EXHIBIT 10.1
PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT ("Agreement") is made as of the 2nd day
of September, 2005 by and among Telular Corporation, a Delaware corporation (the
"Company"), and the Investors set forth on the signature pages affixed hereto
(each an "Investor" and collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation D ("Regulation D"), as
promulgated by the U.S. Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended; and
B. The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, (i) an aggregate of 2,650,000 shares of the Company's
Common Stock, par value $0.01 per share (together with any securities into which
such shares may be reclassified the "Common Stock"), at purchase price of $3.50
per share, (ii) Series A warrants to purchase an aggregate of 1,325,000 shares
of Common Stock (subject to adjustment) at an exercise price of $4.50 per share
(subject to adjustment) in the form attached hereto as Exhibit A (the "Series A
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Warrants"), and (iii) Series B warrants to purchase an aggregate of
1,325,000 shares of Common Stock (subject to adjustment) at an exercise price of
$5.00 per share (subject to adjustment) in the form attached hereto as Exhibit B
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(together with the Series A Warrants, the "Warrants"); and
C. Contemporaneous with the sale of the Common Stock and
Warrants, the parties hereto will execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit C (the "Registration Rights
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Agreement"), pursuant to which the Company will agree to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and
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elsewhere in this Agreement, for the purposes of this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other
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Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person.
"Business Day" means a day, other than a Saturday or Sunday, on
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which banks in New York City are open for the general transaction of business.
"Company's Knowledge" means the actual knowledge of the
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executive officers (as defined in Rule 405 under the 0000 Xxx) of the Company,
after due inquiry.
"Confidential Information" means trade secrets, confidential
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information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).
"Control" (including the terms "controlling", "controlled by" or
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"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Effective Date" means the date on which the initial
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Registration Statement is declared effective by the SEC.
"Effectiveness Deadline" means the date on which the initial
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Registration Statement is required to be declared effective by the SEC under the
terms of the Registration Rights Agreement.
"Intellectual Property" means all of the following: (i) patents,
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patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
"Material Adverse Effect" means a material adverse effect on (i)
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the assets, liabilities, results of operations, condition (financial or
otherwise), business, or prospects of the Company and its Subsidiaries taken as
a whole, or (ii) the ability of the Company to perform its obligations under the
Transaction Documents.
"Nasdaq" means The Nasdaq Stock Market, Inc.
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"Person" means an individual, corporation, partnership, limited
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liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
"Purchase Price" means Nine Million Two Hundred Seventy-Five
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Thousand Dollars ($9,275,000).
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"Registration Statement" has the meaning set forth in the
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Registration Rights Agreement.
"SEC Filings" has the meaning set forth in Section 4.6.
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"Securities" means the Shares, the Warrants and the Warrant
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Shares.
"Shares" means the shares of Common Stock being purchased by the
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Investors hereunder.
"Subsidiary" of any Person means another Person, an amount of
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the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Transaction Documents" means this Agreement, the Warrants and
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the Registration Rights Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon
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the exercise of the Warrants.
"1933 Act" means the Securities Act of 1933, as amended, or any
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successor statute, and the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as
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amended, or any successor statute, and the rules and regulations promulgated
thereunder.
2. Purchase and Sale of the Shares and Warrants. Subject to the
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terms and conditions of this Agreement, on the Closing Date, each of the
Investors shall severally, and not jointly, purchase, and the Company shall sell
and issue to the Investors, the Shares and Warrants in the respective amounts
set forth opposite the Investors' names on the signature pages attached hereto
in exchange for the Purchase Price as specified in Section 3 below.
3. Closing. Except as otherwise agreed with the Company, upon
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confirmation that the other conditions to closing specified herein have been
satisfied or duly waived by the Investors, the Company shall deliver to
Xxxxxxxxxx Xxxxxxx PC, in trust, a certificate or certificates, registered in
such name or names as the Investors may designate, representing the Shares and
Warrants, with instructions that such certificates are to be held for release to
the Investors only upon payment in full of the Purchase Price to the Company by
all the Investors. Except as otherwise agreed with the Company, upon such
receipt by Xxxxxxxxxx Xxxxxxx PC of the certificates, each Investor shall
promptly, but no more than one Business Day thereafter, cause a wire transfer in
same day funds to be sent to the account of the Company as instructed in writing
by the Company, in an amount representing such Investor's pro rata portion of
the Purchase Price as set forth on the signature pages to this Agreement.
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Except as otherwise agreed with the Company, on the date (the "Closing Date")
the Company receives the Purchase Price, the certificates evidencing the Shares
and Warrants shall be released to the Investors (the "Closing"). The Closing of
the purchase and sale of the Shares and Warrants shall take place at the offices
of Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other location and on such other date as the Company and
the Investors shall mutually agree.
4. Representations and Warranties of the Company. The Company
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hereby represents and warrants to the Investors that:
4. 1 Organization, Good Standing and Qualification. Each
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of the Company and its material Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and to own its properties. Each of the Company and
its material Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and could not
reasonably be expected to have a Material Adverse Effect.
