Exhibit 10.4
Execution Copy
Worldcomm Systems Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
November 9th, 1995
Gentlemen:
1. Purchase and Sale Commitment. Subject to the terms and conditions set
forth below and in applicable law, Thomson-CSF ("Thomson") agrees to purchase,
and Worldcomm Systems Inc. ("WSI") agrees to issue and sell to Thomson, 70,000
shares of common stock, par value $0.01 per share, of WSI ("Shares") for a total
purchase price of $933,100 ($13.33 per share) to be paid by wire transfer or
check at a closing (the "Closing") to occur at WSI's offices at the address set
forth above no later than November 20th, 1995.
2. General Rights and Obligations of Thomson. ▇▇▇▇▇▇▇ shall have all of the
rights, obligations and transfer restrictions (on a "most favored nation" basis)
of any other investor pursuant to WSI's private offering of Shares (the "Private
Placement"), including, without limitation, all rights and obligations of an
offeree and purchaser pursuant to Section 4(2) of the Securities Act of 1933, as
amended, and Regulation D promulgated thereunder. WSI acknowledges that ▇▇▇▇▇▇▇
was contemplated as, and shall be deemed for all purposes to be, the "corporate
investor" referred to in Sections 1.03(c), 2.05(a) and 2.05(b) of the Group "A"
Shareholders' Agreement, dated March 28th, 1995, among WSI and certain
shareholders of WSI, a copy of which (certified by the Secretary of WSI as true
and correct) is attached hereto as Annex 1 (the "Shareholders' Agreement"), and
in Section 7.3(b) of the form Subscription Agreement to the Private Placement,
executed and delivered by each of the investors in the Private Placement, a copy
of which (certified by the Secretary of WSI as true and correct) is attached
hereto as Annex 2 (the "Subscription Agreement") and that, without prejudice to
WSI's right otherwise to seek further equity financing as approved by its Board
of Directors, there shall be no further "corporate investors" within the meaning
of such sections of the Shareholders' Agreement or such section of the
Subscription Agreement. Pursuant to Section 7.3(b) of the Subscription
Agreement, WSI hereby deems all of the investors in the Private Placement to
have approved and consented to this Agreement.
3. Condition to Closing. The obligation of Thomson to consummate the Closing
is subject to (a) the accuracy as of the closing of the representations and
warranties of WSI herein in all material respects, (b) the performance and
compliance as of the Closing by WSI in all material respects of its undertakings
and agreements herein and (c) the execution and delivery to Thomson, at or prior
to the Closing, by parties to the Shareholders' Agreement set forth in Annex 3
hereto (together with each such party's shareholdings) representing not less
than 59% of the outstanding share capital and voting rights of
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WSI as of the Closing, of a consent in the form attached hereto as Annex 4.
4. Special Rights of ▇▇▇▇▇▇▇. WSI hereby agrees that ▇▇▇▇▇▇▇ shall have the
rights provided in Paragraph 2 and certain additional rights set out below in
respect of WSI and each of the shareholders set forth in Annex 3 who executes
and delivers the consent referred to in Paragraph 3. WSI hereby agrees as
follows:
(a) Public Offering Preemptive Right. In the event WSI proposes to issue
securities through a public offering of securities for payment in cash, whether
by decision of the Board of Directors of WSI or a General Meeting of
Shareholders, WSI shall give Thomson prompt written notice of such proposal,
including information regarding (i) the number and class or series of the
securities proposed to be sold, and, if such securities will be of a new class,
the rights, preferences and restrictions applicable to such new class, (ii) the
price or price range at which WSI expects to offer such securities and (iii) the
proposed terms of payment and any other material terms and conditions of the
offering. WSI shall also give ▇▇▇▇▇▇▇ written notice of the public offering
price simultaneously with the final determination thereof. ▇▇▇▇▇▇▇ shall have a
preemptive right (with priority over any rights of any other shareholder) to
purchase up to 15% of the total number of securities offered in such public
offering (or such greater number of securities as the Board of Directors of WSI
may approve) at a price per security equal to the public offering price and on
the other terms and conditions of the public offering. In order to exercise its
preemptive right under this Paragraph 4(a), ▇▇▇▇▇▇▇ must notify WSI thereof in
writing not later than thirty (30) minutes after receipt by ▇▇▇▇▇▇▇ of written
notice of the final public offering price. Such notice shall state the number of
securities which Thomson desires to purchase and shall be deemed to be an
irrevocable commitment on the part of Thomson to purchase the number of
securities set forth therein for the public offering price and upon the other
terms and conditions of the public offering. ▇▇▇▇▇▇▇ agrees to consult,
regularly and on a timely basis, with WSI and the managing underwriter (if any)
of the public offering in connection with its exercise of its preemptive right
pursuant to this Paragraph 4(a).
(b) Private Offering Preemptive Right.
