx").
RECITALS
A. The Company is a Santa Xxxxxx-based business which designs,
manufactures, and markets integrated networking and bandwidth aggregation
products for enhancing the performance of data and telecommunications networks
(the "Business").
X. Xxxxxx has served as the Company's Chief Executive Officer and
Chairman of the Board of Directors.
X. Xxxxxx intends to resign as Chief Executive Officer and as a
Director to pursue other business interests.
D. The Company recognizes Chadha's extensive knowledge and unique
understanding of the operation of the Business and desires to retain his
services as a Consultant.
E. On June 2, 2000, the Board of Directors of the Company ("Board")
approved by unanimous written consent in lieu of a special meeting ("Consent") a
resolution to accept Chadha's resignation and elect his replacement, with such
resignation and election to be effective on July 8, 2000, subject to the prior
execution of one or more written agreements with Xxxxxx which incorporate the
terms set forth on the Term Sheet attached to the Consent approving same.
Consent and Term Sheet are attached hereto as Exhibit "A". The Consent further
authorizes the appropriate officers of the Company to negotiate and execute such
agreements and documents as necessary to effectuate the foregoing resolution.
F. In accordance with this Consent, the Company and Xxxxxx enter into
this Agreement to formalize the continuing relationship between Xxxxxx and the
Company, upon the terms and subject to the conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions set forth herein, the receipt and sufficiency of
which are hereby acknowledged, the Company and Xxxxxx agree as follows:
1. Resignation. Xxxxxx will resign as CEO and as a Director of the
Company and any of its subsidiaries for which he is now an officer or director,
with such resignation to be effective July 8, 2000.
2. Consulting Services.
a. Upon the effective date of his resignation as set forth in
paragraph 1 above, Chadha's status will be changed to that of Consultant. The
term of the consultancy will continue until and including July 8, 2003
("Consultancy Term"). During the Consultancy Term, Xxxxxx will provide
nonexclusive consulting services as reasonably requested by the Board or its
designee, at the Company's option. Consulting services shall be provided at
reasonable and mutually convenient times and locations or through written
communications. The Company understands and agrees that Xxxxxx will be
unavailable to provide consulting services from July 8, 2000, until and
including July 31, 2000.
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x. Xxxxxx will provide such assistance and consultation as may
be reasonably requested by the Board or its designee on matters including, but
not limited to, strategic relations; business plans and currently pending
transactions; and currently pending or future litigation or threatened
litigation.
x. Xxxxxx'x fee for his agreement to render the above services
will be Seven Hundred Fifty Thousand Dollars ($750,000) to be paid in three
equal installments. $250,000 shall be paid no later than ten (10) days following
execution of this Agreement, $250,000 on June 2, 2001, and $250,000 on June 2,
2002. In addition, the Company will pay or reimburse Xxxxxx for reasonable
expenses incurred by Xxxxxx in rendering his consulting services, including
reasonable travel and lodging expenses, in fulfillment of his consulting
services. The Company will continue to provide Xxxxxx with an active e-mail
address, and with services of an assistant for the performance of his consulting
services, all at the Company's expense. For income tax purposes, Xxxxxx will be
treated as an independent contractor effective with the first payment hereunder.
d. If there is a material breach of a term of this Agreement
by Company, which is not cured by Company within 60 days of written notice from
Xxxxxx of the breach, then all payments payable under this Agreement are
immediately due and payable and Xxxxxx will have no obligations under this
Agreement. If Xxxxxx dies or becomes Permanently Disabled before July 8, 2003,
all payments payable under this Agreement are immediately due and payable to
Xxxxxx (or his legal representative as the case may be) and Xxxxxx (nor any
related persons or entities) will not have any obligations under this Agreement.
For purposes of this Agreement, Permanent Disability shall be defined as any
physical or mental illness or incapacity which renders Xxxxxx incapable of fully
performing the consulting services provided for herein for a period aggregating
120 days in any twelve month period ending before July 8, 2003. Upon request,
Company will be provided with medical verification of Permanent Disability.
3. Fringe Benefits.
a. Until and including July 8, 2003, Xxxxxx will be covered at
Company's expense under plans of the Company relating to health, medical and
life insurance, if permitted by law and the existing terms of such plans. In the
event the terms of such plans do not provide for continuation of coverage
through and including July 8, 2003, Company will provide, entirely at its
expense, Xxxxxx (and for purposes of health care coverage, Chadha's family
members who are "qualified beneficiaries", as such is defined in the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")), with coverage
comparable to the coverage provided to Xxxxxx as of the Effective Date of his
resignation.
b. The Company will cooperate and effectuate all actions for
the benefit of Xxxxxx or any related person or entity as were contemplated in
any and all previous actions approved by the Board.
4. Stock Options.
a. All stock options relating to securities of the Company or
any subsidiary or affiliate, held by Xxxxxx, or any person or entity related to
him (the "Options"), to the extent not previously vested, shall immediately
fully vest and be exercisable, without regard to any vesting terms to the
contrary contained in any plan or agreement pursuant to which any such Options
were granted. A schedule of Options subject to this Section 4, is attached
hereto as Exhibit "B". Notwithstanding the foregoing, with respect to the
600,000 Options to purchase Company common stock under "ID 1650", granted to
Xxxxxx Xxxxx 26, 2000, under the Company's Amended and Restated 1997 Incentive
and Non-Qualified Stock Option Plan (ID 1650), the Company has the repurchase
rights as set forth in the Stock Repurchase Agreement ("Repurchase Agreement"),
attached hereto as Exhibit "C".
b. The period for exercise of any Option shall not expire or
terminate until the final expiration date set forth in the applicable plan or
agreement pursuant to which any such Options were granted, regardless of
Chadha's change in status from officer, employee and/or director of the Company
to consultant, and regardless of any subsequent termination or expiration of
this Agreement, the Exhibits hereto, or any option plans.
c. If any term or provision of any option plan, or agreement
heretofore entered into between the parties pursuant to such plan, conflicts
with the terms hereof, then such term or provision is hereby waived
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and/or modified, to the fullest extent required to effectuate the intent of this
Section 4, to the extent permitted by law, and the Company shall take all such
steps as are necessary to cause such conflicting term or provision to be waived,
modified or amended in accordance herewith.
d. In connection with the exercise of any or all Options, the
Company will lend the holder, upon request, up to 100% of the purchase price for
the shares purchased, at the AFR rate then prevailing under Section 7872 of the
Internal Revenue Code. Any loan will be evidenced by a promissory note payable
with accrued interest in 24 months from the date of the loan, and a pledge of
the shares purchased. Alternatively, if the Company then has in effect another
program to facilitate exercise of outstanding options held by other persons,
that program will also be available with respect to the Options.
e. Any existing or future programs that the Company develops
for any holders of outstanding options to reflect and adjust for corporate
transactions, (including, without limitation, any and all dividends and
distributions in cash, stock of other companies, property, or grant and or
forgiveness of loans or other obligations), will also be available with respect
to the Options.