4.2 Authorization. The Company has full corporate power
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and authority and has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) the authorization of
the performance of all obligations of the Company hereunder or thereunder, and
(iii) the authorization, issuance (or reservation for issuance) and delivery of
the Securities. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally.
4.3 Capitalization. The capitalization of the Company is
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as set forth in the SEC Filings. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of
third parties. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full compliance
with applicable state and federal securities law and any rights of third parties
and are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. No Person is entitled to pre-emptive or
similar statutory or contractual rights with respect to any securities of the
Company. Except as disclosed in the SEC Filings, there are no outstanding
warrants, options, convertible securities or other rights, agreements or
arrangements of any character under which the Company or any of its Subsidiaries
is or may be obligated to issue any equity securities of any kind and except as
contemplated by this Agreement, neither the Company nor any of its Subsidiaries
is currently in negotiations for the issuance of any equity securities of any
kind.
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Except as described in the SEC Filings and except for the Registration Rights
Agreement, there are no voting agreements, buy-sell agreements, option or right
of first purchase agreements or other agreements of any kind among the Company
and any of the securityholders of the Company relating to the securities of the
Company held by them. Except as described in the SEC Filings and except as
provided in the Registration Rights Agreement, no Person has the right to
require the Company to register any securities of the Company under the 1933
Act, whether on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of any other
Person.
The issuance and sale of the Securities hereunder will not
obligate the Company to issue shares of Common Stock or other securities to any
other Person (other than the Investors) and will not result in the adjustment of
the exercise, conversion, exchange or reset price of any outstanding security.
The Company does not have outstanding stockholder purchase
rights or "poison pill" or any similar arrangement in effect giving any Person
the right to purchase any equity interest in the Company upon the occurrence of
certain events.
4.4 Valid Issuance. The Shares have been duly and validly
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authorized and, when issued and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions (other than those created by the Investors),
except for restrictions on transfer set forth in the Transaction Documents or
imposed by applicable securities laws. The Warrants have been duly and validly
authorized. Upon the due exercise of the Warrants, the Warrant Shares will be
validly issued, fully paid and non-assessable free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws and except for
those created by the Investors. The Company has reserved a sufficient number of
shares of Common Stock for issuance upon the exercise of the Warrants, free and
clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws
and except for those created by the Investors.
4.5 Consents. The execution, delivery and performance by
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the Company of the Transaction Documents and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods. Subject to the accuracy
of the representations and warranties of each Investor set forth in Section 5
hereof, the Company has taken all action necessary to exempt (i) the issuance
and sale of the Securities, (ii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iii) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or
other "poison pill" arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company's Certificate of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.
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4.6 Delivery of SEC Filings; Business. The Company has
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made available to the Investors through the XXXXX system, true and complete
copies of the Company's most recent Annual Report on Form 10-K for the fiscal
year ended September 30, 2004 (the "10-K"), and all other reports filed by the
Company pursuant to the 1934 Act since the filing of the 10-K and prior to the
date hereof (collectively, the "SEC Filings"). The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such period.
4.7 Use of Proceeds. The net proceeds of the sale of the
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Shares and the Warrants hereunder shall be used by the Company for working
capital and general corporate purposes.
4.8 No Material Adverse Change. Since September 30, 2004,
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except as identified and described in the SEC Filings, there has not been:
(i) any change in the consolidated assets,
liabilities, financial condition or operating results of the Company from that
reflected in the financial statements included in the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2005, except for changes in the
ordinary course of business which have not had and could not reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate;
(ii) any declaration or payment of any dividend, or
any authorization or payment of any distribution, on any of the capital stock of
the Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss,
whether or not covered by insurance to any assets or properties of the Company
or its Subsidiaries;
(iv) any waiver, not in the ordinary course of
business, by the Company or any Subsidiary of a material right or of a material
debt owed to it;
(v) any satisfaction or discharge of any lien,
claim or encumbrance or payment of any obligation by the Company or a
Subsidiary, except in the ordinary course of business and which is not material
to the assets, properties, financial condition, operating results or business of
the Company and its Subsidiaries taken as a whole (as such business is presently
conducted and as it is proposed to be conducted);
(vi) any change or amendment to the Company's
Certificate of Incorporation or Bylaws, or material change to any material
contract or arrangement by which the Company or any Subsidiary is bound or to
which any of their respective assets or properties is subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company or any
Subsidiary; or
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(viii) any material transaction entered into by the
Company or a Subsidiary required to be disclosed in a Current Report on Form
8-K.
4.9 SEC Filings; S-3 Eligibility.
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(a) At the time of filing thereof (or, if amended
prior to the date hereof, when amended), the SEC Filings complied as to form in
all material respects with the requirements of the 1934 Act and did not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Company is eligible to use Form S-3 to
register the Registrable Securities (as such term is defined in the Registration
Rights Agreement) for sale by the Investors as contemplated by the Registration
Rights Agreement.
