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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 23, 1996
OSICOM TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in charter)
New Jersey 0-15810 22-2367234
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(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification Number)
2800 28th Street, Suite 100, Santa Monica, CA
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(Address of principal executive offices)
90405
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(Zip code)
(310) 828-7496
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 4, 1996, Osicom Technologies, Inc. ("Osicom") entered into an
agreement to acquire 100% of CEH Holdings, Inc. and its wholly owned
subsidiaries including Cray Communications, Inc. (collectively "Cray"), for a
purchase price of $14 million: $11 million in cash and convertible preferred
stock of Osicom valued at $3 million. The purchase price was determined by
negotiations between the buyer and seller.
The funds to effectuate this transaction will include cash on hand, proceeds of
a new $5 million credit line from a lender and a $8.2 million loan from Builders
Warehouse Association, Inc.
Cray, the U.S. division of UK-based Cray Electronics Holdings, PLC based in
Annapolis Junction, Maryland, designs, manufactures, markets, and supports an
extensive range of communications products and systems for local area networks
and wide area networks. Cray provides end-users with intelligent products to
support data, voice, and video transmission over a wide variety of carrier
services. Network access products include: CSU/DSUs, ISDN terminal Adapters,
Frame Relay Encryptors, T1 Multiplexers and ROUTERmate(TM). Internetworking
products include: branch office routers, enterprise routers and switches.
All assets acquired in this transaction will continue to be used in the conduct
of the normal business activities of Cray and Osicom. No significant business
relationship existed between Cray and Osicom or their officers or directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements and pro forma financial information of
the business acquired are expected to be filed by amendment to
this filing with sixty (60) days of the earliest date reported
herein.
(b) Exhibit 2.1 Plan of Acquisition:
Stock Purchase Agreement by and between Osicom Technologies,
Inc., Cray Electronics Holdings, PLC and Reilrop, B.V. Dated as
of July 1, 1996
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Osicom Technologies, Inc.
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(Registrant)
By: /s/ CHRISTOPHER E. SUE
Dated: September 23, 1996 ---------------------------------
Christopher E. Sue
Chief Financial Officer
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EXHIBIT 2.1
Stock Purchase Agreement by and between
Osicom Technologies, Inc.,
Cray Electronics Holdings, PLC and Reilrop, B.V.
Dated as of July 1, 1996
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STOCK PURCHASE AGREEMENT
by and between
OSICOM TECHNOLOGIES, INC.,
CRAY ELECTRONICS HOLDINGS, PLC
and
REILROP, B.V.
Dated as of July 1, 1996
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TABLE OF CONTENTS
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STOCK PURCHASE AGREEMENT..................................................................... 1
ARTICLE I- ACQUISITION OF THE SHARES......................................................... 1
1.01. Purchase and Sale...................................... 1
1.02. Purchase Price......................................... 1
1.03. Loan Repayment......................................... 2
1.04. Canadian Assets........................................ 2
1.05. Autofile, Inc.......................................... 2
ARTICLE II - ADDITIONAL TRANSACTIONS......................................................... 2
2.01. Shareholder's Products................................. 2
2.02. Severance.............................................. 2
2.03. Cray Communications.................................... 3
2.04. Employment Agreements.................................. 3
2.05. Confidentiality and Non-Competition
Agreements............................................. 3
2.06. Board of Directors..................................... 3
2.07. Acquisition of Stock................................... 3
2.08. Restrictive Legend..................................... 4
2.09. Receipt of Information................................. 4
2.10. Accredited Investor Status............................. 4
2.11 Acquisition of the Shares.............................. 4
2.12. Restrictive Legend..................................... 4
2.13 Registration Obligation................................ 5
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDER................................................. 5
3.01. Valid Corporate Existence; Qualification............... 6
3.02. Capitalization......................................... 6
3.03. Subsidiaries........................................... 6
3.04. Consents............................................... 6
3.05. Binding Nature of Agreement; Title to Shares........... 7
3.06. Financial Statements................................... 7
3.07. Liabilities............................................. 8
3.08. Action Since Balance Sheet Date......................... 8
3.09. Adverse Developments................................... 9
3.10. Taxes................................................... 9
3.11. Ownership of Assets.................................... 10
3.12. Insurance.............................................. 10
3.13. Litigation, Compliance with Law........................ 10
3.14. Real Property.......................................... 11
3.15. Agreements and Obligations; Performance................ 11
3.16. Condition of Assets.................................... 12
3.17. Accounts Receivable.................................... 12
3.18. Permits and Licenses................................... 12
3.19. Banking Arrangements................................... 12
3.20. Interest in Assets..................................... 12
3.21. Salary Information..................................... 12
3.22. Employee Benefit Plans................................. 13
3.23. No Breach.............................................. 14
3.24. Brokers................................................ 15
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3.25. Labor Discussions........................................ 15
3.26. Change of Name........................................... 15
3.27. Backlog.................................................. 15
3.28. Environmental............................................ 15
3.29. Knowledge ............................................... 16
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF OSICOM.......................................... 16
4.01. Organization............................................. 16
4.02. No Breach................................................ 16
4.03. Authority for and Binding Nature of Agreement............ 16
4.04. Brokers.................................................. 16
4.05. Public Reports........................................... 16
4.06. Capitalization........................................... 17
4.07. Osicom Stock............................................. 17
4.08. Registration Obligation.................................. 17
ARTICLE V - PRE-CLOSING COVENANTS.............................................................. 17
5.01. Access................................................... 17
5.02. Conduct of Business...................................... 17
5.03. Insurance................................................ 17
5.04. Liabilities.............................................. 18
5.05. Preservation of Business................................. 18
5.06. Financial Statements..................................... 18
5.07. No Breach................................................ 18
5.08. No Negotiations.......................................... 18
ARTICLE VI- CONDITIONS PRECEDENT TO THE OBLIGATIONS TO
OSICOM TO CLOSE................................................................. 18
6.01. Representations and Warranties........................... 18
6.02. Covenants................................................ 19
6.03. No Action................................................ 19
6.04. Consents, Licenses and Permits........................... 19
6.05. Certificate.............................................. 19
6.06. Opinion.................................................. 19
ARTICLE VIII - CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE SHAREHOLDER TO CLOSE........................................................ 19
7.01. Representations and Warranties........................... 19
7.02. Covenants................................................ 20
7.03. No Actions............................................... 20
7.04. Certificate.............................................. 20
7.05. Consents................................................. 20
7.06. Opinion.................................................. 20
ARTICLE VIII - CLOSING......................................................................... 20
8.01. Location................................................. 20
8.02. Items to be Delivered by the Shareholder................. 20
8.03. Items to be Delivered by Osicom.......................... 21
ARTICLE IX - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...................................... 21
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9.01. Survival................................................................... 21
9.02. Indemnification............................................................ 21
9.03. Limits on Indemnification.................................................. 22
9.04. Defense of Claims.......................................................... 22
9.05. Pension Plan................................................................22
ARTICLE X - TERMINATION AND WAIVER............................................................................... 23
10.01. Termination................................................................ 23
10.02. Waiver..................................................................... 23
ARTICLE XI - MISCELLANEOUS PROVISIONS............................................................................ 24
11.01. Expenses................................................................... 24
11.02. Confidential Information................................................... 24
11.03. Modification, Termination or Waiver........................................ 24
11.04. Publicity.................................................................. 24
11.05. Notices.................................................................... 24
11.06. Binding Effect and Assignment.............................................. 25
11.07. Entire Agreement........................................................... 25
11.08. Governing Law.............................................................. 25
11.09. Counterparts............................................................... 25
11.10. Section Headings............................................................25
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AGREEMENT made as of the 1st day of July, 1996, by and between
Osicom Technologies, Inc., a New Jersey corporation ("Osicom") and Cray
Electronics Holdings, PLC, a United Kingdom corporation ("Holdings") and
Reilrop, B.V., a Netherlands corporation ("Reilrop") (Holdings and Reilrop being
referred to herein collectively as the "Shareholder").
WHEREAS, Holdings is the sole Shareholder of Reilrop, which is
the owner of all of the outstanding shares of capital stock (collectively, the
"Shares") of CEH Holdings, Inc., a Delaware corporation ("CEH"), which is the
owner of all of the outstanding shares of capital stock of B&T Holdings, Inc., a
Delaware corporation ("B&T"), which is the owner of all of the outstanding
shares of capital stock of Cray Communications, Inc. - U.S., a Delaware
corporation ("Cray") (CEH, B&T and Cray are referred to in this Agreement
individually as a "Corporation" and collectively as the "Corporations").
WHEREAS, Holdings wishes Reilrop to sell the Shares to Osicom,
and Osicom wishes to acquire the Shares from Reilrop on the terms and subject to
the conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual agreements recited
herein, the parties agree as follows:
ARTICLE I
ACQUISITION OF THE SHARES
1.01. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties set forth
herein, on the Closing Date, as defined herein, Holdings will cause Reilrop to
sell, transfer and deliver to Osicom, and Osicom shall acquire from Reilrop, all
of the Shares free and clear of all liens, pledges, encumbrances, charges and
claims thereon. Certificates evidencing the Shares shall be either duly endorsed
in blank or accompanied by appropriate stock powers endorsed in blank. Such
certificates shall also be accompanied by evidence reasonably satisfactory to
Osicom of Reilrop's payment of any applicable transfer taxes.