5. Change in Control.
a. If there is change in control as defined below, then all
payments payable under this Agreement are immediately due and payable and Xxxxxx
will have no obligations under this Agreement.
b. As used in this Agreement, the phrase "change in control"
shall mean: (a) the sale, transfer or other disposition of more than 50% of the
Company's outstanding common stock or other voting securities in a single
transaction or a series of transactions in concert with each other; (b) one or
more changes in the composition of the Company's Board of Directors such that
the members of the Board as of the date of this Agreement do not constitute a
majority of the Board; or (c) the Sale or other disposition of all of the assets
or stock of Sorrento Networks, Inc. to an entity that is not affiliated with the
Company or Sale of the Company (as defined in the Option Agreement and the
Option Plan under which they were granted).
6. Noncompetition; Nondisclosure of Confidential Information.
a. During the term of the Agreement, Xxxxxx will not directly
or indirectly engage in other business activities that are in Direct Competition
with the Business now being carried on by the Company and its affiliates. In
addition, for one year after his resignation in accordance with Section 1,
Xxxxxx may not use or disclose Confidential Information acquired in the course
of his relationship or solicit customers or employees of the Company for any
business activity unrelated to his services as a consultant without the consent
of the Company. Xxxxxx may engage in all other business activities without
restriction.
b. For purposes of this Agreement, "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development, proprietary product data, marketing plans
and other non-public, proprietary and confidential information of the Company
and its affiliates.
c. For purposes of this Agreement, "Direct Competition" shall
mean any business activity with a person or entity (other than Company or its
affiliates) involving the design, manufacture and marketing of integrated
networking and bandwidth aggregation products which are competitive with the
products or services of Company in existence or under development upon the
effective date of this Agreement.
d. This Section 6 supersedes any and all noncompetition and
nondisclosure obligations of Xxxxxx to Company under any provision of any plan
or agreement, including but not limited to paragraph 4, of the Indemnification
Agreement approved by the Board in November of 1999.
7. Communications About Xxxxxx. Company agrees that all communications,
whether written or oral, made by the Company or on its behalf to any person or
entity (including, without limitation, any Company employee, customer, vendor,
supplier, competitor, investor, or member of the media) regarding Xxxxxx or any
person or entity related to him ("Communications") will: (a) be truthful; and
(b) not directly or indirectly, criticize,
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disparage, or in any manner undermine the reputation or business practices of
Xxxxxx or any person or entity related to him. In addition, Company will give
Xxxxxx reasonable notice and Xxxxxx shall have the option to review and approve
such Communication before it is released in a reasonable amount of time.
Notwithstanding the foregoing, the Company may make such truthful Communications
as are lawfully compelled and made under oath in connection with a court or
governmental administrative proceeding.
8. Mutual Release. For and in consideration of the foregoing, Company
and Xxxxxx hereby irrevocably and unconditionally release and forever discharge
each other, and each of their respective current and former partners, officers,
directors, shareholders, agents, employees, attorneys, representatives,
beneficiaries, family members, subsidiaries, affiliates, insurers, predecessors
and successors in interest, assigns, executors, administrators and heirs, all
persons acting by, through, under or in concert with them, or any of them
(collectively "Affiliates"), from any and all manner of past, present or future
actions or causes of action, liens, claims, damages, obligations, liabilities,
debts, accounts, judgments, demands, costs and expenses (including attorneys'
fees and costs) of every nature, kind, and description whatsoever, whether known
or unknown, suspected or unsuspected, fixed or contingent, arising out of or in
any way related to any matters through the effective date of this Agreement (the
"Released Claims").
Notwithstanding the foregoing, this Agreement and release shall not
effect a release of any claims or the rights and obligations of the Parties
under this Agreement or Exhibits thereto. Nothing contained in this Section 8,
shall affect any rights, claims or causes of action which Xxxxxx may have (1)
with respect to his outstanding stock options, warrants or other stock
subscription rights to purchase the Stock of the Company or any of its
subsidiaries or related entities or other securities under the terms and
conditions thereof; and (2) to indemnification by the Company.
9. Unknown Claims. Company and Xxxxxx acknowledge that they have
investigated to their complete satisfaction all facts and potential claims which
relate to or arise out of the Released Claims, and that there is a risk that
after the execution of this Agreement, they will discover, incur or suffer
claims which were unknown or unanticipated at the time this Agreement is
executed, and which if known on the date of execution and delivery hereof may
have materially affected their decision to execute this Agreement. Company and
Xxxxxx acknowledge and agree that by reason of the mutual releases contained
above, they are assuming the risk of such unknown claims and agree that this
Agreement applies thereto. In connection therewith, Company and Xxxxxx expressly
waive and relinquish the benefits of Section 1542 of the California Civil Code,
which Section reads as follows:
"A General Release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
10. Indemnification. The Indemnification Agreement approved by the
Board in November of 1999, is hereby modified and, modified, the terms thereof
are set forth in an Indemnification Agreement attached hereto as Exhibit "D".
11. Miscellaneous.
11.1. Legal Advice and Construction of Agreement. Both Company
and Xxxxxx have received (or have voluntarily and knowingly elected not to
receive) independent legal advice with respect to the advisability or entering
into this Agreement and with respect to all matters covered by this Agreement
and neither has been entitled to rely upon or has in fact relied upon the legal
or other advice of the other party or such other party's counsel (or employees)
in entering into this Agreement.
11.2. Parties' Understanding. Company and Xxxxxx state that
each has carefully read this Agreement, that it has been fully explained to
it/him by its/his attorney (or that it/he has voluntarily and knowingly elected
not to receive such explanation), that it/he fully understands its final and
binding effect, that the only promises made to it/him to sign the Agreement are
those stated herein, and the Exhibits attached hereto, and that it/he is signing
this Agreement voluntarily.