4.10 No Conflict, Breach, Violation or Default. The
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execution, delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Company's Certificate of Incorporation or the Company's
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Investors through the XXXXX system), or (ii)(a)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, any Subsidiary
or any of their respective assets or properties, or (b) any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary is bound or to which any of their respective assets or
properties is subject, other than, in the case of this clause (ii) only, a
conflict, breach or default that has not and would not reasonably be expected to
have a Material Adverse Effect.
4.11 Tax Matters. The Company and each Subsidiary has
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timely prepared and filed all tax returns required to have been filed by the
Company or such Subsidiary with all appropriate governmental agencies and timely
paid all taxes shown thereon or otherwise owed by it. The charges, accruals and
reserves on the books of the Company in respect of taxes for all fiscal periods
are adequate in all material respects, and there are no material unpaid
assessments against the Company or any Subsidiary nor, to the Company's
Knowledge, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audits by any federal, state or local taxing
authority except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All taxes and other assessments and levies that
the Company or any Subsidiary is required to withhold or to collect for payment
have been duly withheld and collected and paid to the proper governmental entity
or third party when due. There are no tax liens or claims pending or, to the
Company's Knowledge, threatened against the Company or any Subsidiary or any of
their respective assets or property. There are no outstanding tax sharing
agreements or other such arrangements between the Company and any Subsidiary or
other corporation or entity.
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4.12 Title to Properties. Except as disclosed in the SEC
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Filings, the Company and each Subsidiary has good and marketable title to all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Certificates, Authorities and Permits. The Company
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and each Subsidiary possess adequate certificates, authorities or permits issued
by appropriate governmental agencies or bodies necessary to conduct the business
now operated by it the absence of which could reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.
4.14 Labor Matters.
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(a) The Company is not a party to or bound by any
collective bargaining agreements or other agreements with labor organizations.
The Company has not violated in any material respect any laws, regulations,
orders or contract terms, affecting the collective bargaining rights of
employees, labor organizations or any laws, regulations or orders affecting
employment discrimination, equal opportunity employment, or employees' health,
safety, welfare, wages and hours.
(b) (i) There are no labor disputes existing, or to the
Company's Knowledge, threatened, involving strikes, slow-downs, work stoppages,
job actions, disputes, lockouts or any other disruptions of or by the Company's
employees, (ii) there are no unfair labor practices or petitions for election
pending or, to the Company's Knowledge, threatened before the National Labor
Relations Board or any other federal, state or local labor commission relating
to the Company's employees, (iii) no demand for recognition or certification
heretofore made by any labor organization or group of employees is pending with
respect to the Company and (iv) to the Company's Knowledge, the Company enjoys
good labor and employee relations with its employees and labor organizations.
(c) The Company is in compliance in all material respects
with all applicable laws respecting employment (including laws relating to
classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization. There are no claims pending against the Company before the
Equal Employment Opportunity Commission or any other administrative body or in
any court asserting any violation of Title VII of the Civil Rights Act of 1964,
the Age Discrimination Act of 1967, 42 U.S.C. Sections 1981 or 1983 or any other
federal, state or local Law, statute or ordinance barring discrimination in
employment.
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(d) Except as disclosed in the SEC Filings, the Company
is not a party to, or bound by, any employment or other contract or agreement
that contains any severance, termination pay or change of control liability or
obligation, including, without limitation, any "excess parachute payment," as
defined in Section 2806(b) of the Internal Revenue Code.
4.15 Intellectual Property.
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(a) To the Company's Knowledge, all Intellectual
Property of the Company and its Subsidiaries is currently in material compliance
with all legal requirements (including timely filings, proofs and payments of
fees) and is valid and enforceable. Except as set forth in the SEC Filings, no
Intellectual Property of the Company or its Subsidiaries which is necessary for
the conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has been or is now
involved in any cancellation, dispute or litigation, and, to the Company's
Knowledge, no such action is threatened. No patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.
(b) All of the licenses and sublicenses and consent,
royalty or other agreements concerning Intellectual Property which are necessary
for the conduct of the Company's and each of its Subsidiaries' respective
businesses as currently conducted or as currently proposed to be conducted to
which the Company or any Subsidiary is a party or by which any of their assets
are bound (other than generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $10,000 per license) (collectively, "License Agreements") are valid
and binding obligations of the Company or its Subsidiaries that are parties
thereto and, to the Company's Knowledge, the other parties thereto, enforceable
in accordance with their terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' rights
generally, and there exists no event or condition which will result in a
material violation or breach of or constitute (with or without due notice or
lapse of time or both) a default by the Company or any of its Subsidiaries under
any such License Agreement.
(c) The Company and its Subsidiaries own or have the
valid right to use all of the Intellectual Property that is necessary for the
conduct of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted and for the
ownership, maintenance and operation of the Company's and its Subsidiaries'
properties and assets, free and clear of all liens, encumbrances, adverse claims
or obligations to license all such owned Intellectual Property and Confidential
Information, other than licenses entered into in the ordinary course of the
Company's and its Subsidiaries' businesses. The Company and its Subsidiaries
have a valid and enforceable right to use all third party Intellectual Property
and Confidential Information used or held for use in the respective businesses
of the Company and its Subsidiaries.
