COMMON STOCK PURCHASE AGREEMENT
By and Among
OCEAN STRATEGIC HOLDINGS LIMITED
ZEBRA STRATEGIC HOLDINGS LIMITED
(the "Purchasers")
and
RACOM SYSTEMS, INC.
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Dated as of July 20, 1999
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TABLE OF CONTENTS
Page
Article I Certain Definitions.................................................... 1
Article II Purchase of Common Stock............................................... 3
Article III Representations and Warranties......................................... 3
Article IV Other Agreements of the Parties........................................ 8
Article V Conditions Precedent to Closing........................................ 10
Article VI Termination............................................................ 12
Article VII Legal Fees............................................................. 13
Article VIII Miscellaneous.......................................................... 13
Schedule 1 List of Purchasers
Schedule 3.1(a) Subsidiaries
Schedule 3.1(c) Capitalization
Schedule 3.1(f) Required Consents and Approvals
Schedule 3.1(g) Litigation
Schedule A List of Creditors
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COMMON STOCK PURCHASE AGREEMENT, dated as of July 20, 1999
(this "Agreement"), by and among Racom Systems, Inc., a Delaware corporation
(the "Company"), and the purchasers listed on Schedule 1 attached hereto (each
individually, the "Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the
Purchasers and the Purchasers desire to acquire an aggregate of Six Hundred
Sixty Seven Thousand (667,000) (the "Shares") of the authorized but unissued
common stock, $.01 par value per share (the "Common Stock") of the Company.
WHEREAS, the entering into this Agreement is a condition to
closing the Agreement and Plan of Reorganization dated as of July 14, 1999 among
the Company, NewState Capital Corp., NewState Capital Co., Inc. and NSK
Holdings, Inc.
IN CONSIDERATION of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities by contract or
otherwise.
"Business Day" means any day except Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in the state
of New York are authorized or required by law or other government actions to
close, between the hours of 9:30 a.m. and 6:00 p.m. New York Time.
"Closing" shall have the meaning set forth in Section 2.1(b).
"Closing Date" shall mean the date of Closing, as set forth in
Section 2.1(b).
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"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value
$.01 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, encumbrance, charge or security interest of any kind in or on such asset
or the revenues or income thereon or therefrom.
"Material" shall mean having a financial consequence in excess
of $100,000.
"Material Adverse Effect" shall have the meaning set forth in
Section 3.1(a).
"NASD" means the National Association of Securities Dealers,
Inc.
"Per Share Consideration" shall have the meaning set forth in
Section 2.1(a).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Purchase Price" shall have the meaning set forth in Section
2.1(a).
"Required Approvals" shall have the meaning set forth in
Section 3.1(f).
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiaries" shall have the meaning set forth in Section
3.1(a).
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ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1. Purchase of Common Stock; Closing
(a) Subject to the terms and conditions herein set forth, the
Company shall issue and sell to the Purchasers, and the Purchasers shall
purchase from the Company on the Closing Date the number of Shares of Common
Stock listed opposite the Purchasers' names on Schedule 1, at a price per Share
of US$.01 (the "Per Share Consideration"). The Per Share Consideration
multiplied by the number of Shares to be purchased by the Purchasers hereunder
is hereinafter referred to as the "Purchase Price." The total number of Shares
to be purchased by the Purchasers is Six Hundred Sixty Seven Thousand (667,000)
and the total Purchase Price shall be $1,000,000.
(b) The closing of the purchase and sale of the Shares of
Common Stock (the "Closing") shall take place at the offices of the escrow agent
(the "Escrow Agent"), immediately upon the Escrow Agent's receipt of the
Purchase Price and the receipt by the Escrow Agent of certificates for the
Shares of Common Stock registered in the names of the Purchasers. The date of
the Closing is hereinafter referred to as the "Closing Date".
(c) At the Closing, (i) the Company shall deliver to the
Escrow Agent (A) certificates registered in the names of the Purchasers and in
the amounts set forth in Schedule I (the "Certificates") and (B) all documents,
instruments and writings required to have been delivered at or prior to Closing
by the Company pursuant to this Agreement, and (ii) the Purchasers shall deliver
to the Escrow Agent (A) the Purchase Price as determined pursuant to this
Article I in United States dollars in immediately available funds and (B) all
documents, instruments and writings required to have been delivered at or prior
to Closing by the Purchaser pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company has no subsidiaries other than as
set forth in Schedule 3.1(a) (collectively, the "Subsidiaries"). Each of the
Subsidiaries is a
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corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the full corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
(a) the results of operations, assets, prospects, or financial condition of the
Company and the Subsidiaries, or (b) the Purchaser's rights under this Agreement
(a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized, issued and outstanding
capital stock of the Company and each of the Subsidiaries is set forth in
Schedule 3.1(c). No shares of Common Stock are entitled to preemptive or similar
rights. Except as specifically disclosed in Schedule 3.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate of incorporation, bylaws or other charter
documents.
