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EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 16,
1997, by and among Telular Corporation, a Delaware corporation, with
headquarters located at 000 Xxxxxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxx 00000
(the "COMPANY"), and the investors listed on the Schedule of Buyers attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized the following new series of its
Preferred Stock, $.01 par value per share (the "PREFERRED STOCK"): the
Company's Series A Convertible Preferred Stock (the "SERIES A PREFERRED
STOCK"), which shall be convertible into shares of the Company's Common Stock,
$.01 par value per share (the "COMMON STOCK") (as converted, the "CONVERSION
SHARES"), in accordance with the terms of the Company's Certificate of
Designations, Preferences and Rights of the Series A Preferred Shares,
substantially in the form attached hereto as Exhibit A (the "CERTIFICATE OF
DESIGNATIONS");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of up to 10,000 shares of Series A
Preferred Stock in the respective amounts set forth opposite each Buyer's name
on the Schedule of Buyers; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF SERIES A PREFERRED SHARES.
a. Purchase of Series A Preferred Shares. Subject to
the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7
below, the Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate of 10,000 shares of Series A Preferred
Stock (the "SERIES A PREFERRED SHARES"), in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers (the "CLOSING"). The per
share purchase price (the "PURCHASE PRICE") of the Series A Preferred Shares
shall be $1,000.00.
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b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Central Standard Time, within five (5)
business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company and
the Buyers). The Closing shall occur on the Closing Date at the offices of
Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000.
c. Form of Payment. On the Closing Date, (i) each
Buyer shall pay the Purchase Price to the Company for the Series A Preferred
Shares to be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, and (ii) the Company shall deliver to each Buyer, a stock
certificate representing such number of the Series A Preferred Shares which
such Buyer is then purchasing (as indicated opposite such Buyer's name on the
Schedule of Buyers), duly executed on behalf of the Company and registered in
the name of such Buyer or its designee (the "STOCK CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only
itself that:
a. Investment Purpose. Such Buyer (i) is acquiring the
Series A Preferred Shares and (ii) upon conversion of the Series A Preferred
Shares, will acquire the Conversion Shares then issuable, for its own account
for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making
the representations herein, such Buyer does not agree to hold any Series A
Preferred Shares for any minimum or other specific term and reserves the right
to dispose of Series A Preferred Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3) of Regulation
D.
c. Reliance on Exemptions. Such Buyer understands that
the Series A Preferred Shares and the Conversion Shares are being offered and
sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire
the Series A Preferred Shares and the Conversion Shares.
d. Information. Such Buyer and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Series A Preferred Shares and the Conversion Shares which have been requested
by such Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due
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diligence investigations conducted by such Buyer or its advisors, if any, or
its representatives shall modify, amend or affect such Buyer's right to rely on
the Company's representations and warranties contained in Section 3 below.
Such Buyer understands that its investment in the Series A Preferred Shares and
the Conversion Shares involves a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Series A
Preferred Shares and the Conversion Shares.
e. No Governmental Review. Such Buyer understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Series A Preferred Shares or the Conversion Shares or the fairness or
suitability of the investment in the Series A Preferred Shares or the
Conversion Shares nor have such authorities passed upon or endorsed the merits
of the offering of the Series A Preferred Shares or the Conversion Shares.
f. Transfer or Resale. Such Buyer understands that
except as provided in the Registration Rights Agreement: (i) the Series A
Preferred Shares and the Conversion Shares have not been and are not being
registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such securities can be
sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933
Act (or a successor rule thereto); (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("RULE 144") may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx)
may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor
any other person is under any obligation to register such securities under the
1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the
certificates or other instruments representing the Series A Preferred Shares
and, until such time as the sale of the Conversion Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
stock certificates representing the Conversion Shares, except as set forth
below, shall bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
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SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Series A Preferred Shares
or the Conversion Shares upon which it is stamped, if, unless otherwise
required by state securities laws, (i) the Conversion Shares are registered for
sale under the 1933 Act, (ii) in connection with a sale transaction, such
holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that a public sale, assignment or transfer of
the Series A Preferred Shares or the Conversion Shares may be made without
registration under the 1933 Act, or (iii) such holder provides the Company with
reasonable assurances that the Series A Preferred Shares or the Conversion
Shares can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold. Each Buyer acknowledges, covenants and agrees to sell the
Series A Preferred Shares and the Conversion Shares represented by a
certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from the Series A Preferred
Shares or the Conversion Shares, the Company may, upon reasonable advance
notice to the holder, require that the above legend be placed on any Series A
Preferred Shares or Conversion Shares that cannot then be sold pursuant to an
effective registration statement or Rule 144(k) under the 1933 Act (or any
successor rule thereto).
h. Authorization; Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country
specified in its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
subsidiaries (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the
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failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority
to enter into and perform this Agreement and the Registration Rights Agreement,
and to issue the Series A Preferred Shares and the Conversion Shares in
accordance with the terms hereof and thereof, (ii) the execution and delivery
of this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Series A Preferred Shares and
the reservation for issuance and the issuance of the Conversion Shares issuable
upon conversion thereof, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) this Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company, (iv) this Agreement and the Registration Rights Agreement constitute
the valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (v)
prior to the Closing Date, the Certificate of Designations has been filed with
the Secretary of State of the State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of 75,000,000 shares of Common
Stock, of which as of April 15, 1997, 31,540,041 shares were issued and
outstanding, and 10,000,000 shares of Preferred Stock, of which as of the date
hereof, no shares were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or Preferred Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). Except as disclosed in Schedule 3(c), there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Series A Preferred Shares or the
Conversion Shares as described in this Agreement. The Company has furnished to
the Buyer true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "CERTIFICATE
OF INCORPORATION"), and the Company's By-laws, as
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in effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Series A Preferred
Shares are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, (ii) free
from all taxes, liens and charges with respect to the issue thereof and (iii)
entitled to the rights and preferences set forth in the Certificate of
Designations. Not less than 150% of the number of shares of Common Stock
necessary to provide for the issuance of the Conversion Shares based on the
trading price of the Common Stock as of the date hereof have been duly
authorized and reserved for issuance upon conversion of the Series A Preferred
Shares. Upon conversion in accordance with the Certificate of Designations,
the Conversion Shares will be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
e. No Conflicts. Except as disclosed in Schedule 3(e),
the execution, delivery and performance of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby will
not (i) result in a violation of the Certificate of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series
of preferred stock of the Company or By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. Except as disclosed in Schedule 3(e), neither the Company nor its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, Certificate of Designation, Preferences and Rights of any
outstanding series of preferred stock or By-laws or their organizational
charter or by-laws, respectively, or any material contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its subsidiaries. The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted, in violation of any law, ordinance, regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement or the
Registration Rights Agreement in accordance with the terms hereof or thereof.