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(d) To the Company's Knowledge, the conduct of the
Company's and its Subsidiaries' businesses as currently conducted does not
infringe or otherwise impair or conflict with (collectively, "Infringe") any
Intellectual Property rights of any third party or any confidentiality
obligation owed to a third party, and, to the Company's Knowledge, the
Intellectual Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted are not being Infringed by any third party. There is no
litigation or order pending or outstanding or, to the Company's Knowledge,
threatened or imminent, that seeks to limit or challenge or that concerns the
ownership, use, validity or enforceability of any Intellectual Property or
Confidential Information of the Company and its Subsidiaries and the Company's
and its Subsidiaries' use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company's Knowledge, there is no
valid basis for the same.
(e) The consummation of the transactions
contemplated hereby and by the other Transaction Documents will not result in
the alteration, loss, impairment of or restriction on the Company's or any of
its Subsidiaries' ownership or right to use any of the Intellectual Property or
Confidential Information which is necessary for the conduct of Company's and
each of its Subsidiaries' respective businesses as currently conducted or as
currently proposed to be conducted.
(f) The Company and its Subsidiaries have taken
reasonable steps to protect the Company's and its Subsidiaries' rights in their
Intellectual Property and Confidential Information. To the Company's Knowledge,
except under confidentiality obligations, there has been no material disclosure
of any of the Company's or its Subsidiaries' Confidential Information to any
third party.
4.16 Environmental Matters. Neither the Company nor any
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Subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "Environmental Laws"), owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company's Knowledge,
threatened investigation that might lead to such a claim.
4.17 Litigation. Except as described in the SEC Filings,
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there are no pending actions, suits or proceedings against or affecting the
Company, its Subsidiaries or any of its or their properties which could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and, to the Company's Knowledge, no such actions, suits or
proceedings are threatened.
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4.18 Financial Statements. The financial statements
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included in each SEC Filing present fairly, in all material respects, the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis ("GAAP")
(except as may be disclosed therein or in the notes thereto, and, in the case of
quarterly financial statements, as permitted by Form 10-Q under the 1934 Act).
Except as set forth in the financial statements of the Company included in the
SEC Filings filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise, except those
incurred in the ordinary course of business, consistent (as to amount and
nature) with past practices since the date of such financial statements, none of
which, individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect.
4.19 Insurance Coverage. The Company and each Subsidiary
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maintains in full force and effect insurance coverage that is customary for
comparably situated companies for the business being conducted and properties
owned or leased by the Company and each Subsidiary.
4.20 Compliance with Nasdaq Continued Listing Requirements.
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The Company is in compliance with applicable Nasdaq continued listing
requirements. There are no proceedings pending or, to the Company's Knowledge,
threatened against the Company relating to the continued listing of the Common
Stock on Nasdaq and the Company has not received any written notice of, nor to
the Company's Knowledge is there any basis for, the delisting of the Common
Stock from Nasdaq.
4.21 Brokers and Finders. No Person will have, as a result
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of the transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company, other than as
previously disclosed to the Investors.
4.22 No Directed Selling Efforts or General Solicitation.
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Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the Securities.
4.23 No Integrated Offering. Neither the Company nor any
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of its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
4.24 Private Placement. Assuming the accuracy of the
-----------------
Investors' representations and warranties as set forth in Section 5, the offer
and sale of the Securities to the Investors as contemplated hereby is exempt
from the registration requirements of the 1933 Act.
-11-
4.25 Questionable Payments. Neither the Company nor any of
---------------------
its Subsidiaries nor, to the Company's Knowledge, any of their respective
current or former stockholders, directors, officers, employees, agents or other
Persons acting on behalf of the Company or any Subsidiary, has on behalf of the
Company or any Subsidiary or in connection with their respective businesses: (a)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
4.26 Transactions with Affiliates. Except as disclosed in
----------------------------
the SEC Filings, none of the officers or directors of the Company and, to the
Company's Knowledge, none of the employees of the Company is presently a party
to any transaction with the Company or any Subsidiary (other than as holders of
stock options and/or warrants, and for services as employees, officers and
directors) required under applicable statutes and rules to be disclosed in the
SEC Filings, including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the Company's Knowledge, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
4.27 Internal Controls. The Company is in material
-----------------
compliance with the provisions of the Xxxxxxxx-Xxxxx Act of 2002 currently
applicable to the Company. The Company and the Subsidiaries maintain a system of
internal accounting controls reasonably designed to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, including the Subsidiaries, is made known to the certifying officers by
others within those entities, particularly during the period in which the
Company's most recently filed period report under the 1934 Act, as the case may
be, is being prepared. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of the end of the
period covered by the most recently filed periodic report under the 1934 Act
(such date, the "Evaluation Date"). The Company presented in its most recently
filed periodic report under the 1934 Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls over
financial reporting (as such terms are used in Item 308 of Regulation S-K) or,
to the Company's Knowledge, in other factors that could significantly affect the
Company's internal controls. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with
GAAP and the applicable requirements of the 1934 Act.