(i) In the event WSI proposes to issue securities through a private
offering of securities for payment in cash, whether by decision of
the Board of Directors of WSI or a General Meeting of Shareholders,
WSI shall give Thomson prompt written notice of such proposal (a
"Private Offering Notice"), including information regarding (A) the
number and class or series of the securities proposed to be sold
(the "Offered Securities"), and, if such securities will be of a new
class, the rights, preferences and restrictions applicable to
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such new class, (B) if known, the identity of any proposed third
party acquiror or acquirors of the Offered Securities, (C) the price
per security at which WSI proposes to sell the Offered Securities
(the "Offer Price") and (D) the proposed terms of payment and any
other material terms and conditions of the proposed sale. Subject to
the provisions of Paragraph 4(b)(iv), Thomson shall have a
preemptive right with WSI to purchase its Pro Rata Part (as
hereinafter defined) of the Offered Securities at the Offer Price
and on the other terms and conditions set forth in the Private
Offering Notice. "Pro Rata Part" shall mean the proportion which the
number of voting securities of WSI owned by Thomson bears to the
number of voting securities of WSI owned by all shareholders
(including Thomson) immediately prior to the date subscriptions are
opened in such private offering. In order to exercise its preemptive
right under this Paragraph 4(b)(i), ▇▇▇▇▇▇▇ must notify WSI thereof
in writing not later than fifteen (15) days after receipt by ▇▇▇▇▇▇▇
of the Private Offering Notice. Such notice shall state the number
of securities which Thomson desires to purchase and shall be deemed
to be an irrevocable commitment on the part of Thomson to purchase
the number of securities set forth therein for the Offering Price
upon the other terms and conditions set forth in the Private
Offering Notice.
(ii) To the extent the other shareholders have not elected, prior to the
fifth day preceding the date subscriptions are opened in such
private offering, to purchase, pursuant to their preemptive rights
(if any) existing as of the date hereof, all of the Offered
Securities as to which ▇▇▇▇▇▇▇ has not exercised its preemptive
right under Paragraph 4(b)(i) (the "Remaining Securities"), WSI
shall give Thomson written notice thereof (a "Notice of Remaining
Securities"), not later than the forth day preceding the date
subscriptions are opened in such private offering, including the
number of Remaining Securities. Thomson shall have an additional
preemptive right, subject to the provision of Paragraph 4(b)(iv), to
purchase all or any portion of the Remaining Securities at the Offer
Price and on the other terms and conditions set forth in the Private
Offering Notice. In order to exercise its right under this Paragraph
4(b)(ii), ▇▇▇▇▇▇▇ must notify WSI thereof in writing not later than
three days after receipt by ▇▇▇▇▇▇▇ of the Notice of Remaining
Securities. Such notice shall state the number of Remaining
Securities which Thomson desires to purchase and shall be deemed to
be an irrevocable commitment on the part of Thomson to purchase the
number of securities set forth therein for the Offer Price and upon
the other terms
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and conditions set forth in the Private Offering Notice.
(iii) To the extent Thomson and the other shareholders do not elect to
purchase all of the Offered Securities pursuant to their respective
preemptive rights, WSI may sell the shares of Offered Securities as
to which such preemptive rights have not been exercised within a
period of six (6) months following the date the subscriptions are
opened in such private offering, at a price per security not less
than the Offer Price and on such other terms and conditions as are
no more favorable to the purchasers than those specified in the
Private Offering Notice. If any such sale of Offered Securities by
WSI is not completed within such six-month period, the provisions of
this Paragraph 4(b) shall again apply.
(iv) ▇▇▇▇▇▇▇ agrees not to exercise its preemptive rights under Paragraph
4(b)(i) and 4(b)(ii) in the case of any private offering of
securities by WSI exclusively to a single industrial entity as part
of a Strategic Business Alliance (as hereinafter defined) with such
entity. "Strategic Business Alliance" shall mean a strategic
business alliance with an industrial entity where (A) the Board of
Directors of WSI has been given a written report outlining in
reasonable detail the business objectives and commercial advantages
to be obtained by WSI and providing a business plan demonstrating
the commercial advantages to WSI in connection with such strategic
business alliance, (B) such strategic business alliance has been
approved by a majority vote of the Board of Directors of WSI after
full consideration of any strong and well reasoned objection thereto
by any director on the Board of Directors or any shareholder owning
at least 5% of the share capital of WSI and (C) the industrial
entity with which such strategic business alliance is proposed is
not a competitor of Thomson, as set out in Annex 5 hereto.
