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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Osicom Technologies, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
688271501
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(CUSIP Number)
Mr. Rohit Phansalkar With a copy to:
FIBR Holdings, LLC Jeffry S. Hoffman, Esq.
1330 Avenue of the Americas, 36th Floor Swidler Berlin Shereff Friedman, LLP
New York, New York 10022 405 Lexington Avenue
(212) 842-1600 New York, New York 10174
(212) 758-9500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 1, 1999
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(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(e), (f) or (g), check the following: [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the Schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 688271501 Page 2 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FIBR Holdings, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ---------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 679,483
REPORTING ---------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
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10 SHARED DISPOSITIVE POWER
679,483
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
679,483
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.1%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
The class of equity security to which this Statement on Schedule 13D
(this "Schedule 13D") relates is the common stock, par value $.30 per share (the
"Common Stock") of Osicom Technologies, Inc., a New Jersey corporation (the
"Issuer" or the "Company"), with its principal executive offices located at 2800
28th Street, Suite 100 Santa Monica, CA 90405.
ITEM 2. IDENTITY AND BACKGROUND
(a), (b), (c) and (f) This Schedule 13D is being filed by FIBR
Holdings, LLC, a New York limited liability company ("Holdings" or the
"Reporting Person") with a business address at 1330 Avenue of the Americas, 36th
Floor, New York. In accordance with the requirements of Schedule 13D, responses
to Items 2 through 6 of Schedule 13D are also being provided with respect to
Andersen Weinroth & Co., L.P., a Delaware limited partnership and the sole
voting member of Holdings ("AW"), G. Chris Andersen ("Andersen"), Stephen
Weinroth ("Weinroth"), and Rohit Phansalkar ("Phansalkar"). Each of Holdings,
AW, and Messrs. Andersen, Weinroth and Phansalkar are collectively referred to
herein as the "Covered Persons".
Holdings is a New York limited liability company with a business
address of 1330 Avenue of the Americas, 36th Floor, New York.
AW is a Delaware limited partnership with a business address of 1330
Avenue of the Americas, 36th Floor, New York. AW is the sole voting member of
Holdings.
Mr. Andersen is a United States citizen with a business address of
Andersen Weinroth & Co., L.P., 1330 Avenue of the Americas, 36th Floor, New
York. Mr. Andersen is one of the two managers of Holdings and one of the two
general partners of AW.
Mr. Weinroth is a United States citizen with a business address of
Andersen Weinroth & Co., L.P., 1330 Avenue of the Americas, 36th Floor, New
York. Mr. Weinroth is one of the two general partners of AW.
Mr. Phansalkar is a United States citizen with a business address of
Andersen Weinroth & Co., L.P., 1330 Avenue of the Americas, 36th Floor, New
York. Mr. Phansalkar is one of the two managers of Holdings.
(d) and (e). During the past five years, none of the Covered Persons
has been convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS
Holdings used its working capital to purchase the 679,483 shares of
Common Stock at an aggregate cost of $7,500,000 as disclosed in Item 4 below.
Mr. Andersen purchased the securities of the Issuer disclosed herein as
owned by him with his own funds.
Mr. Phansalkar purchased the securities of the Issuer disclosed herein
as owned by him through two separate margin accounts maintained with Bear
Stearns & Company (with respect to which a copy of the form of margin account
agreement is attached hereto as Exhibit 1) and Laidlaw Global Securities (with
respect to which clearing is conducted by Pershing, Division of Donaldson,
Lufkin & Jenrette Securities Corporation).
ITEM 4. PURPOSE OF THE TRANSACTION
On December 1, 1999, pursuant to the Stock Purchase Agreement, dated
December 1, 1999, between the Company and Holdings (the "Stock Purchase
Agreement"), Holdings purchased from the Company 679,483 shares of Common Stock
(the "Purchase Agreement Shares") at a per share price of $11.0378 and an
aggregate price of $7,500,000.
The Stock Purchase Agreement provides that at or subsequent to the
closing of such Agreement (the "Closing Date"), Holdings shall have the right to
designate one member of the Board of Directors of the Company to serve until the
annual meeting of the shareholders of the Company in 2001. The nominee shall be
required to complete a questionnaire in the same form as has been executed by
all other directors of the Company. Subject to the approval of the existing
directors upon review of such questionnaire and any other relevant information,
such approval not to be unreasonably withheld, the existing directors will elect
such nominee to the Board of Directors, and such individual shall receive the
same compensation as each other non-employee director of the Company.
To date, Holdings has not designated one member of the Board of
Directors of the Company.
Pursuant to the Stock Purchase Agreement, from and after the Closing
Date, Holdings shall, and shall use its reasonable best efforts to cause any of
its members to which Holdings transfers the Purchase Agreement Shares, to vote
the Purchase Agreement Shares at all times prior to their sale at any regular or
special meeting of the shareholders of the Company called for the purpose of
filling positions on the Board of Directors of the Company, or in any written
consent executed in lieu of such a meeting of shareholders, in favor of the
nominees proposed by the Company's Board of Directors. In the event that
Holdings or its members do not cast its vote in accordance with the previous
sentence, the Company's Board of Directors is authorized to do so. As a
condition precedent to having the Company's transfer agent effect a transfer of
any Purchase Agreement Shares to a member of Holdings, the Company may require
such transferee(s) to execute a document granting the Board of Directors
authority consistent with this paragraph.
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All of the shares of Common Stock reported herein were acquired for
investment purposes. Each of the Covered Persons may acquire or dispose of
securities of the Issuer, including shares of Common Stock, directly or
indirectly, in open-market or privately negotiated transactions, depending upon
the evaluation of the performance and prospects of the Issuer by the Covered
Persons, and upon other developments and circumstances, including, but not
limited to, general economic and business conditions and stock market
conditions.
Except for the foregoing, no Covered Person has any present plans or
proposals which relate to or would result in any of the actions or events
described in paragraphs (a) through (j) of Item 4 of Schedule 13D. However, the
Covered Persons retain their respective rights to modify their plans with
respect to the transactions described in this Item 4, to acquire or dispose of
securities of the Issuer and to formulate plans and proposals which could result
in the occurrence of any such events, subject to applicable laws and
regulations.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) Holdings is the beneficial owner of 679,483 shares of
Common Stock (representing 6.1% of the outstanding shares of Common Stock) which
are owned directly by Holdings, and with respect to such shares, Holdings has
shared power with AW, and Messrs. Andersen, Weinroth and Phansalkar to vote and
dispose of such shares.
AW is the beneficial owner of 679,483 shares of Common Stock
(representing 6.1% of the outstanding shares of Common Stock), of which 679,483
shares of Common Stock are directly owned by Holdings and may be deemed to be
indirectly owned by AW, in its capacity as the sole voting member of Holdings.
AW has shared power with Holdings, and Messrs. Andersen, Weinroth and Phansalkar
to vote and dispose of such shares.
Mr. Andersen is the beneficial owner of 724,483 shares of Common Stock
(representing __% of the outstanding shares of Common Stock), of which (i)
679,483 shares of Common Stock are owned directly by Holdings and may be deemed
to be indirectly owned by Mr. Andersen, in his capacity as one of the general
partners of AW and a manager of Holdings, and with respect to such shares, Mr.
Andersen has shared power with Holdings, AW, and Messrs. Weinroth and Phansalkar
to vote and dispose of such shares and (ii) 45,000 shares of Common Stock are
owned directly by Mr. Andersen, and with respect to such shares, Mr. Andersen
has sole power to vote and dispose of such shares. On September 24, 1999, Mr.
Andersen sold, at a price of $131.30, in the open market a covered call option
exercisable by the holder to purchase 10,000 shares at $15.00 per share. The
call option expires in February 2000. In addition, on November 15, 1999, Mr.
Andersen sold, at a price of $403.00, on the open market a covered call option
exercisable by the holder to purchase 10,000 shares at $22.50 per share. The
call option expires in February 2000.
Mr. Weinroth is the beneficial owner of 679,483 shares of Common Stock
(representing 6.1% of the outstanding shares of Common Stock), of which 679,483
shares of Common Stock are directly owned by Holdings and may be deemed to be
indirectly owned by Mr. Andersen in his capacity as one of the general partners
of AW.
Mr. Phansalkar is the beneficial owner of 693,551 shares of Common
Stock (representing 6.2% of the outstanding shares of Common Stock), of which
(i) 679,483 shares of Common Stock are owned directly by Holdings and may be
deemed to be indirectly owned by Mr. Phansalkar in his capacity as a manager of
Holdings, and with respect to such shares, Mr. Phansalkar has shared power with
Holdings, AW, and Messrs. Andersen and Weinroth to vote and dispose of such
shares and (ii)
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14,068 shares of Common Stock are owned directly by Mr. Phansalkar, and with
respect to such shares, Mr. Phansalkar has sole power to vote and dispose of
such shares.
The number of shares beneficially owned by each of the Covered Persons
and the percentage of outstanding shares represented thereby, have been computed
in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. The ownership of the Covered Persons is based on 11,107,666 outstanding
shares of Common Stock of the Issuer as of December 1, 1999, as represented by
the Company in its Proxy Statement dated December 1, 1999 for its Annual Meeting
of Shareholders to be held January 5, 2000.
(c) On December 1, 1999, pursuant to the Stock Purchase Agreement,
Holdings purchased from the Company 679,483 shares of Common Stock at a per
share price of $11.0378 and an aggregate price of $7,500,000. During the past
sixty days, no other transactions in the Common Stock have been effected by
Holdings.
During the past sixty days, no transactions in the Common Stock have
been effected by AW.
Each transaction in the Common Stock by Mr. Andersen during the past
sixty days is set forth on Annex A hereto.
During the past sixty days, no transactions in the Common Stock have
been effected by Mr. Weinroth.
Each transaction in the Common Stock by Mr. Phansalkar during the past
sixty days is set forth on Annex A hereto.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONS WITH RESPECT
TO SECURITIES OF THE ISSUER
On December 1, 1999, pursuant to the Stock Purchase Agreement, Holdings
purchased from the Company 679,483 shares of Common Stock (the "Purchase
Agreement Shares") at a per share price of $11.0378 and an aggregate price of
$7,500,000.
The Stock Purchase Agreement provides that at or subsequent to the
closing of such Agreement (the "Closing Date"), Holdings shall have the right to
designate one member of the Board of Directors of the Company to serve until the
annual meeting of the shareholders of the Company in 2001. The nominee shall be
required to complete a questionnaire in the same form as has been executed by
all other directors of the Company. Subject to the approval of the existing
directors upon review of such questionnaire and any other relevant information,
such approval not to be unreasonably withheld, the existing directors will elect
such nominee to the Board of Directors, and
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such individual shall receive the same compensation as each other non-employee
director of the Company.
Pursuant to the Stock Purchase Agreement, from and after the Closing
Date, Holdings shall, and shall use its reasonable best efforts to cause any of
its members to which Holdings transfers the Purchase Agreement Shares, to vote
the Purchase Agreement Shares at all times prior to their sale at any regular or
special meeting of the shareholders of the Company called for the purpose of
filling positions on the Board of Directors of the Company, or in any written
consent executed in lieu of such a meeting of shareholders, in favor of the
nominees proposed by the Company's Board of Directors. In the event that
Holdings or its members do not cast its vote in accordance with the previous
sentence, the Company's Board of Directors is authorized to do so. As a
condition precedent to having the Company's transfer agent effect a transfer of
any Purchase Agreement Shares to a member of Holdings, the Company may require
such transferee(s) to execute a document granting the Board of Directors
authority consistent with this paragraph.
The Stock Purchase Agreement provides, that prior to any offer or sale
by the Company's subsidiary, Meret Communications, Inc. ("Meret") of Meret's
common stock (or any securities convertible or exercisable into or exchangeable
for common stock) it will deliver, at least ten (10) business days prior to such
proposed issuance, to Holdings written notice describing the proposed offering,
including the aggregate amount to be offered and the terms and conditions
thereof (a "Participation Notice"), and provide Holdings with an option to
participate in such offering up to $7,500,000 (the "Right of Participation") on
the terms and conditions set forth in the Participation Notice. Holdings may
exercise its Right of Participation by delivering written notice of such
exercise (an "Exercise Notice") to the Company on or before the eighth (8th)
business day following receipt of the Participation Notice, which notice shall
specify the dollar amount of the securities that Holdings wishes to purchase in
such offering. In the event that Holdings exercises its Right of Participation
with respect to such offering, the Company shall, within one business day
thereafter (i) determine in good faith from the lead investor or lead venture
financier in the event of a private offering or from the managing underwriter in
the event of an initial public offering whether Holdings will be allowed to
participate in such offering, provided that the Company shall recommend to such
lead investor or lead venture financier or managing underwriter that Holdings be
allowed to so participate, and to purchase the dollar amount of securities
requested by Holdings and (ii) notify Holdings of such determination. The Right
of Participation shall apply only to Meret's initial financing subsequent to the
Closing Date. In the event that Holdings transfers Purchase Shares to any of its
members and until such time as such members transfer the Purchase Shares, each
such member shall have the foregoing rights afforded to Holdings with respect to
such Purchase Shares (it being the intent of the parties that the Right of
Participation for Holdings and its members not exceed $7,500,000 in the
aggregate); provided that Holdings shall retain and have the sole right to
receive the Participation Notice from the Company and deliver the Exercise
Notice to the Company in accordance with the provisions of the foregoing
provision of the Stock Purchase Agreement.
In addition to the assignment of rights and obligations contemplated
under the above-described provisions to members of the Purchaser, Holdings may
assign its rights and obligations hereunder, in connection with any private sale
or transfer of the Shares in accordance with the terms hereof, as long as, as a
condition precedent to such transfer, the transferee executes an acknowledgment
agreeing to be bound by the applicable provisions of this Agreement in which
case
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the term "Holdings" shall be deemed to refer to such transferee as though such
transferee were an original signatory hereto.
At the Closing, the Company paid to Andersen Weinroth Capital Corp.
$300,000 in connection with the transactions contemplated by the Stock Purchase
Agreement.
A copy of the Stock Purchase Agreement is attached hereto as Exhibit 2.
Pursuant to the Registration Rights Agreement, dated December 1, 1999
between the Company and Holdings (the "Registration Rights"), at any time after
the Registrable Date (as defined below), subject to the terms and conditions of
the Registration Rights Agreement, Holdings on behalf of the holders of the
Transfer Restricted Securities (as defined below) shall have the right to
require the Company, by written request, to cause the Transfer Restricted
Securities to be registered with the Commission by filing a registration
statement to cover the offer and resale by a holder from time to time and the
methods of distribution elected by such holder of the Purchase Securities as set
forth in such registration statement. The Registrable Date is defined as the
date upon which the first of the following occur: (a) the Company distributes to
its shareholders or otherwise sells, transfers or disposes of all or
substantially all of the common stock of NETsilicon, Inc., a Massachusetts
corporation, that it owns, or (b) the first anniversary of the date upon which
the Purchase Securities were issued to Holdings. Pursuant to the Registration
Rights Agreement, subject to the terms and conditions set forth in the
Registration Rights Agreement, if the Company at any time proposes to register
(other than a registration on Form S-8 or S-4 or any successor or similar forms)
any of its equity securities under the Act, whether or not for sale for its own
account, in a manner which would permit registration of Transfer Restricted
Securities for offer or resale under the Act, it will each such time use its
best efforts to effect the registration under the Act of all Transfer Restricted
Securities held by the holders. "Transfer Restricted Securities" are defined as
the Purchase Agreement Shares until each such share (i) has been effectively
registered under the Securities Act of 1933, as amended (the "Act"), or (ii) is
distributed to the public pursuant to Rule 144 under the Act or (iii) may be
sold or transferred pursuant to Rule 144(k)(or any similar provisions then in
force) under the Act or otherwise.
The Registration Rights Agreement shall not inure to the benefit of or
be binding upon a successor or assign of a holder of Transfer Restricted
Securities unless and to the extent such successor or assign acquired Transfer
Restricted Securities from such holder. Notwithstanding any assignment by
Holdings of the Registration Rights Agreement, Holdings shall remain the entity
which has the right to require the Company by written request to cause the
Transfer Restricted Securities to be registered pursuant to the terms of the
Demand Registration provisions thereof unless Holdings expressly agrees
otherwise in a written instrument executed by Holdings.
A copy of the Registration Rights Agreement is attached hereto as
Exhibit 3.
Pursuant to a letter agreement, dated November 5, 1999, by and between
the Company and AW (the "Letter Agreement"), AW has agreed to provide assistance
to the Company with respect to the identification and recruitment of senior
officers and directors for the Company and/or its subsidiaries or affiliates.