-12-
5. Representations and Warranties of the Investors. Each of the
-----------------------------------------------
Investors hereby severally, and not jointly, represents and warrants to the
Company that:
5.1 Organization and Existence. Such Investor is a validly
--------------------------
existing corporation, limited partnership or limited liability company and has
all requisite corporate, partnership or limited liability company power and
authority to invest in the Securities pursuant to this Agreement.
5.2 Authorization. The execution, delivery and performance
-------------
by such Investor of the Transaction Documents to which such Investor is a party
have been duly authorized and will each constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally.
5.3 Purchase Entirely for Own Account. The Securities to be
---------------------------------
received by such Investor hereunder will be acquired for such Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the 1933 Act, and such Investor
has no present intention of selling, granting any participation in, or otherwise
distributing the same in violation of the 1933 Act without prejudice, however,
to such Investor's right at all times to sell or otherwise dispose of all or any
part of such Securities in compliance with applicable federal and state
securities laws. Nothing contained herein shall be deemed a representation or
warranty by such Investor to hold the Securities for any period of time. Such
Investor is not a broker-dealer registered with the SEC under the 1934 Act or an
entity engaged in a business that would require it to be so registered.
5.4 Investment Experience. Such Investor acknowledges that
---------------------
it can bear the economic risk and complete loss of its investment in the
Securities and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby.
5.5 Disclosure of Information. Such Investor has had an
-------------------------
opportunity to receive all information related to the Company requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Securities. Such Investor acknowledges receipt of copies of the SEC Filings.
Neither such inquiries nor any other due diligence investigation conducted by
such Investor shall modify, amend or affect such Investor's right to rely on the
Company's representations and warranties contained in this Agreement.
5.6 Restricted Securities. Such Investor understands that
---------------------
the Securities are characterized as "restricted securities" under the U.S.
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
-13-
5.7 Legends. It is understood that, except as provided
-------
below, certificates evidencing the Securities may bear the following or any
similar legend:
(a) "The securities represented hereby may not be
transferred unless (i) such securities have been registered for sale pursuant to
the Securities Act of 1933, as amended, (ii) such securities may be sold
pursuant to Rule 144(k), or (iii) the Company has received an opinion of counsel
reasonably satisfactory to it that such transfer may lawfully be made without
registration under the Securities Act of 1933 or qualification under applicable
state securities laws."
(b) If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.
5.8 Accredited Investor. Such Investor is an accredited
-------------------
investor as defined in Rule 501(a) of Regulation D, as amended, under the
0000 Xxx.
5.9 No General Solicitation. Such Investor did not learn of
-----------------------
the investment in the Securities as a result of any public advertising or
general solicitation.
5.10 Brokers and Finders. No Person will have, as a result
-------------------
of the transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.
5.11 Prohibited Transactions. During the last thirty (30)
-----------------------
days prior to the date hereof, neither such Investor nor any Affiliate of such
Investor which (x) had knowledge of the transactions contemplated hereby, (y)
has or shares discretion relating to such Investor's investments or trading or
information concerning such Investor's investments, including in respect of the
Securities, or (z) is subject to such Investor's review or input concerning such
Affiliate's investments or trading (collectively, "Trading Affiliates") has,
directly or indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any "put equivalent position" (as defined in
Rule 16a-1(h) under the 0000 Xxx) with respect to the Common Stock, granted any
other right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each, a "Prohibited
Transaction"). Such Investor acknowledges that the representations and
warranties contained in this Section 5.11 are being made for the benefit of the
Investors as well as the Company and that each of the other Investors shall have
an independent right to assert any claims against such Investor arising out of
any breach or violation of the provisions of this Section 5.11.
-14-
6. Conditions to Closing.
---------------------
6.1 Conditions to the Investors' Obligations. The
----------------------------------------
obligation of each Investor to purchase the Shares and the Warrants at the
Closing is subject to the fulfillment to such Investor's satisfaction, on or
prior to the Closing Date, of the following conditions, any of which may be
waived by such Investor (as to itself only):
(a) The representations and warranties made by the
Company in Section 4 hereof qualified as to materiality shall be true and
correct at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the Company in
Section 4 hereof not qualified as to materiality shall be true and correct in
all material respects at all times prior to and on the Closing Date, except to
the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct in
all material respects as of such earlier date. The Company shall have performed
in all material respects all obligations and covenants herein required to be
performed by it on or prior to the Closing Date.
(b) The Company shall have obtained any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities and the consummation
of the other transactions contemplated by the Transaction Documents, all of
which shall be in full force and effect.
(c) The Company shall have executed and delivered
the Registration Rights Agreement.
(d) The Company shall have received oral
confirmation from Nasdaq to the effect that the issuance and sale of the
Securities as contemplated hereby will not require stockholder approval pursuant
to the requirements of Nasdaq Marketplace Rule 4350(i).
