THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into this 30th day of June, 1997, by and between Glasgal Communications,
Inc., a Delaware corporation (the "Company") and Xxxxx Xxxxxxx an individual
residing at 0X Xxxxxxxx Xxxx, Xxxxxxxxx, X.X. 00000 (the "Purchaser").
In consideration of the premises and of the mutual
representations, warranties and covenants hereinafter set forth, the Company and
the Purchaser hereby agree as follows:
ARTICLE I
THE PURCHASE AND SALE
1.1 THE PURCHASE AND SALE. Subject to the terms and conditions
set forth herein, at the Closing described below, the Company will sell and the
Purchaser will purchase an aggregate of 160,000 shares (the "Shares") of the
Common Stock, $.001 par value per share, of the Company (the "Common Stock") for
an aggregate purchase price of $620,000 (the "Purchase Price"). The Purchase
Price shall be paid as provided in Section 1.2.
1.2 THE CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the principal offices of the Company
at 00 X Xxxxxxxx Xxx, Xxxxxx, Xxx Xxxxxx 00000 on June 27, 1997 at 10:00 A.M. or
at such other place or time as the parties may agree (the "Closing Date"). At
the Closing, the Purchase Price shall be payable by delivery of immediately
available funds by wire transfer to an account of the Company that shall be
specified in writing by the Company prior to the Closing. Within ten calendar
days following the Closing, the Company shall deliver to the Purchaser a
certificate representing the Shares.
1.3 TERMINATION OF THIS AGREEMENT. Anything contained in this
Agreement to the contrary notwithstanding, in the event that the Purchaser fails
to deliver immediately available funds representing the Purchase Price by the
close of business on the Closing Date, this Agreement shall terminate and be of
no force and effect without the requirement of any notice from, or any action
by, the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized and existing under the laws of the State of Delaware and is in
good standing under such laws.
2.2 CORPORATE POWER. The Company has all requisite corporate
power and authority to enter into this Agreement and the Company will have at
the Closing Date all requisite corporate power to sell the Shares and to carry
out and perform its obligations under the terms of this Agreement.
2.3 CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company consists of (i) 34,000,000 shares of Common Stock
and (ii) 4,000,000 shares of preferred stock, par value $.001 per share. There
are approximately 23,708,690 shares of the Company's Common Stock and [no]
shares of Preferred Stock currently issued and outstanding.
2.4 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
filed with the Securities and Exchange Commission (the "SEC"), and has
heretofore made available to the Purchaser true and complete copies of all
forms, reports, schedules, statements and other documents required to be filed
by it under the Securities Act of 1933, as amended (the "Securities Act") and
the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (as
such documents have been amended or supplemented since the time of their filing,
collectively, the "SEC Reports"). As of their respective dates, the SEC Reports
have been prepared in conformity with Generally Accepted Accounting Principles
consistently applied and as of the dates indicated, and for the periods then
ended, present fairly the financial position and results of operations of the
Company as of the dates and for the periods indicated.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as described in
the SEC Reports, the Company has no material debts, liabilities or obligations
of any kind, whether accrued, absolute, contingent or other, whether due or to
become due, except as incurred in the ordinary course of business, that would
have a material adverse effect on the Company.
2.6 FULLY PAID SHARES. The Shares, when acquired by the
Purchaser will be fully paid and non-assessable, free of preemptive rights and
encumbrances, and will have the same rights under the Company's certificate of
incorporation and by-laws as all other shares of Common Stock.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants to the Company as
follows:
3.1 INVESTMENT INTENT, ETC. The Purchaser is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act. The Purchaser has received, examined and reviewed copies of
the Company's most recent reports, as amended, filed under the Exchange Act and
other publicly available documents requested by him and recognizes that the
investment in the Shares involves a high degree of risk. The Purchaser has been
advised that it may not be possible to readily liquidate this investment. The
Purchaser's overall commitment to the Shares, which are not readily marketable,
is not disproportionate to his net worth, his investment in the Company will not
cause such overall commitment to become excessive, and he can afford to bear the
loss of his entire investment in the Company. The Purchaser has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in the Common Stock of the
Company. The Purchaser confirms that the Company has made available to him the
opportunity to ask questions of, and receive answers from, the Company
concerning the Company and the activities of the Company and otherwise to obtain
any additional information, to the extent that the Company possesses such
information or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information conveyed to him. The
Purchaser hereby acknowledges that he has been advised that this offering of
Shares has not been registered with, or reviewed by, the Securities and Exchange
Commission because this offering is intended to be a non-public offering
pursuant to Section 4(2) of the Securities Act. The Purchaser represents that
the Shares are being purchased for his own account, for investment purposes only
and not with a view towards distribution or resale to others. The Purchaser
agrees that he will not attempt to sell, transfer, assign, pledge or otherwise
dispose the Shares unless they are registered under the Securities Act or unless
in the opinion of counsel satisfactory to the Company an exemption from such
registration is available. The Purchaser understands that no securities
administrator of any state has made any finding or determination relating to the
fairness of this investment and that no securities administrator of any state
has recommended or endorsed, or will recommend or endorse, the offering of the
Shares. The execution, delivery and performance by the Purchaser of this
Agreement will not constitute or result in a breach or default under, or
conflict with, any order, ruling or regulation of any court or other tribunal or
of any governmental commission or
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agency, or any agreement or other undertaking, to which the Purchaser is a party
or by which he is bound. The Purchaser has relied solely upon the advice of its
own tax and legal advisors with respect to the tax and other legal aspects of
this investment. The Purchaser is purchasing the Shares for his account, and not
in any agency, fiduciary or similar capacity. The source of the funds evidencing
the Purchase Price are from legally available funds of the Purchaser.