The Letter Agreement provides that for each senior officer (an "Officer")
identified by AW and employed by the Company or any of its subsidiaries or
affiliates, the Company
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will grant AW 75,000 warrants with a life of two years and exercisable at the
same price or prices at which the Officer's employee stock options are
exercisable. The Warrants shall vest six months after the Officer's start date
and only if upon such date the Officer remains employed by the Company or its
subsidiary or affiliate. In addition, the Company will issue unregistered shares
of Common Stock to AW in an amount equal to 10% of the total value of the
Officer's first year compensation.
The Letter Agreement provides that for each director (a "Director")
identified by AW and elected to the Board of Directors of the Company or any of
its subsidiaries or affiliates, the Company will grant the Director a number of
options and having such terms as would ordinarily be granted under the Directors
Stock Option Plan (or other applicable compensation plan) of the Company or its
subsidiary or affiliate. For each Director identified by AW, the Company will
grant, or cause to be granted to 25,000 warrants each having a life of two
years, but otherwise having the same terms as the options granted the Director.
The warrant grant shall be made as of the date the Director is elected to the
Board of Directors of the Company or any of its subsidiaries or affiliates.
A copy of the Letter Agreement is attached hereto as Exhibit 4.
The Operating Agreement, dated December 1, 1999, of Holdings (the
"Operating Agreement"), by and among AW, Libra Fund LP, organized under the laws
of the State of Delaware, Topaz Private Equity Fund, organized under the laws of
the Cayman Islands, and Michael Targoff, an individual resident in the State of
New York, provides that there shall be two classes of Members: the Voting
Members and the Nonvoting Members. On any matter requiring a vote, consent or
approval of the Members, the Voting Members shall be the only persons to whom
the matter is required to be submitted, and each shall have one vote. Except as
otherwise provided in the Operating Agreement, or as required by applicable law,
the vote, consent or approval of a majority of the Voting Members shall
constitute the act of Holdings. No Non-voting Member shall have a voice or vote
in any matter, except as specifically provided herein. The Operating Agreement
provides that AW is the sole Voting Member of Holdings.
The Operating Agreement provides that unless otherwise agreed by a
unanimous vote of the Members, there shall be two (2) Managers of Holdings, and
that the initial Managers shall be Christopher Andersen and Rohit K. Phansalkar
. Each Manager shall hold office until his or her death, resignation or
retirement or until his or her successor is elected A Manager need not be a
Member.
The Operating Agreement provides for the establishment of capital
accounts and membership percentages, as well as the method of allocations and
distributions of gains and losses of Holdings to Members of Holdings. The
Operating Agreement provides that Holdings may distribute to the Members of
Holdings assets of Holdings as a distribution-in-kind.
A copy of the form of Operating Agreement is attached hereto as
Exhibit 5.
On September 24, 1999, Mr. Andersen sold, at a price of $131.30, in the
open market a covered call option exercisable by the holder to purchase 10,000
shares at $15.00 per share. The call option expires in February 2000. In
addition, on November 15, 1999, Mr. Andersen sold, at a price of $403.00, on the
open market a covered call option exercisable by the holder to purchase 10,000
shares at $22.50 per share. The call option expires in February 2000.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Form of Margin Account Agreement, between Bear Stearns and Mr.
Phansalkar
Exhibit 2 Stock Purchase Agreement, dated December 1, 1999, between Osicom
Technologies, Inc. and FIBR Holdings, LLC
Exhibit 3 Registration Rights Agreement, dated December 1, 1999 between
Osicom Technologies, Inc. and FIBR Holdings, LLC.
Exhibit 4 Letter Agreement, dated November 5, 1999, between Osicom
Technologies, Inc. and Andersen Weinroth & Co., L.P.
Exhibit 5 Form of Operating Agreement of FIBR Holdings, LLC, dated
December 1, 1999
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
FIBR HOLDINGS, LLC
By: /s/ Rohit Phansalkar
Name: Rohit Phansalkar
Title: Manager
Dated: December 13, 1999
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ANNEX A
Purchases and Sales of Shares of Common Stock within the Last 60 Days
By Chris Andersen
Number
------
Price Per of
--------- --
Date Share Shares
- ---- ----- ------
11/4(2) $11.50 9,800
11/4(2) 11.438 200
9/24(1) 15.00 10,000
11/15(1) 22.50 10,000
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1 Open Market Sale
2 Open Market Purchase
Purchases and Sales of Shares of Common Stock within the Last 60 Days
By Rohit Phansalkar
Price Per Number of
--------- ---------
Date Share Shares
- ---- ----- ------
11/17, 18, 19(2) $10.00 7,000
11/17, 18, 19(2) 12.50 5,600
10/12(1) 8.00 300
11/17(3) 8 5/8 500
11/17(3) 8 5/8 400
11/18(3) 6 1/8 900
11/18(3) 9 5/8 300
11/18(3) 8 1/8 300
11/18(3) 5 7/8 1,000
11/18(3) 7 1/8 1,000
- -------------------------------
1 Open Market Sale
2 Exercise of Publicly Traded Option
3 Open Market Sale of Currently Exercisable Publicly-Traded Option
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Exhibit Index
Exhibit Number Description
- -------------- -----------
1 Form of Margin Account Agreement, between Bear Stearns and Mr.
Phansalkar
2 Stock Purchase Agreement, dated December 1, 1999, between Osicom
Technologies, Inc. and FIBR Holdings, LLC
3 Registration Rights Agreement, dated December 1, 1999 between
Osicom Technologies, Inc. and FIBR Holdings, LLC.
4 Letter Agreement, dated November 5, 1999, between Osicom
Technologies, Inc. and Andersen Weinroth & Co., L.P.
5 Form of Operating Agreement of FIBR Holdings, LLC, dated
December 1, 1999
<PAGE>
BEAR STEARNS
THE BEAR STEARNS COMPANIES INC.
245 PARK AVENUE
NEW YORK, NY 10167
(212) 272-2000
CUSTOMER AGREEMENT
PLEASE READ CAREFULLY, SIGN AND RETURN
This Agreement ("Agreement") sets forth the terms and conditions on
which subsidiaries of The Bear Stearns Companies Inc. will open and maintain
account(s) in your name and otherwise transact business with you.
1. PARTIES. You hereby agree that the parties to this Agreement shall
consist of you and each and every subsidiary of The Bear Stearns Companies Inc.,
whether now existing or hereafter created (each such subsidiary being referred
to hereinafter as a "Bear Stearns entity" and all such subsidiaries being
collectively referred to hereinafter as "Bear Stearns").
2. APPLICABLE LAWS, RULES AND REGULATIONS. All transactions shall be
subject to the applicable laws, rules and regulations of all federal, state and
self-regulatory authorities, including, but not limited to, the rules and
regulations of the Board of Governors of the Federal Reserve System and the
constitution, rules and customs of the exchange or market (and clearing house)
where such transactions are executed.
3. SECURITY INTEREST AND LIEN; REGISTRATION OF SECURITIES. As security
for the payment and performance of all of your obligations and liabilities from
time to time outstanding to any Bear Stearns entity, whether under this
Agreement or otherwise, each Bear Stearns entity shall have a continuing first
lien and security interest in (i) all property in which you now have or
hereafter acquire an interest which is now or hereafter held by or through any
Bear Stearns entity, including, but not limited to, any and all accounts,
instruments, documents, contract rights, commodities and commodity futures
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and bailee for itself and all other Bear Stearns entities. You represent that
all of the above-described collateral shall at all times be free and clear of
all liens, claims and encumbrances of any nature other than the security
interest created hereby. In addition, in order to satisfy any of your
outstanding liabilities or obligations to any Bear Stearns entity, Bear Stearns
may, to the fullest extent permitted by law, at any time in its discretion and
without prior notice to you, use, apply or transfer any and all securities or
other property (including, without limitation, fully-paid securities and cash).
You hereby agree that, except as otherwise specifically agreed in writing, Bear
Stearns may register
<PAGE>
and hold the securities and other property in your accounts in its name or the
name of its designees.
4. DEPOSITS ON TRANSACTIONS. Whenever Bear Stearns, in its sole
discretion, considers it necessary in order to assure the due performance of
your open contractual commitments, it may require you, and you hereby agree, to
deposit cash or collateral immediately in your account(s) prior to any
applicable settlement date.
5. BREACH, BANKRUPTCY OR DEFAULT. Any breach of or default under this
Agreement or any other agreement you may have with any Bear Stearns entity,
whether heretofore or hereafter entered into, or the filing of a petition or
other commencement of a proceeding in bankruptcy or insolvency, or the
appointment of a receiver, by or against you or any guarantor, co-signer or
other party liable on or providing security for your obligations to any Bear
Stearns entity, or the levy of an attachment against your or any such other
party's account(s) with any Bear Stearns entity, or your death, mental
incompetence or dissolution, or any other grounds for insecurity, as determined
by Bear Stearns in its sole discretion (including, without limitation, any
indication of your refusal or inability to satisfy promptly any margin call or
other deposit requirement hereunder), shall constitute, at Bear Stearns'
election, a default by you under any or all agreements you may then have with
any Bear Stearns entity, whether heretofore or hereafter entered into. In the
event of any such default, each Bear Stearns entity shall have all of the rights
of a secured party upon default under the New York Uniform Commercial Code and
other applicable laws, rules and regulations, including, without limitation, the
right, without prior notice to you; to sell any and all property in which you
have an interest held by or through any Bear Stearns entity, to buy any and all
property which may have been sold short, to exercise any and all options and
other rights, to accelerate, cancel, terminate, liquidate, close out and net the
settlement payments and/or delivery obligations under any or all outstanding
transactions and/or to purchase or sell any other securities or property to
offset market risk, and to offset any indebtedness you may have (either
individually or jointly with others), after which you shall be liable to Bear
Stearns for any remaining deficiency, loss, costs or expenses incurred or
sustained by Bear Stearns in connection therewith. Such purchases and/or sales
may be effected publicly or privately without notice or advertisement in such
manner as Bear Stearns may in its sole discretion determine. At any such sale or
purchase, any Bear Stearns entity may purchase or sell the property free of any
right of redemption. In addition, each Bear Stearns entity shall have the right,
at any time and from time to time, to set off and otherwise apply any and all
amounts owing by such Bear Stearns entity to you or for your account or credit
against any and all amounts now or hereafter owing by you to any Bear Stearns
entity (including, without limitation, any indebtedness in your accounts),
whether matured or unmatured, fixed, contingent or otherwise and irrespective of
whether any Bear Stearns entity shall have made any demand therefor. Bear
Stearns agrees to notify you of any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
any such set-off and application.
<PAGE>
6. EXECUTION FEES AND SERVICE CHARGES. You understand that your
account(s) will be charged brokerage commissions or mark-ups/mark-downs in
connection with the execution of transactions ("Execution Fees") and may be
charged certain other fees for custody and other services furnished to you
("Service Fees"). All such fees shall be determined by Bear Stearns unless your
account(s) is (are) introduced to Bear Stearns by another broker, in which case
all Execution Fees and certain Service Fees shall be determined by such other
broker. You further understand that Execution Fees may be changed from time to
time without prior notice to you and Service Fees may be changed from time to
time upon thirty days' prior written notice to you, and, in each case, you agree
to be bound thereby.
7. TRANSACTION REPORTS AND ACCOUNT STATEMENTS. Reports of the execution
of orders shall be conclusive if not objected to in writing by you within the
shorter of the applicable settlement cycle of the subject transactions or three
business days after such documents have been transmitted to you by mail or
otherwise. Statements of account shall be conclusive if not objected to in
writing within ten days after transmission.
8. DEBIT BALANCES; TRUTH-IN-LENDING. You hereby acknowledge receipt of
Bear Stearns' Truth-in-Lending disclosure statement. You understand that
interest will be charged on any debit balances in your account(s) in accordance
with the methods described in such statement or in any amendment or revision
thereto which may be provided to you. Any debit balance which is not paid at the
close of an interest period will be added to the opening balance for the next
interest period.
9. CLEARANCE ACCOUNTS. If any of your accounts is carried by any Bear
Stearns entity as clearing agent for your broker, unless such Bear Stearns
entity receives from you prior written notice to the contrary, it may accept
from such introducing broker, without any inquiry or investigation: (a) orders
for the purchase or sale of securities and other property in your account(s), on
margin or otherwise, and (b) any other instructions concerning your account(s)
or the property therein. You understand and agree that Bear Stearns shall have
no responsibility or liability to you for any acts or omissions of your broker,
its officers, employees or agents. You agree that your broker and its employees
are third-party beneficiaries of this Agreement, and that the terms and
conditions hereof, including the arbitration provisions, shall be applicable to
all matters between or among any of you, your broker and its employees and Bear
Stearns and its employees.
10. COLLECTION AND OTHER ACCOUNT-RELATED COSTS. You hereby agree to
pay, on demand, all reasonable direct and indirect costs, liabilities and
damages incurred by Bear Stearns (including, without limitation, costs of
collection, attorneys' fees, court costs and other expenses in connection with
(i) enforcing its rights hereunder, (ii) any investigation, litigation or
proceeding involving your account or any property therein (including, without
limitation, claims to such property by third parties), (iii) your use of or
access to any Bear Stearns or third-party system or (iv) Bear Stearns' acting in
reliance upon your instructions or, if your account is introduced to Bear
Stearns by another broker, the instructions of such other broker. In
<PAGE>
each case and whether or not demand has been made therefor, you hereby authorize
Bear Stearns to charge your account(s) for any and all such costs, including,
without limitation, costs incurred in connection with the liquidation of any
property held in your account(s).
11. IMPARTIAL LOTTERY ALLOCATION. You agree that, in the event Bear
Stearns holds on your behalf securities in its name, in the name of its designee
or in bearer form which are called in part, you will participate in the
impartial lottery allocation system for such called securities in accordance
with the rules of the New York Stock Exchange, Inc. or any other appropriate
self-regulatory organization. When any such call is favorable, no allocation
will be made to any account in which, to the knowledge of Bear Stearns, any
officer, director or employee of Bear Stearns has any financial interest until
all other customers have been satisfied on an impartial lottery basis.
12. WAIVER, ASSIGNMENT AND NOTICES. Neither Bear Stearns' failure to
insist at any time upon strict compliance with this Agreement or with any of the
terms hereof nor any continued course of such conduct on its part shall
constitute or be considered a waiver by Bear Stearns of any of its rights or
privileges hereunder. Any assignment of your rights and obligations hereunder or
your interest in any property held by or through Bear Stearns without obtaining
the prior written consent of an authorized representative of Bear Stearns shall
be null and void. Each Bear Stearns entity reserves the right to assign any of
its rights or obligations hereunder to any other Bear Stearns entity without
prior notice to you. Notices and other communications (including, without
limitation, margin calls) delivered, taxed, sent by express delivery service or
mailed to the address provided by you shall, until Bear Stearns has received
notice in writing of a different address be deemed to have been personally
delivered to you. Margin calls may also be communicated orally, without
subsequent written confirmation.
13. FREE CREDIT BALANCES. You hereby authorize Bear Stearns to use any
free credit balance awaiting investment or reinvestment in your account(s) in
accordance with all applicable rules and regulations and to pay interest thereon
at such rate or rates and under such conditions as are established from time to
time by Bear Stearns for such account(s) and for the amounts of cash so used.
14. RESTRICTIONS ON ACCOUNT. You understand that Bear Stearns, in its
sole discretion, may restrict or prohibit trading of securities or other
property in your account(s) and may terminate your account(s), and you shall
nevertheless remain liable for all of your obligations to Bear Stearns under
this Agreement or otherwise.
15. CREDIT INFORMATION AND INVESTIGATION. You authorize Bear Stearns
and, if applicable, your introducing broker, in its or their discretion, at any
time and from time to time, to make or obtain reports concerning your credit
standing and business conduct. You may make a written request for a description
of the nature and scope of the reports made or obtained by Bear Stearns and the
same will be provided to you within a reasonable period of time.
<PAGE>
16. SHORT AND LONG SALES. In placing any sell order for a short
account, you will designate the order as such and hereby authorize Bear Stearns
to mark the order as being "short." In placing any sell order for a long
account, you will designate the order as such and hereby authorize Bear Stearns
to mark the order as being "long." The designation of a sell order as being for
a long account shall constitute a representation that you own the security with
respect to which the order has been placed, that such security may be sold
without restriction in the open market and that, if Bear Stearns does not have
the security in its possession at the time you place the order, you shall
deliver the security by settlement date in good deliverable form or pay to Bear
Stearns any losses and expenses it may incur or sustain as a result of your
failure to make a delivery on a timely basis.