(e) No judgment, writ, order, injunction, award or
decree of or by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.
(f) The Company shall have delivered a Certificate,
executed on behalf of the Company by its Chief Executive Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfillment
of the conditions specified in subsections (a), (b), (d), (e) and (i) of this
Section 6.1.
(g) The Company shall have delivered a Certificate,
executed on behalf of the Company by its Secretary, dated as of the Closing
Date, certifying the resolutions adopted by the Board of Directors of the
Company approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, certifying the current
versions of the Certificate of Incorporation and Bylaws of the Company and
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company.
-15-
(h) The Investors shall have received an opinion
from Xxxxxxxxx & Xxxxxxx, the Company's counsel, dated as of the Closing Date,
in the form previously agreed to with the Investors.
(i) No stop order or suspension of trading shall
have been imposed by Nasdaq, the SEC or any other governmental or regulatory
body with respect to public trading in the Common Stock.
6.2 Conditions to Obligations of the Company. The
----------------------------------------
Company's obligation to sell and issue the Shares and the Warrants at the
Closing is subject to the fulfillment to the satisfaction of the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:
(a) The representations and warranties made by the
Investors in Section 5 hereof, other than the representations and warranties
contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the "Investment
Representations"), shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. The
Investment Representations shall be true and correct in all respects when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date. The Investors
shall have performed in all material respects all obligations and covenants
herein required to be performed by them on or prior to the Closing Date.
(b) The Investors shall have executed and delivered
the Registration Rights Agreement.
(c) The Investors shall have delivered the Purchase
Price to the Company.
6.3 Termination of Obligations to Effect Closing; Effects.
-----------------------------------------------------
(a) The obligations of the Company, on the one hand,
and the Investors, on the other hand, to effect the Closing shall terminate as
follows:
(i) Upon the mutual written consent of the
Company and the Investors;
(ii) By the Company if any of the conditions
set forth in Section 6.2 shall have become incapable of fulfillment, and shall
not have been waived by the Company;
(iii) By an Investor (with respect to itself
only) if any of the conditions set forth in Section 6.1 shall have become
incapable of fulfillment, and shall not have been waived by the Investor; or
-16-
(iv) By either the Company or any Investor
(with respect to itself only) if the Closing has not occurred on or prior to
September 9, 2005; provided, however, that, except in the case of clause (i)
above, the party seeking to terminate its obligation to effect the Closing shall
not then be in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement or the other Transaction Documents if
such breach has resulted in the circumstances giving rise to such party's
seeking to terminate its obligation to effect the Closing.
(b) In the event of termination by the Company or
any Investor of its obligations to effect the Closing pursuant to this Section
6.3, written notice thereof shall forthwith be given to the other Investors and
the other Investors shall have the right to terminate their obligations to
effect the Closing upon written notice to the Company and the other Investors.
Nothing in this Section 6.3 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents.
7. Covenants and Agreements.
------------------------
7.1 Reservation of Common Stock. The Company shall at all
---------------------------
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of providing for the exercise of the
Warrants, such number of shares of Common Stock as shall from time to time equal
the number of shares sufficient to permit the exercise of the Warrants issued
pursuant to this Agreement in accordance with their respective terms.
7.2 [Reserved]
7.3 No Conflicting Agreements. The Company will not take
-------------------------
any action, enter into any agreement or make any commitment that would conflict
or interfere in any material respect with the Company's obligations to the
Investors under the Transaction Documents.
7.4 Insurance. The Company shall not materially reduce the
---------
insurance coverages described in Section 4.19.
7.5 Compliance with Laws. The Company will comply in all
--------------------
material respects with all applicable laws, rules, regulations, orders and
decrees of all governmental authorities.
7.6 Listing of Underlying Shares and Related Matters.
------------------------------------------------
Promptly following the date hereof, the Company shall take all necessary action
to cause the Shares and the Warrant Shares to be listed on the Nasdaq National
Market System as promptly as practicable after the Closing Date. Further, if the
Company applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it shall include in such application the
Shares and the Warrant Shares and will take such other action as is necessary to
cause such Common Stock to be so listed. The Company will use commercially
reasonable efforts to continue the listing and trading of its Common Stock on
the Nasdaq National Market System and, in accordance, therewith, will use
commercially reasonable efforts to comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such market
or exchange, as applicable.
-17-
7.7 Termination of Covenants. The provisions of Sections
------------------------
7.2 through 7.5 shall terminate and be of no further force and effect on the
date on which the Company's obligations under the Registration Rights Agreement
to register or maintain the effectiveness of any registration covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate.