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11.3. Recitals and Section Headings. Each term of this
Agreement is contractual and not merely a recital. All recitals are incorporated
by reference into this Agreement. Captions and section headings are used herein
for convenience only, are not part of this Agreement, and shall not be used in
interpreting or construing it.
11.4. Entire Agreement. This Agreement and the Exhibits
thereto constitutes a single integrated contract expressing the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous oral and written agreements and discussions with
respect to the subject matter hereof. Notwithstanding the foregoing, nothing in
this Agreement shall be deemed to waive or supersede any provision in any other
plan or agreement, the terms of which are more beneficial or favorable to Xxxxxx
than those set forth herein.
11.5. Force Majeure. Neither the Company nor Xxxxxx shall be
deemed in default if its/his performance of obligations hereunder is delayed or
become impossible or impracticable by reason of any act of God, war, fire,
earthquake, strike, civil commotion, epidemic, or any other cause beyond such
party's reasonable control.
11.6. Assignment. This Agreement shall inure to the benefit
of, and be binding upon, the parties and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by Xxxxxx,
nor may any of Chadha's duties hereunder be delegated, without the prior written
consent of Company, which consent may be given or withheld by Company in its
sole discretion. The rights of Company under this Agreement may not be assigned
without the consent of Xxxxxx, which consent may be given or withheld by Xxxxxx
in his sole discretion.
11.7. Excise Tax. If Xxxxxx becomes liable for any excise tax
imposed by Section 4999 of the Internal Revenue Code, as amended, by reason of
any provision of this Agreement, the Company shall make an additional "gross up"
payment to Xxxxxx, in an amount such that Xxxxxx will be left in the same
economic position after imposition of such excise tax (and any income tax
imposed on the gross-up payment) as he would have been had such excise tax not
been imposed.
11.8. Survival. The covenants, agreements, representations and
warranties contained in or made pursuant to Sections 4, 5, 7, 8, 9, 10 and 11.7
shall survive the expiration of this Agreement.
11.9. Third Party Beneficiaries. Except as expressly provided
herein with respect to successors and assigns of the parties, this Agreement
does not create, and shall not be construed as creating, any rights enforceable
by any person or entity not a party to this Agreement.
11.10. Waiver. The failure of either party hereto at any time
to enforce performance by the other party of any provision of this Agreement
shall in no way affect such party's rights thereafter to enforce the same, nor
shall the waiver by either party of any breach of any provision hereof be deemed
to be a waiver by such party of any other breach of the same or any other
provision hereof.
11.11. Notices. All notices, consents, requests, demands,
instructions, approval, acceptances and other communications of any kind
whatsoever which may or must be given under this Agreement shall be in writing
and shall be deemed duly given or made upon certified or registered mail, return
receipt requested, postage prepaid, or reputable overnight delivery service, to
the parties at the addresses set forth below (or at such other addresses as
shall be specified by like notice): to Company, attention General Counsel and
Secretary, at 0000 00xx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx Xxxxxxxxxx 00000 (with a
copy to Xxxxxxx X. Xxxxxxxx, Esq., Fulbright and Xxxxxxxx, 000 Xxxxxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X., 00000-0000; and to Xxxxxx at _____________
___________________________________________. Any party may change said party's
address for purposes of giving notices under this Section by giving to the other
party a written notice of such change in the manner provided in this Section.
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11.12. Severability. All sections, clauses thereof and
covenants contained in this Agreement are severable, and in the event any of
them shall be held to be invalid by any court, this Agreement shall be
interpreted as if such invalid sections, clauses or covenants were not contained
herein.
11.13. Applicable Law. This Agreement (exclusive of Exhibit
"D") is made with reference to the laws of this State of California, and shall
be governed by and construed in accordance therewith. Any legal action, suit or
proceeding brought by either party to enforce or interpret any term or provision
of this Agreement shall be brought in the appropriate state or federal court
located in Los Angeles, California. The prevailing party in any such legal
action, suit or proceeding shall be entitled to have and recover from the losing
party such prevailing party's attorneys' fees and costs incurred in connection
therewith, including, but not limited to expert witness fees and costs and
expenses of appeals.
11.14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
11.15. No Admission. Neither the entry into this Agreement nor
the giving of consideration hereunder shall constitute an admission of any
wrongdoing by Company or Xxxxxx.
11.16. Effectiveness. This Agreement shall become effective
upon execution by the later of the parties hereto to execute this Agreement.
OSICOM TECHNOLOGIES, INC. PAR XXXXXX
By: /s/ Xxx Xxxxx By: /s/ Par Xxxxxx
------------- --------------
Its: President
Date: June 12, 2000 Date: June 12, 2000
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EXHIBIT B
PAR XXXXXX
Stock Options
Final Unexercised
ID Plan Grant Vesting Expiration Strike Options Options Vested
Number Date Date Date Price Granted Granted Balance
Osicom Technologies, Inc.: (Par Xxxxxx)
42 1988 9/11/95 9/11/95 9/11/05 $ 13.500 16,667 16,667 16,667
284 1988 2/2/96 2/2/96 2/1/06 $ 23.760 16,667 16,667 16,667
497 1988 8/7/95 8/7/95 8/7/05 $ 11.160 39,167 23,000 23,000
499 1988 8/7/95 5/31/96 8/7/05 $ 11.160 39,167 39,167 39,167
501 1988 8/7/95 5/31/97 8/7/05 $ 11.160 39,167 39,167 39,167
824 1988 9/26/97 9/26/97 9/26/07 $ 13.500 16,667 16,667 16,667
1161 1988 5/1/98 8/1/98 5/1/08 $ 13.500 8,334 8,334 8,334
1233 1997 11/2/98 2/1/02 11/2/08 $ 7.031 340,830 298,830 298,830
1575 1997 8/24/99 8/24/99 8/24/09 $ 7.110 70,000 70,000 70,000
1650 1997 4/26/00 2/1/03 2/1/10 $ 49.250 600,000 600,000 -
------------------------------------
1,186,666 1,128,499 528,499
------------------------------------
Osicom Technologies, Inc.: (Xxxxxx Xxxxxx)
43 1988 9/11/95 9/11/95 9/11/05 $ 13.500 16,667 16,667 16,667
285 1988 2/2/96 2/2/96 2/1/06 $ 23.760 16,667 16,667 16,667
824 1988 9/26/97 9/26/97 9/26/07 $ 13.500 16,667 16,667 16,667
------------------------------------
50,001 50,001 50,001
------------------------------------
NETsilicon, Inc.:
n/a Osi Stock 9/14/99 9/14/99 9/14/09 $ 7.00 12,632 12,632 12,632
Entrada Networks, Inc.:
n/a Osi Stock 6/15/00 8/31/00 6/15/10 $ 3.50 200,000 200,000 200,000
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EXHIBIT X-0
XXXXX XXXXXXXXXX AGREEMENT
THIS STOCK REPURCHASE AGREEMENT is made between PAR XXXXXX (the
"Purchaser") and OSICOM TECHNOLOGIES, INC., a New Jersey Corporation (the
"Company") as of June 12, 2000.