(c) Board Seat. Subject to Paragraph 7(a), the Board of Directors of WSI
shall at all times include as a director such person as ▇▇▇▇▇▇▇ may from time to
time notify to WSI, provided (i) for the period from the Closing to the date of
the next Annual Shareholders Meeting of WSI (September 1996), the Thomson
nominee shall be appointed to the Board of Directors of WSI by action of the
Board of Directors and (ii) thereafter at each Annual Shareholders Meeting, the
Board of Directors of WSI shall nominate the nominee designated by ▇▇▇▇▇▇▇ and
shall recommend the election of such nominee to the shareholders of WSI.
(d) Shares for Orders. Thomson shall receive Shares in consideration for
Orders in accordance with Paragraph 9(c) below.
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(e) Survival of Rights. ▇▇▇▇▇▇▇'▇ rights under Paragraphs 4, 5 and 9(c) of
this Agreement shall not be affected by the termination of the Shareholders'
Agreement.
5. Assignment of Priority Right of First Refusal. Subject to Paragraph 7(a),
WSI hereby irrevocably assigns and transfers to Thomson, effective as of the
Closing, its priority right of first refusal under Sections 1.03(c) and
1.03(e)(i) of the Shareholders' Agreement. WSI represents and warrants that, as
a result of such assignment, ▇▇▇▇▇▇▇ shall have a right of first refusal (with
priority over the rights of first refusal of the other shareholders) to purchase
any Shares proposed to be transferred by any shareholder, at a price per Share
equal to the bona fide third party purchase price offered to such shareholder.
▇▇▇▇▇▇▇'▇ rights under this Paragraph 5 shall not cover Shares which are
encumbered, sold or otherwise disposed of (a) to a shareholder of WSI by any
other shareholder of WSI with the prior written consent of the Board of
Directors of WSI pursuant to Section 1.03(a) of the Shareholders' Agreement, (b)
by an investor in the Private Placement who is not a party to the Shareholders'
Agreement, or (c) pursuant to Section 1.01(b) of the Shareholders' Agreement.
6. Representations and Warranties of WSI. WSI hereby represents, warrants and
covenants to Thomson as follows:
(a) the Shares to be purchased by Thomson pursuant to Paragraph 1 above
shall represent approximately 5.4%, but in no event less than 5%, of the
outstanding share capital and voting rights of WSI as of the Closing, and WSI
shall certify to Thomson, on or prior to the Closing, the exact percentage of
the outstanding share capital and voting rights of WSI represented by 70,000
Shares;
(b) to WSI's best knowledge as of the Closing, there are no restrictions
under applicable law on (i) the ability of Thomson to exercise its right to
nominate a director to the Board of Directors of WSI as contemplated under
Paragraph 4(c) above and (ii) the ability of ▇▇▇▇▇▇▇'▇ nominee to the Board of
Directors of WSI to participate fully as a director in the management of WSI;
and
(c) under WSI's Certificate of Incorporation and By-Laws and under
applicable law, there is no requirement for greater than a simple majority in
respect of any matter to be submitted to a vote of the shareholders or to a vote
of the Board of Directors of WSI.
7. Representations and Warranties of ▇▇▇▇▇▇▇. Thomson hereby represents,
warrants and covenants to WSI, effective as of the Closing, as follows:
(a) ▇▇▇▇▇▇▇'▇ rights under Paragraphs 4, 5, and 9(c) of this Agreement
shall immediately terminate if (i) Thomson or any of its permitted transferees
sells or otherwise disposes of Shares and (ii) as a result of such sale(s) or
other disposition(s), Thomson and its permitted transferees shall
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collectively own less than 5% of the outstanding share capital of WSI.
(b) Thomson has been provided with or permitted access to all information
regarding WSI which it deems material to formulating an investment decision and
such information (assuming its accuracy and completeness) has been sufficient to
make an informed investment decision.
8. Covenants of WSI. No later than three (3) days following the execution of
this Agreement by WSI, WSI shall furnish to Thomson complete copies of all of
the offering documents furnished or made available to other offerees in
connection with the Private Placement including, without limitation, the
offering memorandum and the Subscription Agreement (the "Offering Documents").
WSI shall use its good faith best efforts to fulfil or obtain the fulfilment of
the condition to Closing set forth in Paragraph 3 above.
9. Business Cooperation. The parties intend for this Agreement to result in
short- and long-term business cooperation between them. ▇▇▇▇▇▇▇ further intends
to offer business opportunities to WSI after the Closing. In order to facilitate
the achievement of the foregoing objectives, the parties agree, effective as of
the Closing, as follows:
(a) ▇▇▇▇▇▇▇ shall make a good faith effort to provide WSI with business
and marketing assistance in the field of satellite communications.
(b) WSI shall make good faith effort to support ▇▇▇▇▇▇▇'▇ activities and
endeavors in the field of satellite communications.