17. MARGIN AND OTHER COLLATERAL REQUIREMENTS. You hereby agree to
deposit and maintain in your margin accounts, if any, as Bear Stearns may in its
sole discretion require, and you agree to pay forthwith on demand any debit
balance owing with respect to any of your margin accounts. In addition, you
further agree to deposit promptly and maintain such other collateral with Bear
Stearns as is required by any other agreement or open transaction you may have
with any Bear Stearns entity. Upon your failure to make any such payment or
deposit, or if at any time Bear Stearns, in its sole discretion, deems it
necessary for its protection, whether with or without prior demand, call or
notice, Bear Stearns shall be entitled to exercise all rights and remedies
provided in paragraphs 3.5 and 27 hereof. No demands, calls, tenders or notices
that Bear Stearns may have made or given in the past in any one or more
instances shall invalidate your waiver of the requirement to make or give the
same in the future. You further acknowledge and agree that any positions in your
margin account(s) shall be deemed "securities contracts" within the meaning of
Sections 555 and 741(7) of the U.S. Bankruptcy Code and any successors thereto.
Unless you advise Bear Stearns in writing to the contrary, you represent that
you are not an affiliate [as defined in rule 144(a)(1) under The Securities Act
of 1933] of the issuer of any security held in any of your accounts.
18. CONSENT TO LOAN OR PLEDGE OF SECURITIES IN MARGIN ACCOUNTS. Within
the limits of applicable law and regulations, you hereby authorize Bear Stearns
to lend either to itself or to others any securities held by Bear Stearns in any
of your margin accounts to convey therewith all attendant rights of ownership
(including voting rights) and to use all such property as collateral for its
general loans. Any such property, together with all attendant rights of
ownership, may be pledged, repledged, hypothecated or rehypothecated either
separately or in common with other property for any amounts due to Bear Stearns
thereon or for a greater sum, and Bear Stearns shall have no obligation to
retain a like amount of similar property in its possession and control. You
hereby acknowledge that, as a result of such activities, Bear Stearns may
receive and retain certain benefits to which you will not be entitled. In
certain circumstances, such loans may limit, in whole or in part, your ability
to exercise voting and other attendant rights of ownership with respect to the
loaned or pledged securities.
19. LEGALLY BINDING. You hereby agree that this Agreement and all of
the terms hereof shall be binding upon you and your estate, heirs, executors,
administrators, personal
<PAGE>
representatives, successors and assigns. You further agree that all purchases
and sales shall be for your account(s) in accordance with your oral and written
instructions. You hereby waive any and all defenses that any such oral
instruction was not in writing as may be required by any applicable law, rule or
regulation.
20. AMENDMENT. You agree that Bear Stearns may modify the terms of this
Agreement at any time upon prior written notice to you. By continuing to accept
services from Bear Stearns thereafter, you will have indicated your acceptance
of any such modification. If you do not accept such modification, you must
notify Bear Stearns in writing; your account may then be terminated by Bear
Stearns, after which you will remain liable to Bear Stearns for all outstanding
liabilities and obligations. Otherwise, this Agreement may not be modified
absent a written instrument signed by an authorized representative of Bear
Stearns.
21. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN
THE STATE OF NEW YORK AND SHALL BE CONSTRUED, AND THE CONTRACTUAL AND ALL OTHER
RIGHTS AND LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PRINCIPLES
THEREOF.
22. ARBITRATION. YOU AGREE THAT CONTROVERSIES ARISING BETWEEN YOU AND
YOUR INTRODUCING BROKER AND/OR BEAR STEARNS, AND ANY OF YOUR OR THEIR CONTROL
PERSONS, PREDECESSORS, SUBSIDIARIES, AFFILIATES, SUCCESSORS, ASSIGNS AND
EMPLOYEES, SHALL BE DETERMINED BY ARBITRATION.
WITH RESPECT TO THE RESOLUTION OF ANY SUCH CONTROVERSY, YOU FURTHER ACKNOWLEDGE
THAT:
O ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
O EXCEPT AS OTHERWISE PROVIDED HEREIN, THE PARTIES ARE WAIVING THEIR
RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL.
O PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT
FROM COURT PROCEEDINGS.
O THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION
OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
<PAGE>
O THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
O NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO
ARBITRATION NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT
AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION
OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE
CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS
ACTION UNTIL: (I) THE CLASS CERTIFICATION IS DENIED; (II) THE CLASS IS
DECERTIFIED; OR (III) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE
COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT
CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE
EXTENT STATED HEREIN.
O ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE HELD AT THE FACILITIES
AND BEFORE AN ARBITRATION PANEL APPOINTED BY THE NEW YORK STOCK
EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC. OR THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR, IF THE TRANSACTION WHICH
GIVES RISE TO SUCH CONTROVERSY IS EFFECTED IN ANOTHER UNITED STATES
MARKET WHICH PROVIDES ARBITRATION FACILITIES, BEFORE SUCH OTHER
FACILITIES. YOU MAY ELECT ONE OF THE FOREGOING FORUMS FOR ARBITRATION,
BUT IF YOU FAIL TO MAKE SUCH ELECTION BY REGISTERED MAIL OR TELEGRAM
ADDRESSED TO BEAR STEARNS SECURITIES CORP., 245 PARK AVENUE, NEW YORK,
NEW YORK 10167, ATTENTION: CHIEF LEGAL OFFICER (OR ANY OTHER ADDRESS OF
WHICH YOU ARE ADVISED IN WRITING). BEFORE THE EXPIRATION OF TEN DAYS
AFTER RECEIPT OF A WRITTEN REQUEST FROM BEAR STEARNS TO MAKE SUCH
ELECTION, THEN BEAR STEARNS MAY MAKE SUCH ELECTION FOR ANY ARBITRATION
SOLELY BETWEEN YOU AND A BROKER FOR WHICH BEAR STEARNS ACTS AS CLEARING
AGENT. SUCH ELECTION SHALL BE MADE BY REGISTERED MAIL TO SUCH BROKER AT
ITS PRINCIPAL PLACE OF BUSINESS. THE AWARD OF THE ARBITRATORS, OR OF A
MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON THE AWARD RENDERED
MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION.
23. SEVERABILITY. If and to the extent any term or provision herein is
or should become invalid or unenforceable under any present or future law, rule
or regulation of any sovereign government or regulatory body having jurisdiction
over the subject matter of this
<PAGE>
Agreement, then (i) the remaining terms and provisions hereof shall be
unimpaired and remain in full force and effect and (ii) the invalid or
unenforceable provision or term shall be replaced by a term or provision that is
valid and enforceable and that comes closest to expressing the intention of such
invalid or unenforceable term or provision.
24. EXTRAORDINARY EVENTS. Bear Stearns shall not be liable for losses
caused directly or indirectly by government restrictions, exchange or market
rulings, suspension of trading, war, strikes or other conditions beyond its
control.
25. HEADINGS. The headings or the provisions hereof are for ease of
reference only and shall not affect the interpretation or application of this
Agreement or in any way modify or qualify any of the rights provided for
hereunder.
26. TELEPHONE CONVERSATIONS. For the protection of both you and Bear
Stearns, and as a tool to correct misunderstandings, you hereby authorize Bear
Stearns, at Bear Stearns' discretion and without prior notice to you, to monitor
and/or record any or all telephone conversations or electronic communications
between you and Bear Stearns or any of Bear Stearns' employees or agents. You
acknowledge that Bear Stearns may determine not to make or keep any of such
recordings and that such determination shall not in any way affect any party's
rights.
27. CUMULATIVE RIGHTS; ENTIRE AGREEMENT. The rights of each Bear
Stearns entity set forth in this Agreement and in each other agreement you may
have with any Bear Stearns entity, whether heretofore or hereafter entered into,
are cumulative and in addition to any other rights and remedies that any Bear
Stearns entity may have and shall supersede any limitation on or any requirement
for the exercise of such rights and remedies that is inconsistent with the terms
of this or any other such Agreement (including, without limitation, any
requirement that time elapse or notice or demand be given prior to the exercise
of remedies). The provisions of this Agreement shall supersede any inconsistent
provisions of any other agreement heretofore or hereafter entered into by you
and any Bear Stearns entity to the extent that the subject matter thereof is
dealt with in this Agreement and the provisions of such other agreement would
deny any Bear Stearns entity any benefit or protection afforded to it under this
Agreement. You hereby appoint Bear Stearns as your agent and attorney-in-fact to
take any action (including, but not limited to, the filing of financing
statement) necessary or desirable to perfect and protect the security interest
granted in paragraph 3 hereof or to otherwise accomplish the purposes of this
Agreement. Except as set forth above, this Agreement represents the entire
agreement and understanding between you and Bear Stearns concerning the subject
matter hereof.
28. CAPACITY TO CONTRACT; AFFILIATIONS. You represent that you are of
legal age and that, unless you have notified Bear Stearns to the contrary,
neither you nor any member of your immediate family is: (i) an employee or
member of any exchange, (ii) an employee or member of the National Association
of Securities Dealers, Inc., (iii) an individual or
<PAGE>
an employee of any corporation or firm engaged in business of dealing, as broker
or principal, in securities, options or futures or (iv) an employee of any bank,
trust company or insurance company. If the undersigned is signing on behalf of
others, the undersigned hereby represents that the person(s) or entity(ies) on
whose behalf it is signing is/are authorized to enter into this Agreement and
that the undersigned is duly authorized to sign this Agreement and make the
representation herein in the name and on behalf of such other person(s) or
entity(ies).
If this is a Joint Account, both parties must sign. Persons signing on behalf of
others should indicate the titles or capacities in which they are signing.
BY SIGNING THIS AGREEMENT, YOU ACKNOWLEDGE THAT:
1. THE SECURITIES IN YOUR MARGIN ACCOUNT(S) AND ANY SECURITIES FOR WHICH
YOU HAVE NOT FULLY PAID, TOGETHER WITH ALL ATTENTION OWNERSHIP RIGHTS,
MAY BE LOANED TO BEAR STEARNS OR TO OTHERS; AND
2. YOU HAVE RECEIVED A COPY OF THIS AGREEMENT.
THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 22.
THIS AGREEMENT IS DATED AS OF ___________________________, 19__.
- -------------------------------------------------------
(ACCOUNT NUMBER)
- -------------------------------------------------------
(TYPED OR PRINTED NAME)
X
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(SIGNATURE)
- -------------------------------------------------------
(TYPED OR PRINTED NAME)
X
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(SIGNATURE)
ACCEPTED AND AGREED TO:
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THE BEAR STEARNS COMPANIES, INC. AND ITS SUBSIDIARIES
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December 1,
1999, by and between OSICOM TECHNOLOGIES, INC., a New Jersey corporation (the
"Company"), and FIBR HOLDINGS, LLC, a New York limited liability company (the
"Purchaser").
WHEREAS, the Company wishes to sell to the Purchaser, and the Purchaser
wishes to purchase from the Company, on the terms and subject to the conditions
set forth in this Agreement, shares of the Company's Common Stock, par value
$.30 per share (the "Shares"); and
WHEREAS, the Company has agreed to effect the registration of the
Shares to be issued pursuant to this Agreement under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Rights Agreement
of even date herewith by and between the Company and the Purchaser attached
hereto as Exhibit A (the "Registration Rights Agreement"); and
WHEREAS, the sale of the Shares by the Company to the Purchaser will be
effected in reliance upon an exemption from securities registration in
accordance with Section 4(2) of the Securities Act and the rules and regulations
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the Company and the Purchaser hereby
agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
satisfaction of the conditions set forth herein, the Company agrees to sell at
the Closing (as defined in paragraph 1.2 below), and the Purchaser agrees to
purchase, Six Hundred Seventy-Nine Thousand Four Hundred Eighty-Three (679,483)
Shares at a purchase price equal to Eleven and 0378/10000 Dollars ($11.0378) per
Share or Seven Million Five Hundred Thousand Dollars ($7,500,000) in the
aggregate (the "Purchase Price").
1.2 Closing. Subject to the satisfaction or waiver of the conditions
set forth herein, the closing of the purchase and sale of the Shares hereunder
(the "Closing") will be held simultaneously with the execution and delivery of
this Agreement and will be deemed completed when this Agreement and the other
Transaction Documents (as defined below) have been executed and delivered by the
Company and Purchaser (which delivery may be effected by facsimile
transmission), and full payment of the Purchase Price has been made by the
Purchaser by wire transfer of immediately available funds against physical
delivery by the Company of duly executed certificates representing the Shares
purchased by the Purchaser at the Closing. The date on which the Closing occurs
is referred to herein as the "Closing Date".
1.3 Certain Definitions. When used herein, (A) "business day" shall
mean any day on which the New York Stock Exchange and commercial banks in the
city of New York are open for
<PAGE>
business, (B) an "affiliate" of a party shall mean any person or entity
controlling, controlled by or under common control with that party and (C)
"control" shall mean, with respect to an entity, the ability to direct the
business, operations or management of such entity, whether through an equity
interest therein or otherwise.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby makes the following representations and warranties
to the Company and agrees with the Company that, as of the date of this
Agreement and as of the Closing Date:
2.1 Authorization; Enforceability. The Purchaser is duly and validly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization with full power and authority
to purchase the Shares and to execute and deliver this Agreement. This Agreement
constitutes the Purchaser's valid and legally binding obligation, enforceable in
accordance with its terms, except as such enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
2.2 Accredited Investor; Investment Intent. The Purchaser is an
accredited investor as that term is defined in Rule 501 of Regulation D, and is
acquiring the Shares solely for its own account for investment purposes as a
principal and not with a present view to the public resale or distribution of
all or any part thereof, except pursuant to sales that are exempt from the
registration requirements of the Securities Act or sales registered under the
Securities Act; provided, however that in making such representation, the
Purchaser does not agree to hold the Shares for any minimum or specific term and
reserves the right to sell, transfer or otherwise dispose of the Shares at any
time in accordance with the provisions of this Agreement and with Federal and
state securities laws applicable to such sale, transfer or disposition.
2.3 Information. The Company has provided the Purchaser with
information regarding the business, operations and financial condition of the
Company, and has granted to the Purchaser the opportunity to ask questions of
and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the Company and materials relating to
the terms and conditions of the purchase and sale of the Shares hereunder.
2.4 Limitations on Disposition. The Purchaser acknowledges that, except
as provided in the Registration Rights Agreement, the Shares have not been and
are not being registered under the Securities Act and may not be transferred or
resold without registration under the Securities Act or unless pursuant to an
exemption therefrom.
2.5 Legend. The Purchaser understands that the certificates
representing the Shares will bear at issuance a restrictive legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of
-2-
<PAGE>
any state, and may not be offered or sold unless a registration
statement under the Securities Act and applicable state securities laws
shall have become effective with regard thereto, or an exemption from
registration under the Securities Act and applicable state securities
laws is available in connection with such offer or sale. The securities
are subject to the provisions of a Stock Purchase Agreement dated
December 1, 1999 between the Company and FIBR Holdings, LLC with
respect to voting."
Notwithstanding the foregoing, it is agreed that, as long as
(A) the resale or transfer (including without limitation a pledge) of any of the
Shares is registered pursuant to an effective registration statement, (B) the
Shares can be sold to the public pursuant to Rule 144 under the Securities Act
("Rule 144") and a registered broker dealer provides to the Company a customary
broker's Rule 144 letter, or (C) the Shares are eligible for sale to the public,
without limitation as to the amount of or manner in which the Shares may be
sold, under Rule 144(k) or any successor provision, the Shares shall be issued
without any legend or other restrictive language and, with respect to Shares
upon which such legend is stamped, the Company shall issue new certificates
without the first sentence of such legend to the holder upon request. In
addition to the foregoing in the event that the Shares are transferred to any
transferee other than a member of the Purchaser, the Company will issue new
certificates without the last sentence of such legend.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties
to the Purchaser and agrees with the Purchaser that, as of the date of this
Agreement and as of the Closing Date:
3.1 Organization, Good Standing and Qualification. Each of the Company
and its subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
all requisite corporate power and authority to carry on its business as now
conducted. The term "subsidiaries" shall mean entities in which the Company has
a voting equity interest of 50% or greater.