3.2 LEGENDS. The Purchaser understands that the certificates
evidencing the Shares will bear a legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE
ACT SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO AND THEY
SHALL HAVE BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE
APPROPRIATE STATE SECURITIES LAWS OR (II) IN THE OPINION OF
COUNSEL TO THE CORPORATION, REGISTRATION AND QUALIFICATION
UNDER THE ACT AND THE SECURITIES LAWS OF THE APPROPRIATE STATE
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."
The legend referred to above shall be removed by the Company
from any certificate at such time as the holder of the shares represented by the
certificate delivers an opinion of counsel reasonably satisfactory to the
Company to the effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act, or at such time as the
holder of such shares satisfies the requirements of Rule 144(k) under the
Securities Act, as then in effect with respect to such shares.
3.3 RISK FACTORS. The Purchaser has conducted his own due
diligence with respect to all aspects of this transaction and is familiar with
the risk factors inherent in the purchase of the Shares, and has been fully
apprised that all or a portion of the proceeds from this investment will be used
to repay indebtedness owed to FINOVA Capital Corporation.
3.4 APPLICABILITY OF "SHORT SWING PROFIT RULE". The Purchaser
is aware of Section 16(b) of the Securities Exchange Act of 1934, as amended and
the rules promulgated thereunder which provides that any director, officer, or
owner of ten percent or more of any class of an issuer's securities who reaps a
"profit" on the "purchase" or "sale" of equity securities within a six-month
period, must return the profit to the issuer. Specifically, the Purchaser
recognizes that his investment in the Shares is a "purchase" under such statute
which will be matched with any "sale" occurring within six months prior to or
within six months after the Closing Date. The Purchaser hereby acknowledges that
he may be
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required to return any "profits realized" from any such short term "purchase"
and "sale" to the Company.
ARTICLE IV
REGISTRATION OF SHARES
4.1 "PIGGYBACK REGISTRATION". (a) If the Company at any time
or from time to time during the three (3) year period commencing on the Closing
Date proposes to register any Common Stock under the Securities Act (other than
pursuant to a registration statement (including pre-effective amendments
thereto) (i) on Form S-8 or any successor form to such form, (ii) on Form S-4 or
any successor form to such form, (iii) filed in connection with an exchange
offer or an offering of Common Stock or of securities convertible or
exchangeable into Common Stock made solely to its existing shareholders in
connection with a rights offering or solely to employees of the Buyer, or a
post-effective amendment to any then effective registration statement), it will
give written notice to the Purchaser of its intention at least ten (10) days in
advance of the filing of any Registration Statement with respect thereto. Upon
the written request of the Purchaser given within five (5) days after receipt of
such notice, the Company, subject to Section 4.1(b) below, will cause the Shares
and/or the resale of the Shares requested by the Purchaser to be registered, to
be so registered.
(b) (i) In the case of an underwritten offering by the Company
of Common Stock, the Company shall, with respect to Shares that the Purchaser
then desires to sell, enter into an underwriting agreement with the same
underwriters engaged by the Company with respect to securities being offered by
the Company and cause such underwriters to include in any such underwriting all
of the Common Shares that the Purchaser then desires to sell; PROVIDED, HOWEVER,
that such underwriting agreement is in substantially the same form as the
underwriting agreement that the Buyer enters into in connection with the primary
offering it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 4.1 requests in writing that the number of
Shares of the Purchaser that are entitled to be registered pursuant to this
Section 4.1 be reduced because in the judgment of the managing underwriter the
offering would be materially and adversely affected, then the Shares that the
Purchaser wishes to register pursuant to this Section 4.1 shall be reduced by
such amount as the managing underwriter may determine in writing so as to not
materially and adversely affect the proposed offering, which reduced number of
Shares shall be included in such offering.