(d) Issuance of the Common Stock. The Shares of Common Stock
have been duly and validly authorized for issuance, offer and sale pursuant to
this Agreement and, when issued and delivered as provided hereunder against
payment in accordance with the terms hereof, shall be valid and binding
obligations of the Company enforceable in accordance with their terms. When
issued in accordance with the terms hereof, the Shares of Common Stock will be
duly authorized, validly issued, fully paid and nonassessable.
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(e) No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of its certificate of incorporation or bylaws or
(ii) subject to obtaining the consents referred to in Section 3.1(f), 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 agreement, indenture or
instrument to which the Company is a party, or (iii) to the knowledge of the
Company result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including Federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except in the case of each of clauses (ii) and (iii), such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, do not have a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set forth
in Schedule 3.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement, other than the making
of the applicable blue-sky filings under state securities laws, and other than,
in all cases, where the failure to obtain such consent, waiver, authorization or
order, or to give or make such notice or filing, would not materially impair or
delay the ability of the Company to effect the Closing and deliver to the
Purchaser the Shares of Common Stock free and clear of all Liens (collectively,
the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed
in Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (Federal, State, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of this
Agreement or the Shares of Common Stock (ii) could, individually or in the
aggregate, have a Material Adverse Effect or (iii) could, individually or in the
aggregate, materially impair the ability of the Company to perform fully on a
timely basis its obligations under this Agreement.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such conflicts or defaults
as do not have a Material Adverse Effect, (ii) is in violation of any order of
any court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could
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(individually or in the aggregate) (x) adversely affect the legality, validity
or enforceability of this Agreement, (y) have a Material Adverse Effect or (z)
adversely impair the Company's ability or obligation to perform fully on a
timely basis its obligations under this Agreement.
(i) Certain Fees. No fees or commission will be payable by the
Company to any investment banker or bank with respect to the consummation of the
transactions contemplated hereby.
(j) Non-Registered Offering. Neither the Company nor any
Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Company under
circumstances which would require the integration of such offering with the
offering of the Shares of Common Stock under the Securities Act) which might
subject the offering, issuance or sale of the Shares of Common Stock to the
registration requirements of Section 5 of the Securities Act.
(k) Reporting Company; Eligibility to use Exemption under
Section 4(2). The Company is subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act. The Company is eligible to issue
securities exempt from registration pursuant to Section 4(2) of the Securities
Act.
Section 3.2. Representations and Warranties of the Purchasers. The
Purchasers hereby represents and warrants to the Company as follows:
(a) Organization; Authority. Each of the Purchasers is a
corporation duly and validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Purchasers has the requisite
power and authority to enter into and to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder and
thereunder. The purchase of the Shares of Common Stock by the Purchasers
hereunder has been duly authorized by all necessary action on the part of each
of the Purchasers. Each of this Agreement has been duly executed and delivered
by the Purchasers or on its behalf and constitutes the valid and legally binding
obligation of the Purchasers, enforceable against the Purchasers in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(b) Investment Intent. The Purchasers are acquiring the Shares
of Common Stock for their own account for investment purposes only and not with
a view to or for distributing or reselling such Shares or any part thereof or
interest therein, without prejudice, however, to the Purchaser's right, subject
to the provisions of this Agreement, at all times to sell or otherwise dispose
of all or any part of such Shares in compliance with applicable federal and
State securities laws.
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(c) Purchasers' Status. At the time the Purchasers were
offered the Shares, each was, and at the date hereof, each is, and at the
Closing Date, each will be, an "accredited investor" as defined in Rule 501(a)
under the Securities Act, in that it is a broker-dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended. The Purchasers
are purchasing the Shares for its own account.
(d) Experience of Purchasers. The Purchasers, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment.
(e) Ability of Purchasers to Bear Risk of Investment. The
Purchasers are able to bear the economic risk of an investment in the Shares
and, at the present time, are able to afford a complete loss of such investment.
(f) Prohibited Transactions. The Shares to be purchased by the
Purchasers are not being acquired, directly or indirectly, with the assets of
any "employee benefit plan", within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
(g) Access to Information. The Purchasers acknowledges that
they have been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the Shares; (ii) access to information about the
Company and the Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment in the Common Stock; and (iii) the opportunity to obtain such
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the Shares.