1.02. PURCHASE PRICE.
(a) In consideration of the sale, transfer, and
delivery of the Shares by Reilrop to Osicom, Osicom will pay to Reilrop the sum
of (i) Three Million Two Hundred Thirteen Dollars (US$3,213,000) by wire
transfer of immediately available funds on the Closing Date, plus (ii) Three
Million Dollars ($3,000,000) by issuing to Reilrop on the Closing Date Osicom
Series D Preferred Stock (the "Osicom Preferred Stock") having a liquidation
value equal to such amount.
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(b) In addition, on the Closing Date, Osicom will
assume up to Three Million Dollars ($3,000,000) of the Corporation's indebted-
ness to NationsBank.
(c) The Osicom Preferred Stock will be non-voting, will
have no cumulative dividend, will have a liquidation value equal of $3,000,000,
will be prior to Osicom's Common Stock but junior to Osicom's Series A, Series B
and Series C Preferred Stock upon liquidation, and will be convertible, in whole
or in part, to Osicom Common Stock having an aggregate market value at the time
of conversion equal to $3,000,000. For purposes of this Agreement, the market
value of the Osicom Common Stock shall be the average closing bid and asked
prices of such stock as reported by NASDAQ for the five (5) trading days
preceding the conversion dates.
1.03. LOAN REPAYMENT. On the Closing Date, Osicom will pay or
cause to be paid the Corporations' indebtedness to affiliates of the Shareholder
in the amount of US$7,537,000 and Nations Bank in the amount of US$250,000.
1.04. CANADIAN ASSETS. At or prior to the Closing, the
Shareholder will cause certain of the assets of its Canadian subsidiary,
consisting of cash in the amount of US$357,000, accounts receivable in the
amount of US$76,000 and a loan receivable from Cray in the amount of
US$1,002,000, to be contributed to CEH, which assets are included in the
Corporation's financial statements delivered pursuant to Section 3.06 of this
Agreement.
1.05. AUTOFILE, INC. At or prior to the Closing, the Corporations
will sell, transfer or otherwise dispose of their interests in Autofile, Inc.
("Autofile") without cost or liability to the Corporations.
ARTICLE II
ADDITIONAL TRANSACTIONS
2.01. SHAREHOLDER'S PRODUCTS. The Shareholder will permit the
Corporations and Osicom to sell subsequent to the Closing, on a non-exclusive
basis, certain of the Shareholder's products and those of its subsidiaries and
affiliates (which products are set forth on Schedule 2.01, the "Products") and,
for so long as Holdings has the right to use the "Cray Communications" name,
Osicom may use such name without additional consideration to Holdings but only
insofar as the Products are stamped with such name. Osicom will have the right
to purchase the Products, including without limitation MatchBox routers and
switch products, on a "most favored nation" price basis (and at no more than the
Corporation currently pays to the Shareholder, its subsidiaries and/or
affiliates) for a period of three (3) years beginning on the Closing Date, and
except as to each customer of the Corporations that has a contract with the
Corporation expiring more than three (3) years after the Closing Date, in which
case Osicom's right to purchase shall be for a period ending upon expiration of
such contract with respect to such customer. The terms upon which the
Corporations and Osicom will purchase and sell products hereunder are more
particularly set forth on, and are subject to, Exhibit 2.01.
2.02. SEVERANCE. The Shareholder shall pay the severance due to
any key employee of any Corporation listed on Exhibit 2.02 who is terminated on
or before April 30, 1997.
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2.03. CRAY COMMUNICATIONS. At the Closing, the Shareholder will
grant to Osicom and the Corporations the right to use the name "Cray
Communications" as a corporate name until September 30, 1996 and on products
already so labeled as of the Closing Date until December 31, 1996.
2.04. CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS.
Simultaneously with the execution of this Agreement, the Shareholder will enter
into an agreement, which will be effective on the Closing Date, with the
Corporations and Osicom not to use or disclose any confidential information
relating to the Corporations or their business and not to compete with the
Corporations in their direct and indirect manufacturing business in the United
States, for a period of thirty-six (36) months following the Closing Date. Such
agreement will be in form and substance as set forth on Exhibit 2.04 and is
hereafter referred to as the "CNC Agreement."
2.05. BOARD OF DIRECTORS. On the Closing Date, all of the
directors of each Corporation will resign from its respective Board of
Directors.
2.06. ACQUISITION OF STOCK. Reilrop represents and warrants that
the Series D Preferred Stock and Osicom Common Stock (collectively, the "Osicom
Stock") to be acquired by it pursuant to the terms of this Agreement is being
acquired for its own account, with no intention of assigning any participation
or interest therein, and without a view to the distribution of any portion
thereof, except in accordance with the Securities Act of 1933, as amended (the
"Act"). Reilrop will not sell, assign, transfer or encumber any of such shares
unless (i) a registration statement under the Act with respect thereto is in
effect and the prospectus included therein meets the requirements of Section 10
of the Act, or (ii) a no-action letter is obtained from the staff of the
Commission in respect of such proposed sale, assignment, transfer or
encumbering, or (iii) Osicom has received a written opinion of counsel
reasonably satisfactory to Osicom that, after an investigation of the relevant
facts, such counsel is of the opinion that such proposed sale, assignment,
transfer or encumbering does not require registration under the Act.
Reilrop understands that the Osicom Stock is not being registered
under the Act and must be held indefinitely unless it is subsequently registered
thereunder or an exemption from such registration is available. Reilrop
understands that, except as otherwise provided in this Agreement, the Osicom
Stock is not being registered under the Act in part on the grounds that the
issuance thereof is exempt under Section 4(2) of the Act as a transaction by an
issuer not involving any public offering; that Osicom's reliance on such
exemption is predicated in part on the foregoing representation and warranty of
Reilrop and that in the view of the Securities and Commission (the
"Commission"), the statutory basis for the exemption claimed would not be
present if, notwithstanding such representation and warranty, Reilrop
contemplates acquiring any of the Osicom Stock for sale upon the occurrence or
non-occurrence of some predetermined event.
2.07. RESTRICTIVE LEGEND. Reilrop understands that Osicom will
have an appropriate stop order placed on its records indicating the existence of
the terms of this Agreement, and that the certificates representing the Osicom
Stock shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE SOLD,
TRANSFERRED OR
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ENCUMBERED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A NO-ACTION LETTER FROM THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION OR PURSUANT TO AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
UNNECESSARY."
2.08. RECEIPT OF INFORMATION. Reilrop, by delivering the Shares
at the Closing pursuant to Section 8.02 of this Agreement, shall be deemed
without further action of any kind to have acknowledged receipt of all
information requested by the Shareholder.
2.09. ACCREDITED INVESTOR STATUS. Reilrop represents and warrants
to Osicom that he is an accredited investor, as defined in Regulation D
promulgated by the Commission under the Act ("Regulation D").
2.10. ACQUISITION OF THE SHARES. Osicom represents and warrants
that the Shares to be acquired by it pursuant to the terms of this Agreement is
being acquired for its own account, with no intention of assigning any
participation or interest therein, and without a view to the distribution of any
portion thereof, except in accordance with the Act. Osicom will not sell,
assign, transfer or encumber any of such shares unless (i) a registration
statement under the Act with respect thereto is in effect and the prospectus
included therein meets the requirements of Section 10 of the Act, or (ii) a
no-action letter is obtained from the staff of the Commission in respect of such
proposed sale, assignment, transfer or encumbering, or (iii) the Corporation has
received a written opinion of counsel reasonably satisfactory to the Corporation
that, after an investigation of the relevant facts, such counsel is of the
opinion that such proposed sale, assignment, transfer or encumbering does not
require registration under the Act.
Osicom understands that the Shares are not being registered under
the Act and must be held indefinitely unless it is subsequently registered
thereunder or an exemption from such registration is available. Osicom
understands that, except as otherwise provided in this Agreement, the Shares are
not being registered under the Act in part on the grounds that the issuance
thereof is exempt under the Act; that the Shareholder's reliance on such
exemption is predicated in part on the foregoing representation and warranty of
the Shareholder and that in the view of the Commission, the statutory basis for
the exemption claimed would not be present if, notwithstanding such
representation and warranty, Osicom contemplates acquiring any of the Shares for
sale upon the occurrence or non-occurrence of some predetermined event.
2.11. RESTRICTIVE LEGEND. Osicom understands that the Shares will
have an appropriate stop order placed on its records indicating the existence of
the terms of this Agreement, and that the certificates representing the Shares
shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE SOLD,
TRANSFERRED OR ENCUMBERED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A NO-ACTION LETTER
FROM THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION OR PURSUANT TO AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
UNNECESSARY."
2.12. REGISTRATION OBLIGATION. Osicom agrees to file a
registration statement with the Commission within one hundred twenty (120)
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days following the Closing Date and to use its best efforts to cause such
registration statement to become effective under the Act with respect to the
shares of Osicom Stock to be issued upon conversion of the Osicom Preferred
Stock (the "Underlying Stock") and keep such registration statement effective
and to take such other action as Shareholder may reasonably request in
connection with such registration so as to cause the sale by the Shareholder of
the Underlying Stock to be in compliance with applicable securities laws.
Notwithstanding the foregoing, at any time that the Shareholder owns either the
Preferred Stock or the Underlying Stock, Osicom shall have the right to pay
$3,000,000 to the Shareholder in cash in redemption of the Preferred Stock or to
arrange a private sale of the Preferred Stock at any time following its issuance
for a price equal to $3,000,000.