3.2 Authorization; Consents. The Company has the requisite corporate
power and authority to enter into and perform its obligations under (i) this
Agreement, (ii) the Registration Rights Agreement and (iii) all other
agreements, documents, certificates or other instruments executed and delivered
by or on behalf of the Company at any Closing (the instruments described in (i),
(ii) and (iii) being collectively referred to herein as the "Transaction
Documents") and to issue and sell the Shares to the Purchaser in accordance with
the terms hereof. All corporate action on the part of the Company by its
officers, directors and stockholders necessary for the authorization, execution
and delivery of, and the performance by the Company of its obligations under the
Transaction Documents has been taken, and no further consent or authorization of
the Company, its Board of Directors, its stockholders, any governmental agency
or organization (other than as may be required under the Securities Act and
applicable state securities laws in respect of the Registration Rights
Agreement), or any other person or entity is required (pursuant to any rule of
the National Association of Securities Dealers, Inc. (the "NASD") or otherwise).
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3.3 Enforcement. The Transaction Documents constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except as such enforcement may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and (ii)
general principles of equity.
3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company has filed with the Commission: (i) the Company's Annual
Report on Form 10-K for the year ended January 31, 1999, (ii) the Company's
Quarterly Reports on Form 10-Q for the three month periods ended April 30, 1999
and July 31,1999, and the Company's Balance Sheet as of October 31, 1999 and
Profit and Loss Statement for the three month period ended October 31, 1999,
(such Balance Sheet and Profit and Loss Statement being referred to herein as
the "October Financial Statements") and (iii) all Current Reports on Form 8-K
required to be filed by the Company with the Commission since January 31, 1999
(collectively, the "Disclosure Documents"). The Company is not aware of any
event occurring on or prior to the Closing (other than the transactions effected
hereby) that would require the filing of, or with respect to which the Company
intends to file, a Form 8-K after the Closing. Each Disclosure Document, as of
the date of the filing thereof with the Commission (and with respect to the
October Financial Statements, as of October 31, 1999), conformed, and as of the
Closing Date will conform, in all material respects to the requirements of the
Exchange Act, and the rules and regulations thereunder and such Disclosure
Document did not, as of the date of such filing (and with respect to the October
Financial Statements, as of October 31, 1999), and will not, as of the Closing
Date, contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that any information set forth in any Disclosure Document
which is a forward-looking statement as defined in Rule 175(c) promulgated by
the Commission under the Securities Act shall not be deemed to contain an untrue
statement of material fact as long as such forward-looking statement was made
with a reasonable basis and in good faith.
3.5 Capitalization. The capitalization of the Company as of November
30, 1999, including its authorized capital stock, the number of shares issued
and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans, the number of shares issuable and
reserved for issuance pursuant to securities exercisable for, or convertible
into or exchangeable for any shares of Common Stock is set forth on Schedule 3.5
to this Agreement. All of such outstanding shares of capital stock have been, or
upon issuance will be, validly issued, fully paid and non-assessable. No shares
of the capital stock of the Company are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any liens or
encumbrances created by or through the Company. Except as disclosed in the
Disclosure Documents, or as contemplated herein, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its subsidiaries, or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries.
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3.6 Valid Issuance. The Shares are duly authorized and, when issued,
sold and delivered in accordance with the terms hereof, (i) will be duly and
validly issued, fully paid and nonassessable, free and clear of any taxes,
liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company, (ii) based in part upon the representations of the
Purchaser in this Agreement, will be issued, sold and delivered in compliance
with all applicable Federal and state securities laws and (iii) will be entitled
to all of the rights, preferences and privileges of the holders of the Common
Stock of the Company.
3.7 No Conflict with Other Instruments. The execution, delivery and
performance of this Agreement and the other Transaction Documents, and
consummation of the transactions contemplated hereby and thereby will not result
in (a) a violation of any provision of the Certificate of Incorporation or
by-laws of the Company or its subsidiaries, (b) a violation of any Law (as
defined below) or any judgment, decree, order, regulation or rule of any court
or other Governmental Entity (as defined in Section 5.1.8 hereof) applicable to
the Company or its subsidiaries, or (c) any violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any provision, instrument or contract to which the Company or any
of its subsidiaries are a party or by which any of their assets are subject, or
an event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company or of any of its subsidiaries or the triggering of any
preemptive or anti-dilution rights or rights of first refusal or first offer on
the part of holders of the Company's securities. "Law" shall mean any statute,
ordinance, code, rule, regulation or order enacted, adopted, promulgated,
applied or followed by any Governmental Entity.
3.8 Breach of Contract; Litigation.
3.8.1 The Company is not aware of any breaches in any
agreement to which it is a party which breach could have a material adverse
effect on the Company and its subsidiaries taken as a whole.
3.8.2 Except as described in the Disclosure Documents, there
is no material claim or litigation pending, or, to the Company's knowledge,
threatened or contemplated, against the Company or any of its subsidiaries, or
against any officer, director or employee of the Company or any such subsidiary
in connection with such person's employment therewith. Neither the Company nor
any of its subsidiaries is a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality which could reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole.
3.9 Trading on NASDAQ. The Common Stock is designated for quotation on
the NASDAQ National Market and trading in the Common Stock on such market has
not been suspended. The Company is in full compliance with the continued
designation criteria of the NASDAQ National Market and does not reasonably
anticipate that the Common Stock will be delisted from the NASDAQ National
Market, whether by reason of the transactions contemplated
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by this Agreement or the other Transaction Documents and is not aware of any
inquiry by or received any notice from the NASD regarding any failure or alleged
failure by the Company to comply with such requirements which has not been
favorably resolved prior to the date hereof.
3.10 Solicitation. Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Shares or (ii) has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under any circumstances that would require
registration of the Shares under the Securities Act.
3.11 Registration Rights. No holders of the Company's Common Stock nor
of any securities convertible or exchangeable into Common Stock nor of other
rights to acquire Common Stock (except employee stock options) have any rights
to require such Common Stock to be registered under the Securities Act, whether
pursuant to a demand, piggyback or other type of registration right.
4. COVENANTS OF THE COMPANY.
4.1 Corporate Existence. The Company shall, so long as any Purchaser or
any affiliate of the Purchaser beneficially owns any of the Shares, maintain its
corporate existence in good standing and shall pay all taxes owed by it when due
except for taxes which the Company reasonably disputes.
4.2 Provision of Information. The Company shall provide the Purchaser,
as long as the Purchaser holds any Shares, with copies of its annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy
statements and other materials sent to stockholders, in each such case promptly
after the filing thereof with the Commission.
4.3 Reporting Status. As long as the Purchaser or any affiliate of the
Purchaser beneficially owns any Shares and until the date on which any of the
foregoing may be sold to the public pursuant to Rule 144(k) (or any successor
rule or regulation), (i) the Company shall timely file with the Commission all
reports required to be so filed pursuant to the Exchange Act and (ii) the
Company shall not terminate its status as an issuer required by the Exchange Act
to file reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination. The Company agrees to file with the
Commission a Form 8-K describing the terms of the transactions contemplated by
this Agreement and the Registration Rights Agreement, with this Agreement
attached to such Form 8-K as an exhibit thereto, on or before the tenth (10th)
day following the Closing Date in the form required by the Exchange Act.
4.4 Quotation on NASDAQ. The Company shall (i) promptly following the
Closing, take such action as may be necessary to include the Shares for
quotation on the NASDAQ National Market and (ii) use its best efforts to
maintain the listing of the Shares on such market.
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4.5 Blue Sky Filings. In connection with the sale of the Shares to the
Purchaser, the Company will comply with, and make all filings required under,
any State securities law to which the sale of the Shares hereunder is subject.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at Closing. The Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase the Shares, are conditioned upon the fulfillment (or waiver by the
Purchaser) of each of the following events as of the Closing Date:
5.1.1 the representations and warranties of the Company set
forth in this Agreement shall be true and correct in
all material respects as of such date as if made on
such date;
5.1.2 the Company shall have complied with or performed in
all material respects all of the agreements,
obligations and conditions set forth in this
Agreement that are required to be complied with or
performed by the Company on or before the Closing;
5.1.3 the Company shall have delivered to the Purchaser a
certificate, signed by an officer of the Company,
certifying that the conditions specified in
paragraphs 5.1.1, 5.1.2 and 5.1.7 have been fulfilled
as of the Closing;
5.1.4 the Company shall have delivered to the Purchaser a
certificate, signed by the Secretary of the Company,
attaching a copy of the resolutions of the Board of
Directors authorizing the transactions contemplated
hereby, and certifying that such resolutions have not
been modified or rescinded since the date of their
adoption by the Company's Board of Directors;
5.1.5 the Company shall have delivered duly executed
certificates representing the Shares being purchased;
5.1.6 the Company shall have executed and delivered the
Registration Rights Agreement;
5.1.7 there shall have been no material adverse changes in
the Company's consolidated business or financial
condition since the date of the Company's most recent
audited financial statements contained in the
Disclosure Documents;
5.1.8 there shall be no action or proceeding by or before
any federal, state, local or foreign government or
any court of competent jurisdiction, administrative
agency or commission or other governmental authority
or instrumentality, domestic or foreign (a
"Governmental Entity") or NASD
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pending or threatened challenging or seeking to
restrain or prohibit the purchase and sale of any of
the Shares or any of the other transactions
contemplated by this Agreement or seeking to obtain
damages from either party hereto in connection with
the purchase and sale of the Shares or any of the
other transactions contemplated by this Agreement.
5.1.9 there shall be no statute, rule, regulation,
executive order, decree, temporary restraining order,
preliminary injunction, permanent injunction or other
order, enacted, entered, promulgated, enforced or
issued by any Governmental Entity or other legal
restraint or prohibition preventing the purchase and
sale of the Shares in effect.
5.1.10 the Purchaser shall have received an opinion of the
Company's counsel in form and substance as set forth
on Exhibit B.
5.2 Conditions to Company's Obligations at Closing. The Company's
obligations at the Closing are conditioned upon the fulfillment (or waiver by
the Company) of each of the following events as of the Closing Date:
5.2.1 the representations and warranties of the Purchaser
shall be true and correct in all material respects as
of such date as if made on such date; and
5.2.2 the Purchaser shall have complied with or performed
all of the agreements, obligations and conditions set
forth in this Agreement that are required to be
complied with or performed by the Purchaser on or
before the Closing.
5.2.3 there shall be no action or proceeding by or before
any Governmental Entity or NASD pending or threatened
challenging or seeking to restrain or prohibit the
purchase and sale of any of the Shares or any of the
other transactions contemplated by this Agreement or
seeking to obtain damages from either party hereto in
connection with the purchase and sale of the Shares
or any of the other transactions contemplated by this
Agreement.
5.2.4 there shall be no statute, rule, regulation,
executive order, decree, temporary restraining order,
preliminary injunction, permanent injunction or other
order, enacted, entered, promulgated, enforced or
issued by any Governmental Entity or other legal
restraint or prohibition preventing the purchase and
sale of the Shares in effect.
6. ADDITIONAL TRANSACTIONS
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6.1 Board of Directors Seat. At or subsequent to the Closing, the
Purchaser shall have the right to designate one member of the Board of Directors
of the Company to serve until the annual meeting of the shareholders of the
Company in 2001. The nominee shall be required to complete a questionnaire in
the same form as has been executed by all other directors of the Company.
Subject to the approval of the existing directors upon review of such
questionnaire and any other relevant information, such approval not to be
unreasonably withheld, the existing directors will elect such nominee to the
Board of Directors, and such individual shall receive the same compensation as
each other non-employee director of the Company.
6.2 Election of Directors. From and after the Closing Date, the
Purchaser shall, and shall use its reasonable best efforts to cause any of its
members to which the Purchaser transfers the Shares, to vote the Shares at all
times prior to their sale at any regular or special meeting of the shareholders
of the Company called for the purpose of filling positions on the Board of
Directors of the Company, or in any written consent executed in lieu of such a
meeting of shareholders, in favor of the nominees proposed by the Company's
Board of Directors. In the event that the Purchaser or its members do not cast
its vote in accordance with the previous sentence, the Company's Board of
Directors is hereby authorized to do so. As a condition precedent to having the
Company's transfer agent effect a transfer of any Shares to a member of the
Purchaser, the Company may require such transferee(s) to execute a document
granting the Board of Directors authority consistent with this paragraph.
6.3 Right of Participation. The Company agrees that, prior to any offer
or sale by the Company's subsidiary, Meret Communications, Inc. ("Meret") of
Meret's common stock (or any securities convertible or exercisable into or
exchangeable for common stock) it will deliver, at least ten (10) business days
prior to such proposed issuance, to the Purchaser written notice describing the
proposed offering, including the aggregate amount to be offered and the terms
and conditions thereof (a "Participation Notice"), and provide the Purchaser
with an option to participate in such offering up to $7,500,000 (the "Right of
Participation") on the terms and conditions set forth in the Participation
Notice. The Purchaser may exercise its Right of Participation by delivering
written notice of such exercise (an "Exercise Notice") to the Company on or
before the eighth (8th) business day following receipt of the Participation
Notice, which notice shall specify the dollar amount of the securities that the
Purchaser wishes to purchase in such offering. In the event that a Purchaser
exercises its Right of Participation with respect to such offering, the Company
shall, within one business day thereafter (i) determine in good faith from the
lead investor or lead venture financier in the event of a private offering or
from the managing underwriter in the event of an initial public offering whether
the Purchaser will be allowed to participate in such offering, provided that the
Company shall recommend to such lead investor or lead venture financier or
managing underwriter that the Purchaser be allowed to so participate, and to
purchase the dollar amount of securities requested by the Purchaser and (ii)
notify the Purchaser of such determination. The Right of Participation shall
apply only to Meret's initial financing subsequent to the Closing Date. In the
event that the Purchaser transfers Shares to any of its members and until such
time as such members transfer the Shares, each such member shall have the rights
afforded to the Purchaser under this Section 6.3 with respect to such Shares (it
being the intent of the parties that the Right of Participation for the
Purchaser and its members not exceed $7,500,000 in the aggregate); provided
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that the Purchaser shall retain and have the sole right to receive the
Participation Notice from the Company and deliver the Exercise Notice to the
Company in accordance with the provisions of this Section 6.3.
6.4 Commission. At the Closing, the Company shall pay to Andersen
Weinroth Capital Corp., by certified check or wire transfer, $300,000 in
connection with the transactions contemplated by this Agreement.
7. MISCELLANEOUS.
7.1 Public Disclosure. The existence of this Agreement and the
transactions contemplated therein shall not be disclosed by either Party without
the other Party's prior written consent, such consent not to be unreasonably
withheld.
7.2 Survival; Severability. The representations, warranties, covenants
and indemnities made by the parties herein shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that in such case the parties shall negotiate
in good faith to replace such provision with a new provision which is not
illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Agreement to the parties.
7.3 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and permitted assignors any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement. In addition to the assignment of rights and
obligations contemplated under Sections 6.2 and 6.3 hereof to members of the
Purchaser as expressly provided for in Sections 6.2 and 6.3 hereof, the
Purchaser may assign its rights and obligations hereunder, in connection with
any private sale or transfer of the Shares in accordance with the terms hereof,
as long as, as a condition precedent to such transfer, the transferee executes
an acknowledgment agreeing to be bound by the applicable provisions of this
Agreement in which case the term "Purchaser" shall be deemed to refer to such
transferee as though such transferee were an original signatory hereto. The
Company may not assign it rights or obligations under this Agreement.
7.4 No Reliance. Each party acknowledges that (i) it has such knowledge
in business and financial matters as to be fully capable of evaluating this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby, (ii) it is not relying on any advice or representation of
the other party in connection with entering into this Agreement, the other
Transaction Documents or such transactions (other than the representations made
in this Agreement or the other Transaction Documents), (iii) it has not received
from such party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this
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Agreement or the other Transaction Documents or the performance of its
obligations hereunder and thereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors
to the extent that it has deemed necessary, and has entered into this Agreement
and the other Transaction Documents based on its own independent judgment and on
the advice of its advisors as it has deemed necessary, and not on any view
(whether written or oral) expressed by such party.
7.5 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed under the laws of the State of New Jersey without regard to the
conflict of laws provisions thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the State
of New Jersey, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit action or
proceeding, any claim that it is nor personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
7.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.7 Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.8 Notices. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day, (ii) on the next business day after
timely delivery to a nationally-recognized overnight courier and (iii) on the
third business day after deposit in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed to the parties as follows:
If to the Purchaser:
FIBR Holdings, LLC
1330 Avenue of the Americas
36th Floor
New York, New York 10019
Attn: Rohit Phansalkar
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Tel: (212) 842-1606
Fax: (212) 842-1540
with copies to:
Andersen, Weinroth & Co., L.P.