Except as disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
f. SEC Documents; Financial Statements. Since January
1, 1996, the Company has filed all reports, schedules, forms, statements and
other documents required to be
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filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The
Company has delivered to the Buyer or its representative true and complete
copies of the SEC Documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g) or the Company's Quarterly Report on Form 10-Q for the three
months ended December 31, 1996 as filed with the SEC on February 14, 1997,
since December 31, 1996 there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole. The Company has not taken any steps, and does
not currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or its subsidiaries have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely affect
the validity or enforceability of, or the authority or ability of the Company
to perform its obligations under, this Agreement or any of the documents
contemplated herein or (iii), except as expressly set forth in the SEC
Documents or in Schedule 3(h), have a material adverse effect on the business,
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operations, properties, financial condition or results of operation of the
Company and its subsidiaries taken as a whole.
i. Acknowledgment Regarding Buyers' Purchase of Series
A Preferred Shares. The Company acknowledges and agrees that each of the
Buyers is acting solely in the capacity of arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by any
of the Buyers or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Buyer's purchase of the Series A Preferred Shares or
the Conversion Shares. The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives.
j. Intentionally omitted.
k. No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 0000 Xxx) in connection with the offer or
sale of the Series A Preferred Shares or the Conversion Shares.
l. No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Series A Preferred Shares or the Conversion Shares under
the 1933 Act or cause this offering of Series A Preferred Shares and Conversion
Shares to be integrated with prior offerings by the Company for purposes of the
1933 Act or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Nasdaq National Market
System.
m. Employee Relations. Neither the Company nor any of
its subsidiaries is involved in any union labor dispute nor, to the knowledge
of the Company or any of its subsidiaries, is any such dispute threatened. None
of the Company's or its subsidiaries' employees is a member of a union and the
Company and its subsidiaries believe that their relations with their employees
are good.
n. Intellectual Property Rights. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate in the near future. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name
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rights, patents, patent rights, copyrights, inventions, licenses, service
names, service marks, service xxxx registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth on Schedule
3(n), there is no claim, action or proceeding being made or brought against, or
to the Company's knowledge, being threatened against, the Company or its
subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service xxxx
registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
o. Environmental Laws. The Company and its
subsidiaries are (i) in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.
p. Title. The Company and its subsidiaries have good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or such
as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
q. Insurance. The Company and each of its subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to
be prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. Neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
r. Regulatory Permits. The Company and its
subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
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s. Internal Accounting Controls. The Company and each
of its subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, 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
generally accepted accounting principles 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.
t. No Materially Adverse Contracts, Etc. Neither the
Company nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the
future to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.
u. Tax Status. Except as set forth on Schedule 3(u),
the Company and each of its subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
v. Certain Transactions. Except as set forth on
Schedule 3(v) and in the SEC Documents and except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties
and other than the grant of stock options disclosed on Schedule 3(c), none of
the officers, directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as employees,
officers and directors), 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 knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
w. Dilutive Effect. The Company understands and
acknowledges that the number of Conversion Shares issuable upon conversion of
the Series A Preferred Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Series A Preferred Shares in accordance with this
Agreement and the Certificate of Designations is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
-10-
11
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
respect to the Series A Preferred Shares and the Conversion Shares as required
under Regulation D and to provide a copy thereof to each Buyer promptly after
such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Series A Preferred Shares and the Conversion Shares for, or obtain exemption
for the Series A Preferred Shares and the Conversion Shares for, sale to the
Buyers at the Closing pursuant to this Agreement under applicable securities or
"Blue Sky" laws of the states of the United States, and shall provide evidence
of any such action so taken to the Buyers on or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date
as of which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor thereto), or (ii)
the date on which (A) the Investors shall have sold all the Conversion Shares
and (B) none of the Series A Preferred Shares is outstanding (the "REGISTRATION
PERIOD"), the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds
from the sale of the Series A Preferred Shares for substantially the same
purposes and in substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send
the following to each Investor (as that term is defined in the Registration
Rights Agreement) during the Registration Period: (i) within five (5) days
after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and
any registration statements or amendments filed pursuant to the 1933 Act; (ii)
within one (1) day after release thereof, copies of all press releases issued
by the Company or any of its subsidiaries and (iii) copies of any notices and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
f. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 150% of the number of shares of Common Stock needed
to provide for the issuance of the Conversion Shares based on the trading price
of the Common Stock at such time.
g. Listing. The Company shall promptly secure the
listing of the Conversion Shares upon each national securities exchange and
automated quotation system (including the Nasdaq National Market System), if
any, upon which shares of Common Stock are then listed
-11-
12
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable under the terms of this Agreement and the
Registration Rights Agreement. The Company shall maintain the Common Stock's
authorization for quotation on the Nasdaq National Market, The New York Stock
Exchange, Inc. or The American Stock Exchange, Inc. ("AMEX"). The Company
shall promptly provide to each Buyer copies of any notices it receives from the
Nasdaq National Market System regarding the continued eligibility of the Common
Stock for listing on the Nasdaq National Market System. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(g).
h. Expenses. Each of the Company and the Buyers shall
each pay its respective costs and expenses incurred by such party in connection
with the negotiation, investigation, preparation, execution, delivery and
performance of this Agreement and the Registration Rights Agreement; provided,
that, subject to Section 9(l) below, following the Closing, the Company shall
reimburse the Buyers for Buyers' attorneys' fees and expenses in connection
with this Agreement and the Registration Rights Agreement up to an aggregate of
$25,000.
i. No Short Sales of the Common Stock. So long as (i)
a Buyer or any of its affiliates beneficially owns any Series A Preferred
Shares, (ii) the Company has not issued any publicly traded convertible
securities and (iii) the Company is not in default under the Certificate of
Designations for failing to effect any requested Redemption (as defined in the
Certificate of Designations) or conversion of any Series A Preferred Shares
pursuant to the Certificate of Designations, such Buyer shall not (A) directly
or through or with any other person, engage in any transaction in or relating
to securities of the Company in violation of Section 9 of the 1933 Act, or (B)
engage in any short sales of the Common Stock ("SHORT SALES"); provided,
however, that Short Sales made no earlier than three days prior to the Date of
Conversion of any Series A Preferred Shares with respect to a number of shares
of Common Stock that does not exceed the number of Conversion Shares to be
obtained pursuant to such conversion shall not be prohibited by this Section
4(i)(B). Each Buyer agrees not to engage in any Short Sales during the ten
(10) days prior to the Closing.
j. Additional Issuances of Series A Preferred Stock.