2.13. INCOME TAXES. The Shareholder, at its expense, will prepare
or cause to be prepared and file all required federal and state income tax
returns for the Corporations through and including the period ending June 30,
1996. Certain advisors of Osicom will assist in the preparation of such returns,
for which the Shareholder will reimburse Osicom at the rate of $100 per hour.
The Shareholder will pay all taxes due with respect to such periods. Such
returns and payments will be made within the time periods provided by law, after
giving effect to any permissible extensions of time to file such returns or pay
such taxes. At the Closing, the Osicom Preferred Stock to be issued to the
Shareholder pursuant to Section 1.02(b) will be placed in escrow with an escrow
agent and pursuant to an escrow agreement satisfactory to Osicom and the
Shareholder in order to secure the performance of the foregoing obligations, the
payment of any taxes referred to above, and the Shareholder's indemnification,
pursuant to Section 9.02 of this Agreement with respect to certain pending
examinations of the Corporations' federal income tax returns by the United
States Internal Revenue Service, which examinations are referred to on the
Disclosure Letter (as defined below) (collectively, the "Tax Liabilities") and
to secure the Shareholder's indemnification obligations under Section 9.05 of
this Agreement. Shares of Osicom Preferred Stock having a market value on the
Closing Date of $2,500,000 will be released from escrow upon the Shareholder's
settlement of all Tax Liabilities. The balance of the shares of Osicom Preferred
Stock held in escrow will be released to the Shareholder upon final settlement
of all liabilities with respect to the Pension Plan pursuant to Section 9.05 of
this Agreement. To the extent that the Tax Liabilities have not been resolved
prior to the first anniversary of the Closing Date, Osicom shall have the right,
but not the obligation, to negotiate a settlement of the Tax Liabilities with
the Internal Revenue Service, subject to the Shareholder's approval, not to be
unreasonably withheld or delayed, and withdraw from the aforesaid escrow account
an amount sufficient to satisfy such settlement. Notwithstanding any
registration of the Underlying Stock, the Shareholder shall have no right to
sell, or cause to be sold, the Osicom Preferred Stock or the Underlying Stock in
such escrow for so long as such stock remains in escrow.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder makes the following representations and
warranties to Osicom. Osicom, in executing, delivering and consummating this
Agreement, has relied and will rely upon the correctness and completeness of
each of such representations and warranties:
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3.01. VALID CORPORATE EXISTENCE; QUALIFICATION. Each Corporation
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each Corporation has the corporate power to carry
on its business as now conducted and to own its assets. Each Corporation is duly
qualified to conduct business and is in good standing as a foreign corporation
in those jurisdictions set forth in a disclosure letter from the Shareholder to
Osicom delivered simultaneously with the execution and delivery of this
Agreement, as supplemented prior to Closing (the "Disclosure Letter"), which are
the only jurisdictions in which each such Corporation is required to qualify in
order to own its assets or properties or to carry on its business as now
conducted (except for such jurisdictions where the failure to so qualify would
not have a material adverse effect on such Corporation), and there has not been
any claim by any other jurisdiction to the effect that any Corporation is
required to qualify or otherwise be authorized to do business as a foreign
corporation therein (except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on such Corporation). The
copies of the Corporation's Certificate of Incorporation (certified by the
Secretary of State of Delaware) and By-Laws (certified by the Corporation's
secretary), as amended to date, which will be delivered to Osicom, prior to the
Closing Date and will be true and complete copies of those documents as now in
effect. The minute books of each Corporation contain accurate records of all
material meetings of its Board of Directors, Executive Committee of the Board,
if any, and shareholders since its incorporation, and accurately reflect all
transactions authorized therein in all material respects.
3.02. CAPITALIZATION. The authorized capital stock of CEH
consists of 1,000 shares of Common Stock, without par value, of which 1,000
shares are issued and outstanding. All of such issued shares of Common Stock are
duly authorized and validly issued and outstanding, fully paid and
nonassessable. There are no subscriptions, options, warrants, rights or calls or
other commitments or agreements to which any Corporation or the Shareholder is a
party or by which any of such persons is bound, calling for the issuance,
transfer, sale or other disposition of any class of securities of CEH. There are
no outstanding securities of CEH convertible or exchangeable, actually or
contingently, into shares of Common Stock or any other securities of CEH.
3.03. SUBSIDIARIES. Other than Autofile, there are no
corporations, partnerships or other business entities controlled by any
Corporation, except that CEH owns all of the outstanding shares of capital stock
of B&T and that B&T owns all of the outstanding shares of capital stock of Cray.
As used herein, "controlled by" means (i) the ownership of not less than 50% of
the voting securities or other interests of a corporation, partnership or other
business entity, or (ii) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a corporation,
partnership or other business entity, whether through the ownership of voting
shares, by contract or otherwise. None of the Corporations has made any
investments in, nor does it own, any of the capital stock of, or any other
proprietary interest in, any other corporation, partnership or other business
entity.
3.04. CONSENTS. The Disclosure Letter lists all requisite
consents of governmental and other regulatory agencies, foreign or domestic, and
of other parties required to be received by or on the part of any Corporation
or the Shareholder to enable the Shareholder to enter into and carry out this
Agreement.
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3.05. BINDING NATURE OF AGREEMENT; TITLE TO SHARES. This
Agreement constitutes each Shareholder's valid and binding obligation and is
enforceable in accordance with its terms. Reilrop is, and at the Closing will
be, the sole record and beneficial owner of the Shares, free and clear of all
manner of liens, charges, encumbrances, and claims. Reilrop at the Closing will
have good and marketable title to the Shares and at the Closing will have the
absolute and unqualified right to sell, transfer and deliver the Shares to
Osicom. The delivery of the Shares to Osicom at the Closing pursuant to the
provisions of this Agreement will transfer valid title thereto, free and clear
of all manner of liens, charges, encumbrances and claims.
3.06. FINANCIAL STATEMENTS. (a) The books of account of the
Corporations fairly reflect their consolidated income, expenses, assets and
liabilities in all material respects. The audited consolidated financial
statements of the Corporations for the years ended April 30, 1995 and April 30,
1996 and the unaudited consolidated financial statements for the two (2) months
ended June 30, 1996, previously delivered to Osicom, fairly present the
financial position of the Corporations as of the said dates and the consolidated
results of their operations for such fiscal years and period and, except as set
forth therein, were prepared in conformity with United States generally accepted
accounting principles consistently applied throughout the periods covered
thereby ("GAAP") (except, in the case of consolidated financial statements for
the two months ended June 30, 1996, for year-end audit adjustments). The
consolidated financial statements as of and for the period ending June 30, 1996
will be audited by Weinbaum & Yalamanchi, independent certified public
accountants, pursuant to GAAP, at the Shareholder's expense (not to exceed
$45,000) prior to the Closing Date and will reflect no material change in net
worth from the unaudited consolidated financial statements attached as Exhibit
3.06 (the "Closing Balance Sheet") and shall deliver the Closing Balance Sheet
to Shareholder upon receipt thereof. The representation and warranty regarding
the June 30, 1996 consolidated financial statements shall not survive the
Closing.
(b) In the event that the aforesaid audit results in a decrease
in net worth of 10% or more as compared to the unaudited financial statements as
of June 30, 1996, the Shareholder shall have the right to have such audit
reviewed by Arthur Andersen & Co., LLP or such other accounting firm as the
Shareholder shall select. In connection with such audit, the Shareholder and its
accountants may make inquiry and review the workpapers of the representatives
of Osicom's accountants and Osicom. If there is a dispute between the parties
relating to the Closing Balance Sheet which cannot be resolved by them within
twenty (20) days after Shareholder's receipt of the Closing Balance Sheet, then
at the written request of either party (the "Auditor Request"), the dispute
shall be referred to a third auditor mutually agreeable to Osicom and the
Shareholder (the "Dispute Auditor"). The decision of the Dispute Auditor shall
be final and binding on both parties. The parties agree that they will require
the Disputes Auditor to render its decision within fifteen (15) days after
referral of the dispute to the Disputes Auditor for decision pursuant hereto.
(c) Before referring a matter to the Disputes Auditor, the
parties shall agree on procedures to be followed by the Disputes Auditor
(including procedures for presentation of evidence). If the parties are unable
to agree upon procedures before the end of fifteen (15) days after receipt of
the Auditor Request, the Disputes Auditor shall establish procedures giving due
regard to the intention of the parties to resolve disputes as quickly,
efficiently and inexpensively as possible. The Disputes Auditor's procedures may
be, but need not be, those proposed by either party. The parties shall, as
promptly as practicable, submit evidence in accordance
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with the procedures agreed upon or established by the Disputes Auditor, and the
Disputes Auditor shall decide the dispute in accordance therewith as promptly as
practicable. The fee of the Dispute Auditor for, and relating to, the making of
any such decision shall be borne by the parties equally.
(d) The Closing Balance Sheet shall become final and binding on
both parties upon the earliest of (i) if no Auditor Request has been given prior
to the expiration of the twenty (20) day period within which the Shareholder may
notify Osicom of any objections to the Closing Balance Sheet, (ii) agreement by
the Shareholder and Osicom that such Closing Balance Sheet, together with any
modifications thereto agreed by the Shareholder and Osicom, shall be final and
binding, and (iii) the date on which the Disputes Auditor shall issue its
decision with respect to any dispute relating to such Closing Balance Sheet. The
Closing Balance Sheet, as adjusted pursuant to any agreement between the parties
or pursuant to the decision of the Disputes Auditor, when final and binding on
both parties, is herein referred to as the "Final Closing Statement".