1330 Avenue of the Americas
36th Floor
New York, New York 10019
Attn: Chris Andersen
Tel: (212) 842-1606
Fax: (212) 842-1540
and
Swidler Berlin Shereff Friedman
405 Lexington Avenue
New York, New York 10174
Attn: Jeffry S. Hoffman, Esq.
Tel: 212-758-9500
Fax: 212-891-9598
If to the Company:
Osicom Technologies, Inc.
2800 28th Street, Suite 100
Santa Monica, CA 90405
Attn: Chief Financial Officer
Tel: 310-581-4030
Fax: 310-581-4032
with a copy to:
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP
Metro Corporate Campus One
P.O. Box 5600
Woodbridge, New Jersey 07095-0988
Attn: W. Raymond Felton, Esq.
Tel: 732-549-5600
Fax: 732-549-1881
7.9 Expenses. The Company and the Purchaser each shall pay all costs
and expenses that it incurs in connection with the negotiation, execution,
delivery and performance of this Agreement; provided, however, that the Company
shall reimburse the Purchaser for legitimate and itemized legal fees and
expenses incurred by it in connection with its due diligence investigation of
the Company
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and the negotiation, preparation, execution, delivery and performance of this
Agreement and the other Transaction Documents in an amount not to exceed
Twenty-Five Thousand Dollars ($25,000).
7.10 Entire Agreement; Amendments. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Notwithstanding the foregoing, Sections 1 and 2 of the certain letter
between Andersen, Weinroth & Co., L.P. and the Company, dated November 5, 1999,
remain in full force and effect. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by the Company and the Purchaser and no provision hereof may
be waived other than by a written instrument signed by the party against whom
enforcement of any such waiver is sought.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
FIBR HOLDINGS, LLC OSICOM TECHNOLOGIES, INC.
By: /s/ Rohit K. Phanslkar By: /s/ Christopher E. Sue
--------------------------------- ------------------------------------
Name: Rohit K. Phanslkar Name: Christopher E. Sue
------------------------------- ----------------------------------
Title: Manager Title: Vice President Finance, Secretary
------------------------------ ---------------------------------
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into this 1st day of December, 1999, by and between Osicom Technologies, Inc., a
New Jersey corporation (the "Company") and FIBR Holdings, LLC, a New York
limited liability company (the "Purchaser").
This Agreement is made pursuant to a Stock Purchase Agreement, dated
as of December 1, 1999 (the "Purchase Agreement") between the Company and the
Purchaser. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to closing under the Purchase Agreement. All defined terms used but not defined
herein shall have the meanings ascribed to them in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Commission: The Securities and Exchange Commission.
Common Stock: The Common Stock, $.30 par value per share, of the
Company.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Holders: As defined in Section 2(b) hereof.
Issue Date: The date on which the Transfer Restricted Securities are
issued to the Purchaser pursuant to the Purchase Agreement.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in the Registration Statement (as
defined herein), as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Registration Statement and by all
other amendments and supplements to the Prospectus, including
<PAGE>
post-effective amendments, and all material which may be incorporated by
reference into such Prospectus.
Registrable Date: The date upon which the first of the following
occur: (a) the Company distributes to its shareholders or otherwise sells,
transfers or disposes of all or substantially all of the common stock of
NETsilicon, Inc., a Massachusetts corporation, that it owns, or (b) the first
anniversary of the Issue Date.
Transfer Restricted Securities: Each share of the Company's Common
Stock issued pursuant to the Purchase Agreement, until each such share (i) has
been effectively registered under the Act, or (ii) is distributed to the public
pursuant to Rule 144 under the Act or (iii) may be sold or transferred pursuant
to Rule 144(k)(or any similar provisions then in force) under the Act or
otherwise.
Underwriter: Any underwriter, placement agent, selling broker, dealer
manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Registration or Underwritten Offering: An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm commitment
or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTRATION
(a) Registration on Demand. (i) At any time after the Registrable Date
the Purchaser on behalf of the Holders of the Transfer Restricted Securities
shall have the right to require the Company, by written request, to cause the
Transfer Restricted Securities to be registered with the Commission by filing a
Registration Statement to cover the offer and resale by a Holder from time to
time and the methods of distribution elected by such holder of Transfer
Restricted Securities as set forth in such Registration Statement. Within 10
days after receipt of any such request, the Company will serve a written notice
of such registration request to all Holders, and the Company will include in
such registration all Transfer Restricted Securities of such Holders with
respect to which the Company has received written requests for inclusion therein
within 20 business days after the delivery such notice. As used herein,
"register", "registered" and "registration" each refer to a registration of the
Transfer Restricted Securities effected by filing with the Commission a
2
<PAGE>
Registration Statement in compliance with the Act and the declaration or
ordering by the Commission of effectiveness of such Registration Statement.
"Registration Statement" shall mean Form S-3 or such other form as may be
available to the Company and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein. In connection with any registration, the Company will pay
for all registration expenses (as defined in Section 5 hereof) and will pay for
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed.
(iii) A registration will not be deemed to have been effected
pursuant to this Section 3(a) unless it has been declared effective by the
Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided that if, after
it has become effective, the offering of shares of Transfer Restricted
Securities pursuant to such registration is or becomes the subject of any stop
order, injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of the shares of Common Stock pursuant to the registration at
any time within the time period provided under Section 4(b)(ii)(y), such
registration will be deemed not to have been effected. If (i) a registration
requested pursuant to this Section 3(a) is deemed not to have been effected or
(ii) the registration requested pursuant to this Section 3(a) does not remain
effective for a period of at least the period provided under Section
4(b)(ii)(y), then the Company shall continue to be obligated to effect such
registration pursuant to this Section 3(a).
(b) Incidental Registration. If the Company at any time proposes to
register (other than a registration on Form S-8 or S-4 or any successor or
similar forms) any of its equity securities under the Act, whether or not for
sale for its own account, in a manner which would permit registration of
Transfer Restricted Securities for offer or resale under the Act, it will each
such time use its best efforts to effect the registration under the Act of all
Transfer Restricted Securities held by the Holders; provided, however, that (i)
if such registration involves an Underwritten Offering, all Holders, if
requested by an Underwriter, must sell their Transfer Restricted Securities to
the Underwriters selected by the Company on the same terms and conditions as
apply to the Company; and (ii) if, (x) at any time after giving written notice
of its intention to register any securities pursuant to this Section 3(b) and
(y) prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register such securities, the Company shall give written notice to all
Holders of Transfer Restricted Securities and, thereupon, shall be relieved of
its obligation to register any Transfer Restricted Securities in connection with
such proposed registration. Notwithstanding the foregoing, the Holders shall
have the absolute right in their sole discretion not to participate in any
Underwritten Offering in the event that the terms or conditions of such offering
are not satisfactory.
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(i) If a registration pursuant to Section 3(b) involves an
Underwritten Offering and the managing Underwriter advises the Company in
writing that, in its opinion, the number of equity securities (including all
Transfer Restricted Securities) which the Company, the Holders and any other
Persons intend to include in such registration exceeds the largest number of
securities which can be sold without having an adverse effect on such offering,
including the price at which such securities can be sold, the Company will
include in such registration (x) first, all the securities the Company proposes
to sell for its own account, and (y) second, to the extent that the number of
securities which the Company proposes to sell for its own account pursuant to
Section 3(b) hereof is less than the number of equity securities which the
Company has been advised can be sold in such offering without having the adverse
effect referred to above, all Transfer Restricted Securities requested to be
included in such registration by the Holders pursuant to Section 3(b) hereof
(provided that if the number of Transfer Restricted Securities requested to be
included in such registration by the Holders pursuant to Section 3(b) hereof,
together with the number of Transfer Restricted Securities to be included in
such registration pursuant to clause (x) of this Section 3(b)(i), exceeds the
number which the Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of such Transfer
Restricted Securities requested to be included in such registration by the
Holders pursuant to Section 3(b)(i) hereof shall be limited to such extent and
shall be allocated pro rata among all such Holders on the basis of the relative
number of Transfer Restricted Securities then held by such Holder) and all other
person having similar registration rights with respect to the Company's Common
Stock.
(ii) In the event of an Underwritten Offering, upon the Company's
request, any Holder will execute and deliver a custody agreement and power of
attorney in form and substance reasonably satisfactory to the Holders with
respect to the Transfer Restricted Securities to be registered pursuant to this
Section 3(b) (a "Custody Agreement and Power of Attorney"). The Custody
Agreement and Power of Attorney will provide, among other things, that the
Holders will deliver to, and deposit in custody with, the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Transfer Restricted Securities (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Holder's agent and attorney-in-fact with full power and authority to act under
the Custody Agreement and Power of Attorney on the Holder's behalf with respect
to the matters specified thereon. The Holders agree that they will execute such
other agreements as the Company may reasonably request to further evidence the
provision of this Section 3(b).
(c) No Holder of Transfer Restricted Securities may include any of its
Transfer Restricted Securities in any Registration Statement pursuant to this
Agreement unless such Holder furnishes to the Company in writing, within ten
(10) business days after receipt of a request therefor, such information related
to such Holder as the Company may reasonably request for use in connection with
any Registration Statement or Prospectus or preliminary Prospectus included
therein.
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(d) Notwithstanding any other provision of Section 3(a), if the
Company determines in the good faith judgment of the Company's counsel that the
filing of a Registration Statement would require the disclosure of material
information which the Company has a good faith business purpose for preserving
as confidential, the Company shall not be required to commence using its best
efforts to effect a registration pursuant to Section 3(a) until the earlier of
(i) the date upon which such material information is disclosed to the public (it
being understood that nothing herein shall require such disclosure) or ceases to
be material or (ii) 60 days after the Company makes such good faith
determination. In addition, the Company shall have the right to defer the
initial filing or the effectiveness of a Registration Statement filed pursuant
to Section 3(a) hereof for a reasonable period of time to permit the Company to
have prepared, to the extent not already available, financial statements for the
Company's most recently completed fiscal period ended at the time that the
demand for registration is received by the Company, only to the extent that the
Company, in consultation with its regularly retained counsel and certified
public accountants, determines in good faith that the inclusion of such
financial statements is desirable to avoid the use of stale financial
statements. The Company may impose stop-transfer instructions with respect to
the Transfer Restricted Securities of the Holders for any period of suspension
of effectiveness of the Registration Statement being filed pursuant to Section
3(a).
SECTION 4. REGISTRATION PROCEDURES
In connection with the Registration Statement, the Company will use
its best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution or disposition thereof, and pursuant thereto the Company
will as expeditiously as possible:
(a) prepare, file and use its best efforts to cause to become
effective a registration statement under the Act regarding the Transfer
Restricted Securities to be offered; provided, however, that before filing a
Registration Statement or any Prospectus, or any amendments or supplements
thereto, (other than documents incorporated by reference after the initial
filing of the Registration Statement), the Company will furnish to the Holders
and the Underwriter(s), if any, copies of all such documents proposed to be
filed, and the Company will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which (i) the
Underwriter(s), if any, shall reasonably object or (ii) the Holders of a
majority of the Transfer Restricted Securities to be registered in the
Registration Statement shall reasonably object, in each such case within ten
(10) business days after the receipt thereof. A Holder or Underwriter, if any,
shall be deemed to have reasonably objected to such filing if the Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed to be
filed contains a material misstatement or omission which misstatement or
omission is specifically identified to the Company in writing within such ten
(10) business days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary (i)to prevent the Registration Statement from
containing any material misstatement or omission and
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(ii) to keep such Registration Statement effective and to comply with the
provisions of the Act with respect to the disposition of all Transfer Restricted
Securities until the later of (x) the disposition of all of the Transfer
Restricted Securities covered by such Registration Statement or (y) the
expiration of three (3) years after such Registration Statement becomes
effective;
(c) use its best efforts to register or qualify all Transfer
Restricted Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Shareholders or any
Underwriter of such Transfer Restricted Securities shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable the Shareholders or any Underwriter to consummate the disposition in such
jurisdictions of its Transfer Restricted Securities covered by such Registration
Statement;
(d) advise the Underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (i) when
the Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment thereto, when the same has become effective, (ii) of any request by
the Commission for amendments to the Registration Statement or any amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the suspension
by any state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (iv) of the
existence of any fact and the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or blue sky laws, the Company shall
use its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(e) in the case of any Underwritten Offering, furnish to the
Shareholders and the Underwriters, addressed to them, (A) an opinion of counsel
for the Company, dated the date of the closing under the underwriting agreement
relating to any Underwritten Offering, and (B) a comfort letter signed by the
independent public accountants who have certified the Company's financial
statements included in such Registration Statement, covering substantially the
same matters with respect to such Registration Statement (and the Prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters,
respectively, delivered to underwriters in underwritten public offerings of
securities and such other matters and the Shareholders may reasonably request;
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(f) promptly following the filing of any document that is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement), provide copies of such
document to the Holders;
(g) deliver to each Holder and each of the Underwriter(s), if any,
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus and any
amendment or supplement thereto by each of the Holders and each of the
Underwriter(s), if any, in connection with the public offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(h) comply with all applicable rules and regulations of the
Commission, including Section 11(a) of the Securities Act and Rule 158 of the
Securities Act, and make generally available to its security holders, as soon as
practicable, a consolidated earnings statement (which need not be audited) for
the twelve-month period (i) commencing at the end of any fiscal quarter in which
Transfer Restricted Securities are sold to Underwriters in a firm or best
efforts Underwritten Offering or (ii) if not sold to Underwriters in such an
offering, beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement;
(i) make all filings required to be made with the NASD and in the
performance of any due diligence investigation by any Underwriter (including any
"qualified independent Underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD).
(j) cooperate with the Holders and the Underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the Underwriter(s),
if any, may request at least two business days prior to any sale or Transfer
Restricted Securities made by such Underwriter(s);
(k) if any fact or event contemplated by clause (d)(v) above shall
exist or have occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(l) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange or quotation
system on which similar securities issued by the Company are then listed, if
any;
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Each Holder as to which any Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 4(d)(iv) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus, or
until it is advised in writing (the "Advice") by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the time period regarding the effectiveness
of the Registration Statement set forth in Section 4(b) hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4(d)(v) hereof to and including the
date when each selling Holder covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus or shall have
received the Advice.
SECTION 5. REGISTRATION EXPENSES
Except as otherwise specifically set forth herein, all expenses
incident to the Company's performance of or compliance with this Agreement will
be borne solely by the Company, regardless whether a Registration Statement
becomes effective, including without limitation:
(i) all registration and filing fees and expenses (including
filings made with the NASD);
(ii) fees and expenses of compliance with federal securities
or state blue sky laws;
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer
Restricted Securities in a form eligible for deposit with Depository
Trust Company and of printing Prospectuses), messenger and delivery
service and telephone;
(iv) reasonable fees and disbursements of counsel for the
Company;
(v) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to
such performance);
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(vi) fees and expenses associated with any NASD filing
required to be made in connection with the Registration Statement,
including, if applicable, the fees and expenses of any "qualified
independent Underwriter" (and its counsel) that is required to be
retained in accordance with the rules and regulations of the NASD;
(vii) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual
audit and the fees of any rating agency (collectively, the
"registration expenses").
The expense of any broker's commission or Underwriters' discount or commission
in connection with the sale of Transfer Restricted Securities shall be borne by
the Holder of such Transfer Restricted Securities.