So long as a Buyer or any of its affiliates beneficially owns Series A
Preferred Shares, the Company shall not issue or agree to issue any shares of
Series A Preferred Stock unless (i) the Company receives prior written consent
from each Buyer, which consent shall not be unreasonably withheld, (ii) the
purchaser of the shares of Series A Preferred Stock enters into a securities
purchase agreement and registration rights agreement in substantially the form
of, and with terms no more favorable to the purchasers of shares of Series A
Preferred Stock than those set forth in, this Agreement and the Registration
Rights Agreement, respectively, and (iii) the issuance of such additional
shares of Series A Preferred Stock is consummated by April 30, 1997.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of each Buyer or
its respective nominee(s), for the Conversion Shares in such amounts as
specified from time to time by each Buyer to the
-12-
13
Company upon conversion of the Series A Preferred Shares (the "IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares
under the 1933 Act, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of the
Conversion Shares under the 0000 Xxx) will be given by the Company to its
transfer agent and that the Series A Preferred Shares and the Conversion Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section 5 shall affect in any way each Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the Series A Preferred Shares or Conversion Shares. If a Buyer
provides the Company with an opinion of counsel, reasonably satisfactory in
form, and substance to the Company, that registration of a resale by such Buyer
of any of the Series A Preferred Shares or the Conversion Shares is not
required under the 1933 Act, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as specified by
such Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyers by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5, that the Buyers
shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Series A Preferred Shares to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed this Agreement and
the Registration Rights Agreement and delivered the same to the Company.
b. The Certificate of Designations shall have been
filed with the Secretary of State of the State of Delaware.
c. Such Buyer shall have delivered to the Company the
Purchase Price for the Series A Preferred Shares being purchased by such Buyer
at the Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
d. The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
-13-
14
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Series
A Preferred Shares at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
a. The Company shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to such Buyer.
b. The Certificate of Designations, shall have been
filed with the Secretary of State of the State of Delaware, and a copy thereof
certified by such Secretary of State shall have been delivered to such Buyer.
c. The Common Stock shall be authorized for quotation
on the Nasdaq National Market System, The New York Stock Exchange, Inc. or
AMEX, trading in the Common Stock issuable upon conversion of the Series A
Preferred Shares to be traded on the Nasdaq National Market System, The New
York Stock Exchange, Inc. or AMEX shall not have been suspended by the SEC, The
Nasdaq Stock Market, Inc., The New York Stock Exchange, Inc. or AMEX and all of
the Conversion Shares issuable upon conversion of the Series A Preferred Shares
to be sold at the Closing shall be listed upon the Nasdaq National Market
System, The New York Stock Exchange, Inc. or AMEX.
d. The representations and warranties of the Company
shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 3(c) above.
e. Such Buyer shall have received the opinion of the
Company's counsel dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of Exhibit
C attached hereto.
f. The Company shall have executed and delivered to
such Buyer the Stock Certificates (in such denominations as such Buyer shall
request) for the Series A Preferred Shares being purchased by such Buyer at the
Closing.
-14-
15
g. The Board of Directors of the Company shall have
adopted the resolutions in substantially the form of Exhibit D attached hereto.
h. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series A Preferred Shares, at least
150% of the number of shares of Common Stock necessary to provide for the
issuance of the Conversion Shares based on the trading price of the Common
Stock as of the Closing Date.
i. The Irrevocable Transfer Agent Instructions, in the
form of Exhibit E attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
8. INDEMNIFICATION. In consideration of each Buyer's execution
and delivery of this Agreement and acquiring the Series A Preferred Shares and
Conversion Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of Series A Preferred Shares
and Conversion Shares and all of their officers, directors, employees and
agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) subject to
Section 9(i), any misrepresentation or breach of any representation or warranty
made by the Company in this Agreement, the Certificate of Designations or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Certificate of
Designations or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out
of or resulting from the execution, delivery, performance or enforcement of
this Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Indemnitees, any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of
the Series A Preferred Shares or the status of such Buyer or holder of the
Series A Preferred Shares or the Conversion Shares as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Illinois without
regard to the principles of conflict of laws.
-15-
16
b. Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
Telular Corporation
000 Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
-16-
17
With a copy to:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
If to the Transfer Agent:
Xxxxxx Trust and Savings Bank
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxx
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Series A Preferred
Shares. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Buyers, except
pursuant to a Major Transaction (as defined in Section 3(c) of the Certificate
of Designations) with respect to which the Company is in compliance with
Section 3 of the Certificate of Designations. A Buyer may assign some or all
of its rights hereunder without the consent of the Company, provided, however,
that (i) any such assignment shall not release such Buyer from its obligations
hereunder unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption and (ii) no Buyer may assign
its rights hereunder in a manner that would cause the offering of Series A
Preferred Shares hereunder to be required to be registered under the 1933 Act.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the Buyers
contained in Sections 3 and 2, respectively, shall survive the Closing until
two years after the Closing Date. Unless this agreement is terminated under
Section 9(l), the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive the
Closing. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
-17-
18
j. Publicity. The Company and each Buyer shall have
the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to
such transactions as is required by applicable law and regulations (although
each Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof).
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. Termination. In the event that the Closing shall
not have occurred with respect to a Buyer on or before five (5) business days
from the date hereof due to the Company's or such Buyer's failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party
shall have the option to terminate this Agreement with respect to such
breaching party at the close of business on such date without liability of any
party to any other party; provided, however, that if this Agreement is
terminated pursuant to this Section 9(l), the Company shall remain obligated to
reimburse the Buyers for the expenses described in Section 4(h) above.
m. Placement Agent. The Company acknowledges that it
has engaged a placement agent in connection with the sale of the Series A
Preferred Shares, which placement agent may have formally or informally engaged
other agents on its behalf. The Company shall be responsible for the payment
of any placement agent's fees or broker's commissions relating to or arising
out of the transactions contemplated hereby. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out of pocket expenses) arising in connection
with any such claim.
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.
-18-
19
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
TELULAR CORPORATION XXXXXX PARTNERS
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXXX XXXXX
--------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxx Xxxxx
Its: President and Chief Executive Its: Officer
Officer
OLYMPUS SECURITIES, LTD.
By: /s/ XXXX XXXXX
------------------------------
Name: Xxxx Xxxxx
Its: Alternate Director
20
SCHEDULE OF BUYERS
NUMBER OF
SERIES A
INVESTOR ADDRESS PREFERRED INVESTOR'S ADVISORS AND LEGAL
INVESTOR NAME AND FACSIMILE NUMBER SHARES COUNSEL ADDRESS
----------------------- ------------------------------ ----------- --------------------------------
Xxxxxx Partners c/o Leeds Management Services 5,000 Citadel Investment Group, L.L.C.
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX00 Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx Attention: Xxxxxxx X. Simpler
Facsimile: (000) 000-0000 Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Xxxxxx Xxxxxx & Zavis
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Olympus Securities, Ltd. c/o Leeds Management Services 5,000 Citadel Investment Group, L.L.C.
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX00 Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx Attention: Xxxxxxx X. Simpler
Facsimile: (000) 000-0000 Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Xxxxxx Xxxxxx & Zavis
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
21
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(a)
SUBSIDIARIES
1. Telular International, Inc. (inactive)
2. Telular-Adcor Security Products, Inc. (inactive)
3. Wireless Domain, Inc. (43% ownership position)
22
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(c)
CAPITALIZATION
The Company has issued stock option and stock under, and is or may become
obligated to issue stock in the future, under the following agreements and
arrangements:
1. Telular Corporation Second Amended and Restated Stock
Incentive Plan.