(e) If the Final Closing Statement reflects a decrease in net
worth by ten percent (10%) or less from the unaudited financial statements
attached as Exhibit 3.06 then the difference shall be deemed to be not material
and there shall be no adjustment in the purchase price.
(f) If net worth decreases by more than 10% but less than 15%,
the portion of the purchase price payable pursuant to clause (ii) of Section
1.02(a) of this Agreement will be reduced by the amount by which net worth
decreases above 10%. If net worth decreases by more than 15% but less than 20%,
then the purchase price payable pursuant to clause (ii) of Section 1.02(a) will
be reduced by the amount by which net worth decreases between 10% and 15%, and
the amount of the purchase price payable pursuant to clause (i) of Section
1.02(a) will be reduced by the amount by which net worth decreases above 15%. In
the event that the decrease in net worth is 20% or more, Osicom shall have no
obligation to consummate the transactions contemplated under this Agreement.
3.07. LIABILITIES. Except as set forth in the Disclosure Letter,
as at June 30, 1996, (the "Balance Sheet Date"), the Corporations had no
material debts, liabilities or obligations required by GAAP to be disclosed on
its financial statements, other than those debts, liabilities and obligations
reflected or reserved against on the Corporations' Consolidated Balance Sheet
and the notes thereto at the Balance Sheet Date (the "Balance Sheet") or arising
after the Balance Sheet Date in the ordinary course of the Corporations'
business.
3.08. ACTION SINCE BALANCE SHEET DATE. Except as otherwise
expressly provided or set forth in, or required by, this Agreement or as set
forth in the Disclosure Letter, since the Balance Sheet Date, none of the
Corporations has as of the date of this Agreement: (i) issued or sold, or agreed
to issue or sell any of its capital stock, options, warrants, rights or calls to
purchase such stock, any securities convertible or exchangeable into such
capital stock or other corporate securities, or effected any subdivision or
other recapitalization affecting its capital stock; (ii) discharged or satisfied
any lien or encumbrance, except in the ordinary and usual course of business, or
paid or satisfied any liability, absolute or contingent, other than liabilities
as of the Balance Sheet Date and current liabilities incurred since the Balance
Sheet Date in the ordinary and usual course of business; (iii) made any wage or
salary increases of more than 5% or granted any bonuses in excess of $5,000
other than wage and salary increases and bonuses granted in accordance with its
normal salary increase and bonus policies; (iv)
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mortgaged, pledged or subjected to any lien or other encumbrance any of its
properties or assets, or permitted any of its property or assets to be subjected
to any lien or other encumbrance, except in the ordinary and usual course of
business; (v) sold, assigned or transferred any of its material properties or
assets, except in the ordinary and usual course of business; (vi) entered into
any material transaction except in the ordinary course of its business; (vii)
waived any rights of material value, or cancelled, modified or waived any
indebtedness for borrowed money held by it, except in the ordinary and usual
course of business; (viii) declared, paid or set aside any dividends or other
distributions or payments on its capital stock, or redeemed or repurchased, or
agreed to redeem or repurchase, any shares of its capital stock; (ix) made any
loans or advances to any person, or assumed, guaranteed, endorsed or otherwise
became responsible for the obligations of any person; (x) incurred any
indebtedness for borrowed money (except for borrowings under its revolving
credit facilities and for endorsement, for collection or deposit of negotiable
instruments received in the ordinary and usual course of business), or (xi) made
any payments to the Shareholder or its affiliates other than payments consistent
and commensurate with the Corporation's past practices.
3.09. ADVERSE DEVELOPMENTS. Except as otherwise expressly
provided or set forth in, or required by, this Agreement, since the Balance
Sheet Date, to the actual knowledge of the Shareholder after reasonable inquiry,
there have been no changes in the properties, operations or financial condition
of the Corporation, and no event has occurred other than in the ordinary and
usual course of business which could be reasonably expected to have a materially
adverse effect upon the business of the Corporation.
3.10. TAXES. The Shareholder has delivered to Osicom true and
complete copies of the Federal income tax returns on Form 1120 of the
Corporations as filed with the Internal Revenue Service for the fiscal year
ended April, 1995. Except as set forth in the Disclosure Letter, each of such
returns was prepared in conformity with information contained in the books and
records of the Corporations in all material respects and contains no untrue
statement of a material fact or omits to state any fact required to make any
such return correct and complete in all material respects. All taxes, including,
without limitation, income, property, sales, use, franchise, capital stock,
excise, added value, employees' income withholding, social security and
unemployment taxes imposed by the United States, any state or any foreign
country, or by any other taxing authority, which have or may have become due or
payable by the Corporations and all interest and penalties thereon, whether
disputed or not, have been paid in full or adequately provided for by reserves
shown in its books of account; all deposits required by law to be made by the
Corporations with respect to estimated income, franchise and employees'
withholding taxes have been duly made; and all tax returns, including estimated
tax returns, required to be filed have been duly filed. No extension of time for
the assessment of deficiencies for any year is in effect. No deficiency is
proposed or, to the knowledge of the Shareholder, threatened against the
Corporation, except as listed on the Disclosure Letter. The Disclosure Letter
sets forth a list of those states in which income, franchise or sales and use
tax returns were filed by the Corporation for the fiscal years ended April 30,
1996 and April 30, 1995, respectively.
Osicom shall promptly notify the Shareholder in writing upon
receipt by Osicom or any affiliate of notice of any tax audit or assessment
relating to any Corporation for any pre-closing period ending on or before the
Closing Date. The Shareholder shall have the sole right to represent such
Corporation's interests in any such audit or assessment or any related
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<PAGE> 15
administrative or court proceeding, and Osicom shall provide the Shareholder
with such cooperation and information as the Shareholder reasonably requests.
Osicom and its affiliates shall not, without the Shareholder's prior written
consent, settle any such tax dispute, file any amended tax return or claim for
tax refund with respect to the Corporations for any pre-closing period.
3.11. OWNERSHIP OF ASSETS. Except as set forth in the Disclosure
Letter, each Corporation owns outright, and has good and valid title to all of
its assets, properties and business (including all assets reflected in the
Balance Sheet, except as the same may have been disposed of since the Balance
Sheet Date), free and clear of all liens, mortgages, pledges, conditional sales
agreements, restrictions on transfer or other encumbrances or charges
(collectively, the "Encumbrances") except for Encumbrances arising by operation
of law other than by grant of a Corporation (for example, tax liens and
mechanics liens) in the ordinary course of the Corporation's business for
liabilities reflected in the Balance Sheet and not more than $25,000 in the
aggregate and accept for Encumbrances that do not and will not materially
interfere with the present use by such Corporation of the property subject
thereto or affected thereby, Encumbrances for taxes, assessments or governmen-
tal charges, or landlord's, mechanic's, workmen's, materialmen's or similar
liens, in each case that are not delinquent or which are being contested in good
faith, encumbrances of record, encumbrances that are reflected in any title
reports or surveys delivered or otherwise made available to Osicom in connection
with the transactions contemplated hereby and encumbrances which do not and will
not in the aggregate have a material adverse effect on the Corporations
("Permitted Encumbrances"). The Disclosure Letter sets forth a true and complete
list and brief description of all registered patents, copyrights, trademarks,
trade names and other similar intangible assets which are either owned by any
Corporation or in which any of them has an interest. Except as set forth in the
Disclosure Letter, no other person, firm or corporation has any proprietary or
other interest in any such intangible assets. Such assets so owned or leased
are, in the reasonable business judgment of the Shareholder, sufficient to
permit the Corporations to conduct their business as now conducted in all
material respects. Except as set forth in the Disclosure Letter, none of the
Corporations is a party to or bound by any license or agreement requiring the
payment to any person, firm or corporation of any royalty. The Shareholder does
not know of any violation by others of the trademark, trade name or patent
rights of the Corporations. To the best knowledge of the Shareholder, the
Corporations are not infringing upon any patent, copyright, trade name or
trademark or otherwise is violating the rights of any third party with respect
thereto, and no proceedings have been instituted or, to the knowledge of the
Shareholder, are threatened, and no claim has been received by the Corporations
or the Shareholder alleging any such violation.
3.12. INSURANCE. The Disclosure Letter sets forth a list and
brief description of all policies of fire, liability and other forms of
insurance held by the Corporations as of the date hereof. Except as set forth in
the Disclosure Letter, the premiums have been paid currently for such policies
and neither the Corporations nor the Shareholder has received notice of
cancellation of any such policy.
3.13. LITIGATION, COMPLIANCE WITH LAW. Except as set forth in the
Disclosure Letter, there are no actions, suits, proceedings or governmental
investigations relating to the Corporations or to any of their properties,
assets or businesses pending or, to the knowledge of the Shareholder, threat-
ened, or any order, injunction, award or decree outstanding against the
Corporations or against or relating to any of its properties, assets or
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<PAGE> 16
businesses. Except as set forth in the Disclosure Letter, to the best knowledge
of the Shareholder, the Corporations are not in violation of any law,
regulation, ordinance, order, injunction, decree, award or other requirement of
any governmental body, court or arbitrator relating to their properties, assets
or business which violation could have a material adverse effect on the
Corporation.