7.8 Removal of Legends. Upon the earlier of (i)
------------------
registration for resale pursuant to the Registration Rights Agreement and
receipt by the Company of the Investor's written confirmation that such
Securities will not be disposed of except in compliance with the prospectus
delivery requirements of the 1933 Act or (ii) Rule 144(k) becoming available the
Company shall, upon an Investor's written request, promptly cause certificates
evidencing the Investor's Securities to be replaced with certificates which do
not bear such restrictive legends, and Warrant Shares subsequently issued upon
due exercise of the Warrants shall not bear such restrictive legends provided
the provisions of either clause (i) or clause (ii) above, as applicable, are
satisfied with respect to such Warrant Shares. When the Company is required to
cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an Investor within
three (3) Business Days of submission by that Investor of legended
certificate(s) to the Company's transfer agent (with a copy to the Company)
together with a representation letter in customary form, the Company shall be
liable to the Investor for liquidated damages in an amount equal to 1.5% of the
aggregate purchase price of the Securities evidenced by such certificate(s) for
each thirty (30) day period (or portion thereof) beyond such three (3) Business
Day that the unlegended certificates have not been so delivered.
7.9 Covenant of the Investors. Prior to the earliest to
-------------------------
occur of (i) the termination of this Agreement, (ii) the Effective Date or (iii)
the Effectiveness Deadline, each Investor shall not, and shall cause its Trading
Affiliates not to, engage, directly or indirectly, in a Prohibited Transaction.
Such Investor acknowledges that the covenant contained in this Section 7.9 is
being made for the benefit of the Investors as well as the Company and that each
of the other Investors shall have an independent right to assert any claims
against such Investor arising out of any breach or violation of the provisions
of this Section 7.9.
8. Survival and Indemnification.
-----------------------------
8.1 Survival. The representations, warranties, covenants and
--------
agreements contained in this Agreement shall survive the Closing of the
transactions contemplated by this Agreement.
8.2 Indemnification. The Company agrees to indemnify and
---------------
hold harmless each Investor and its Affiliates and their respective directors,
officers, employees and agents from and against any and all losses, claims,
damages, liabilities and expenses (including without limitation reasonable
attorney fees and disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) (collectively, "Losses") to
which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such Person.
-18-
8.3 Conduct of Indemnification Proceedings. Promptly after
--------------------------------------
receipt by any Person (the "Indemnified Person") of notice of any demand, claim
or circumstances which would or might give rise to a claim or the commencement
of any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
--------
however, that the failure of any Indemnified Person so to notify the Company
-------
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to such Indemnified Person representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.
9. Miscellaneous.
-------------
9.1 Successors and Assigns. This Agreement may not be
----------------------
assigned by a party hereto without the prior written consent of the Company or
the Investors, as applicable, provided, however, that an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some or all of its Securities in a private
transaction without the prior written consent of the Company or the other
Investors, after notice duly given by such Investor to the Company provided,
that no such assignment or obligation shall affect the obligations of such
Investor hereunder. The provisions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
-19-
9.2 Counterparts; Faxes. 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. This Agreement
may also be executed via facsimile, which shall be deemed an original.
9.3 Titles and Subtitles. The titles and subtitles used
--------------------
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 Notices. Unless otherwise provided, any notice
-------
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such delivery, (ii) if
given by telex or telecopier, then such notice shall be deemed given upon
receipt of confirmation of complete transmittal, (iii) if given by mail, then
such notice shall be deemed given upon the earlier of (A) receipt of such notice
by the recipient or (B) three days after such notice is deposited in first class
mail, postage prepaid, and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one Business Day
after delivery to such carrier. All notices shall be addressed to the party to
be notified at the address as follows, or at such other address as such party
may designate by ten days' advance written notice to the other party:
If to the Company:
Telular Corporation
000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Chief Operating Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to the Investors:
to the addresses set forth on the signature pages hereto.
-20-
9.5 Expenses. The parties hereto shall pay their own
--------
costs and expenses in connection herewith, except that the Company shall pay the
reasonable fees and expenses of Xxxxxxxxxx Xxxxxxx PC in connection with the
preparation and negotiation of the Transaction Documents not to exceed $20,000.
Such expenses shall be paid not later than the Closing. The Company shall
reimburse the Investors upon demand for all reasonable out-of-pocket expenses
incurred by the Investors, including without limitation reimbursement of
attorneys' fees and disbursements, in connection with any amendment,
modification or waiver of this Agreement or the other Transaction Documents. In
the event that legal proceedings are commenced by any party to this Agreement
against another party to this Agreement in connection with this Agreement or the
other Transaction Documents, the party or parties which do not prevail in such
proceedings shall severally, but not jointly, pay their pro rata share of the
reasonable attorneys' fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.
9.6 Amendments and Waivers. 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 the Investors.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such Securities, and the Company.