Unless otherwise defined herein, the terms defined in the Company's
Amended and Restated 1997 Incentive and Non-Qualified Stock Option Plan (the
"Plan") or in the Agreement between the Company and Purchaser ("Agreement"),
dated the date hereof and to which this Stock Repurchase Agreemeent is attached
as Exhibit C, shall have the same meanings in this Stock Repurchase Agreement.
RECITALS
A. Pursuant to the Plan, the Purchaser was granted an option, known as
ID 1650 (the "Option"), to purchase up to 600,000 shares of Company Common Stock
subject to certain vesting provisions.
B. Purchaser was previously granted other options to purchase the
Company's Common Stock.
C. Purchaser and the Company entered into the Agreement, dated the date
hereof to which this Stock Repurchase Agreement is attached as Exhibit C, which
modifies the terms of all options held by Purchaser, to eliminate all vesting
and repurchase provisions except as set forth in this Stock Repurchase
Agreement, and permits, but does not require, the immediate exercise of the
Option.
D. The Repurchase Option set forth in this Stock Repurchase Agreement
is limited to the Options, as defined above and granted under ID 1650.
Now therefore, in consideration of the foregoing and the mutual
covenants and conditions set forth herein, the Company and Purchaser agree as
follows:
1. REPURCHASE OPTION.
(a) If, before July 8, 2003, Purchaser commits a Breach, as
defined below, of the Agreement dated as of June 12, 2000 (this Stock Repurchase
Agreement is Exhibit C to the Agreement), Company shall give written notice of
such Breach to Purchaser, and Purchaser shall have thirty (30) days following
receipt of said notice in which to cure such Breach. For purposes of this Stock
Repurchase Agreement, a Breach by Purchaser shall be limited to the willful
failure by Purchaser to perform pursuant to the terms set forth in paragraph 2
(Consulting Services) or paragraph 6 (Noncompetition; Nondisclosure of
Confidential Information) of the Agreement. If the Breach remains uncured after
30 days, then, subject to the limitations set forth in paragraphs (b), (c), (d)
and (g) of this Section 1, the Company shall have the right and option (the
"Repurchase Option") to cancel outstanding Options, or repurchase certain Shares
(the "Repurchasable Shares") as to which the Option shall have been exercised,
at the rate of 16,667 Repurchasable Shares or Option for every 30 days that the
breach remains uncured.
(b) For purposes of this Stock Repurchase Agreement,
Repurchasable Shares shall mean and include only Shares as to which Purchaser
has debt outstanding, i.e., as to which, at the time of any Breach, any
indebtedness or obligations to the Company that Purchaser incurred in order to
purchase the Shares subject to the Option has not been paid in full, or
cancelled or forgiven by prior action of the Company.
(c) The maximum number of Repurchasable Shares that may be
repurchased, or Options that may be cancelled shall not exceed the number
determined in accordance with the following schedule:
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Maximum Repurchase
Date of Breach Option
--------------------------------------------------------------------------------
Before July 8, 2001 500,000 Options or Shares
July 8, 2001 - July 7, 2002 400,000 Options or Shares
July 8, 2002 - July 7, 2003 200,000 Options or Shares
After July 7, 2003 None
(d) If the Company elects to exercise its repurchase and
cancellation rights at a time when the Option and/or Repurchasable Shares have
partially vested, Purchaser shall have the right to determine whether and to
what extent outstanding Options shall be canceled or Repurchasable Shares
repurchased in order to meet the vesting provisions set forth above.
(e) If the Company does not give notice required by paragraph
1(a) above, within 30 days following a Breach, the Repurchase Option shall
terminate as to that Breach.
(f) If a Breach by Purchaser remains uncured after expiration
of the Cure Period set forth in paragraph 1(a) above, the Company may exercise
its Repurchase Option by delivering personally or by registered mail to
Purchaser, within 30 days of said expiration, a notice in writing indicating the
Company's intention to exercise the Repurchase Option and setting forth a date
for closing not later than 30 days from the mailing of such notice. The closing
shall take place at the Company's office. At the closing, if any Shares are to
be repurchased under the Repurchase Option, the holder of the certificates for
the Shares being transferred shall deliver stock certificate or certificates and
the Company shall deliver the purchase price by proportionally reducing the
amount owed it on the indebtedness incurred to purchase the shares, including
principal and accrued interest, and will take appropriate actions to reduce the
balance owed under Purchaser's notes or other evidences of indebtedness. In the
event the payment is larger than the promissory note outstanding then the
remainder will be paid by the Company in cash, certified or cashier's check,
wire transfer, or other method reasonably acceptable to Purchaser.
(g) In the event that Purchaser's obligations under the
Agreement terminate for any reason before the expiration of the Consultancy Term
(as defined therein), including but not limited to paragraph 1(d), and 5 (Change
of Control) thereof, then the Company's Repurchase Option provided hereunder
shall terminate concurrently and any and all repurchase or cancellation rights
of the Company provided herein shall expire.
2. TRANSFERABILITY OF THE SHARES; ESCROW.
(a) Purchaser hereby authorizes and directs the Secretary of
the Company, or such other person designated by the Company, to transfer the
Repurchasable Shares as to which the Repurchase Option has been exercised from
Purchaser to the Company.