3.14. REAL PROPERTY. The Disclosure Letter sets forth a brief
description of all real property which is owned by, or leased to the
Corporation. The Corporation owns outright the fee simple title in and to the
real properties shown in the Disclosure Letter as being owned by it, free and
clear of all claims, liens, mortgages, charges, or encumbrances of any nature
whatsoever, except as otherwise described in the Disclosure Letter and except
for Permitted Encumbrances. Neither the Corporations nor the Shareholder had
received any notice that the real property leases described in the Disclosure
Letter that relate to the leased properties described therein has been breached.
All material amounts due and payable under such leases have been paid. To the
knowledge of the Shareholder, all uses of such owned or leased property by the
Corporations conform, in all material respects, to all applicable building and
zoning ordinances, laws, and regulations and, in the case of leased property, to
all material terms of the leases relating thereto.
3.15. AGREEMENTS AND OBLIGATIONS; PERFORMANCE. Except as listed
and briefly described in the Disclosure Letter (the "Listed Agreements"), none
of the Corporations, as of the date hereof, is a party to, or bound by any
written: (i) agreement or other contractual commitment, understanding or
obligation which involves aggregate payments or receipts in excess of $25,000;
(ii) contract, arrangement, commitment or understanding which involves aggregate
payments or receipts in excess of $25,000 that cannot be canceled on ninety
(90) days or less notice without penalty or premium or any continuing obligation
or liability; (iii) contractual obligation or contractual liability of any kind
to the Shareholder, its subsidiaries or affiliates; (iv) contract, arrangement,
commitment or understanding with its customers or any officer, employee,
shareholder, director, representative or agent thereof for the repurchase of
products, sharing of fees, the rebating of charges to such customers, bribes,
kickbacks from such customers or other similar arrangements; (v) contract
requiring payments in excess of $25,000 for the purchase or sale of any
materials, products or supplies which contain, or which commits or will commit
it for a fixed term; (vi) contract of employment with any officer or employee
not terminable at will without penalty or premium or any continuing obligation
of liability; (vii) deferred compensation, bonus or incentive plan or agreement
not cancelable at will without penalty or premium or any continuing obligation
or liability; (viii) management or consulting agreement not terminable at will
without penalty or premium or any continuing obligation or liability; (ix) lease
for real or personal property (including borrowings thereon), license or royalty
agreement in any case requiring payments in excess of $25,000; (x) union or
other collective bargaining agreement; (xi) agreement, commitment or
understanding relating to the indebtedness for borrowed money; (xii) contract
involving aggregate payments or receipts of $25,000 or more which, by its terms,
requires the consent of any party thereto to the consummation of the
transactions contemplated hereby; (xiii) contract containing covenants limiting
the freedom of any Corporation to engage or compete in any line or business or
with any person in any geographical area; (xiv) contract relating to the
acquisition or sale of any business; and (xv) voting trust agreement or similar
shareholders' agreement. Except as set forth in the Disclosure Letter, the
Corporations have not during the last 36 months entered into any of the types of
contracts, arrangements, commitments or understandings with any of its suppliers
or customers referred to in clause (iv) of this Section 3.15. A true and correct
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copy in all material respects of each of the written Listed Agreements has been
delivered or made available to Osicom. The Corporations have in all material
respects performed all obligations required to be performed by them to date
under all of the Listed Agreements, are not in default in any material respect
under any of the Listed Agreements and have received no notice of any material
default or alleged material default thereunder which has not heretofore been
cured or which notice has not heretofore been withdrawn. The Shareholder knows
of no material default under any of the Listed Agreements by any other party
thereto or by any other person, firm or corporation bound thereunder.
3.16. CONDITION OF ASSETS. The inventories of the Corporations are
accurately reflected on the Corporations' financial statements in all material
respects in accordance with GAAP.
3.17. ACCOUNTS RECEIVABLE. Except as set forth in the Disclosure
Letter, all of the accounts receivable are reflected in the books of account of
the Corporations in accordance with GAAP and arose in the ordinary course of its
business from the sale of services or goods.
3.18. PERMITS AND LICENSES. The Disclosure Letter sets forth all
material permits, licenses, orders, franchises and approvals from all federal,
state, local and foreign governmental regulatory bodies held by the
Corporations. To the best knowledge of the Shareholder, the Corporations have
all material permits, licenses, orders and approvals of all federal, state,
local and foreign governmental or regulatory bodies required of them to carry on
their business as presently conducted in all material respects; all such
permits, licenses, orders, franchises and approvals (collectively, the
"Permits") are in full force and effect, and to the knowledge of the Share-
holder, no suspension or cancellation or any of the Permits is threatened; and
the Corporations are, to the best knowledge of the Shareholder, in compliance in
all material respects with all requirements, standards and procedures of the
federal, state, local and foreign governmental bodies which have issued the
Permits. The Disclosure Letter also sets forth a brief description of all vans,
automobiles, trucks or other vehicles owned or leased by the Corporation and the
state of title thereof.
3.19. BANKING ARRANGEMENTS. The Disclosure Letter sets forth the
name of each bank in or with which any of the Corporations has an account,
credit line or safety deposit box, and a brief description of each such account,
credit line or safety deposit box including the names of all persons currently
authorized to draw thereon or having access thereto, and the names of all
persons, if any, now holding powers of attorney from any of the Corporations and
a summary statement of the terms thereof.
3.20. INTEREST IN ASSETS. Except as set forth in the Disclosure
Letter and the assets referred to in Section 1.04, neither the Shareholder nor
any subsidiary, affiliate, officer, director or holder of 5% or more of the
outstanding common stock of the Shareholder, owns any property or rights,
tangible or intangible, including without limitation technology and intellectual
property rights, used in or related, directly or indirectly, to the business of
the Corporations.
3.21. SALARY INFORMATION. The Disclosure Letter contains a list of
the names and current salary rates of and bonus commitments to all present
officers and directors of the Corporations, and the names and current annual
salary rates of all other persons employed by the Corporations whose annual
salaries exceed $40,000.00.
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3.22. EMPLOYEE BENEFIT PLANS. The Disclosure Letter includes a list
of all of the "pension" and "welfare" benefit plans (within the respective
meanings of sections 3(2) and 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) maintained by the Corporations or to which
they make employer contributions with respect to their employees, a materially
complete and correct copy of each of which has been delivered to Osicom. There
are no vested and unfunded benefits under any such plans.
3.22.1. All of the pension and profit sharing plans maintained by
the Corporations (herein collectively referred to as the "Pension Plans") are
listed in the Disclosure Letter. Each of the Pension Plans has received a
favorable determination letter as to its qualification under section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code") (including, but not
limited to, amendments made by ERISA), nothing has occurred with respect to any
such Pension Plan which would cause the loss of such qualification, and the
Corporation has delivered to Osicom true and correct copies of all such
determination letters.
3.22.2. All of the pension plans not maintained by the Corporations
but to which they make employer contributions with respect to its employees
(herein collectively referred to as the "Other Pension Plans"), are listed in
the Disclosure Letter. Each of the Other Pension Plans is a multi-employer plan
(within the meaning of section 3(37) of ERISA), but the Corporations are not
substantial employers (within the meaning of section 4001(a)(2) of ERISA) with
respect to any of the Other Pension Plans.
3.22.3. All contributions required by law or required under the
Pension Plans with respect to plan years ended prior to the Closing Date shall
have been made on or prior to the Closing Date by the Corporations. With regard
to the current plan year of each of the Other Pension Plans, all contributions
required to meet the employer contribution obligations of the Corporations,
under Section 412 of the Code, Part 3 of Title I(B) of ERISA, such other Pension
Plan or any applicable collective bargaining agreement, with respect to that
portion of the current plan year ending on the Closing Date, shall have been
made on or prior to the Closing Date by the Corporations.
3.22.4. No Pension Plan or related trust has terminated, and no
"reportable event" (within the meaning of section 4043(b) of ERISA) has occurred
with respect to either any of the Pension Plans or the participation of the
Corporations in any of the Other Pension Plans, other than the transactions
contemplated by this Agreement, since the effective date of ERISA.
3.22.5. None of the Pension Plans which are subject to provisions of
Section 412 of the Code or Part 3 of Title I(B) of ERISA or their related trusts
has incurred any "accumulated funding deficiency" (within the meanings of
Section 412(a) of the Code and section 302 of ERISA) since the effective date of
ERISA.
3.22.6. The Corporations have not incurred any liability (except for
required premium payments, which premium payments have been made for plan years
ended prior to the Closing Date, to the Pension Benefit Guaranty Corporation)
with respect to the Pension Plans.
3.22.7. All of the welfare plans maintained by the Corporations
or to which they make employer contributions with respect to its employees
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<PAGE> 19
(herein collectively referred to as the "Welfare Plans") are listed in the
Disclosure Letter. There are no actions, suits or claims, pending or, to the
Shareholder's knowledge, threatened against any of the Pension Plans, or (with
respect to the participation of the Corporation therein) against any of the
Other Pension or Welfare Plans, or against the Corporation with respect to any
thereof.
3.22.8. The Corporations have satisfied in all material respects all
reporting and disclosure requirements applicable to them under ERISA, and the
Department of Labor and Internal Revenue Service regulations promulgated
thereunder, with respect to all of the Pension and Welfare Plans, and the
Corporations will deliver to Osicom prior to the Closing Date true and complete
copies of the most recently filed and disclosed Forms 5500 and 5500-C (with
exhibits), and summary plan description for the Pension and Welfare Plans.