2. Various stock options agreements with individual
employees and former employees.
3. Stock option agreements with members of the Board of
Directors.
4. Services agreement with law firm of Xxxxxx & Xxxx,
pursuant to which stock is issued in exchange for
services.
5. Consulting Agreement with Xxxxxxx XxXxxxxx.
6. Bonus Plan agreements with Xxxxxxx Xxxxxxx and Xxxxxx
Xxxxxxxxxx.
7. Stock Purchase Agreement with TelePath Corporation
(a/k/a Wireless Domain, Inc.)
The Company has granted registration rights under the following agreements
and arrangements:
1. Various stock option and incentive agreements with
current and former employees.
2. Stock Purchase Agreement with TelePath Corporation
(a/k/a/ Wireless Domain, Inc.)
3. Second Registration Rights Agreement, as amended,
between Telular Corporation and certain of the original
shareholders.
23
Detail listing - Plan post IPO
POST-IPO Dte end q4,96
today, or date for calculation
Shares Strike Active Active
Name Issued Rev. Strike (Act Emp) (Term Emp)
Xxxxx, Xxxxxxx 390 $ 5.5625 - 260
Xxxxx, Xxxxx 2,400 $ 5.5625 - 1,600
Xxxxx, Xxxxx 7,600 $ 5.5625 - 2,533
Xxxxx, Xxxxxx 900 $ 5.5625 - 600
Xxxxx, Xxx 6,000 $ 5.5625 - 4,000
Xxxxx, Xxx 4,000 $ 5.5625 - 4,000
Xxxxxxxx, Xxxxxx 1,410 $ 5.5625 - 940
Xxxxx, Xxxxxxx 480 $ 5.5625 - 320
Xxxxxx, Xxxxxx 150 $ 5.5625 - 100
Xxxxxx, Xxxx 510 $ 5.5625 - 340
Love, Xxxxxx 150 $ 5.5625 - 000
Xxxxxx, Xxxxxx 10,000 $ 5.5625 - -
X'Xxxx, Xxxxxx 210 $ 5.5625 - 140
X'Xxxxxx, Xxxxxxx 225 $ 5.5625 - 150
Xxxxxxx, Xxxx tbd - -
ten Xxxxx, Xxxxx 25,000 $ 5.0000 25,000 -
ten Xxxxx, Xxxxx 25,000 $ 4.5000 25,000 -
ten Xxxxx, Xxxxx 50,000 $ 4.5000 50,000 -
Xxxxx, Xxxxxxx 180 $ 5.5625 000 -
Xxxxx, Xxxxxxx 000 $ 5.5625 750 -
Altermer, Mehmet 210 $ 5.5625 210 -
Xxxxx, Xxxx 7,500 $ 5.5625 7,500 -
Xxxxx, Xxxx 2,500 $ 5.5625 2,500 -
Xxxxxxxx, Xxxx 450 $ 5.5625 450 -
Xxxx, Xxx 1,290 $ 5.5625 1,290 -
Xxxxxxx, Xxxxxx 180 $ 5.5625 000 -
Xxxxxxx, Xxxxxxx 000 $ 5.5625 420 -
Xxxxxxx, Xxxxxxx 4,580 $ 5.5625 4,580 -
Xxxxx, Xxxx 210 $ 5.5625 210 -
Xxxxxx, Xxxxx 180 $ 5.5625 180 -
Xxxxxxx, Xxxxxx 15,000 $ 5.5625 15,000 -
Xxxxxxx, Xxxxxx 15,000 $ 5.5625 15,000 -
Xxxxxxx, Xxxxxx 18,209 $ 5.5625 18,209 -
Xxxxxxxx, Xxxxx 420 $ 5.5625 000 -
Xxxx, Xxxxxxx 000 $ 5.5625 900 -
Xxxxxx, Xxxxx 180 $ 5.5625 180 -
Xxxxx, Xxxx 165 $ 5.5625 165 -
Xxxxxx, Xxxxxx 3,600 $ 5.5625 3,600 -
Xxxxxxxxx, Xxxx 1,500 $ 5.5625 1,500 -
Holtzrichter, R. 1,500 $ 5.1875 1,500 -
Xxxxx, Xxxx 270 $ 5.5625 270 -
Xxxxxxxx, Xxxxx 210 $ 5.5625 210 -
Xxxxxxx, Xxxxxx 25,000 $ 5.5625 25,000 -
Xxxxxxx, Xxxxxx 6,000 $ 5.5625 6,000 -
Xxxxxxx, Xxxxxx 6,000 $ 5.5625 6,000 -
Xxxxxxxx, Xxxx 1,500 $ 5.3125 1,500 -
Xxxxxxx, Xxxx 25,000 $ 5.5625 25,000 -
Xxxxxxxx, Xxxx 390 $ 5.5625 390 -
Page 1
24
Detail listing - Plan post IPO
POST-IPO Dte end q4,96
today, or date for calculation
Shares Strike Active Active
Name Issued Rev. Strike (Act Emp) (Term Emp)
Xxxxxxxx, Xxxx 6,610 $ 5.5625 6,610 -
Xxxxxxx, Xxxxx 1,200 $ 5.5625 1,200 -
Maennena, Risto 2,400 $ 5.5625 2,400 -
Xxxxxxxx, Xxxxxx 1,200 $ 5.5625 1,200 -
Xxxxx, Xxx 20,000 $ 5.5625 20,000 -
Xxxxx, Xxx 20,000 $ 5.5625 20,000 -
Xxxxx, Xxx 20,000 $ 5.5625 20,000 -
XxXxxxxx, Xxxx 510 $ 5.5625 510 -
Xxxxxxx, Xxx 50,000 $ 5.0000 50,000 -
Xxxxxxx, Xxx 150,000 $ 4.5000 150,000 -
Xxxxxxx, Xxx 300,000 $ 4.5000 300,000 -
Xxxxxxx, Xxx 150,000 $ 4.7800 150,000 -
Xxxxxxxx, Xxxx 10,000 $ 5.5625 10,000 -
Xxxxxxxx, Xxxx 10,000 $ 5.5625 10,000 -
Xxxxxxxxxx, Xxxxxx 25,000 $ 5.0000 25,000 -
Xxxxxxxxxx, Xxxxxx 62,000 $ 4.5000 62,000 -
Xxxxxxxxxx, Xxxxxx 123,000 $ 4.5000 123,000 -
Xxxxxxxxxx, Xxxxxx 18,000 $ 4.5000 18,000 -
Xxxxxxxxxx, Xxxxxx 18,000 $ 4.5000 18,000 -
Xxxxx, S perfomance 25,000 $ 5.5625 25,000 -
Xxxxx, S perfomance 25,000 $ 5.5625 25,000 -
Xxxxx, Xxxxx 12,500 $ 5.5625 12,500 -
Xxxxx, Xxxxx 12,500 $ 5.5625 12,500 -
Xxxxx, Xxxxx 25,000 $ 5.5625 25,000 -
Xxxxxx, Xxxxxxx 210 $ 5.5625 210 -
Xxxxxxxx, Xxxxxx 1,140 $ 5.5625 1,140 -
Xxxxxxx, B 2,000 $ 5.3750 2,000 -
Xxxxxxx, Xxxxx 150 $ 5.5625 150 -
Xxxxxxx, Xxxxx 300 $ 5.5625 000 -
Xxxxxxx, Xxxxx 000 $ 5.5625 900 -
Xxxxxxx, Xxxxxxx 450 $ 5.5625 450 -
Xxxxxxx, Xxxxxxx 450 $ 5.5625 450 -
Xxxxx, Xxxx 13,750 $ 5.5625 13,750 -
Xxxxx, Xxxx 13,750 $ 5.5625 13,750 -
Xxxxx, Xxxx 27,500 $ 5.5625 27,500 -
Rock, Xxxxxx 420 $ 5.5625 420 -
Xxxxxxx, Xxx 1,500 $ 5.3125 1,500 -
Xxxxxxx, Xxxxxx 390 $ 5.5625 390 -
Xxxxx, Xxxxxxx 240 $ 5.5625 240 -
Schormack, Louis 3,900 $ 5.5625 3,900 -
Schormack, Louis 6,100 $ 5.5625 6,100 -
Xxxxxx, Xxxxxx 15,000 $ 5.5625 15,000 -
Xxxxxx, Xxxxxx 15,000 $ 5.5625 15,000 -