(b) To insure the availability for delivery of Purchaser's
Repurchasable Shares upon repurchase the Company pursuant to the Repurchase
Option under Section 1, Purchaser hereby appoints the Secretary, or any other
person designated by the Company as escrow agent, as his attorney-in-fact to
sell, assign and transfer unto the Company, such Repurchasable Shares, if any,
repurchased by the Company pursuant to the Repurchase Option. When any exercise
of the Repurchase Option occurs, Purchaser shall deliver and deposit with the
Secretary of the Company, or such other person designated by the Company, the
share certificates representing the Repurchasable Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit C-2. The
Repurchasable Shares and stock assignment shall be held by the secretary in
escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser
attached as Exhibit C-3 hereto, until the Company exercises its Repurchase
Option, until such Repurchasable Shares are vested, or until such time as this
Stock Repurchase Agreement no longer is in effect. Upon vesting of the
Repurchasable Shares, the escrow agent shall promptly deliver to the Purchaser
the certificate or certificates representing such Shares in the escrow agent's
possession belonging to the Purchaser, and the escrow agent shall be discharged
of all further obligations hereunder; provided, however, that the escrow agent
shall nevertheless retain such certificate or certificates as escrow agent if so
required pursuant to other restrictions imposed pursuant to this Stock
Repurchase Agreement.
(c) The Company, or its designee, shall not be liable for any
act it may do or omit to do with
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respect to holding the Shares in escrow and while acting in good faith and in
the exercise of its judgment.
(d) Transfer or sale of the Shares is subject to restrictions
on transfer imposed by any applicable state and federal securities laws. Any
transferee shall hold such Shares subject to all the provisions hereof and the
Exercise Notice executed by the Purchaser with respect to any Repurchasable
Shares purchased by Purchaser and shall acknowledge the same by signing a copy
of this Stock Repurchase Agreement.
3. OWNERSHIP, VOTING RIGHTS, DUTIES. This Stock Repurchase Agreement
shall not affect in any way the ownership, voting rights, rights to receive
dividends or other rights or duties of Purchaser, except as specifically
provided herein.
4. LEGENDS. The share certificate evidencing the Repurchasable Shares
shall be endorsed with the following legend (in addition to any legend required
under applicable federal and state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS
SET FORTH IN A STOCK REPURCHASE AGREEMENT DATED JUNE 12, 2000
BETWEEN THE COMPANY AND THE PURCHASER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY.
5. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Options,
Shares and the purchase price of the Repurchasable Shares in this Agreement
shall be appropriately adjusted to reflect any stock split, stock dividend or
other change in the Options or Shares which may be made by the Company pursuant
to Section 12 of the Plan after the date of this Stock Repurchase Agreement.
6. NOTICES. Notices required hereunder shall be given in person or by
registered mail to the address of Purchaser shown on the records of the Company,
and to the Company at their respective principal executive offices.
7. SURVIVAL OF TERMS. This Stock Repurchase Agreement shall apply to
and bind Purchaser and the Company and their respective permitted assignees and
transferees, heirs, legatees, executors, administrators and legal successors.
8. SECTION 83(B) ELECTION. Purchaser hereby acknowledges that he or she
has been informed that, with respect to the exercise of an Option for Shares, an
election (the "Election") may be filed by the Purchaser with the Internal
Revenue Service, within 30 days of the purchase of the exercised Shares,
electing pursuant to Section 83(b) of the Code to be taxed currently on any
difference between the purchase price of the exercised Shares and their Fair
Market Value on the date of purchase. In the case of a Nonstatutory Stock
Option, this will result in a recognition of taxable income to the Purchaser on
the date of exercise, measured by the excess, if any, of the Fair Market Value
of the exercised Shares, at the time the Option is exercised over the purchase
price for the exercised Shares. Absent such an Election, taxable income will be
measured and recognized by Purchaser at the time or times on which the Company's
Repurchase Option lapses. In the case of an Incentive Stock Option, such an
Election will result in a recognition of income to the Purchaser for alternative
minimum tax purposes on the date of exercise, measured by the excess, if any, of
the Fair Market Value of the exercised Shares, at the time the option is
exercised, over the purchase price for the exercised Shares. Absent such an
Election, alternative minimum taxable income will be measured and recognized by
Purchaser at the time or times on which the Company's Repurchase Option lapses.
Purchaser is strongly encouraged to seek the advice of his or her own tax
consultants in connection with the purchase of the Shares and the advisability
of filing of the Election under Section 83(b) of the Code. A form of Election
under Section 83(b) is attached hereto as Exhibit C-5 for reference.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND
NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE,
EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING
ON PURCHASER'S BEHALF.
10
9. REPRESENTATIONS. Purchaser has reviewed with his own tax advisors
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by this Stock Repurchase Agreement. Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. Purchaser understands that he (and not the
Company) shall be responsible for his own tax liability that may arise as a
result of this investment or the transactions contemplated by this Stock
Repurchase Agreement.
10. GOVERNING LAW. This Stock Repurchase Agreement shall be governed by
the internal substantive laws, but not the choice of law rules, of New Jersey.
IN WITNESS WHEREOF, this Stock Repurchase Agreement is deemed made as
of the date first set forth above.
OSICOM TECHNOLOGIES, INC.
By: /s/ Xxxx X. Lines
-----------------
Name: Xxxx X. Lines
Title: General Counsel and Secretary
PURCHASER
Signature: /s/ Par Xxxxxx
----------------
Par Xxxxxx
Address:
--------------------
--------------------
EXHIBIT C-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, PAR XXXXXX, hereby sell, assign and transfer unto
OSICOM Technologies, Inc. __________ shares of the Common Stock of Osicom
Technologies, Inc. standing in my name of the books of said corporation
represented by Certificate No. _____ herewith and do hereby irrevocably
constitute and appoint ___________________________ to transfer the said stock on
the books of the within named corporation with full power of substitution in the
premises.
This Stock Assignment may be used only in accordance with the Stock
Repurchase Agreement between Osicom Technologies, Inc. and the undersigned dated
June 12, 2000.
Dated: June 12, 2000 Signature: /s/ Par Xxxxxx
----------------
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"Repurchase Option," as set forth in the Stock Repurchase Agreement, without
requiring additional signatures on the part of the Purchaser.
11
EXHIBIT C-3
JOINT ESCROW INSTRUCTIONS
-------------, ----
[Date]
Osicom Technologies, Inc.