3.22.9. None of the Pension and Welfare Plans or any of their
related trusts, nor the Corporations or any trustee, administrator or other
"party in interest" or "disqualified person" (within the meaning of section
3(14) of ERISA or section 4975(e)(2) of the Code, respectively) with respect to
the Plans, has engaged in any "prohibited transaction" (within the meaning of
section 408 of ERISA or section 4975(c)(23) or (d) of the Code), with respect to
the participation of the Corporations therein, which could subject any of the
Pension or Welfare Plans or related trusts, or any trustee, administrator or
other fiduciary of the Plan, or the Corporations or Osicom, or any other party
dealing with the Plans, to material penalties or excise taxes under section
502(i) of ERISA or section 4975 of the Code.
3.22.10. The Trustees of each of the Pension Plans have completed
their required annual accountings for the plan years ended December 31, 1995,
such accountings accurately reflect the financial positions of the Pension Plans
as at such date, and true and complete copies of the Trustees' reports or
schedules of such accountings have been delivered to Osicom.
3.22.11. The representations and warranties set forth in this
Section 3.22 are qualified by the disclosures in the Disclosure Letter.
3.23. NO BREACH. Neither the execution and delivery of this
Agreement nor compliance by the Corporations and the Shareholder with any of the
provisions hereof nor the consummation of the transactions contemplated hereby,
will:
(a) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of any Corporation;
(b) violate or, alone or with notice of the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a material default under,
the terms of any agreement or other document or undertaking to which any
Corporation or the Shareholder is a party or by which any of them or any of
their respective properties or assets may be bound (except for such violations,
conflicts, breaches or defaults as to which required waivers or consents by
other parties have been, or will, prior to the Closing, be, obtained or which
will not have a material adverse effect on any Corporation);
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Corporations
pursuant to the terms of any such agreement or instrument;
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(d) violate any judgment, order, injunction, decree or award
against, or binding upon, any of the Corporations or the Shareholder or upon
their respective properties or assets; or
(e) violate any law or regulation of any jurisdiction relating
to the Corporations or any of their securities, assets or properties, the
violation of which would have a material adverse effect on the Corporations or
the Shareholder.
3.24. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly with Osicom by
the Corporations and the Shareholder without the intervention of any broker,
finder, investment banker or other third party except for Garofalo & Associates,
Inc., to be paid by the Shareholder. Neither the Corporations nor the
Shareholder has engaged, consented to, or authorized any other broker, finder,
investment banker or other third party to act on his or its behalf, directly or
indirectly, as a broker or finder in connection with the transaction
contemplated by this Agreement.
3.25. LABOR DISCUSSIONS. Except with respect to the agreements in
the Disclosure Letter, the Corporations are not, and during the past three years
has not been, involved in any labor discussions with any unit or group seeking
to become the bargaining unit for any of its employees. With respect to said
agreements, the Disclosure Letter sets forth a description of the status
thereof, including any demands or proposals with respect to the renewal,
extension or replacement thereof.
3.26. CHANGE OF NAME. The Corporations have not conducted business
under any names other than their current corporate names during the past three
(3) years except those set forth in the Disclosure Letter.
3.27. BACKLOG. The Disclosure Letter sets forth as of July 31, 1996,
the name, and, with respect to the top forty (40) customers, revenues received
to date. However, the representation and warranty made by this Section 3.27 is
only represented and warranted to be accurate as to those orders in excess of
$25,000.
3.28. ENVIRONMENTAL. As used in this Agreement, the term "Hazardous
Materials" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which any Corporation conducts
business, or the United States Government, including, but not limited to, any
material or substance which is (i) defined as "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" under any provision of Maryland law, (ii) petroleum, (iii)
asbestos, (iv) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (v) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6901), or (vi) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C.
9601). Except as set forth in the Disclosure Letter, the current operations of
the Corporations comply and, to the best knowledge of the Shareholder, their
past use then complied in all material respects with all applicable laws and
governmental regulations including all applicable federal, state and local laws,
ordinances, and regulations pertained to air and water quality, Hazardous
Materials, waste, disposal or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid
Waste Disposal Act, the
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Resource Conservation Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, and the statutes, rules, regulations and
ordinances or the state, city and country in which the Corporation's property is
located.
3.29. KNOWLEDGE. As used in this Agreement, the term "knowledge" or
"best knowledge" or words of similar effect as they relate to the Shareholder
shall mean the actual knowledge of any of the corporate officers of the
Shareholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OSICOM
Osicom makes the following representations and warranties to the
Shareholder, and the Shareholder, in executing this Agreement, has relied and
will rely on the correctness and completeness of such representations and
warranties:
4.01. ORGANIZATION. Osicom is a corporation, duly organized, validly
existing and in good standing under the laws of the State of New Jersey, and has
the corporate power to carry on its business as now conducted and to own its
assets.
4.02. NO BREACH. The execution and delivery of this Agreement by
Osicom and the consummation of the transactions contemplated hereby will not
violate: (a) any provision of the Certificate of Incorporation or By-Laws of
Osicom, (b) violate any judgment, order, injunction, decree or award against, or
binding upon, Osicom or upon its properties or assets, or (c) violate or, alone
or with notice of the passage of time, result in the material breach or
termination of, or otherwise give any contracting party the right to terminate,
or declare a material default under, the terms of any agreement or other
document or undertaking to which Osicom is a party or by which any of its
properties or assets may be bound (except for such violations, conflicts,
breaches or defaults as to which required waivers or consents by other parties
have been, or will, prior to the Closing, be, obtained or which will not have a
material adverse effect on Osicom).
4.03. AUTHORITY FOR AND BINDING NATURE OF AGREEMENT. All corporate
and other proceedings required to be taken by or on behalf of Osicom including,
without limitation, all actions required to be taken by its Board of Directors,
to authorize Osicom to enter into and carry out this Agreement have been duly
and properly taken. This Agreement has been duly executed and delivered by
Osicom and is valid and binding upon Osicom in accordance with its terms and is
enforceable against Osicom in accordance with its terms.
4.04. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly with the
Corporations and the Shareholder by Osicom without the intervention of any
broker, finder, investment banker or other third party other than Garofalo &
Associates, Inc.. Osicom has not engaged, consented to, or authorized any
broker, finder, investment banker or third party to act on its behalf, directly
or indirectly, as a broker or finder in connection with the transactions
contemplated by this Agreement.
4.05. PUBLIC REPORTS. Osicom has filed with the Commission all
reports required to be filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such reports do not include any untrue statement
of a material fact or omit to state a material fact necessary in
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order to make the statements included in those reports, in light of the
circumstances in which they were made, not misleading in any material respect.
4.06. CAPITALIZATION. The authorized capital stock of Osicom
consists of 20,000,000 shares of Common Stock and 2,000,000 shares of Preferred
Stock, of which 3,056,174 shares of Common Stock and 3,800 shares of Preferred
Stock are outstanding as of the date of this Agreement. All of such issued
shares of Common Stock and Preferred Stock are duly authorized and validly
issued and outstanding, fully paid and nonassessable. Except as disclosed in
Osicom's reports filed with the Commission pursuant to the Exchange Act, (a)
there are no subscriptions, options, warrants, rights, calls or other
commitments or agreements to which Osicom is a party or by which it is bound,
calling for the issuance, sale or other disposition of any class of Osicom
stock, and (b) there are no outstanding securities of Osicom convertible or
exchangeable, actually or contingently, into shares of Osicom stock or other
Osicom securities.
4.07. OSICOM STOCK. The Osicom Stock to be issued under this
Agreement has been duly authorized and reserved for issuance and, when issued in
accordance with this Agreement, will be validly issued and outstanding, fully
paid and non-assessable. Osicom covenants to reserve a sufficient number of
shares of Osicom Common Stock as may from time to time be necessary for issuance
upon conversion of any outstanding Osicom Preferred Stock issued pursuant to
this Agreement.
4.08. REGISTRATION OBLIGATION. Osicom is not aware of any reason why
the Commission would refuse to register the underlying stock or any condition
that would prevent the registration statement with respect thereto from becoming
effective.
ARTICLE V
PRE-CLOSING COVENANTS
The Shareholder and Osicom, as the case may be, hereby covenant
that, from and after the date hereof, and until the Closing or earlier
termination of this Agreement:
5.01. ACCESS. The Corporations shall afford to the officers,
attorneys, accountants and other authorized representatives of Osicom full
access, during regular business hours and upon reasonable notice, to the books,
records, personnel and properties of the Corporations (including, without
limitation, the work papers prepared by the Corporations' auditors) so that
Osicom may have full opportunity to make such review, examination and
investigation as it may desire of their respective businesses and affairs. The
Shareholder will use its reasonable efforts to cause the Corporation's
employees, accountants and attorneys to cooperate fully with said review,
examination and investigation and to make full disclosure to Osicom of all facts
affecting their respective financial conditions and business operations.
5.02. CONDUCT OF BUSINESS. The Corporation shall conduct its
business only in the ordinary and usual course and make no material change in
any of their policies without the prior written consent of Osicom, which consent
shall not be unreasonably withheld.
5.03. INSURANCE. The Corporations shall maintain in force the
insurance policies listed in the Disclosure Letter to the extent commercially
reasonable, except to the extent that they may be replaced with equivalent
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policies at the same or lower rates approved by Osicom, which approval may not
unreasonably be denied.