SECTION 6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder
(each such Holder an "Indemnified Holder") and in the case of an Underwritten
Offering, each Underwriter participating in the distribution (each such
Underwriter an "Indemnified Underwriter"), each officer and director of each
Holder and each person that controls each Indemnified Holder or Indemnified
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and agents, employees, officers and directors or any such
controlling person of any Indemnified Holder or Indemnified Underwriter from and
against any and all losses, claims, damages, judgments, liabilities and expenses
(including the reasonable fees and expenses of counsel and other expenses in
connection with investigating, defending or settling any such action or claim)
as they are incurred arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the any Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
Prospectus or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except (i) the Company shall not be
liable to any such Indemnified Holder or Indemnified Underwriter in any such
case insofar as such losses, claims, damages, judgments, liabilities or expenses
arise out of, or are based upon, any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to such
Indemnified Holder or Indemnified Underwriter furnished in writing by such
Indemnified Holder or Indemnified Underwriter to the Company expressly for use
therein and (ii) the Company shall not be liable to any such Indemnified Holder
or Indemnified Underwriter under the indemnity agreement in this Section 6(a)
with respect to any preliminary Prospectus to the extent that any such loss,
claim, damage, judgment, liability or expense (x) arise out of or are based upon
an untrue statement or omission in such prospectus and
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<PAGE>
(y) such untrue statement or omission is corrected in an amendment or supplement
to such prospectus, and (z) having previously been furnished by or on behalf of
the Company with sufficient copies of such prospectus as so amended or
supplemented, such Indemnified Holder or Indemnified Underwriter thereafter
fails to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of a person asserting the claim from which such loss,
claim, damages, judgments, liabilities or expenses arise.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
Indemnified Holder or Indemnified Underwriter with respect to which indemnity
may be sought against the Company pursuant to Section 6(a), such Indemnified
Holder or Indemnified Underwriter shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Holder or
Indemnified Underwriter and payment of all fees and expenses; provided, however,
that the omission so to notify the Company shall not relieve the Company from
any liability that they may have to any Indemnified Holder or Indemnified
Underwriter (except to the extent that the Company is materially prejudiced or
otherwise forfeits substantive rights or defenses by reason of such failure). An
Indemnified Holder or Indemnified Underwriter shall have the right to employ
separate counsel in any such action or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder or Indemnified Underwriter unless (i) the
Company agrees in writing to pay such fees and expenses, (ii) the Company has
failed promptly to assume the defense and employ counsel satisfactory to the
Indemnified Holder or Indemnified Underwriter or (iii) the named parties to any
such action or proceeding (including any impleaded parties) include both the
Indemnified Holder or Indemnified Underwriter, on the one hand, and the Company
and such Indemnified Holder or Indemnified Underwriter shall have been advised
in writing by its counsel that representation of it and the Company by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation has been proposed) due to actual or
potential conflicts of interests between them (in which case the Company shall
not have the right to assume the defense of such action on behalf of such
Indemnified Holder or Indemnified Underwriter). The Company shall not be liable
for any settlement of any such action effected without the written consent of
the Company, but if settled with the written consent of the Company, or if there
is a final judgment with respect thereto, the Company agrees to indemnify and
hold harmless each Indemnified Holder or Indemnified Underwriter from and
against any loss or liability by reason of such settlement or judgment. The
Company shall not, without the prior written consent of each Indemnified Holder
or Indemnified Underwriter affected thereby, effect any settlement of any
pending or threatened proceeding in which such Indemnified Holder or Indemnified
Underwriter has sought indemnity hereunder, unless such settlement includes an
unconditional release of such Indemnified Holder or Indemnified Underwriter from
all liability arising out of such action, claim, litigation or proceeding. For
the purposes of this Section 6(b), the term "conflict of interest" shall mean
that there are one or more legal defenses available to the Indemnified Holder or
the Company, as applicable, which different or additional defenses make joint
representation inappropriate.
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(c) Each Indemnified Holder and Indemnified Underwriter agrees to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, the "Company Indemnified Parties") to the same extent as the
foregoing indemnity from the Company to such Indemnified Holder or Indemnified
Underwriter, but only with respect to information relating to such Indemnified
Holder or Indemnified Underwriter furnished to the Company in writing by such
Indemnified Holder or Indemnified Underwriter, respectively, expressly for use
in the Registration Statement, Prospectus (or any amendment of supplement
thereto), or any preliminary Prospectus. In case any action shall be brought
against any Company Indemnified Party based on the Registration Statement,
Prospectus (or any amendment of supplement), or any preliminary Prospectus and
in respect of which indemnification may be sought against each Indemnified
Holder and Indemnified Underwriter pursuant to this Section 6(c), such
Indemnified Holder and Indemnified Underwriter shall have the rights and duties
given to the Company by Section 6(a) (except that if the Company shall have
assumed the defense thereof, such Indemnified Holder and Indemnified Underwriter
may, but shall not be required to employ separate counsel therein and
participate in the defense thereof and the fees and expenses of such counsel
shall be at the expense of such Indemnified Holder or Indemnified Underwriter)
and the Company Indemnified Parties shall have the rights and duties given to
the Indemnified Holders or Indemnified Underwriters by Section 6(b). In no event
shall the liability of any Indemnified Holder hereunder be greater in amount
than the dollar amount of the net proceeds (after broker's commissions or
underwriters discounts and commissions) received by such Indemnified Holder upon
the sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(d) If the indemnification provided for in this Section 6 is
unavailable to any party entitled to indemnification pursuant to Section 6(a) or
6(c), then such indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, judgments, liabilities and expenses
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each Indemnified Holder or Indemnified Underwriter
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, judgments, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and each Indemnified Holder and Indemnified Underwriter on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or by each Indemnified Holder and Indemnified Underwriter on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. In no event shall
the liability of any Indemnified Holder hereunder be greater in amount than the
dollar amount of the net proceeds (after broker's commissions or underwriters
discounts and commissions) received by such Indemnified Holder upon the sale of
the Transfer Restricted Securities giving rise to such contribution obligation.
(e) The Company and each Indemnified Holder and Indemnified
Underwriter agree that it would not be just and equitable if contribution
pursuant to Section 6(d) were determined
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by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 6(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not found guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 6 are in addition to any liability that any indemnifying party may
otherwise have to any indemnified party.
SECTION 7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements. In addition to the foregoing, all Holders agree that in connection
with the first Underwritten Offering following the date hereof, they shall not,
to the extent requested by the Company and the lead Underwriter in such
offering, sell or otherwise transfer or dispose of any Transfer Restricted
Securities (other than (i) sales, transfers or dispositions to donees who agree
to be similarly bound or (ii) sales, transfers or dispositions of Transfer
Restricted Securities included in the registration of the first Underwritten
Offering or in any registration statement previously declared effective) during
a reasonable and customary period of time, not to exceed 180 days, next
following the effective date of the Registration Statement relating to the first
Underwritten Offering; provided, however, that such agreement by the Holders not
to dispose of Transfer Restricted Securities during such period shall apply only
if all executive officers, directors and principal shareholders of the Company
and all other persons with registration rights relating to any of the Company's
securities to be registered in such offering (whether or not pursuant to this
Agreement) enter into similar agreements with the Company and the Underwriters
containing the same terms as set forth in this Section 7. In order to enforce
the foregoing covenant contained in the prior sentence, the Company may impose
stop-transfer instructions with respect to the Transfer Restricted Securities of
the Holders until the end of such agreed upon period.
SECTION 8. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of Transfer
Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders or Transfer Restricted
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Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the Holders of the Company's securities under any
other agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
Shareholders.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery;
(i) if to a Holder of Transfer Restricted Securities, at the
address set forth on the records of the Company's registrar, with a
copy to Andersen Weinroth, & Co., L.P., 1330 Avenue of the Americas,
36th Floor, New York, New York 10019, Attn: Chris Andersen, Tel.:
212-842-1605, Fax: 212-842-1540, and a copy to Swidler Berlin Shereff
Friedman, LLP, 405 Lexington Avenue, New York, New York, 10174Attn:
Jeffrey S. Hoffman, Esq., Telephone: 212-758-9500, Fax: 212-891-9598.;
and
(ii) if to the Company, initially at its address set forth
in the Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section,
with a copy to Greenbaum, Rowe, Smith, Ravin, Davis & Himmel, LLP, 99
Wood Avenue South, P.O. Box 5600, Woodbridge, New Jersey 07095, Attn:
W. Raymond Felton, Esq., Telephone: 732- 549-5600, Fax: 732-549-1881.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder of Transfer Restricted Securities unless and to the extent
such successor or assign acquired Transfer Restricted Securities from such
Holder. Notwithstanding any assignment by the Purchaser of this Agreement, the
Purchaser shall remain the entity which pursuant to Section 3(a) has the right
to require the Company by written request to cause the Transfer Restricted
Securities to be registered pursuant to the terms of Section 3(a) unless the
Purchaser expressly agrees otherwise in a written instrument executed by the
Purchaser.
13
<PAGE>
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law; Jurisdiction. This Agreement shall be governed by
and construed under the laws of the State of New Jersey without regard to the
conflict of laws provisions thereof. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the State
of New Jersey, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit action or
proceeding, any claim that it is nor personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
OSCIOM TECHNOLOGIES, INC.
By:
----------------------------------------
FIBR HOLDINGS, LLC
By: /s/ Rohit K. Phansalkar
----------------------------------------
Name: Rohit K. Phansalkar
Title: Manager
15
<PAGE>
Anderson, Weinroth & Co., L.P.
1330 Avenue of the Americas
New York, New York 10019
November 5, 1999
Mr. Par Chadha
Osicom Technologies, Inc.
2800 28th Street, Suite 100
Santa Monica, California 90405
Dear Mr. Chadha:
Anderson, Weinroth & Co., L.P. ("AW") proposes to provide assistance to
Osicom Technologies, Inc. ("FIBR" or the "Company") with respect to the
identification and recruitment of senior officers and directors for the Company
and/or its subsidiaries or affiliates. AW also desires to establish a strategic
ownership position in the Company through a negotiated transaction (the
"Transaction"), subject to satisfactory completion of due diligence, as
described in the Paragraph 3 below. The terms of the agreement (the "Agreement")
shall be as follows:
1. For every senior officer ("Officer") identified by AW and employed by
FIBR or any of its subsidiaries or affiliates, the Company will grant
AW seventy-five thousand (75,000) warrants (the "Warrants") with a life
of two (2) years and exercisable at the same price or prices at which
the Officer's employee stock options are exercisable. The Warrants
shall vest six months after the Officer's start date, and only if upon
such date the Officer remains employed by Osicom or its subsidiary or
affiliate. In addition, the Company will issue unregistered FIBR common
shares to AW in an amount equal to ten percent (10%) of the total value
of the Officer's first-year compensation.
2. For every director (the "Director") identified by AW and elected to the
Board of the Company or its subsidiary or affiliates, the Company will
grant the Director a number of options and having such terms as would
ordinarily be granted under the Directors Stock Option Plan (or other
applicable compensation plan) of the Company or its subsidiary or
affiliates. For each Director identified by AW, the Company will grant,
or cause to be granted to AW twenty-five thousand (25,000) warrants
each having a life of two (2) years but otherwise having the same terms
as the options granted the Director. The Warrant grant described in
this paragraph herein shall be made as of the date the Director is
elected to the Board of the Company or its subsidiary or affiliate.
<PAGE>
3. The Company will sell to a group to be held by AW, or to a specified
purpose entity created by AW, SIX HUNDRED SEVENTY-NINE THOUSAND FOUR
HUNDRED EIGHTY THREE (679,483) newly-issued shares of the Company's
common stock (the "New Shares") having a value of seven and one half
million U.S. dollars (USD $7,500,000). For the purposes of the
Transaction described herein, the New Shares shall be issued at USD
$11.04 New Share, such price being equal to the average of the closing
prices for the Company's common stock for the four (4) trading days
immediately preceding and the day upon which this Agreement is
executed, as reported by Nasdaq. In the event that AW and the Company
complete the Transaction, the Company and AW agree as follows:
(i) The Company shall pay to AW a cash fee equal to four percent
(4%) of the Transaction amount, payable at the Closing of the
Transaction.
(ii) AW shall have the right to nominate one Director (the
"Nominee") to the Company's Board. The Company shall have the
right to approve the Nominee, such approval shall not be
unreasonably withheld. The Company shall have no obligation to
pay any compensation to AW in connection with the appointment
of the Nominee to the Company's Board (e.g., the terms of
Paragraph 2 above shall not apply to the appointment of the
Nominee).
(iii) The AW Group and the Company shall enter into a definitive
Stock Purchase Agreement containing standard representations,
warranties and indemnification provisions. The Company and AW
agree to use their best efforts to complete the Transaction
before December 1, 1999.
(iv) AW and the Company shall enter into a Registration Rights
Agreement containing one demand registration right at the
Company's expense on a "best efforts" basis, and piggyback
registration rights. The demand registration described therein
shall not be available before the earlier of the (i) first
date upon which the Company distributes the shares of
Netsilicon, Inc. common stock which it owns; or (ii) the first
anniversary of the date upon which the New Shares are issued.
(v) AW agrees that it shall vote all of its New Shares in favor of
the slate of directors nominated by the Company's management
at any meeting of the Company's shareholders.
(vi) The Company shall reimburse AW its legitimate out-of-pocket
legal and other expenses incurred in connection with the
Transaction, such expense reimbursements not to exceed
twenty-five thousand U.S. Dollars (USD $25,000).
4. AW and/or an entity created by AW shall have the right to invest in the
Company's Optical Networking subsidiary ("CN") in the first round of
financing conducted by CN to occur (the "CN Investment"), subject to
the following conditions.
<PAGE>
(i) In the event that the first round of CN financing to occur is
venture capital financing, then AW shall have the right to
invest up to seven and one half million U.S. Dollars (USD
$7,500,000) in that round, if and only if that investment is
approved by CN's lead venture financier. The Company agrees on
behalf of it and CN's management to recommend that such lead
venture financier approve the CN Investment. If so approved,
AW shall have the right to make the CN investment at the
then-outstanding valuation of CN.
(ii) In the event that the first round of CN financing to occur is
an initial public offering of stock, then AW shall have the
right to purchase up to seven and one half million U.S.
Dollars (USD $7,500,000) of the common stock of CN in the IPO
at the IPO price, if and only if that investment is approved
by the managing underwriter for the CN IPO. The Company agrees
on behalf of it and CN's management to recommend that such
managing underwriter approve the CN investment.
AW and the Company agree that the terms of Paragraphs 1 and 2 shall be binding
upon them whether or not the Transaction described in Paragraph 3 above is
completed.
If you are in agreement with the foregoing, please indicate your acceptance by
signing on the space provided below.
Andersen, Weinroth & Co., L.P.
/s/ Rohit Phansalkar
------------------------------------------
Rohit Phansalkar
Osicom Technologies, Inc.
/s/ Par Chada
- ------------------------------------
Par Chadha, Chairman and CEO
<PAGE>
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
FIBR HOLDINGS , LLC
A NEW YORK LIMITED LIABILITY COMPANY
DATED AS OF DECEMBER 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - PURPOSE AND POWERS................................................................................ 1
1.1 Purpose...................................................................................... 1
1.2 Powers....................................................................................... 1
ARTICLE II - MEMBERS AND INTERESTS............................................................................ 1
2.1 Members; Voting Rights....................................................................... 1
2.2 Membership Interests......................................................................... 2
2.3 Preemptive Rights............................................................................ 2
2.4 Meetings..................................................................................... 3
ARTICLE III - MANAGEMENT OF THE COMPANY........................................................................ 3
3.1 Managers..................................................................................... 3
3.2 Number, Term and Election.................................................................... 4
3.3 Officers..................................................................................... 4
3.4 Meetings..................................................................................... 4
3.5 Management Decisions......................................................................... 5
3.6 Management Compensation...................................................................... 5
ARTICLE IV - FINANCIAL INTERESTS OF MEMBERS.................................................................... 5
4.1 General...................................................................................... 5
4.2 Capital Contributions........................................................................ 5
4.3 Capital Accounts............................................................................. 5
4.4 Gains and Losses............................................................................. 6
4.5 Participation Percentages.................................................................... 6
4.6 Allocations of Gains and Losses.............................................................. 6
4.7 Distributions................................................................................ 7
ARTICLE V --TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS................................................. 7
5.1 General Restrictions......................................................................... 7
5.2 Prohibited Transfers......................................................................... 8
5.3 Permissible Transfers........................................................................ 8
5.4 Involuntary Transfers........................................................................ 8
5.5 Right of First Refusal....................................................................... 8
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5.6 Tag Along Right.............................................................................. 10
5.7 Effect of Transfers.......................................................................... 12
5.8 Compliance with Sections 5.5 and 5.6 hereof.................................................. 12
5.9 Costs........................................................................................ 12
5.10 Inapplicability of Right of First Refusal and Tag-Along Right................................ 13
5.11 Admission of Members......................................................................... 13
ARTICLE VI - TERM AND TERMINATION OF THE COMPANY.............................................................. 13
6.1 Term of the Company.......................................................................... 13
6.2 Events of Dissolution........................................................................ 13
6.3 Conclusion of Affairs........................................................................ 13
6.4 Liquidating Distributions.................................................................... 14
6.5 Termination.................................................................................. 14
ARTICLE VII - GENERAL AND ADMINISTRATIVE PROVISIONS........................................................... 14
7.1 Principal Office............................................................................. 14
7.2 Indemnification.............................................................................. 14
7.3 Fiscal Year.................................................................................. 14
7.4 Books and Records............................................................................ 15
7.5 Reports...................................................................................... 15
7.6 Notices...................................................................................... 15
7.7 Headings..................................................................................... 15
7.8 Gender; Number............................................................................... 15
7.9 Amendments................................................................................... 15
7.10 Attorneys' Fees.............................................................................. 15
7.11 Entire Agreement............................................................................. 15
7.12 Counterparts................................................................................. 16
</TABLE>
ii
<PAGE>
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
FIBR Holdings, LLC
a New York Limited Liability Company
This Limited Liability Company Operating Agreement (this
"Agreement") of FIBR Holdings, LLC (the "Company"), dated as of December 1,
1999, is adopted and agreed to by the parties identified in Section 2.1(b)
hereof and each of the other persons who, from time to time may be admitted as a
member of the Company (collectively, the "Members").