Xxxxxx, Xxxxxx 25,000 $ 5.5625 25,000 -
Xxxxxxx, Xxxxx 3,000 $ 5.5625 3,000 -
Xxxxxxx, Xxxx 180 $ 5.5625 000 -
Xxxxxx, Xxxxx 000 $ 5.5625 210 -
Xxxx, Xxxxx 1,800 $ 5.5625 1,800 -
Page 2
25
POST-IPO Dte end q4,96
today, or date for calculation
Shares Strike Active Active
Name Issued Rev. Strike (Act Emp) (Term Emp)
Xxxx, Xxxxx 8,200 $ 5.5625 8,200 -
Xxxxxxx, Xxxxxx 360 $ 5.5625 360 -
Xxxxxxxxx, Xxx 510 $ 5.5625 510 -
Xxxxxx, Xxxx 390 $ 5.5625 390 -
Xxxxxxxx, Xxxxxx 720 $ 5.5625 720 -
Xxxxx, Xxxx 10,000 $ 5.5625 10,000 -
Xxxxxxxx, Xxx 2,000 $ 6.1250 2,000 -
Page 3
26
Options Board
BOARD MEMBER'S OPTIONS
Shares
Name Issued Strike Active
Xxxxxxxxx, Xxx 25,000 $8.2500 25,000
Xxxx, Xxxxx 25,000 $8.2500 25,000
Xxxxxxxxx, Xxx 7,623 $5.5625 7,623
Xxxx, Xxxxx 10,000 $5.5625 10,000
Xxxxxx, Xxxx 5,000 $5.0625 5,000
Xxxx, Xxxxx 10,000 10,000
Xxxxxx, Xxxx 10,000 10,000
Xxxx, Xxxxx 10,000 10,000
Xxxxxx, Xxxx 10,000 10,000
========================================================
TOTAL 112,623
1
27
Special
SPECIAL OPTIONS
Shares Active Active
Name Issued Price (Act Emp) (Term Emp)
---- ------ ----- --------- ----------
Xxxxx, Xxx 20,023 $ 8.7900 13,349
Xxxxxxx, Xxxxxxx 37,107 $ 8.7900 12,369
Xxxxx, Xxxxx 4,455 $ 8.7900 1,485
Xxxxxxx, Xxx 6,824 $ 8.7900 4,550
Xxxxxxx, Xxxx 6,354 $ 8.7900 4,236
Xxxxxxx, Xxxxxxx 2,248 $ 8.7900 1,498
Xxxxxxxx, Xxxx 59,201 59,201
Xxxxx, Xxx 20,555 $ 9.7500 13,703
Xxxxxxx, Xxxxxxx 17,308 $ 9.7500 11,539
Xxxxx, Xxxxx 4,615 $ 9.7500 1,538
Xxxxxxx, Xxx 1,369 $ 9.7500 913
Xxxxxxx, Xxx 2,734 $ 9.7500 1,823
Xxxxxxx, Xxxx 5,680 $ 9.7500 3,787
Xxxxxxx, Xxxxxxx 2,012 $ 9.7500 1,341
Xxxxxxxx, Xxxx 69,744 69,744
Xxxxx, Xxx 20,000 $ 9.7500 13,333
Xxxxxxx, Xxxxxxx 25,000 $13.0000 12,500
Xxxxx, Xxxxx 5,000 $ 8.5000 5,000
Xxxx, Xxxx 10,000 $ 5.5625 10,000
Xxxxxxx, Xxx 37,220 $ 8.2500
Xxxxxxx, Xxxx 20,000 $13.0000 10,000
Xxxxxxx, Xxxx 30,575 $ 8.2500
Xxxxxxx, Xxxx 10,000 $ 8.2500
Xxxxxxx, Xxxxxxx 10,000 $ 8.2500
428,024 -- 251,909
Page 1
28
PRE-IPO
Act/Term Start Term Xxxxx Xxxxx Shares Exercise
Name 1/0 Date Date Date # Issued Price Date
----- -------- --------- -------- -------- -------- --------- --------- -----------
Xxxxxx, Xxxxxxx 0 11/01/93 06/30/94 08/01/93 28,000 $3.710
08/01/93 14,000 $3.710
08/01/93 14,000 $3.710
$3.710 08/16/95
$3.710 08/17/95
$3.710 08/18/95
Xxxxxxxx, Xxxxxxx 0 11/01/93 11/15/95 11/01/93 36,078 $6.930
11/01/93 36,078 $6.930
11/01/93 36,092 $6.930
08/31/94 $9.750
$6.930 06/04/96
Xxxxxx, Xx 0 01/01/86 05/03/96 12/01/92 017 128,800 $0.930 08/08/94
08/09/94
08/10/94
12/02/94
12/05/94
02/15/95
05/15/95
05/18/95
05/24/95
06/09/95
05/02/96
Xxxxxxxx, Xxxxx 0 12/16/92 01/27/95 12/01/92 028 64,106 $0.930 02/15/95
03/16/95
03/20/95
04/20/95
05/09/95
05/10/95
05/15/95
05/24/95
06/09/95
06/22/95
07/10/95
12/01/92 029 64,106 $0.930 07/10/95
01/02/96
01/03/96
01/04/96
01/05/96
04/02/96
05/02/96
06/03/96
06/04/96
06/04/96
Xxxxxxx, Xxxxxx 1 12/17/86 12/01/92 001 96,376 $0.930
PRE-IPO
Open after Active Active Cancelled
Name Expiry Exercised exercise (Act. Emp) (Term Emp) Shares
----- -------- ---------- ----------- ---------- ---------- -----------
Xxxxxx, Xxxxxxx 28,000
42,000
56,000
1,000 55,000
8,000 47,000
11,000 36,000 36,000
Xxxxxxxx, Xxxxxxx 11/01/99 36,078
11/01/00 72,156
11/01/01 108,248
08/31/04 108,248
10,000 98,248 98,248
Xxxxxx, Xx 12/01/97 20,000 108,800
20,000 88,800
5,000 83,800
3,000 80,800
10,000 70,800
10,000 60,800
10,000 50,800
10,000 40,800
10,000 30,800
5,000 25,800
22,800 3,000 3,000
Xxxxxxxx, Xxxxx 12/01/98 10,000 54,106
5,000 49,106
5,000 44,106
10,000 34,106
500 33,606
5,500 28,106
4,000 24,106
10,000 14,106
10,000 4,106
1,000 3,106
3,106 - -
12/01/99 3,894 60,212
1,000 59,212
1,300 57,912
800 57,112
500 56,612
8,000 48,612
5,000 43,612
5,000 38,612
30,000 8,612
6,000 2,612 2,612
Xxxxxxx, Xxxxxx 12/01/97 96,376 96,376
Page 1
29
PRE-IPO
Act/Term Start Term Xxxxx Xxxxx Shares Exercise
Name 1/0 Date Date Date # Issued Price Date
----- -------- --------- -------- -------- -------- --------- --------- -----------
Xxxxxxxxx, Xxxxxx 0 06/05/87 07/31/96 12/01/92 004 64,106 $0.940
Xxxxxxx, Xxxxxx 1 05/13/74 09/30/93 274 24,850 $1.440 02/23/94
Xxxxxxx, Xxxxxx 1 05/13/74 09/30/93 275 24,850 $18.000
Xxxxxxxxxx, Xxxxxx 1 11/16/83 09/30/93 272 61,950 $18.000
Xxxxxxxxxx, Xxxxxx 1 11/16/83 09/30/93 273 61,950 $1.440 02/23/94
Xxxxxx, Xxx 0 03/15/91 07/01/96 12/01/92 010 96,376 $0.930 08/10/95
08/21/95
09/11/95
09/12/95
09/13/95
09/14/95
09/15/95
06/07/96
06/10/96
06/10/96
Xxxxx, Xxx 1 04/12/93 04/01/93 020 35,084 $2.140
TOTAL
PRE-IPO
Open after Active Active Cancelled