5.04. LIABILITIES. The Corporations shall not incur any obligation
or liability required in accordance with GAAP to be set forth on the
Corporation's financial statements, absolute or contingent, except for those
incurred in the ordinary and usual course of its business; provided, that a
breach of this covenant will not constitute a breach of this Agreement entitling
Osicom to damages, but only to a right to terminate this Agreement nor shall it
prepay any obligation or liability other than: (i) the foregoing obligations and
liabilities, (ii) debts, liabilities, and obligations set forth in the Balance
Sheet; (iii) debts, liabilities and obligations arising after the Balance Sheet
Date in the ordinary course of their respective businesses; and (iv) debts,
liabilities and obligations under the contracts, agreements, past practices,
arrangements, relationships, documents and instruments listed, described or
contained in this Agreement or in the Disclosure Letter.
5.05. PRESERVATION OF BUSINESS. The Shareholder will use its
reasonable efforts consistent with this Agreement to preserve the Corporations'
business organization intact, to keep available the services of their present
officers, employees and consultants (except as Osicom may otherwise approve),
and to preserve their goodwill.
5.06. NO BREACH. Each of the Shareholder and Osicom will (i) use its
best efforts to assure that all of its representations and warranties contained
herein are true in all material respects of the Closing; (ii) not voluntarily
take any action or do anything which will cause a material breach of or default
respecting such covenants, representations or warranties; and (iii) promptly
notify the other of any event or fact which represents or is likely to cause
such a breach or default.
5.07. NO NEGOTIATIONS. Neither the Corporations nor any of their
officers or directors nor the Shareholder shall enter into or conduct
negotiations, or enter into any agreement or understanding, for the sale or
possible sale of any securities of the Corporation of the business or the assets
of the Corporation, with anyone other than Osicom unless the Closing shall not
have occurred by October 31, 1996.
5.08. HART-SCOTT-RODINO. Each party hereto shall cause, to the
extent required by applicable law, appropriate filings to be made as promptly as
practicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS TO OSICOM TO CLOSE
The obligation of Osicom to enter into and complete the Closing is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by Osicom (except
when the fulfillment of such condition is a requirement of law).
6.01. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Shareholder contained in this Agreement and in any exhibit,
certificate, or schedule delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as at the Closing Date, as if made at the Closing Date.
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<PAGE> 24
6.02. COVENANTS. The Shareholder shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it prior to or at the Closing.
6.03. NO ACTION. No action, suit, proceeding or investigation shall
have been instituted or threatened before a court or before or by a governmental
body or agency seeking to restrain or to prevent the carrying out of the
transactions contemplated hereby, the effect of which, if successful, could have
a material adverse effect on the Corporations or on the ability of any party
hereto to consummate the transactions contemplated hereby.
6.04. CONSENTS, LICENSES AND PERMITS. The applicable waiting
periods, including any extensions thereof, under any applicable law, statute,
regulation or rule, including but not limited to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended shall have expired or terminated, as
applicable, and the Corporations, the Shareholder and Osicom shall have each
obtained all consents, licenses and permits of third parties necessary for the
performance by each of them of all of their respective obligations under this
Agreement, and such other consents, if any, to prevent (i) agreements of the
Corporations from terminating, the termination of which, in the aggregate, would
have a material adverse effect on the business, financial condition or assets of
the Corporation, or (ii) any material indebtedness of the Corporation from
becoming due or being subject to becoming due with the passage of time or on
notice as a result of the performance of this Agreement, any other provisions of
this Agreement to the contrary notwithstanding. All such consents are listed in
the Disclosure Letter and are referred to as the "Required Consents."
6.05. CERTIFICATE. Osicom shall have received a certificate dated on
the Closing Date, signed by an officer of the Shareholder as to the satisfaction
of the conditions contained in Sections 6.01 and 6.02.
6.06. OPINION. Osicom shall have received the written opinion of
counsel to the Shareholder, dated the Closing Date, in form and substance
satisfactory to Osicom and its counsel, as to certain matters to be mutually
agreed upon.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE SHAREHOLDER TO CLOSE
The obligation of the Shareholder to enter into and complete the
Closing is subject to the fulfillment, prior to or on the Closing Date, of each
of the following conditions, any one or more of which may be waived by the
Shareholder (except when the fulfillment of such condition is a requirement of
law).
7.01. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Osicom contained in this Agreement and in any written statement,
schedule or other document delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as at the Closing Date, as if made at the Closing and as of the Closing
Date.
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7.02. COVENANTS. Osicom shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing.
7.03. NO ACTIONS. No action, suit, proceedings or investigation
shall have been instituted or threatened before a court or before or by a
governmental body or agency seeking to restrain or prevent the carrying out of
the transactions contemplated hereby, the effect of which, if successful, could
have a material adverse effect on the Corporations or on the ability of any
party hereto to consummate the transactions contemplated hereby.
7.04. CERTIFICATE. The Shareholder shall have received a certificate
of Osicom dated the Closing Date, signed by the Chairman, President or any Vice
President of Osicom as to the satisfaction of the conditions contained in
Sections 7.01 and 7.02.
7.05. CONSENTS. The applicable waiting periods, including any
extensions thereof, under any applicable law, statute, regulation or rule,
including but not limited to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended shall have expired or terminated, as applicable, and the
Shareholder, the Corporation and Osicom shall have each obtained all of the
Required Consents.
7.06. OPINION. The Shareholder shall have received the written
opinion of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel, dated the Closing
Date, in form and substance satisfactory to the Shareholder and its counsel, as
to certain matters to be mutually agreed upon.
ARTICLE VIII
CLOSING
8.01. LOCATION. The Closing provided for herein shall take place at
the office of Greenbaum, Rowe, Smith, Ravin & Davis, 99 Wood Avenue South,
Woodbridge, New Jersey within five (5) business days following satisfaction of
all conditions precedent or at such other time and place as may be mutually
agreed to by the parties hereto. Such date is referred to in this Agreement as
the "Closing Date."
8.02. ITEMS TO BE DELIVERED BY THE SHAREHOLDER. At the Closing, the
Shareholder will deliver or cause to be delivered to Osicom:
(a) Certificates representing the Shares in accordance with
Section 1.01 hereof, accompanied by all instruments and documents as in the
reasonable opinion of Osicom's counsel shall be necessary to effect the transfer
of the Shares, free and clear of all manner of liens, pledges, encumbrances,
charges and claims thereon;
(b) The Confidentiality and Non-Competition Agreement;
(c) The certificate required by Section 6.05;
(d) The opinion of the Shareholder's counsel as required by
Section 6.06;
(e) The resignations of each Corporation's directors; and
(f) The escrow agreement referred to in Section 2.13; and
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(g) Such other certified resolutions, documents and
certificates as are required to be delivered by the Corporation and the
Shareholder pursuant to the provisions of this Agreement.
8.03. ITEMS TO BE DELIVERED BY OSICOM. At the Closing, Osicom will
deliver or cause to be delivered to the Shareholders:
(a) The Purchase Price in accordance with Section 1.02 hereof,
including, without limitation, certificates representing the Osicom Preferred
Stock, accompanied by all instruments and documents as in the reasonable opinion
of Shareholder's counsel shall be necessary to effect the issuance of such
shares, free and clear of all manner of liens, pledges, encumbrances, charges
and claims thereon;
(b) The certificate required by Section 7.04;
(c) The opinion of Greenbaum, Rowe, Smith, Ravin, Davis &
Himmel as required by Section 7.06;
(d) Evidence of the payment of the indebtedness referred to in
Section 1.03;
(e) The escrow agreement referred to in Section 2.13; and
(f) Such other certified resolutions, documents and
certificates as are required to be delivered by Osicom pursuant to the
provisions of this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.01. SURVIVAL. The respective representations, warranties,
covenants and agreements contained in this Agreement shall survive the Closing
for a term of eighteen (18) months with the exception of those regarding taxes
set forth in Section 3.10 which shall not survive the Closing, without
prejudice, however, to Osicom's rights of indemnification under Section 9.02
hereof.
9.02. INDEMNIFICATION. The Shareholder agrees to save, defend and
indemnify Osicom against and hold it harmless from any and all losses, damages,
deficiencies or liabilities caused by, resulting or arising from or otherwise
relating to any failure by Shareholder to perform or otherwise fulfill or comply
with any undertaking, agreement, or obligation of Shareholder hereunder or by
reason of any breach of any representation or warranty of Shareholder contained
herein and for all tax liabilities for periods prior to the Closing Date not
previously paid or reserved for (including, without limitation, counsel fees and
expenses in connection therewith) (collectively, "Osicom Damages"). Osicom
agrees to save, defend and indemnify Shareholder against and hold it harmless
from any and all losses, damages, deficiencies or liabilities caused by,
resulting or arising from or otherwise relating to any failure by Osicom to
perform or otherwise fulfill or comply with any undertaking, agreement, or
obligation of Osicom hereunder or by reason of any breach of any representation
or warranty of Osicom contained herein (collectively, "Shareholder Damages";
Osicom Damages and Shareholder Damages are referred to collectively as
"Damages"). The party providing indemnification under either the two previous
sentences is referred to as the "Indemnifying Party" and the party receiving the
benefit of indemnification is referred to as the "Indemnified Party."