-------------------------
-------------------------
Attention: Secretary
Dear :
----------------------
As Escrow Agent for both Osicom Technologies, Inc. (the "Company"), and
the undersigned purchaser of stock of the Company (the "Purchaser"), you are
hereby authorized and directed to hold the documents delivered to you pursuant
to the terms of that certain Stock Repurchase Agreement between the Company and
the undersigned, in accordance with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") exercises the
Company's Repurchase Option set forth in the Stock Repurchase Agreement, the
Company shall give to Purchaser and you a written notice specifying the number
of shares of stock to be repurchased, the purchase price, and the time for a
closing hereunder at the principal office of the Company. Purchaser and the
Company hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver the stock assignments, together with the
certificate evidencing the shares of stock to be transferred, to the Company or
its assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being repurchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Stock Repurchase
Agreement. Purchaser does hereby irrevocably constitute and appoint you as
Purchaser's attorney-in-fact and agent for the term of this escrow to execute
with respect to such securities all documents necessary or appropriate to make
such securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.
4. You will deliver to Purchaser a certificate or certificates
representing so many shares of stock as are not then subject to the Company's
Repurchase Option within 10 days of the expiration or termination, in whole or
in part, of the Company's rights.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
12
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Stock Repurchase Agreement or any documents or papers
deposited or called for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other
experts as you may deem NECESSARY TO PROPERLY to advise you in connection with
your obligations hereunder, may rely upon the advice of such counsel, and the
Company may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Stock Repurchase Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by the internal
substantive laws, but not the choice of law rules, of New Jersey.
13
IN WITNESS WHEREOF, these Joint Escrow Instructions have been duly
executed as of the date first set forth above.
OSICOM TECHNOLOGIES, INC.
By: /s/ Xxxx X. Lines
-------------------
Name: Xxxx X. Lines
Title: General Counsel and Secretary
PURCHASER
Signature: /s/ Par Xxxxxx
----------------
Printed Name: Par Xxxxxx
ESCROW AGENT
By: /s/ Xxxx X. Lines
------------------
Corporate Secretary,
Osicom Technologies, Inc.
EXHIBIT C-4
CONSENT OF SPOUSE
I, XXXXXX XXXXXX, spouse of PAR XXXXXX, have read and approve the
foregoing Stock Repurchase Agreement and the Agreement to which it is an exhibit
(collectively, the "Agreement"). In consideration of the rights granted to my
spouse , as set forth in the Agreement, I hereby appoint my spouse as my
attorney-in-fact in respect to the exercise of any rights under the Agreement
and agree to be bound by the provisions of the Agreement insofar as I may have
any rights in said Agreement or any shares issued pursuant to the Options
referred to therein under the community property laws of the State of
California.
Dated: June 12, 2000 Signature: /s/ Xxxxxx Xxxxxx
-----------------
Printed Name: Xxxxxx Xxxxxx
14
EXHIBIT D
INDEMNIFICATION AGREEMENT
This Indemnification Agreement, dated as of June 12, 2000, is made by
and between Osicom Technologies Inc., a New Jersey corporation (the
"Corporation"), and PAR XXXXXX. (the "Indemnitee").
RECITALS
A. Indemnitee has served as the Chairman of the Board and Chief
Executive Officer of the Corporation. At the Corporation's request, Indemnitee
has also served as a director and officer, employee and/or agent of one or more
of its subsidiary corporations and other business entities in which it has an
investment. The Corporation wishes Indemnitee to continue to act as a Consultant
to the Corporation Board of Directors or its designee;
B. The Corporation and Indemnitee recognize that the present state of
the law is too uncertain to provide the Corporation and its directors, officers,
and consultants, with adequate and reliable advance knowledge or guidance with
respect to the legal risks and potential liabilities to which they may become
personally exposed as a result of performing their duties for the Corporation;
C. The Restated Certificate of Incorporation (the "Certificate") of the
Corporation provides that the Corporation shall indemnify, to the fullest extent
permitted by law, certain persons, including directors, officers, employees or
agents of the Corporation, against specified expenses and losses arising out of
certain threatened, pending or completed actions, suits or proceedings;
D. Section 14A:3-5(8) of the New Jersey Statutes (the "NJCL") expressly
recognizes that the indemnification provided by the other subsections of Section
14A:3-5 of the NJCL shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in another
capacity while holding such office;
E. Indemnitee has indicated that he may not be willing to serve as a
consultant in the absence of an indemnification agreement from the Corporation;
F. The Board of Directors of the Corporation has concluded that, to
retain and attract talented and experienced individuals to serve as directors,
officers and consultants of the Corporation, it is necessary for the Corporation
to contractually indemnify them, and to assume for itself liability for expenses
and damages in connection with claims against them in connection with their
service to the Corporation, and has further concluded that the failure to
provide such contractual indemnification could result in great harm to the
Corporation and its stockholders.
AGREEMENT
NOW, THEREFORE, the Corporation and the Indemnitee agree as follows:
1. Definitions.
(a) "Expenses" means, for the purposes of this Agreement, all
direct and indirect costs of any type or nature whatsoever (including, without
limitation, any fees and disbursements of Indemnitee's counsel, accountants and
other experts and other out-of-pocket costs) actually and reasonably incurred by
Indemnitee in connection with the investigation, preparation, defense or appeal
of a Proceeding; provided, however, that Expenses shall not include judgments,
fines, penalties or amounts paid in settlement of a Proceeding unless such
matters may
15
be indemnified under applicable provisions of the NJCL.
(b) "Proceeding" means, for the purposes of this Agreement,
any threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (including actions, suits or
proceedings brought by or in the right of the Corporation or an Affiliate) in
which Indemnitee may be or may have been involved as a party or otherwise, by
reason of the fact that Indemnitee is or was a director, officer or consultant
of the Corporation, or any of its Affiliates, by reason of any action taken by
him or of any inaction on his part while acting as such director, officer,
employee agent, or consultant, or by reason of the fact that he is or was
serving at the request of the Corporation as a director, officer, employee,
agent or consultant of another foreign or domestic corporation, partnership,
joint venture, LLC, trust or other enterprise, or was a director or officer of
the foreign or domestic corporation which was a predecessor corporation to the
Corporation or of another enterprise at the request of such predecessor
corporation, whether or not he is serving in such capacity at the time any
liability or expense is incurred for which indemnification or reimbursement can
be provided under this Agreement.