ARTICLE I
PURPOSE AND POWERS
1.1 Purpose. The Company has been organized to invest in the common
stock, debt, warrants and/or other ownership interests (collectively, the
"Securities") of Osicom Technologies, Inc. ("FIBR"), to realize the income and
gains to be derived therefrom for the mutual benefit of the Members and to
engage in any other lawful business activity related or incident thereto.
1.2 Powers. The Company shall have the power and authority to enter
into, make and perform all contracts, agreements and undertakings, and to do any
and all acts and things necessary, appropriate, incidental or convenient to the
accomplishment of its purposes and for the protection and benefit of the
Company.
ARTICLE II
MEMBERS AND INTERESTS
2.1 Members; Voting Rights.
(a) There shall be two classes of Members: the Voting Members
and the Nonvoting Members. On any matter requiring a vote, consent or approval
of the Members, the Voting Members shall be the only persons to whom the matter
is required to be submitted, and each shall have one vote. Except as otherwise
provided herein, or as required by applicable law, the vote, consent or approval
of a majority of the Voting Members shall constitute the act of the Company. No
Non-voting Member shall have a voice or vote in any matter, except as
specifically provided herein.
(b) The initial Members of the Company are Andersen, Weinroth
& Co., L.P. ("Andersen Weinroth"), which shall be a Voting Member, and each of
the other persons who has delivered a duly executed subscription agreement to
the Company (which agreement has been
1
<PAGE>
accepted by the Company) (a "Subscription Agreement") together with a duly
executed signature page to this Agreement, who shall be Non-Voting Members.
Other persons may hereafter be admitted as Members in accordance herewith; but
unless otherwise specifically provided by amendment to this Agreement, any such
additional Member shall be a Non-Voting Member. Each Member shall execute a
counterpart of this Agreement indicating his agreement to the terms and
provisions hereof.
2.2 Membership Interests. Each Member's ownership interest in the
Company is herein referred to generally as a "Membership Interest." The
respective rights of each Member to share in the capital of the Company, either
by way of distributions or on liquidation, will be determined by reference to
the Capital Account (as defined herein) of such Member; and each Member's
interest in the profits and losses of the Company shall be established as
provided herein. Each Member shall have the rights and powers set forth in this
Agreement. Andersen Weinroth shall have the ability to assign all or any portion
of its Membership Interest to any of its affiliates.
2.3 Preemptive Rights.
(a) The Company shall not issue (an "Issuance") additional
membership interests of the Company ("Interests") (other than an Exempt Issuance
(as defined below)) unless not less than thirty (30) days prior to such
Issuance, the Company notifies the Members in writing of the Issuance and grants
to each of the Members the right (the "Preemptive Right") to subscribe for and
purchase the additional Interests so issued at the same price and upon the same
terms as issued in the Issuance such that, after giving effect to the Issuance
and exercise of the Preemptive Right (including, for purposes of this
calculation, the issuance of the Interests upon conversion, exchange or exercise
of any security so convertible, exchangeable or exercisable issued in the
Issuance or subject to the Preemptive Right), the Interests owned by such Member
(rounded to the nearest whole percentage) shall represent the same percentage of
the outstanding Interests as was owned by such Member prior to the Issuance.
(b) The Preemptive Right may be exercised by any Member at any
time by written notice to the Company which is received by the Company within
fifteen (15) days after receipt of notice from the Company of the Issuance, and
the closing of the purchase and sale pursuant to the exercise of the Preemptive
Right shall occur at least ten (10) days after the Company receives notice of
the exercise of the Preemptive Right and prior to or concurrently with the
closing of the Issuance.
(c) "Exempt Issuance" means any Issuance (i) in a public
offering pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), (ii) in compliance with Rule 144A promulgated under the Securities Act,
or (iii) as to which a nationally recognized member of the National Association
of Securities Dealers, Inc. acted as placement agent or underwriter and as to
which the Members were given an opportunity to participate on at least a pro
rata basis.
2
<PAGE>
2.4 Meetings.
(a) The Members shall have a regular annual meeting each year
beginning in 2000, on October 15 or such other date established by the Managers,
for the purpose of electing Managers and conducting such other business as may
properly come before the meeting. Special meetings of the Members may be called
by the Managers.
(b) Written notice stating the place, day and hour of each
meeting of Members and the general purpose or purposes for which the meeting is
called shall be given not less than seven (7) nor more than thirty (30) days
before the date of the meeting to each Member, including the Non-voting Members.
(c) A Member may waive any notice required by law or this
Agreement, before or after the date and time of the meeting that is the subject
of such notice. Except as provided in the next sentence, the waiver shall be in
writing, signed by the Member entitled to the notice and delivered to the
Managers for inclusion in the Company's minutes or records. A Member's
attendance at or participation in a meeting waives any required notice to such
Member of the meeting unless the Member, at the beginning of the meeting or
promptly upon such Member's arrival, objects to the transaction of any business
at such meeting on the ground that such meeting is not lawfully called or
convened. A Member may participate in a meeting in person or by proxy.
(d) Any vote, consent or approval of the Members may be
accomplished by written consent in lieu of a meeting signed by Members
constituting the required vote for the action so taken.
(e) Members may participate in a regular or special meeting
by, or conduct the meeting through, the use of any means of communication by
which all Members participating may simultaneously hear each other during the
meeting. Any Member who participates in a meeting in this manner is deemed to be
present in person at the meeting, except where a Member participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
ARTICLE III
MANAGEMENT OF THE COMPANY
3.1 Managers. Except as otherwise limited by this Agreement or
applicable law, all powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Company's Managers (which term shall be synonymous with
the term "managers" as used in the New York Limited Liability Company Law).
3
<PAGE>
3.2 Number, Term and Election. Unless otherwise agreed by a unanimous
vote of the Members, there shall be two (2) Managers of the Company. The initial
Managers shall be Christopher Andersen and Rohit K. Phansalkar . Each Manager
shall hold office until his or her death, resignation or retirement or until his
or her successor is elected A Manager need not be a Member of the Company.
3.3 Officers. The Managers may appoint such officers who shall have
such power and authority as may be specified in a resolution of the Managers.
Officers shall serve at the pleasure of the Managers.
3.4 Meetings.
(a) An annual meeting of the Managers shall be held
immediately following each annual meeting of Members for the purpose of
appointing officers, if any, and carrying on such other business as may properly
come before the meeting.
(b) Special meetings of the Managers may be called by any
Manager.
(c) Notices of meetings of the Manager shall be given to each
Manager not less than twenty four (24) hours before the meeting. Any such notice
shall set forth the time and place of the meeting.
(d) A Manager may waive any notice required by law or this
Agreement before or after the date and time stated in the notice and such waiver
shall be equivalent to the giving of such notice. The waiver shall be in
writing, signed by the Manager entitled to the notice and filed with the
Company's minutes or records; provided that a Manager's attendance at or
participation in a meeting waives any required notice to him, her or it of the
meeting.
(e) A quorum for the transaction of business at a meeting of
the Managers shall consist of all of the Managers.
(f) Any or all Managers may participate in a regular or
special meeting by, or conduct the meeting through, the use of any means of
communication by which all Managers participating may simultaneously hear each
other during the meeting. A Manager participating in a meeting in this manner is
deemed to be present in person at the meeting.
(g) Any action of the Company that may be authorized by the
Managers at a meeting may be authorized by written consent in lieu of meeting of
the Managers signed by Managers constituting the required vote for the action so
taken, and any such consent shall be filed with the Company's minutes or
records.
4
<PAGE>
3.5 Management Decisions.
(a) Except to the extent that the Managers agree to delegate
the authority with respect to specified matters, all decisions shall be made by
a unanimous vote of the Managers.
(b) Any disbursement of funds of the Company will require such
signatures as may be determined by the Managers.
3.6 Management Compensation. The Company shall pay the Managers as
compensation for their services to the Company, an amount determined by the
Members; and the Managers shall be entitled to reimbursement for all reasonable
expenses incurred on the Company's behalf.
ARTICLE IV
FINANCIAL INTERESTS OF MEMBERS
4.1 General. The Company has been organized with the intention that it
qualify for taxation as a partnership for U.S. federal income tax purposes. The
Members acknowledge that the provisions of Subchapter K of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Treasury Regulations (the
"Regulations") promulgated thereunder will apply to the Company, and intend that
the allocations of taxable income and loss, distributions to the Members and
maintenance of capital accounts all conform to the requirements of the Code and
the applicable Regulations.
4.2 Capital Contributions.
(a) Each Non-Voting Member shall make capital contributions
(the "Capital Contributions") to the Company provided for in the Subscription
Agreement executed by such Member.
(b) To the extent expenses are incurred by the Company in
excess of cash reserves available for the payment thereof, the Managers may call
upon the Members to fund such expenses. Within ten (10) days after receiving a
written call notice from the Managers, each Member shall contribute his pro rata
share of the expense deficiency, which may include up to a $10,000 reserve for
projected expenses. For purposes of this provision, Andersen Weinroth shall
contribute 50% of the required amount, and the remaining Members shall
contribute the balance in proportion (and as an addition) to their Capital
Contributions.
4.3 Capital Accounts.
(a) A separate capital account ("Capital Account") shall be
established and maintained for each Member on the books of the Company which
will reflect the Capital Contributions, distributions and share of profits and
losses of the Company of the Member in accordance with the Regulations.
5
<PAGE>
(b) No Member shall be entitled to receive interest on his
Capital Contributions.
(c) No Member shall be entitled to withdraw all or any part of
his Capital Account.
(d) Loans or advances by any Member to the Company shall not
be considered Capital Contributions and shall not increase the Capital Account
of the lending or advancing Member.
(e) Except as provided in Section 4.2 above, no Member shall
be required under any circumstances to contribute or lend any additional money
or property to the Company.
4.4 Gains and Losses. For purposes hereof, "Gains" means income and
gains, and "Losses" means losses, in each case as determined for federal income
tax purposes. "Cumulative Gain" means the excess of the sum of realized Gains of
the Company over the sum of realized Losses of the Company from the date hereof
to the date of determination; and "Cumulative Loss" means the excess of the sum
of realized Losses of the Company over the sum of realized Gains of the Company
from the date hereof to the date of determination.
4.5 Participation Percentages. Each Member shall have a "Participation
Percentage" which shall be determined by dividing the sum of such Member's
Capital Contributions by the sum of the Capital Contributions of all Members.
4.6 Allocations of Gains and Losses.
(a) Except as provided in the following paragraphs of this
Section 4.6, Gains and Losses shall be allocated to the Members in accordance
with their Participation Percentages.
(b) If the Company does not have Cumulative Loss, 20% of the
Gain otherwise allocable to the Members under paragraph (a) shall be allocated
to Andersen Weinroth.
(c) If the Company has Cumulative Gain, 20% of the Loss
otherwise allocable to the Members under paragraph (a) shall be allocated to
Andersen Weinroth until such Cumulative Gain is eliminated.
(d) Notwithstanding the foregoing, Losses shall not be
allocated to any Member if, or to the extent that, such allocation would create
or increase a deficit balance in such Member's Capital Account, taking into
account all subsequent adjustments, allocations and distributions which are
reasonably expected, as described in Regulations ss.1.704-1(b)(2)(ii)(d). Any
Loss, the allocation of which is prohibited by this Section 4.6(d), shall be
allocated among the Members in accordance to their relative interests in the
Company (as determined under Regulations ss.1.704-1(b)(3)). If for any reason a
deficit balance should result in the Capital Account of a Member, in each
subsequent
6
<PAGE>
period in which the Company has Gains, such Gains shall be allocated first to
such Member until such deficit balance is reduced to zero.
(e) It is the intention of the provisions of this Agreement
with respect to maintenance of Capital Accounts and allocations of Gains and
Losses and distributions to assure that, over the term of the Company, the
Members bear any Cumulative Loss in accordance with their Capital Contributions
and that Andersen Weinroth share in 20% of any Cumulative Gain which would
otherwise be allocable to the Members based on Participation Percentages. The
provisions of this Agreement shall be construed in accordance with this
intention. Andersen Weinroth shall have the ability to waive the allocation of
such 20% of Cumulative Gain with respect to any distribution to any of the
Members.
4.7 Distributions.
(a) Until such time as amounts equal to the Capital
Contributions of the Members have been repaid to the Members, distributions to
the Members shall be made from time to time in the discretion of the Managers
pro rata among the Members in accordance with Participation Percentages.
Thereafter, the Managers may from time to time make distributions to or among
the Members pro rata in accordance with Capital Accounts, provided, that in no
event shall distributions be made which would result in any Member having, as
the result thereof, a negative balance in his Capital Account.
(b) The Managers may distribute cash or, in their discretion,
Securities; provided that no distribution of Securities shall be made except
with the consent of the Member receiving such distribution; and, in the case of
any such in-kind distribution, the Securities shall be marked-to- market and the
unrealized gains or losses shall be reflected in the Capital Accounts of the
Members in order to assure the proper accounting for the allocations to be made
pursuant to Section 4.6.
(c) Rights with respect to any Securities distributed pursuant
hereto shall remain subject to the provisions of, and agreements of the Members
contained in, the Subscription Agreements.
ARTICLE V
TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS
5.1 General Restrictions.
(a) For so long as this Agreement shall remain in effect, no
Member may directly or indirectly (including by operation of law) offer for
sale, sell, assign, transfer, pledge, encumber, or otherwise dispose of, or
subject to a security interest, any Interest or any interest therein whether now
owned or hereafter acquired (each of the above-described actions being referred
to herein as a "Transfer") except in strict compliance with the provisions of
this Agreement.
7
<PAGE>
(b) Interests shall be subject to such restrictions on
Transfer as are required to ensure compliance with the Securities Act, and any
other applicable securities laws.
5.2 Prohibited Transfers. Except as otherwise required by law, any
Transfer of Interest in violation of this Agreement (a "Prohibited Transfer")
shall be null and void. The Company shall not record any Prohibited Transfer on
its books and shall not recognize any equitable or other claim to, or any
interest in, any Interest that is the subject of a Prohibited Transfer on the
part of any person other than the Member that attempted to Transfer the Interest
in violation of this Agreement.
5.3 Permissible Transfers. Notwithstanding any provision to the
contrary contained in this Agreement, a Member may transfer his Interest to (a)
his spouse or any lineal ancestor or descendant of such Member, (b) any person
receiving such Interest from such Member or a Permissible Transferee (as herein
defined) of such Member, at such Member's or Permissible Transferee's death
pursuant to a will or the laws of intestate succession, (c) any trust
established for the benefit of any of the foregoing, (d) any corporation or
other entity directly or indirectly wholly owned by a Member or which directly
or indirectly wholly owns a Member or to any one or more other corporations or
other entities that are directly or indirectly wholly owned by any such
corporation or other entity, or (e) another Member. Any such Permissible
Transfer may be made without complying with the provisions of Sections 5.5 and
5.6.
5.4 Involuntary Transfers. If, at any time, there shall be an
Involuntary Transfer (as defined herein) of any Interest held by a Member, and
as a result thereof the other parties hereto shall be prevented as a matter of
law from exercising their rights hereunder, the transferee of such Interests
shall take and hold such Interests subject to this Agreement. For purposes of
this Agreement, the term "Involuntary Transfer" shall mean any Transfer by or in
which any Member shall be deprived or divested of any right, title or interest
in or to any Interests, including, without limitation, any levy or execution,
transfer in connection with bankruptcy, insolvency or similar proceedings or any
transfer to a public officer or agency pursuant to any abandoned property or
escheat law; provided, however, that notwithstanding the foregoing the term
"Involuntary Transfer" shall not include any Permitted Transfers.