(h) Reliance. The Purchasers understand and acknowledge that
(i) the Shares are being offered and sold, to them without registration under
the Securities Act in a transaction that is exempt from the registration
provisions of the Securities Act, (ii) the availability of such exemption,
depends in part on, and that the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and the Purchaser hereby consents
to such reliance, and (iii) that the certificates representing the Shares will
bear the appropriate legend stating the restrictions on the resale and transfer
of the Shares.
The Company acknowledges and agrees that the Purchasers make
no representation or warranty with respect to the transactions contemplated
hereby other than those specifically set forth in Article III herein.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
Section 4.1. Manner of Offering. The Shares of Common Stock are being
issued pursuant to Section 4(2) of the Securities Act. The Shares will not be
exempt from restrictions on transfer, and will carry a restrictive legend with
respect to the resale and transfer of the Shares.
Section 4.2. Furnishing of Information. As long as the Purchasers owns
Shares, the Company will promptly furnish to it all annual and quarterly reports
comparable to those required by Section 13(a) or 15(d) of the Exchange Act.
Section 4.3. Notice of Certain Events. The Company shall (i) advise the
Purchasers promptly after obtaining knowledge thereof, and, if requested by the
Purchasers, confirm such advice in writing, of (A) the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of the Common Stock for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, or (B) any event that makes
any statement of a material fact made by the Company in Section III untrue or
that requires the making of any additions to or changes in the Company's
representations or warranties in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, (ii) use
its best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption from qualification of the Common Stock under any
state securities or Blue Sky laws, and (iii) if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Common Stock under any such
laws, use its best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
Section 4.4. Blue Sky Laws. The Company shall cooperate with the
Purchasers in connection with the qualification of the Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may request
and to continue such qualification at all times through the fifth anniversary of
the Closing Date; provided, however, that neither the Company nor its
Subsidiaries shall be required in connection therewith to qualify as a foreign
corporation where they are not now so qualified. The Company agrees that it will
execute all necessary documents and pay all necessary state filing or notice
fees to enable the Company to sell the Shares to the Purchasers.
Section 4.5 Integration. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that would require the registration under the Securities Act
of the sale of the Shares to the Purchasers.
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. Section 4.6 Solicitation Materials. The Company shall not (i) distribute any
offering materials in connection with the offering and sale of the Shares other
than the information previously supplied to the Purchasers or (ii) solicit any
offer to buy or sell the Shares by means of any form of general solicitation or
advertising.
Section 4.7. Prohibition on Certain Actions. From the date hereof
through the Closing Date, the Company shall not and shall cause the Subsidiaries
not to, without the consent of the Purchasers, (i) amend its Certificate of
Incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Purchasers; (ii) split, combine or reclassify its outstanding
capital stock; (iii) declare, authorize, set aside or pay any dividend or other
distribution with respect to the Common Stock; (iv) redeem, repurchase or offer
to repurchase or otherwise acquire shares of its Common Stock; or (v) enter into
any agreement with respect to any of the foregoing.
Section 4.8. Listing of Shares. The Company shall use its best efforts
to maintain the quote for its common stock on the NASD OTC Electronic Bulletin
Board (or listing on a national securities exchange or market on which the
Common Stock is listed).
Section 4.9 Demand Registration
At any time commencing after the Closing Date, the Purchasers
shall have the right, exercisable by written notice to the Company (the "Demand
Registration Request"), to have the Company prepare and file with the
Commission, on one occasion, at the sole expense of the Company, in respect of
all the Shares of Common Stock purchased under this Agreement (the "Registrable
Securities"), a Registration Statement so as to permit a public offering and
sale of the Registrable Securities. Upon such demand, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-1 or
another appropriate form permitting registration of Registrable Securities for
resale by the Holders in the manner or manners designated by them (including,
without limitation, public or private sales and one or more Underwritten
Offerings). The Company shall (i) not permit any securities other than the
Registrable Securities to be included in the Registration Statement, except
those shares of common stock owned by NewState Capital Corp. ("NewState") or the
shareholders of NewState is NewState has or is about to be dissolved, GEM
Singapore Pte Limited and Turbo International, Ltd. and (ii) use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing thereof, but in any
event prior 120 days after the filing of such Registration Statement, and to
keep such Registration Statement continuously effective under the Securities Act
until the date which is five years after the date of this Agreement or such
earlier date when all Registrable Securities covered by such Registration
Statement have been sold or may be sold pursuant to Rule 144 as determined by
the counsel to the Company pursuant to a written opinion letter, addressed to
the Holders, to such effect (the "Effectiveness Period"); provided, however,
that the Company shall not be deemed to have used its best efforts to keep the
Registration Statement effective during the Effectiveness Period if it
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voluntarily takes any action that would result in the Holders not being able to
sell the Registrable Securities covered by such Registration Statement during
the Effectiveness Period, unless such action is required under applicable law or
the Company has filed a post-effective amendment to the Registration Statement
and the Commission has not declared it effective.