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9.03. LIMITS ON INDEMNIFICATION. An Indemnified Party shall not be
indemnified under Section 9.02 for Damages resulting from any fact, event or
transaction of which the Indemnified Party had actual knowledge as evidenced in
writing on or prior to the Closing Date. An Indemnified Party shall be entitled
to be indemnified only to the extent its Damages in the aggregate exceed Two
Hundred Fifty Thousand Dollars ($250,000) (with the exception of the
Shareholders' indemnification of Osicom for tax liabilities, for which such
$250,000 will not apply). Neither Indemnified Party shall have any liability for
Damages in excess of Fourteen Million Dollars ($14,000,000) for claims made for
indemnification within twelve (12) months following the Closing Date. Neither
Indemnified Party shall have any liability for Damages for claims for
indemnification made within 12 to 18 months following the Closing Date to the
extent such claims when added to all such claims, made prior to such to such
period exceed $7,000,000 (except for claims relating to taxes, for which such
$7,000,000 limit shall continue until the expiration of the applicable statute
of limitations). In computing Damages for purposes of this Article IX, the value
of any insurance proceeds and tax benefits to the Indemnified Party arising from
the event(s) giving rise to the claim for indemnification shall first be
deducted. Notwithstanding anything contained herein to the contrary, it is
understood and agreed that the Shareholder's Damages for breach of Section 2.12
shall be $3,000,000 (the $250,000 deductible referred to in this Section 9.03
not being applicable to a breach of Section 2.12).
9.04. DEFENSE OF CLAIMS. The Indemnified Party agrees to notify the
Indemnifying Party with reasonable promptness of any claim asserted against the
Indemnified Party in respect of which the Indemnifying Party may be liable under
this Agreement, which notification shall be accompanied by a written statement
setting forth the basis of such claim and the manner of calculation thereof. The
Indemnifying Party shall have the right to defend any such claim at its own
expense and with counsel of its choice; provided, however, that such counsel
shall have been approved by the Indemnified Party prior to engagement, which
approval shall not be unreasonably withheld or delayed; and provided further,
that the Indemnified Party may participate in such defense, if it so chooses,
with its own counsel and at its own expense.
9.05. PENSION PLAN. (a) On and after the Closing Date, Osicom shall
cause the Corporations to continue to maintain the Case Communications Defined
Benefit Plan (the "Pension Plan"), subject to the terms of this Section 9.05,
and provided that maintaining such plan does not require Osicom to provide a
similar plan to the employees of Osicom or of any subsidiary of Osicom. During
the period commencing on the Closing Date and ending on the earliest of (i) the
fifth anniversary of the Closing Date, (ii) the date the Pension Plan is
terminated pursuant to subsection (b) below, or (iii) the sale or liquidation by
Holdings of all or substantially all of its assets, the Shareholder shall
provide to the Corporation cash payments at such times and in such amounts as
will enable the Corporation to pay when due each minimum funding contribution to
the Pension Plan required by Section 412 of the Code, net of any tax benefits to
Osicom and its affiliates by reason of its making of such reimbursed
contributions. Each such cash payment shall be remitted to the Corporation no
less than one business day prior to the date when the corresponding contribution
is due. The minimum funding contribution amounts shall be determined by an
enrolled actuary designated by the Shareholder (the "Shareholder's Actuary").
(b) At any time during the period commencing on the Closing
Date and ending on the fifth anniversary of the Closing Date, Holdings may
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require the Corporation to terminate the Pension Plan. In such event, Holdings
shall be responsible for ensuring the Pension Plan is sufficiently funded (as
determined by the Shareholder's Actuary) to permit the Pension Plan to be
terminated under applicable Pension Benefit Guaranty Corporation regulations. To
the extent the Pension Plan is not sufficiently funded (as determined by the
Shareholder's Actuary) to permit such termination, Holdings shall remit to the
Corporation a cash payment or payments sufficient to cover the shortfall at such
times and in such amounts as will enable the termination to be completed on a
timely basis, which payments shall be contributed by the Corporation to the
Pension Plan as soon as practicable following receipt.
(c) If the Pension Plan has not been terminated at the end of
the five-year period described in subsection (b) above, then the Shareholder and
Osicom shall agree upon a mutually satisfactory arrangement for the termination
or continuation of the Pension Plan.
ARTICLE X
TERMINATION AND WAIVER
10.01. TERMINATION. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the
transactions provided for herein abandoned at any time prior to the Closing
Date:
(a) By mutual consent of Osicom and the Shareholder;
(b) By Osicom if any of the conditions set forth in Article VI
hereof shall not have been fulfilled on or prior to October 31, 1996, or shall
become incapable of fulfillment at any time, and shall not have been waived;
(c) By the Shareholder if any of the conditions set forth in
Article VII hereof shall not have been fulfilled on or prior to October 31,
1996, or shall have become incapable of fulfillment at any time, and shall not
have been waived;
(d) By Osicom or the Shareholder if any material legal action
or proceeding shall have been instituted or threatened seeking to restrain,
prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated by this Agreement, the effect of which, if successful, could have a
material adverse effect on the Corporations or on the ability of any party
hereto to consummate the transactions contemplated hereby.
In the event that this Agreement is terminated as described above,
this Agreement shall be void and of no force and effect, without any liability
or obligation on the part of any of the parties hereto except for any liability
which may arise pursuant to Section 11.02.
10.02. WAIVER. Any condition to the performance of the Shareholder
or Osicom which legally may be waived on or prior to the Closing Date may be
waived at any time by the party entitled to the benefit thereof by action taken
or authorized by an instrument in writing executed by the relevant party or
parties. The failure of any party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party as a
later time to enforce the same. No waiver by any party of the breach of any
term, covenant, representation or warranty contained in this Agreement as a
condition to such party's obligations
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hereunder shall release or affect any liability resulting from such breach, and
no waiver of any nature, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or of any breach of any other term, covenant,
representation or warranty of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. EXPENSES. Each of the parties hereto shall bear its own
expenses in connection herewith.
11.02. CONFIDENTIAL INFORMATION. Each party agrees that such party
and its representatives will hold in strict confidence all information and
documents received from the other parties and, if the transactions herein
contemplated shall not be consummated, each party will continue to hold such
information and documents in strict confidence and will return to such other
party all such documents (including the documents annexed to this Agreement)
then in such receiving party's possession without retaining copies thereof;
provided, however, that each party's obligations under this Section 11.02 to
maintain such confidentiality shall not apply to any information or documents
that are in the public domain at the time furnished by the others or that become
in the public domain thereafter through any means other than as a result of any
act of the receiving party or of its agents, officers, directors or shareholders
which constitutes a breach of this Agreement, or that are required by applicable
law to be disclosed.
11.03. MODIFICATION, TERMINATION OR WAIVER. This Agreement may be
amended, modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
11.04. PUBLICITY. The parties agree that no publicity release or
other public announcement (other than as required by applicable Commission or
stock exchange regulations) concerning the transactions contemplated by this
Agreement shall be issued by either party without the advance approval of both
the form and substance of the same by the other party and its counsel, which
approval, in the case of any publicity, release or other public announcement
required by applicable law, shall not be unreasonably withheld or delayed.
11.05. NOTICES. Any notice or other communication required or which
may be given hereunder shall be in writing and either be delivered personally or
by reputable overnight delivery service, or be mailed, certified or registered
mail, postage prepaid, as follows:
If to the Holdings to:
Caxton Way
Watford Business Park
Watford, Hertz WD1 8XM
United Kingdom
and if to Reilrop to:
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Westersingel 74, 301 SB
Rottersdam, Netherlands
in either case, with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Kenneth E. Adelsberg
and if to Osicom, to:
2800 28th Street, Suite 100
Santa Monica, California 90404
With a copy to:
Greenbaum, Rowe, Smith, Ravin & Davis
99 Wood Avenue South
P.O. Box 5600
Woodbridge, New Jersey 07095
Attention: W. Raymond Felton
The parties may change the persons and addresses to which the
notices or other communications are to be sent to it by giving written notice of
any such change in the manner provided herein for giving notice.
11.06. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
parties hereto; provided, however, that no assignment of any rights or
delegation of any obligations provided for herein may be made by any party
without the express consent of the other parties, and except that Osicom may
assign this Agreement to an affiliate of Osicom, provided that such an
assignment shall not relieve Osicom of its obligations under this Agreement.
11.07. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof.
11.08. GOVERNING LAW. This Agreement shall be deemed negotiated and
executed in the United States and subject exclusively to United States law, and
governed by and construed in accordance with the laws of the State of New Jersey
applicable to agreements made and to be performed entirely within that state,
excluding the choice of law rules thereof.
11.09. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.
11.10. SECTION HEADINGS. The section headings contained in this
Agreement are inserted for conveniences of reference only and shall not affect
the meaning or interpretation of this Agreement.
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WITNESS the execution of this Agreement as of the date first above written.
OSICOM TECHNOLOGIES, INC.
By: /S/ Par Chadha
-------------------------------
Name: Par Chadha
-----------------------------
Title: Director
----------------------------
REILROP, B.V.
By: /S/ A. Paul Brown
-------------------------------
Name: A. Paul Brown
-----------------------------
Title: Authorized Signatory
----------------------------
CRAY ELECTRONICS HOLDINGS, PLC
By: /S/ A. Paul Brown
-------------------------------
Name: A. Paul Brown
-----------------------------
Title: Director
----------------------------
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LIST OF EXHIBITS
2.01 Purchase and Sale of Products
2.02 Severance
2.04 Confidentiality and Non-Competition Agreements
3.06 Unaudited June 30, 1996 Financial Statements