Name Expiry Exercised exercise (Act. Emp) (Term Emp) Shares
----- -------- ---------- ----------- ---------- ---------- -----------
Xxxxxxxxx, Xxxxxx 12/01/97 64,106 64,106
Xxxxxxx, Xxxxxx 24,850 -
Xxxxxxx, Xxxxxx 24,850 24,850
Xxxxxxxxxx, Xxxxxx 61,950
Xxxxxxxxxx, Xxxxxx 61,950 - -
Xxxxxx, Xxx 12/01/97 2,500 93,876
2,500 91,376
10,000 81,376
5,000 76,376
15,000 61,376
20,000 41,376
1,000 40,376
10,000 30,376
10,000 20,376
20,376 -
Xxxxx, Xxx 4/99/00 - 35,084 35,084
TOTAL 121,226 239,050 61,950
Page 2
30
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(e)
CONFLICTS
None
31
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(g)
MATERIAL CHANGES
1. In connection with its consolidation and restructuring, the
Company is transferring manufacturing and certain other
business activities from Atlanta to Illinois
2. R&D contracts:
- Mentor Graphics: Agreement dated December 10, 1996 for
development of RJ-11 ASIC software and/or design.
- Wireless Domain: Various development and project management
projects to develop integrated radio designs for AMPS,
ETACS, GSM, DCS 1800 standards. Create interface between
new radio designs and RJ-11 ASIC.
- Qualcomm Contract dated April 11, 1997, to enter into Supply
Agreement for services and supplies associated with the
Qualcomm daughter card.
- TTP license agreements dated January 21, 1997 for GSM
license and support including a maintenance contract.
Agreements cover GSM protocol stack, GSM data services and
GSM application background layer.
3. The Company is party to ongoing litigation, described on
Schedule 3(h).
4. The Company's existing loan agreement with LaSalle National
Bank is scheduled to terminate on April 30, 1997. A
replacement facility is under negotiation, but has not been
completed.
32
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(h)
LITIGATION
1. The Company is party to the litigation described on pages
10-11 of the Company's Form 10-K for the year ended
September 30, 1996.
2. The Company is engaged in a contractual dispute with Global
Tel*Link, Inc., regarding an agreement pursuant to which the
Company had agreed to purchase payphones to be manufactured
by Global Tel*Link. The Company terminated the agreement
asserting late delivery. Global Tel*Link has asserted a
claim for $1.2 million in damages, but has not instituted an
arbitration demand in accordance with the agreement.
3. Two ex-employees of the Company have asserted claims for
unpaid commissions. One of these employees has also
asserted a claim alleging sex discrimination. On March 5,
1997, this same ex-employee filed a law suit against the
Company.
33
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(n)
INTELLECTUAL PROPERTY
1. The Company is party to the litigation described on pages
10-11 of the Company's Form 10-K for the period ending
September 30, 1996.
2. Information regarding the Company's patents, licenses and
other intellectual property is set forth on pages 8-10 of
the Company's Form 10-K for the year ended September 30,
1996, and incorporated herein.
34
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(p)
LIENS
1 Liens in favor of LaSalle National Bank Loan pursuant to
loan agreement
2. Hewlett Packard Machinery lease
35
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(u)
TAX STATUS
None
36
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 3(v)
CERTAIN TRANSACTIONS
None
37
Schedules to Securities Purchase Agreement of April 1997.
SCHEDULE 4(d)
USE OF PROCEEDS
1. General business purposes
2. Research and development
3. Working capital requirements
38
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF THE SERIES A PREFERRED SHARES
Attached hereto [as Exhibit 99.2].
39
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
Attached hereto [as Exhibit 99.3].
40
EXHIBIT C
Form of Company Counsel Opinion
Attached hereto.
41
[XXXXXXXXX & XXXXXXX LETTERHEAD]
April 16, 1997
Xxxxxx Partners
c/o Leeds Management Services
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx XX00 Xxxxxxx
Attn: Xxxx Xxxxx
Olympus Securities, Ltd.
c/o Leeds Management Services
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx XX00 Xxxxxxx
Attn: Xxxx Xxxxx
Ladies and Gentlemen:
We have acted as counsel to Telular Corporation, a Delaware
corporation (the "Company"), in connection with the issuance and sale of 10,000
shares of Series A Convertible Preferred Shares (the "Preferred Shares")
pursuant to the Securities Purchase Agreement dated April 16, 1997, between the
Company and each of you (the "Securities Purchase Agreement").