a. If the Holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to a Registration
Statement may be effected in the form of an Underwritten Offering. In such
event, and if the managing underwriters advise the Company and such Holders in
writing that in their opinion the amount of Registrable Securities proposed to
be sold in such offering exceeds the amount of Registrable Securities which can
be sold in such offering, there shall be included in such Underwritten Offering
the amount of such Registrable Securities which in the opinion of such managing
underwriters can be sold, and such amount shall be allocated pro rata among the
Holders proposing to sell Registrable Securities in such Underwritten Offering.
b. If any of the Registrable Securities are to be sold in an
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority of the Registrable Securities included in such offering and the
Company shall be advised in advance of the identity of any underwriter and the
general terms of the proposed offering. No Holder may participate in any
Underwritten Offering hereunder unless such Person (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
arrangements.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. Conditions Precedent to Obligations of the Purchasers. The
obligation of the Purchasers to purchase the Shares is subject to the
satisfaction or waiver by the Purchasers, at or prior to the Closing, of each of
the following conditions:
(a) Legal Opinion. The Purchasers shall have received the
legal opinion, addressed to it and dated the Closing Date of the Counsel for the
Company. Such legal opinion shall address the Company's authority to enter into
this Agreement and the availability of Section 4(2)to the offer and sale of the
Shares;
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained herein 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
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(except that representations and warranties that are made as of a specific date
need be true in all material respects only as of such date);
(c) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing;
(d) No Material Adverse Effect. There has been no event which
had a Material Adverse Effect on the Company which has not been disclosed to the
Purchasers;
(e) No Prohibitions. The purchase of and payment for the
Shares hereunder (i) shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation and (ii) shall not
subject the Purchasers to any penalty, or in its reasonable judgment, other
onerous condition under or pursuant to any applicable law or governmental
regulation that would materially reduce the benefits to the Purchaser of the
purchase of the Shares (provided, however, that such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement);
(f) Company Certificates. The Purchasers shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company and certifying (i) that attached thereto is a true,
correct and complete copy of (A) the Company's Certificate of Incorporation, as
amended to the date thereof, (B) the Company's By-Laws, as amended to the date
thereof, (C) resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of this Agreement, the issuance and sale
of the Shares and (D) a certificate of good standing from the Secretary of State
of Delaware and (ii) the incumbency of officers executing this Agreement;
(g) No Suspensions of Trading in Common Stock. Trading in the
Common Stock shall not have been suspended by the Commission or the NASD or
other exchange or market on which the Common Stock is listed or quoted (except
for any suspension of trading of limited duration solely to permit dissemination
of material information regarding the Company);
(h) Required Approvals. All Required Approvals shall have been
obtained;
(i) Delivery of Instructions. The Company shall have delivered
to the Transfer Agent the necessary instructions and authorizations to cause the
issuance of certificates for the Shares to be issued to and registered in the
names of to the Purchasers; and
Section 5.2. Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares of Common Stock hereunder
is subject to the satisfaction or waiver by the Company, at or to the Closing,
of each of the following conditions:
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(a) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of the Purchasers 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 that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date);
(b) Performance by the Purchasers. The Purchasers shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by it at or prior to the Closing; and
(c) No Prohibitions. The sale of the Shares of Common Stock
hereunder (i) shall not be prohibited or enjoined (temporarily or permanently)
by any applicable law or governmental regulation and (ii) shall not subject the
Company to any penalty, or in its reasonable judgment, any other onerous
condition under or pursuant to any applicable law or governmental regulation
that would materially reduce the benefits to the Company of the sale of Shares
to the Purchasers (provided, however, that such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement).
ARTICLE VI
TERMINATION
Section 6.1. Termination by Mutual Consent. This Agreement may be
terminated at any time prior to Closing by the mutual consent of the Company and
the Purchasers.
Section 6.2. Termination by the Company or the Purchaser. This
Agreement may be terminated prior to Closing by either the Company or the
Purchasers, by giving written notice of such termination to the other party, if:
(a) the Closing shall not have occurred by July 31, 1999;
provided that the terminating party is not then in material breach of its
obligations under this Agreement in any manner that shall have caused the
failure referred to in this paragraph (a);
(b) there shall be in effect any statute, rule, law or
regulation that prohibits the consummation of the Closing or if the consummation
of the Closing would violate any non-appealable final judgment, order, decree,
ruling or injunction of any court of or governmental authority having competent
jurisdiction; or
Section 6.3. Termination by the Company. This Agreement may be
terminated prior to Closing by the Company, by giving written notice of such
termination to the Purchasers, if the Purchasers have materially breached any
representation, warranty, covenant or agreement contained
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in this Agreement and such breach is not cured within five business days
following receipt by the Purchasers of notice of such breach.