Notwithstanding the provisions of this Section 4.1, the
Company shall have the right at any time after it shall have given
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written notice pursuant to this Section 4.1 (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
4.2 REGISTRATION PROCEDURES. Each Registration Statement filed
pursuant to this Article IV shall be pursuant to the procedures set forth below:
(a) The Company shall notify the Purchaser promptly after it
shall receive notice thereof, of the date and time when such Registration
Statement and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such Registration Statement has
been filed;
(b) The Company shall furnish to the Purchaser such reasonable
number of copies of the Registration Statement and prospectus and such other
documents as Purchaser may reasonably request in order to facilitate the public
offering of the Shares;
(c) The Company shall use its best efforts to register or
qualify the Shares covered by such Registration Statement under such state
securities or blue sky laws of such jurisdictions as the Purchaser may
reasonably request, PROVIDED, HOWEVER, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to subject
itself to taxation in connection with any such registration or qualification of
such securities;
(d) The Company shall notify the Purchaser participating in
such registration promptly of any request by the SEC for the amending or
supplementing of such Registration Statement or prospectus or for additional
information. The Purchaser agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in this subsection
(d), the Purchaser will forthwith discontinue the offer and sale of Shares
pursuant to the Registration Statement covering such Shares until receipt by the
Purchaser and underwriters of the copies of such supplemented or amended
prospectus and, if so directed by the Company, the Purchaser will deliver to the
Company all copies, other than permanent file copies then in the Purchaser'
possession, of the most recent prospectus covering such Shares at the time of
receipt of such notice; and
(e) The Company shall advise the Purchaser participating in
such registration, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any
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stop order or to obtain its withdrawal if such stop order should be issued.
4.3 EXPENSES OF REGISTRATION. All expenses of the Company
incident to the Company's performance of or compliance with the provisions of
this Article IV shall be borne by the Company including without limitation:
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including fees and disbursements of counsel for the Company in
connection with blue sky qualifications of the Shares; PROVIDED, HOWEVER, that
the Company shall not be required to consent to general service of process in
any such state); and
(c) Fees and disbursements of the Company and its independent
auditors.
Nothing in this Section 4.3 shall be deemed to require the
Company to pay or bear any expenses of the Purchaser's attorneys or accountants
or any other personal expenses or any underwriting discounts relating to the
Common Shares, selling commissions or similar fees attributable pro rata to the
Common Shares if such registration results in an Underwritten Offering of all or
any portion of the Common Shares.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of Purchaser and the Company.
5.2 WAIVER. Any breach of any obligation, covenant, agreement
or condition contained herein shall be deemed waived by the non-breaching party,
only by a writing, setting forth with particularity the breach being waived and
the scope of the waiver, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other breach. No waiver shall be
implied from any conduct or action of the non-breaching party. No failure or
delay by any party in exercising any right, power or privilege hereunder or
under the Documents and no course of dealing by any party shall operate as a
waiver and any right, power or privilege hereunder or under any Document nor
shall any single or partial exercise thereof or the exercise of any other right,
power or privilege.
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5.3 NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand: (a) if to the Company,
to:
Glasgal Communications, Inc.
00 X Xxxxxxxx Xxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxx
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
(b) if to Purchaser, to:
Xxxxx Xxxxxxx
0X Xxxxxxxx Xxxx,
Xxxxxxxxx, X.X. 00000
or to such other address as any party shall have specified by notice in writing
to the other in compliance with this Section 5.3.
5.4 BINDING NATURE AGREEMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without prior written consent of the other parties.
5.5 ACKNOWLEDGEMENT BY THE PURCHASER. The Purchaser has been
informed that the Company's Common Stock is publicly-traded on the Nasdaq
Small-Cap Market and that the Purchase Price for the Shares may bear no relation
to the future market value or book value of the Common Stock. The Purchaser
further acknowledges that he has reviewed such information as he deems
appropriate to evaluate whether to enter into this Agreement. The Purchaser
further acknowledges that he is not relying on any oral information or
representations from the Company or any other person, including representatives
of the Company in connection with his decision to enter into this Agreement,
including the Company's financial condition, prospects, present or future
results of operations, business plans or the potential for future appreciation
in the Company's Common Stock.
5.6 GOVERNING LAW. This Agreement and the legal relations
among the parties hereto shall be governed by and
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construed in accordance with the laws of the State of New Jersey applicable to
contracts made and performed therein.
5.7 EXPENSES. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
5.8 COUNTERPARTS. This Agreement may be signed in counterparts
with the same effect as if both parties had signed one and the same instrument.
5.9 FORM OF SIGNATURE. The parties hereto agree to accept a
facsimile transmission copy of their respective signatures as evidence of their
respective actual signatures to this Agreement; PROVIDED HOWEVER, that each
party who produces a facsimile signature agrees, by the express terms hereof, to
place, immediately after transmission of its signature by fax, a true and
correct original copy of its signature in overnight mail to the address of the
other party.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed the day and year first above written.
GLASGAL COMMUNICATIONS, INC.
By: /S/ XXXXX XXXX
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Name: Xxxxx Xxxx
Title: Vice-President
/S/ XXXXX XXXXXXX
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XXXXX XXXXXXX
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