(c) In consideration for Orders awarded by ▇▇▇▇▇▇▇ to WSI during the
period commencing on the date of the Closing and ending on the date which is two
years and 183 days following the date of the Closing (the "Award Period"), WSI
shall issue to Thomson newly-issued Shares as follows:
(i) when the aggregate value of all Orders awarded by ▇▇▇▇▇▇▇ to WSI
during the Award Period equals or exceeds $1.5 million, WSI shall
issue to Thomson a number of Shares equal to 1% of the then
outstanding share capital of WSI, excluding employee and other
incentive stock options (collectively, "Employee ISOs"); and
(ii) for each of the first four subsequent increments of $3 million of
aggregate value of all Orders in excess of $1.5 million awarded by
▇▇▇▇▇▇▇ to WSI during the Award Period, WSI shall issue to Thomson
an additional number of Shares equal to 1% of the then outstanding
share capital of WSI, excluding Employee ISOs.
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For purposes of this Paragraph 9(c), the term "Order" means a confirmed, legally
binding order for goods or services that has been duly awarded by ▇▇▇▇▇▇▇ and
duly accepted in writing by WSI; provided, however, that, except for orders in
connection with the Triband Project, orders for goods or services procured
exclusively in connection with research and development projects shall not be
considered "Orders" for the purposes hereof. Any Shares issued to Thomson
pursuant to this Paragraph 9(c) shall be limited to a maximum of five "1%"
grants, where "1%" is determined as 1% of the outstanding share capital at the
time of the grant, excluding Employee ISOs. These "1%" grants are not
retroactive and therefore will not result in the readjustment of previously
granted "1%" share amounts. The parties acknowledge that previously granted "1%"
amounts may no longer represent exactly 1% of the outstanding share capital of
WSI at the time of additional 1% grants since the outstanding share capital of
WSI will change by virtue of these grants and other authorized changes.
(d) The obligations of good faith effort set forth in Paragraphs 9(a) and
9(b) above shall not give rise to a right to recover damages in favor of WSI,
▇▇▇▇▇▇▇ or any other person.
10. Termination. This Agreement shall terminate on November 15, 1995 if it
has not been accepted and agreed to by WSI prior thereto and may be terminated
by Thomson, without any liability or other obligation of Thomson, by written
notice delivered by WSI at its address set forth at the head of this Agreement
at any time prior to the Closing, in the event ▇▇▇▇▇▇▇ is not satisfied with the
information regarding WSI contained in the Offering Documents or otherwise
disclosed to Thomson in the course of ▇▇▇▇▇▇▇'▇ due diligence as a private
investor in accordance with applicable law. In the event that, not later than
the day prior to the Closing, ▇▇▇▇▇▇▇ has not provided WSI with written
acknowledgement that (i) it has satisfied its due diligence investigation for
purposes of Paragraphs 9(a) and 9(b) above (without prejudice to the survival of
the representations and warranties of WSI hereunder pursuant to Paragraph 11)
and (ii) the conditions to the Closing set out in Paragraph 9(c) above has been
satisfied, this Agreement may be terminated by WSI at anytime thereafter prior
to or at the Closing, without any liability or other obligation headquarters
address in Paris.
11. Miscellaneous. All of the respective representations and warranties of
WSI and ▇▇▇▇▇▇▇ hereunder shall survive the Closing. This Agreement shall be
governed by, and construed in accordance with, the law of the State of New York
without reference to choice of law principles. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
contained herein. Time shall be of the essence in this Agreement. All disputes
relating to money damages arising in connection with this Agreement shall be
finally resolved under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by three
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arbitrators appointed according to such Rules. Such arbitration shall take place
in New York, New York and shall be conducted in English. Any other disputes
shall be brought and finally resolved in any Federal or State court located
within the State of New York.
12. Assignment. Notwithstanding anything to the contrary contained in this
Agreement, ▇▇▇▇▇▇▇ shall have the right, upon ten (10) days' prior written
notice to WSI, whether before or after the Closing, (i) to assign or delegate
all or any portion of its rights and obligations under this Agreement, and (ii)
to assign, sell or otherwise transfer Shares, to any of its affiliates that are
owned, directly or indirectly, 100% by ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇'▇ rights of assignment
pursuant to this Paragraph 12 shall be subject to the approval of the Board of
Directors of WSI pursuant to this Agreement and Section 1.03(a) of the
Shareholders' Agreement, which approval shall not be denied or delayed provided
WSI shall have received from Thomson and its assignee(s) the written agreement,
in form and substance reasonably acceptable to the Board of Directors of WSI, of
Thomson and such assignee(s) to the terms and conditions of this Agreement,
which written agreement shall provide for the rescission of the assignment in
the event Thomson sells, directly or indirectly, 20% or more of its equity
interest in such assignee(s).
Please confirm your agreement with the terms hereof by executing this
Agreement in the space indicated below.
Very truly yours,
THOMSON-CSF
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Senior Vice President
Accepted and Agreed to:
WORLDCOMM SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Chairman & CEO
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