(c) "Affiliate" of the Corporation means any corporation,
partnership, trust, LLC or other enterprise, foreign or domestic, in which the
Corporation had a significant equity investment (whether through ownership of
shares, warrants, convertible securities, or contract rights) or a business
relationship, including but not limited to, customer, supplier, joint venture or
partnership participant, or both an equity investment and a business
relationship. An equity investment by the Corporation in another enterprise
shall be deemed significant if it at any time amounted to more than five percent
(5%) of such enterprise's total equity, on a fully diluted basis.
(d) "Affiliate" of the Indemnitee means his spouse,
descendants, ancestors, and siblings, and their respective spouses, a trust or
other arrangement established for the primary benefit of one or more of
Indemnitee's family members, and a corporation, partnership, LLC, or other
enterprise in which Indemnitee or his Affiliates hold a majority of the equity
interests.
2. Indemnification.
(a) Third Party Proceedings. To the fullest extent permitted
by law, the Corporation shall indemnify Indemnitee and his Affiliates against
Expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, penalties, and amounts paid in settlement (if the settlement
is approved in advance by the Corporation)) actually and reasonably incurred by
Indemnitee in connection with a Proceeding (other than a Proceeding by or in the
right of the Corporation) if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe Indemnitee's conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner that
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Corporation, or, with respect to any criminal Proceeding, had reasonable
cause to believe that Indemnitee's conduct was unlawful. Notwithstanding the
foregoing, no indemnification shall be made in any criminal proceeding where
Indemnitee has been adjudged guilty unless a disinterested majority of the
directors determines that Indemnitee did not receive, participate in or share in
any pecuniary benefit to the detriment of the Corporation, had no reasonable
cause to believe that his conduct was unlawful, and, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for Expenses or liabilities.
(b) Proceedings by or in the Right of the Corporation. To the
fullest extent permitted by law, the Corporation shall indemnify Indemnitee and
his Affiliates against Expenses actually and reasonably incurred by Indemnitee
or any Affiliate in connection with the defense or settlement of a Proceeding by
or in the right of the Corporation to procure a judgment in its favor if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in, or not opposed to, the best interests of the Corporation. Notwithstanding
the foregoing, no indemnification shall be made in respect of any claim, issue
or matter as to which Indemnitee shall have been adjudged to be liable to the
Corporation in the performance of Indemnitee's duty to the Corporation unless
and only to the extent that the court in which such Proceeding is or was pending
shall determine upon application that, in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity for Expenses and
then only to the extent that the court shall determine.
16
(c) Scope. Notwithstanding any other provision of this
Agreement other than Sections 3 and 13, the Corporation shall indemnify
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by other provisions of this
Agreement, the Certificate, the Bylaws of the Corporation, or statute.
(d) If and to the extent any Affiliate of Indemnitee acted as
a director, officer, employee, agent or consultant to the Corporation, or any of
its affiliates, then all provisions of this Agreement shall apply to such
action, and such Affiliate shall be treated as an Indemnitee hereunder and shall
be entitled to all benefits and to exercise all rights provided to Indemnitee
under this Agreement.
3. Limitations on Indemnification. Any other provision herein to the
contrary notwithstanding, the Corporation shall not be obligated pursuant to the
terms of this Agreement:
(a) Excluded Acts. To indemnify Indemnitee for any acts or
omissions or transactions from which a director may not be relieved of liability
under Section 14A:3-5 of the NJCL; or
(b) Claims Initiated by Indemnitee. To indemnify or advance
Expenses to Indemnitee with respect to Proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 14A:3-5 of the NJCL, but such indemnification or advancement of Expenses
may be provided by the Corporation in specific cases if a majority of the
disinterested directors has approved the initiation or bringing of such suit; or
(c) Lack of Good Faith. To indemnify Indemnitee for any
Expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or
(d) Insured Claims. To indemnify Indemnitee for Expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines or penalties, and amounts paid in settlement) which have been paid
directly to or on behalf of Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Corporation or
any other policy of insurance maintained by the Corporation or Indemnitee; or
(e) Claims Under Section 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
(f) Claims Indemnified by Other Enterprises. To indemnify
Indemnitee for Expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines or penalties, and amounts paid in settlement)
which have been paid directly to or on behalf of Indemnitee by another foreign
or domestic corporation, partnership, joint venture, LLC, trust or other
enterprise, or was a director or officer of the foreign or domestic corporation
which was a predecessor corporation to the Corporation; it being the parties
intent that the indemnification rights under this Agreement shall be secondary
to the indemnification provided by such other enterprise with respect to claims
based on Indemnitee's relationship to such other enterprise.
4. Determination of Right to Indemnification. Upon receipt of a written
claim addressed to the Board of Directors for indemnification pursuant to
Section 2 of this Agreement, the Corporation shall determine by any of the
methods set forth in Section 14A:3-5 of the NJCL whether Indemnitee has met the
applicable standards of conduct that make it permissible under applicable law to
indemnify Indemnitee. The Corporation's Board will use its best efforts to
designate Xxxxxxx Xxxxxxxx, Esq., now of Fulbright & Xxxxxxxx, LLP, as
independent legal counsel to assist the Board in making this determination. If a
claim under Section 2 of this Agreement is not paid in full by the Corporation
within ninety days after such written claim has been received by the
Corporation, Indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim
17
and, unless such action is dismissed by the court as frivolous or brought in bad
faith, Indemnitee shall be entitled to be paid also all expenses of prosecuting
such claim. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to make a
determination prior to the commencement of such action that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct under applicable law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel
or its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has not met the applicable
standard of conduct. The court in which such action is brought shall determine
whether Indemnitee or the Corporation shall have the burden of proof concerning
whether Indemnitee has or has not met the applicable standard of conduct. With
respect to all litigation now pending, the Corporation acknowledges that
Indemnitee and his Affiliates have met the applicable standard of conduct.