9.7 Publicity. Except as set forth below, no public
---------
release or announcement concerning the transactions contemplated hereby shall be
issued by the Company or the Investors without the prior consent of the Company
(in the case of a release or announcement by the Investors) or the Investors (in
the case of a release or announcement by the Company) (which consents shall not
be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Investors, as
the case may be, shall allow the Investors or the Company, as applicable, to the
extent reasonably practicable in the circumstances, reasonable time to comment
on such release or announcement in advance of such issuance. By 8:30 a.m. (New
York City time) on the trading day immediately following the Closing Date, the
Company shall issue a press release disclosing the consummation of the
transactions contemplated by this Agreement. No later than the third trading day
following the Closing Date, the Company will file a Current Report on Form 8-K
attaching the press release described in the foregoing sentence as well as
copies of the Transaction Documents. In addition, the Company will make such
other filings and notices in the manner and time required by the SEC or Nasdaq.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any filing with the SEC
(other than the Registration Statement and any exhibits to filings made in
respect of this transaction in accordance with periodic filing requirements
under the 0000 Xxx) or any regulatory agency or Nasdaq, without the prior
written consent of such Investor, except to the extent such disclosure is
required by law or trading market regulations, in which case the Company shall
provide the Investors with prior notice of such disclosure.
9.8 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
-21-
9.9 Entire Agreement. This Agreement, including the
----------------
Exhibits, and the other Transaction Documents constitute the entire agreement
among the parties hereof with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
9.10 Further Assurances. The parties shall execute and
------------------
deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.
9.11 Governing Law; Consent to Jurisdiction; Waiver of
-------------------------------------------------
Jury Trial. This Agreement shall be governed by, and construed in accordance
----------
with, the internal laws of the State of New York without regard to the choice of
law principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
9.12 Independent Nature of Investors' Obligations and
------------------------------------------------
Rights. The obligations of each Investor under any Transaction Document are
------
several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. The decision of each
Investor to purchase Securities pursuant to the Transaction Documents has been
made by such Investor independently of any other Investor. Nothing contained
herein or in any Transaction Document, and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no Investor will be acting as agent of such Investor in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Investors has been provided with the same Transaction Documents
for the purpose of closing a transaction with multiple Investors and not because
it was required or requested to do so by any Investor.
[signature page follows]
-22-
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
The Company: TELULAR CORPORATION
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
-23-
The Investors: SRB GREENWAY
CAPITAL, L.P.
By: SRB Management, L.P.,
General Partner
By: BC Advisors, L.L.C.,
General Partner
By:
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Member
Aggregate Purchase Price: $306,100
Number of Shares: 87,457
Number of Series A Warrants: 43,728
Number of Series B Warrants: 43,728
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SRB GREENWAY CAPITAL (Q.P.), L.P.
By: SRB Management, L.P.,
General Partner
By: BC Advisors, L.L.C.,
General Partner
By:
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Member
Aggregate Purchase Price: $2,131,979
Number of Shares: 609,136
Number of Series A Warrants: 304,568
Number of Series B Warrants: 304,568
-24-
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
SRB GREENWAY OFFSHORE
OPERATING FUND, L.P.
By: SRB Management, L.P.,
General Partner
By: BC Advisors, L.L.C.,
General Partner
By:
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Member
Aggregate Purchase Price: $199,421
Number of Shares: 56,977
Number of Series A Warrants: 28,488
Number of Series B Warrants: 28,488
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
-25-
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
XXXXXX XXXXX INTERNATIONAL FUND,
LTD.
By: WS Capital Management, L.P.,
Attorney-in-Fact
By: WS Capital, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $675,300
Number of Shares: 192,942
Number of Series A Warrants: 96,471
Number of Series B Warrants: 96,471
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
-26-
XXXXXX XXXXX CAPITAL (Q.P.), L.P.
By: WS Capital Management, L.P.,
General Partner
By: WS Capital, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $492,831
Number of Shares: 140,808
Number of Series A Warrants: 70,404
Number of Series B Warrants: 70,404
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
XXXXXX XXXXX CAPITAL, L.P.
By: WS Capital Management, L.P.,
General Partner
By: WS Capital, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $85,700
Number of Shares: 24,485
-27-
Number of Series A Warrants: 12,242
Number of Series B Warrants: 12,242
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
WS OPPORTUNITY FUND INTERNATIONAL,
LTD.
By: WS Ventures Management, L.P.,
Attorney-in-Fact
By: WSV Management, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $309,269
Number of Shares: 88,362
Number of Series A Warrants: 44,181
Number of Series B Warrants: 44,181
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
-28-
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
WS OPPORTUNITY FUND, L.P.
By: WS Ventures Management, L.P.,
General Partner
By: WSV Management, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $219,500
Number of Shares: 62,714
Number of Series A Warrants: 31,357
Number of Series B Warrants: 31,357
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
-29-
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
WS OPPORTUNITY FUND (Q.P.), L.P.
By: WS Ventures Management, L.P.,
General Partner
By: WSV Management, L.L.C.,
General Partner
By:
-----------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
Aggregate Purchase Price: $217,400
Number of Shares: 62,114
Number of Series A Warrants: 31,057
Number of Series B Warrants: 31,057
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
-30-
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 973.597.2400
BONANZA MASTER FUND LTD.
By:
-----------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
Aggregate Purchase Price: $4,637,500
Number of Shares: 1,325,000
Number of Series A Warrants: 662,500
Number of Series B Warrants: 662,500
Address for Notice:
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Phone: 000.000.0000
Fax: 000.000.0000
-31-