Section 6.4. Termination by the Purchasers. This Agreement may be
terminated prior to Closing by the Purchasers, by giving written notice of such
termination to the Company, if:
(a) the Company has breached any representation, warranty,
covenant or agreement contained in this Agreement and such breach is not cured
within five business days following receipt by the Company of notice of such
breach;
(b) there has occurred an event which could reasonably be
expected to have a Material Adverse Effect and which is not disclosed in this
Agreement; or
(c) trading in the Common Stock has been suspended by the
Commission or the NASD or other exchange or market on which the Common Stock is
listed or quoted (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the Company).
ARTICLE VII
LEGAL FEES
In the event any Party commences a legal action to enforce its rights
under this Agreement, the non-prevailing party shall pay all reasonable costs
and expenses (including reasonable attorney's fees) incurred in enforcing such
rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Fees and Expenses. Except as set forth above, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Shares pursuant hereto. The Purchaser shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement. Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company shall pay (i) all costs, expenses, fees and
all taxes incident to and in connection with: (A) all preliminary and final Blue
Sky memoranda and all other agreements, memoranda, correspondence and other
documents prepared and delivered in connection
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herewith (B) the issuance and delivery of the Shares, (C) the qualification of
the Shares for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the fees and disbursements of the
Purchasers' counsel relating to such registration or qualification), and (D) the
preparation of certificates for the Shares (including, without limitation,
printing and engraving thereof), (ii) all fees and expenses of the counsel and
accountants of the Company and (iii) all expenses and listing fees on Securities
Exchanges, if any.
Section 8.2. Entire Agreement; Amendments. This Agreement, together
with the Schedules hereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters.
Section 8.3. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been made upon facsimile (with transmission confirmation report) at the number
designated below (if delivered on a Business Day during normal business hours
where such notice is to be received), or the first Business Day following such
delivery (if delivered other than on a Business Day during normal business hours
where such notice is to be received) whichever shall first occur. The addresses
for such communications shall be:
If to the Company: ▇▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
Racom Systems, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With copies to: Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchasers:
See Schedule 1 - Schedule of Purchasers (attached hereto)
With copies to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Gottbetter & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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or such other address as may be designated in writing hereafter, in the same
manner, by such person.
Section 8.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser, or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
Section 8.5. Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 8.6. Successors and Assigns. This Agreement may not be assigned
by ant party without the prior written consent of all the parties hereto. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such party
under this Agreement.
Section 8.7. 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.
Section 8.8. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Any action to
enforce the terms of this Agreement or any of its exhibits shall be exclusively
brought in the state and/or federal courts in the State and County of New York.
Section 8.9. Survival. The representations and warranties of the
Company and the Purchaser contained in Article III and the agreements and
covenants of the parties contained in Article IV and this Article VIII shall
survive the Closing (or any earlier termination of this Agreement).
Section 8.10. Counterpart Signatures. This Agreement may be executed in
two or more counterparts, all of which when taken together 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, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
Section 8.11. Publicity. The Company and the Purchasers shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions
contemplated hereby and neither party shall issue any such press release or
otherwise make any such public statement without the prior written consent of
the other, which consent shall not be unreasonably withheld or delayed.
Section 8.12. Severability. In case any one or more of the provisions
of this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
Section 8.13. Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under this Agreement and the Company will be entitled to specific
performance of the obligations of the Purchasers hereunder with respect to the
subsequent transfer of Shares. Each of the Company and the Purchasers agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of any breach of its obligations described in the foregoing sentence
and hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
RACOM SYSTEM, INC.
By:----------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President & Chief Executive Officer
Purchasers:
OCEAN STRATEGIC HOLDINGS LTD.
By:----------------------------------------------------
Name:
Title:
ZEBRA STRATEGIC HOLDINGS LIMITED
By:----------------------------------------------------
Name:
Title:
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SCHEDULE 1
Purchaser
Name & Address Amount of Investment Number
of Shares
Ocean Strategic Holdings Limited 950,000 633,650
P. O. Box 860
11 Bath Street
St. Helier, Jersey
Channel Islands
Zebra Strategic Holdings Limited 50,000 33,350
P. O. Box 860
11 Bath Street
St. Helier, Jersey
Channel Islands