In connection with rendering the opinions set forth hereto,
we have examined a copy of the Securities Purchase Agreement, the Certificate
of Designations, the Registration Rights Agreement and the Irrevocable Transfer
Agent Instructions (the "Transaction Documents"), the Company's Certificate of
Incorporation, as amended to date, its Bylaws, as amended to date, the
proceedings of the Company's Board of Directors taken in connection with the
sale and issuance of the Preferred Shares, and such other documents and
instruments as we have deemed necessary. As to certain matters of fact, we
have relied upon a certificate of officers of the Company.
In conducting our examination, we have assumed the following:
(i) the genuineness of all signatures, the legal capacity of natural persons,
the authenticity and accuracy of all documents submitted to us as originals,
and accuracy of all documents submitted to us as originals, and the conformity
to originals of all documents submitted to as copies, (ii) that the Securities
Purchase Agreement has been duly and validly authorized, executed, and
delivered by the party or
42
Xxxxxx Partners
Olympus Securities, Ltd.
April 16, 1997
Page 2
parties thereto other than the Company, and (iii) that the Securities Purchase
Agreement constitutes the valid and binding agreement of the party or parties
thereto other than the Company, enforceable against such party or parties in
accordance with the terms of the Securities Purchase Agreement.
In rendering the opinion set forth in paragraph 5 below, we
have relied upon your representations and warranties as set forth in the
Securities Purchase Agreement.
With respect to matters stated herein to be to our actual
knowledge, we have advised you only as to the actual knowledge without
independent investigation of those lawyers in our firm who have devoted
substantive attention to this transaction on behalf of the Company.
Capitalized terms used and not defined herein shall have the
meaning set forth in the Securities Purchase Agreement.
Based on the foregoing, and subject to the assumptions and
qualifications set forth below, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power to conduct its business
and to own, lease and operate its properties, as described in the Company's
Annual Report on Form 10-K for the year ended September 30, 1996 (the "1996
10-K"). The Company is qualified as a foreign corporation to do business and
is in good standing in the State of Illinois.
2. The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Securities Purchase
Agreement, the Certificate of Designations, the Registration Rights Agreement
and the Irrevocable Transfer Agent Instructions (collectively, the "Transaction
Documents"), including issuance of the Preferred Shares and the Conversion
Shares in accordance with the terms thereof. The filing of the Certificate of
Designations and the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated therein
have been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board of Directors or its
stockholders is required therefor. The Transaction Documents have been duly
executed and delivered by the Company and the Certificate of Designations has
been duly executed and properly filed by the Company with the Secretary of
State of the State of Delaware in accordance with the Delaware General
Corporate Law (the "Delaware Corporate Law") and has become effective under the
Delaware Corporate Law. The Transaction Documents, other than the Certificate
of Designations, constitute the valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
43
Xxxxxx Partners
Olympus Securities, Ltd.
April 16, 1997
Page 3
3. The issuance and sale of the Preferred Shares, have been duly
authorized. When issued in accordance with the terms of the Securities
Purchase Agreement, the Preferred Shares will be validly issued, fully paid and
non-assessable and free of all taxes, liens, charges and preemptive rights with
respect to the issue thereof. The Conversion Shares have been duly authorized
and reserved for issuance upon conversion of the Preferred Shares in accordance
with the Securities Purchase Agreement and the Certificate of Designations and
when issued in accordance with the Securities Purchase Agreement and the
Certificate of Designations, the Conversion Shares will be validly issued,
fully paid and nonassessable and free of all taxes, liens charges and
preemptive rights with respect to the issue thereof.
4. As of the date hereof, the authorized capital stock of the
Company consists of (i) 75,000,000 shares of Common Stock, par value $.01 per
share, and (ii) 10,000,000 shares of Preferred Stock, par value $.01 per share.
None of such Common Stock or such Preferred Stock is subject to preemptive
rights or other rights of the stockholders of the Company pursuant to the
Certificate of Incorporation or the Bylaws or under the Delaware Corporate Law.
The rights, preferences and privileges of the Series A Preferred Shares are as
stated in the Certificate of Designations. The Board of Directors of the
Company has reserved for issuance shares of Common Stock sufficient to provide
for the issuance of the Conversion Shares.
5. The Preferred Shares and the Conversion Shares may be issued
to you pursuant to the Transaction Documents without registration under the
1933 Act or the securities laws of any state.
6. No authorization, approval, consent, filing or other order of
any federal or state governmental body, regulatory agency, self-regulatory
organization or stock exchange or market, or the stockholders of the Company,
or any court, or, to our knowledge, any third party, is required to be obtained
by the Company to enter into and perform its obligations under the Transaction
Documents or for the issuance and sale of the Preferred Shares and the
Conversion Shares as contemplated by the Transaction Documents, with the
exception of (i) the listing of the Conversion Shares with NASDAQ, (ii) the
filing of a Form D with the Securities and Exchange Commission, and (iii) such
registrations, filings and approvals with and by the Securities and Exchange
Commission and applicable state securities regulators as may be necessary to
effect the registration of the Conversion Shares for resale.
7. Except as disclosed in the Securities Purchase Agreement, we
do not have actual knowledge of any action, suit, proceeding, inquiry or
investigation before or by any court, public board or body or any governmental
agency or self-regulatory organization pending or threatened against the
Company or any of its subsidiaries or any of the Properties of the Company or
any of its subsidiaries.
8. The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated thereby and
44
Xxxxxx Partners
Olympus Securities, Ltd.
April 16, 1997
Page 4
the compliance by the Company with the terms thereof does not violate, conflict
with or constitute a default (or an event which, with the giving of notice or
lapse of time or both, constitutes or would constitute a default) under (i) the
Certificate of Incorporation or the Bylaws, (ii) to the best of our knowledge,
any agreement, note, lease, mortgage, deed or other instrument to which the
Company is a party or by which the Company is bound and which the Company has
filed as an exhibit to the 1996 10-K, or which, to our actual knowledge, the
Company is otherwise required to file with the Securities and Exchange
Commission, or (iii) any statute, law, rule or regulation applicable to the
Company or, to our actual knowledge, any order, writ, injunction or decree, if
such violation would have a material adverse effect on the business,
operations, financial conditions or results of operations of the Company.
9. The Company is not an "investment company" or any entity
controlled by an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
In the process of our review of the 1996 10-K and all other reports
filed by the Company pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, since the date of the filing of the 1996 10-K, although we
have not engaged in any independent investigation and do not assume any
responsibility for the accuracy or completeness of the information contained
therein, nothing has come to our attention that has led us to believe that any
of such reports contain any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, as of its filing date with the SEC.
This opinion is rendered only with regard to the matters set
out above. No other opinions are intended nor should they be inferred. We are
attorneys licensed to practice in the District of Columbia and the federal
courts and agencies of the United States, and we express no opinion herein as
to the laws of any other jurisdiction other than the General Corporation Law of
the State of Delaware.