5. Advancement and Repayment of Expenses. The Expenses incurred by
Indemnitee in defending and investigating any Proceeding shall be paid by the
Corporation prior to the final disposition of such Proceeding within thirty days
after receiving from Indemnitee copies of invoices presented to Indemnitee for
such Expenses and an undertaking by or on behalf of Indemnitee to the
Corporation to repay such amount to the extent it is ultimately determined that
Indemnitee is not entitled to indemnification. In determining whether or not to
make an advance hereunder, the ability of Indemnitee to repay shall not be a
factor. Notwithstanding the foregoing, in a proceeding brought by the
Corporation directly, in its own right (as distinguished from an action brought
derivatively or by any receiver or trustee), the Corporation shall not be
required to make the advances called for hereby if a majority of the
disinterested directors determine that it does not appear that Indemnitee has
met the standards of conduct that made it permissible under applicable law to
indemnify Indemnitee and that the advancement of Expenses would not be in the
best interests of the Corporation and its stockholders.
6. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification or advancement by the Corporation
of some or a portion of any Expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, penalties, and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a Proceeding, but is not entitled to indemnification or advancement of the
total amount thereof, the Corporation shall nevertheless indemnify or pay
advancements to Indemnitee for the portion of such Expenses or liabilities to
which Indemnitee is entitled.
7. Notice to Corporation by Indemnitee. Indemnitee shall notify the
Corporation in writing of any matter with respect to which Indemnitee intends to
seek indemnification hereunder as soon as reasonably practicable following the
receipt by Indemnitee of written notice thereof; provided that any delay in so
notifying the Corporation shall not constitute a waiver by Indemnitee of his
rights hereunder. The written notification to the Corporation shall be addressed
to the Board of Directors and shall include a description of the nature of the
Proceeding and the facts underlying the Proceeding and be accompanied by copies
of any documents filed with the court, if any, in which the Proceeding is
pending. In addition, Indemnitee shall give the Corporation such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
8. Defense of Claim. Indemnitee shall have the right to select separate
counsel to represent him in any Proceeding against him, subject to the approval
of the Corporation, which shall not be unreasonably withheld. An objection to
Indemnitee's selected counsel based on hourly rates shall not be considered
reasonable unless the Corporation is able to demonstrate that the billing rates
or fees quoted by such counsel (whether on an hourly basis, a flat fee, or a
combination) are at least 25% higher than the reasonable and customary rates or
fees charged by national law firms for defending similar actions. All the fees
and expenses billed by the counsel for the Indemnitee shall be paid by the
Corporation.
9. Attorneys' Fees. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to other amounts to which the prevailing party may be entitled, actual
attorneys' fees, expert fees and court costs as may be awarded by the court.
10. Continuation of Obligations. All agreements and obligations of the
Corporation contained herein shall continue during any period that (i)
Indemnitee is a director or officer of the Corporation or of its any Affiliates
and through the entire term (not earlier than July 8, 2003) of the Agreement
relating to consulting services and other
18
matters entered into between the parties on the date hereof, or (ii) Indemnitee
is serving at the request of the Corporation as a director, officer, fiduciary,
employee, agent or consultant, of any other corporation, partnership, joint
venture, LLC, trust or other enterprise, and shall continue thereafter so long
as Indemnitee shall be subject to any possible Proceeding by reason of the fact
that Indemnitee served in any capacity referred to herein, including but not
limited to all Proceedings that are currently pending before any court or
agency.
11. Successors and Assigns. This Agreement establishes contract rights
that shall be binding upon, and shall inure to the benefit of, the successors,
assigns, heirs and legal representatives of the parties hereto. Without limiting
the generality of the foregoing, the Corporation shall ensure that the terms of
this Agreement are assumed by any corporation or other enterprise that may
become a successor entity to it in a merger, consolidation, sale of
substantially all its assets, or change in control, and shall not agree to any
acquisition of the Corporation in which such Assumption is not expressly agreed
to by the acquiring entity.
12. Non-exclusivity.
(a) The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed to be exclusive of any
other rights that Indemnitee may have under any provision of law, the
Certificate or the Bylaws of the Corporation, the vote of the Corporation's
stockholders or disinterested directors, other agreements or otherwise, both as
to action in his official capacity and action in another capacity while
occupying his position as a director or officer of the Corporation.
(b) In the event of any changes, after the date of this
Agreement, in any applicable law, statute, or rule that expand the right of a
New Jersey corporation to indemnify its directors and officers, Indemnitee's
rights and the Corporation's obligations under this Agreement shall be expanded
to the fullest extent permitted by such changes. In the event of any changes in
any applicable law, statute or rule, that narrow the right of a New Jersey
corporation to indemnify a director and officer, such changes, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and obligations
hereunder.
13. Supplemental Insurance. In addition to the coverage provided under
its present D&O liability insurance policies, the Company will, as soon as
feasible following Indemnitee's request therefor, use its best efforts to obtain
and maintain in force one or more supplemental D&O liability policies that will
provide it and Indemnitee with unlimited tail coverage with respect to claims
made against Indemnitee or for which he may be held liable. The Company shall
pay all premiums required to obtain and maintain such coverage.
14. Effectiveness of Agreement. This Agreement shall be effective as of
the date set forth on the first page and may apply to acts or omissions of
Indemnitee that occurred prior to such date if Indemnitee was a director or
officer of the Corporation or its predecessor, or was serving at the request of
the Corporation or its predecessor as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, at
the time such act or omission occurred.
15. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Corporation to do or fail to do any act in
violation of applicable law. The Corporation's inability, pursuant to court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement. The provisions of this Agreement shall be severable as
provided in this Section 15. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee to the fullest extent
permitted by any applicable portion of this Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
16. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of New Jersey without regard to its rules
pertaining to conflicts of laws. To the extent permitted by applicable law, the
parties hereby waive any provisions of law that render any provision of this
Agreement unenforceable in any respect.
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17. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressed, on the date of such
receipt, or (ii) if delivered by facsimile transmission to the recipient
followed by a copy sent by mail on the same date as the facsimile transmission,
on the date of receipt of such facsimile transmission, or (iii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
18. Mutual Acknowledgment. Both the Corporation and Indemnitee
acknowledge that in certain instances, federal law or applicable public policy
may prohibit the Corporation from indemnifying its directors and officers under
this Agreement or otherwise. Indemnitee understands and acknowledges that the
Corporation has undertaken or may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Corporation's
right under public policy to indemnify Indemnitee.
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original.
20. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
OSICOM TECHNOLOGIES INC.,
a New Jersey corporation
By: /s/ Xxx Xxxxx
----------------
Title: President
Address: 0000 00xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
INDEMNITEE:
/s/ Par Xxxxxx
-----------------------
PAR XXXXXX
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