5.5 Right of First Refusal. Except in the case of a Permissible
Transfer, if at any time on or after the date hereof any Member (the "Selling
Member") desires to transfer or otherwise dispose of all or any portion of the
Interest owned, either beneficially or of record, by the Selling Member, the
Selling Member shall deliver written notice ("Offer Notice"), to the Company and
to each other Member ("Offerees") stating its desire to make such transfer and
the amount of the Interest proposed to be transferred (the "Offered Interest"),
and certifying that such transfer that such Selling Member desires to make is
pursuant to a bona fide third party offer to acquire the Offered Interest for
consideration (a "Bona Fide Third-Party Offer"). The Offer Notice shall further
state the name of the person who made the Bona Fide Third-Party Offer (the
"Offeror"), the terms thereof, including a description and a statement of the
aggregate cash value of all consideration and including any consideration other
than cash (the "Offered Price") and a representation that the Offeror has been
informed of the Right of First Refusal (as defined below) and has agreed to
purchase the Interest in
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accordance with the terms thereof. Each Offeree shall have the irrevocable and
exclusive right of first refusal (the "Right of First Refusal"), as hereinafter
provided, to purchase any or all of its Pro Rata Portion (as defined below) of
the Offered Interest at a purchase price determined pursuant to subparagraph (c)
below.
(a) Amount of Interest. Each Offeree's "Pro Rata Portion" of
the Offered Interest shall be determined by multiplying the Offered Interest
times a fraction, the numerator of which shall be the amount of the Interest, on
a fully diluted basis, then owned by such Offeree and the denominator of which
shall be the amount of the Interests, on a fully diluted basis, then owned by
all Offerees electing to purchase the Offered Interest pursuant to the Right of
First Refusal.
(b) Exercise. Any exercise of the Right of First Refusal to
purchase the Offered Interest pursuant to this Section 5.5 shall be by a written
notice (the "Acceptance Notice") delivered by each Offeree to the Selling Member
within fifteen (15) days after delivery by the Selling Member of an Offer
Notice. An Acceptance Notice shall state that such Offeree elects to purchase
such Offeree's Pro Rata Portion of the Offered Interest (as well as the amount,
if any, of additional Offered Interest that such Offeree would be willing to
purchase in the event all of the Offered Interest is not being purchased by the
Offerees) and shall fix a date for the closing of such purchase (the "Closing
Date"), which date shall be not less than ten (10) and not more than twenty (20)
business days after the date on which the Acceptance Notice is given.
(c) Purchase Price.
(i) Determination of Purchase Price. Unless otherwise
agreed upon by the Offerees and the Selling Member or unless otherwise
determined pursuant to subparagraph (ii) below, the purchase price for the
Offered Interest purchased (other than by the Offeror) pursuant to this Section
5.5 shall be the Offered Price, payable as provided in subparagraph (e) below.
(ii) Consideration other than Cash. If the
consideration to be paid for the Offered Interest by the Offeror shall include
any consideration other than cash, then the Offer Notice shall include a cash
valuation of such non-cash consideration and if an Offeree shall object to such
valuation, the Acceptance Notice shall set forth such objection. If thereafter
the Offerees and the Selling Member shall fail to agree on a valuation within
ten (10) business days following the delivery of the Acceptance Notice, then the
items in dispute shall be referred to a nationally recognized independent
investment banking firm (an "Appraiser") selected jointly by the Offerees and
the Selling Member. If there shall be no agreement on the selection of an
Appraiser, then each party (the Offerees on the one side and the Selling Member
on the other) shall select one investment banking firm and such firms shall
designate an Appraiser to determine the aggregate value of all consideration to
be paid for the Offered Interest by the person who made the Bona Fide
Third-Party Offer. The expenses of such investment banking firms and the
Appraiser shall be paid one-half by each such party. All determinations made
pursuant to this subparagraph (c)(ii) shall be final, conclusive and binding on
the Members.
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(d) Closing Date. The closing of any purchase by Offerees of
the Offered Interest under this Section 5.5 shall be held at the principal
offices of the Company or at such other locations as the Selling Member and the
Offerees purchasing such Interest shall agree, on the Closing Date set forth in
the Acceptance Notice; provided, however, that if the purchase price for the
Offered Interest has not been determined pursuant to subparagraph (c) above
prior to the scheduled Closing Date, the Closing Date shall be deferred until
the fifth business day following such determination, or at such other time or
place as the parties to the transaction may agree upon.
(e) Closing. At the closing of any purchase by any Offeree,
(i) the Selling Member shall deliver the Offered Interest free and clear of all
liens and encumbrances other than liens or encumbrances created pursuant to this
Agreement and shall deliver the certificate or certificates (if any)
representing the Offered Interest to such Offeree, which certificate or
certificates (if any) shall be duly endorsed in blank and accompanied by all
other documents necessary for the effective transfer thereof, and (ii) such
Offeree shall deliver to the Selling Member cash or a certified or official bank
check or checks in the amount of the total purchase or redemption price for the
Offered Interest being purchased by it.
5.6 Tag Along Right. Except in the case of a Permissible Transfer, in
the event that a Member or Members (the "Transferring Member") proposes to
Transfer his Interest in such amount as shall constitute a majority of the
Interest, on a fully diluted basis (the "Sale Interest"), in one or more related
transactions (a "Company Sale") to a bona fide third party purchaser (the
"Proposed Purchaser"), subject to the Right of First Refusal provided for in
Section 5.5 above, each other Member (each a "Tag-Along Seller" and collectively
the "Tag-Along Sellers") shall have the right (the "Tag-Along Right") to require
the Proposed Purchaser to purchase from each of them, all or any portion of the
Membership Interests held by them (such amount for the Tag-Along Sellers in the
aggregate being herein referred to as the "Tag-Along Amount") on the same terms
and conditions and at the same price as the Transferring Member.
(a) Notices. The Transferring Member shall notify the
Tag-Along Sellers in writing of such proposed Transfer (the "Company Sale
Notice"). The Company Sale Notice shall set forth: (i) the name and address of
the Proposed Purchaser; (ii) a copy of the written proposal pursuant to which a
Company Sale will be effected containing all of the material terms and
conditions thereof, including the amount of the Sale Interest, on a fully
diluted basis, proposed to be transferred by the Transferring Member; (iii) the
price of the Sale Interest, on a fully diluted basis, to be paid (the "Tag-Along
Purchase Price"); (iv) the terms and conditions of payment offered by the
Proposed Purchaser; (v) that the Proposed Purchaser has been informed of the
Tag-Along Right provided for in this Section 5.6 and has agreed to purchase the
Tag-Along Amount in accordance with the terms hereof and to be bound by such
terms subsequent to such purchase to the same extent as the Tag-Along Seller
immediately prior to that sale; and (vi) the date and location of and procedures
for selling the Sale Interest to the Proposed Purchaser. The Tag-Along Right
shall be exercised by delivery of a written notice to the Transferring Member
(the"Tag-Along Acceptance Notice") within 15 (fifteen) days following receipt of
the Company Sale Notice. The Tag-Along
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Acceptance Notice shall state the amount of Membership Interests that such
Member proposes to include in the Company Sale.
(b) Closing Date. The closing of any purchase by the Proposed
Purchaser under this Section 5.6 shall be held at the principal offices of the
Company or at such other locations as the Transferring Member and the Proposed
Purchaser shall agree, on the closing date set forth in the Company Sale Notice.
(c) Closing. At the closing of any purchase by the Proposed
Purchaser, (i) the Tag-Along Sellers shall deliver their Interest free and clear
of all liens and encumbrances other than liens or encumbrances created pursuant
to this Agreement and shall deliver the certificate or certificates (if any)
representing their Interest to the Proposed Purchaser, which certificate or
certificates (if any) shall be duly endorsed in blank and accompanied by all
other documents necessary for the effective transfer thereof, and (ii) the
Proposed Purchaser shall deliver to the Tag- Along Sellers the Purchase Price
for their Interest in accordance with the terms and conditions set forth in the
Company Sale Notice.
(d) Limitations. If the Proposed Purchaser does not agree to
purchase the Sale Interest from the Tag-Along Sellers at the same price and on
the same terms and conditions as the Proposed Purchaser has agreed to purchase
from the Transferring Member, then the Transferring Member shall not be
permitted to Transfer any Interest to the Proposed Purchaser in the proposed
Transfer. The Transferring Member and the Tag-Along Sellers shall have the
right, for a 150-day period following the dispatch of the Company Sale Notice,
to transfer to the Proposed Purchaser the Sale Interest and Tag-Along Amount
proposed to be transferred on terms and conditions no more favorable to the
Transferring Member and the Tag-Along Sellers than those stated in the Company
Sale Notice. Any Membership Interests that continue to be held by the
Transferring Member or any Tag-Along Seller after the earlier of the
consummation of the proposed transfer or the expiration of such 150-day period
shall again be subject to the provisions of this Section 5.6.
5.7 Effect of Transfers.
(a) Except as provided in paragraph (b) below, (i) any
Transfer of a Membership Interest by a person (the "Transferor") shall be
effective only to give the transferee (the "Transferee") the right to the share
of allocations and distributions to which the Transferor would otherwise be
entitled, and no Transferee of any Interest shall be admitted as a Member, (ii)
the Transferee shall have no right to vote on or consent to any matter submitted
to the Members or otherwise participate in the management of the business and
affairs of the Company, and (iii) subject to 5.7(c) below, the Transferor, if he
retains any Interest, shall retain such rights and shall have the power to
exercise any rights of a Member, except the right to receive allocations and
distributions to the extent those rights are assigned.
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(b) A Transferee of any Interest shall, upon such Transfer, be
admitted as a Member with all the rights and powers of his Transferor if, prior
to such Transfer, all of the Managers consent to the admission of the Transferee
as a Member.
(c) The Managers may, in their discretion, charge a reasonable
fee to cover the expenses incurred by the Company in connection with or as a
consequence of the Transfer of all or part of a Membership Interest.
(d) The Company, the Managers, each Member and any other
person or persons having business with the Company, need deal only with holders
of the Interest who are admitted as Members of the Company, and shall not be
required to deal with any Transferee who has not been admitted as a Member.
5.8 Compliance with Sections 5.5 and 5.6 hereof. In the event a Member
desires to effect a Transfer of the Interest, he shall be bound by any and all
of the provisions of Sections 5.5 and 5.6 hereof, applicable by their terms to
such Transfer, and any Transfer of the Interest by such Member must comply with
the terms of each such applicable provision. Without limiting the generality of
the foregoing, when a Member desires to effect a Transfer of the Interest which
is subject to Section 5.5 or 5.6 hereof he must permit all Members who validly
exercise their Right of First Refusal or Tag-Along Right to purchase or sell, as
the case may be, their Interest in such Transfer and must arrange for the
Transfer of the Interest to the extent required by Section 5.5 or 5.6 hereof.
5.9 Costs. All reasonable costs and expenses incurred by any seller in
connection with a Transfer under Section 5.5 or 5.6 hereof, including without
limitation all reasonable attorneys' fees, costs and disbursements and any
reasonable finders' fees or brokerage commissions, shall be allocated pro rata
among the Members transferring the Interest in such Transfer, with each bearing
that portion of such costs and expenses equal to the aggregate of such costs and
expenses multiplied by a fraction, the numerator of which is the amount of the
gross proceeds received by such Member from such Transfer, and the denominator
of which is the total amount of the gross proceeds received by all Members from
such Transfer.
5.10 Inapplicability of Right of First Refusal and Tag-Along Right.
Neither the Right of First Refusal nor the Tag-Along Right provided for in this
Article V shall apply to any Transfer of the Interest pursuant to either a
public offering pursuant to the Securities Act or in compliance with Rule 144A
promulgated under the Securities Act.
5.11 Admission of Members. Subject to the provisions of Section 2.3,
the Managers may from time to time admit additional Members to the Company on
such terms and conditions, including such contributions to the capital of the
Company, as the Managers shall determine. Any such additional Members shall join
in and agree to be bound by the terms of this Agreement.
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ARTICLE VI
TERM AND TERMINATION OF THE COMPANY
6.1 Term of the Company. The term of the Company commenced upon the
filing of the articles of organization with the Secretary of State of New York
on November 30, 1999. The Company shall have perpetual existence from the date
of formation unless the Company is dissolved and terminated as provided in this
Agreement.
6.2 Events of Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events:
(a) The unanimous determination of the Managers to dissolve
the Company;
(b) The vote of the Members to dissolve the Company;
(c) The sale of all or substantially all of the business and
assets of the Company; and
(d) As otherwise required by the New York Limited Liability
Company Law.
6.3 Conclusion of Affairs. In the event of dissolution of the Company
for any reason, the Managers, or if no Managers remain, the Members, by majority
vote, shall appoint a person (the "Liquidator"), who may but need not be a
Manager and/or Member, and the Liquidator shall proceed, as soon as reasonably
practicable, to wind up the affairs of the Company. The Members (and their
successors in interest) shall continue to share in allocations of income and
loss and distributions during the period of winding up in the same manner as
before the dissolution. The Liquidator shall have reasonable discretion to
determine the time, manner and terms of any sale or sales of Company property
pursuant to such winding up, having due regard to the activity and the condition
of the Company and relevant market and financial and economic conditions, and
consistent with his obligations to the Members.
6.4 Liquidating Distributions. After paying or providing for the
payment of all debts and liabilities of the Company and all expenses of winding
up, and subject to the right of the Liquidator to set up such reserves as it may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation, and any other
remaining assets of the Company, shall be distributed to or for the benefit of
the Members (and their successors in interest) in accordance with their
respective Capital Accounts. No Member shall have any right to demand or receive
property other than cash upon dissolution and winding up of the Company;
provided, however, the Liquidator shall have the right and power to distribute
assets in kind (whether to some or all of the persons entitled to such
distributions), valued at the then estimated fair market value of such assets,
as a liquidating distribution to the Members (and their successors in interest).
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6.5 Termination. Within a reasonable time following the completion of
the winding up of the Company, the Liquidator shall supply to each Member a
statement which shall set forth the assets and the liabilities of the Company as
of the date of complete winding up and each Member's portion of the
distributions pursuant to this Agreement. Upon completion of the winding up of
the Company and the distribution of all Company assets, the Company shall
terminate, and the Liquidator shall execute and file a certificate of
cancellation of the Company with the Secretary of State of New York, and shall
take all other action necessary to effectuate the dissolution and termination of
the Company.
ARTICLE VII
GENERAL AND ADMINISTRATIVE PROVISIONS
7.1 Principal Office. The principal office of the Company shall be at
such location or locations as may be determined by the Managers from time to
time.
7.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless, and may advance expenses to, any
Member or Manager (collectively, the "Indemnitees"), from and against any and
all claims and demands whatsoever arising out of the business and affairs of the
Company; provided, however, that no indemnification may be made to or on behalf
of any Indemnitee if a judgment or other final adjudication adverse to such
Indemnitee establishes (a) that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated or (b) that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled. The provision of
this section shall continue to afford protection to each Indemnitee regardless
of whether such Indemnitee remains a Member, Manager, employee or agent of the
Company.
7.3 Fiscal Year. The fiscal year of the Company shall end on the thirty
first of December.
7.4 Books and Records. At all times during the term of the Company, the
Managers shall keep, or cause to be kept at the Company's principal office, the
books and records of the Company.
7.5 Reports. As soon as practicable following the end of each fiscal
year, the Company shall provide each Member a financial report of the results of
operations, including audited or unaudited financial statements, as determined
by the Managers.
7.6 Notices. Any notice to be given under this Agreement may be given
either personally or by mail, telephone, telegraph, teletype, telecopy or other
form of wire or wireless communication, or by overnight courier. If mailed,
notice shall be deemed to be effective three (3) days after deposited in
registered or certified mail with postage thereon prepaid addressed if to a
Member at its address as it appears on the signature page to this Agreement (or
at such other address for any party as such party shall notify the other
parties), and if to the Company at its principal office. If given in any other
manner, such notice shall be deemed to be effective (i) when given personally,
(ii) when given by telephone, teletype, telecopy or other form of wire or
wireless communication
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(if followed by a copy delivered by registered or certified mail) or (iii) one
(1) day after given to an overnight courier to be delivered.
7.7 Headings. The headings of the sections hereof are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
7.8 Gender; Number. Where the context so requires, the masculine gender
shall be construed to include the female, a corporation, a trust or other
entity, and the singular shall be construed to include the plural and the plural
the singular.
7.9 Amendments. This Agreement may be modified or amended with the
consent of Members holding two-thirds of the Membership Interests; provided,
that, except as otherwise specifically provided herein, no amendment may modify
the economic interest of a Member without such Member's consent. Notwithstanding
the foregoing, the Managers may amend the Agreement as necessary to effect the
issuance of new Interests, including interests which have priority over existing
Interests, and the admission of new Members.
7.10 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
7.11 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto.
7.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned has affixed its signature
signifying its adoption of this Limited Liability Company Operating Agreement.
MEMBER:
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(Print Name)
By:
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Name:
Title:
Address:
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Telephone:
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Telecopy:
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Tax I.D. Number:
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