The opinions expressed herein are given to you solely for
your use in connection with the Securities Purchase Agreement and may not be
relied upon by any other person or entity or for any other purpose without our
prior written consent. This opinion is given solely as of the date hereof, and
we assume no obligation or duty to update any of the opinions expressed herein.
Very truly yours,
/s/ XXXXXXXXX & XXXXXXX
Xxxxxxxxx & Xxxxxxx
45
EXHIBIT D
FORM OF RESOLUTIONS ADOPTED BY THE COMPANY'S BOARD OF DIRECTORS
Attached hereto.
46
Telular Corporation
Special Meeting of Board of Directors
April 14, 1997
Resolution to approve and execute up to $21,000,000 in Series A
Convertible Preferred Stock through a private placement, using
Xxxxxx Brothers as the Investment Banker
WHEREAS, Telular Corporation has determined that it is in the best interest of
the Company to secure up to $21,000,000 in proceeds from a Private Placement
upon the terms and conditions listed on the attached Exhibit A; and
RESOLVED, that 21,000 shares of the Company's Preferred Stock be designated as
the Series A Convertible Preferred Stock, with the preferences and rights set
forth on Exhibit B hereto; and
RESOLVED, that a Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of Telular Corporation, in the form of Exhibit B
hereto, be filed with the Secretary of State of Delaware; and
RESOLVED, that the Corporation be, and it hereby is, authorized to issue 21,000
shares of Series A Convertible Preferred Stock in accordance with and for the
consideration specified in Exhibit A hereto to the purchasers specified in
Exhibit A hereto, or to such other or additional purchasers as the officers of
the Corporation may approve; and
RESOLVED, that the Corporation be, and it hereby is, authorized to issue upon
conversion of the Series A Convertible Preferred Stock such shares of Common
Stock, par value $.01 per share, of the Corporation, up to the total amount
authorized under the Certificate of Incorporation and not theretofore issued or
reserved for issuance for any other purpose, as may be required in accordance
with the terms of the Series A Convertible Preferred Stock; and
47
RESOLVED, that the Corporation hereby reserves for issuance upon conversion of
the Series A Convertible Preferred Stock 12 million shares of Common Stock, par
value $.01 per share, of the Corporation; and
RESOLVED, that the Corporation be, and it hereby is, authorized to effect the
registration of such Common Stock of the Corporation on Securities Exchange
Commission Form S-3 or such other form as may be appropriate, and in connection
therewith to execute and deliver such registration statements and other
documents, instruments, agreements and certificates, pay such sums, and take
such other actions as the officers of the Corporation may deem necessary or
desirable in connection therewith; and
RESOLVED, that the Corporation be, and it hereby is, authorized to issue to
Xxxxxx Brothers up to 95,000 shares of Common Stock, par value $.01 per share,
of the Corporation, in consideration for its services heretofore provided in
connection with the sale of the Series A Convertible Preferred Stock.
RESOLVED, that the Corporation be, and it hereby is, authorized to issue in
accordance with the terms of the Private Placement, that number of shares of
Common Stock of the Corporation, par value $.01 per share, as is specified in
the Private Placement; and
RESOLVED, that the appropriate officers of the Company be and each is
authorized to do and perform or cause to be done and performed in the name and
on behalf of the Company, any and all such acts and things and execute or
deliver, under corporate seal or otherwise, any and all such documents,
agreements, instruments, certificates and notices as shall be necessary or
appropriate to carry out the intent of the foregoing resolution.
48
EXHIBIT E
FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
Attached hereto.
49
TRANSFER AGENT INSTRUCTIONS
TELULAR CORPORATION
April 16, 1997
Xxxxxx Trust and Savings Bank
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxx
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement, of
even date herewith, by and among Telular Corporation, a Delaware corporation
(the "Company"), and each of Xxxxxx Partners and Olympus Securities, Ltd.
(collectively, the "Holders") pursuant to which the Company is issuing to the
Holders an aggregate of 10,000 shares of Series A Preferred Stock, $.01 par
value, of the Company (the "Preferred Shares"). This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue shares (the "Conversion
Shares") of Common Stock, $.01 par value (the "Common Stock"), of the Company
to or upon the order of a Holder from time to time upon (i) surrender to you of
a properly completed and duly executed Conversion Notice, in the form attached
hereto as Exhibit I and (ii) certificates representing Preferred Shares being
converted (or an indemnification undertaking with respect to such shares in the
case of their loss, theft or destruction). Certificates representing the
Convertible Shares shall not bear any legend restricting transfer of the
Conversion Shares thereby and should not be subject to any stop-transfer
restriction: provided, however, that if the Conversion Shares are not
registered for resale under the Securities Act of 1933, as amended, then the
certificates for the Conversion Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT."
and, provided, further that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
in the event a registration statement covering the Conversion Shares is subject
to amendment for events then current.
50
Please be advised that the Holders are relying upon this
letter as an inducement to enter into the Securities Purchase Agreement and,
accordingly, each Holder is a third party beneficiary to these instructions.
Should you have any questions concerning this matter, please
contact me at (000) 000-0000.
Very truly yours,
TELULAR CORPORATION
By:
---------------------------
Name: Xxxxxxx Xxxxxxx
Its: President and Chief
Executive Officer
ACKNOWLEDGED AND AGREED:
XXXXXX TRUST AND SAVINGS BANK
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
Date:
---------------------------
Enclosure
cc: Xxxxxx Partners
Olympus Securities, Ltd.
Xxxxxx X. Xxxxxxxx, Esq.
2
51
EXHIBIT I
TELULAR CORPORATION
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of
Telular Corporation (the "CERTIFICATE OF DESIGNATIONS"). In accordance with and
pursuant to the Certificate of Designations, the undersigned hereby elects to
convert the number of shares of Series A Convertible Preferred Stock, $.01 par
value per share (the "SERIES A PREFERRED SHARES"), of Telular Corporation, a
Delaware corporation (the "COMPANY"), indicated below into shares of Common
Stock, $.01 par value per share (the "COMMON STOCK"), of the Company by
tendering the stock certificate(s) representing the share(s) of Series A
Preferred Shares specified below as of the date specified below. The
undersigned represents and warrants that as of the date of this notice the
undersigned is in compliance with Section 4(i) of the Securities Purchase
Agreement among the Company and the Buyers named therein.
Date of Conversion:
------------------------------
Number of Series A
Preferred Shares to be converted:
------------------------------
Stock certificate no(s). of Series A
Preferred Shares to be converted:
------------------------------
Please confirm the following information:
Conversion Price:
------------------------------
Number of shares of Common Stock
to be issued:
------------------------------
Additional Amount:
------------------------------
Please issue the Common Stock and, if applicable, any check drawn on an account
of the Company into which the Series A Preferred Shares are being converted in
the following name and to the following address:
Issue to:
------------------------------
------------------------------
------------------------------
------------------------------
Facsimile number:
------------------------------
Authorization:
------------------------------
By:
---------------------------
Title:
------------------------
Dated:
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