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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): November 26, 1997.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22046 38-3114641
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
50 Spring Street, Ramsey, New Jersey 07446
(Address of principal executive offices) (Zip Code)
(201) 934-8500
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
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Item 1. Change of Control of Registrant.
On November 26, 1997, Bogen Communications International, Inc. (the
"Company") purchased (the "Repurchase") 3,701,919 shares of its common stock,
par value $.001 per share ("Common Stock"), and warrants to purchase 200,000
shares of Common Stock from Geotek Communications, Inc. ("Geotek"), for an
aggregate purchase price of $18,500,000, pursuant to a Stock Purchase Agreement,
dated November 26, 1997, between the Company and Geotek, which is attached
hereto as Exhibit 10.1. As a result of the Repurchase, Geotek, which owned
approximately 64% of the Common Stock, no longer has an equity interest in the
Company.
In order to finance the Repurchase, on November 26, 1997, the Company
issued 200,000 shares of its Series A Convertible Preferred Stock (the "Series A
Preferred") to a group of investors (the "Investors") for aggregate gross
proceeds of $20,000,000, pursuant to a Convertible Preferred Stock Purchase
Agreement, dated November 26, 1997, between the Company and the Investors, which
is attached hereto as Exhibit 10.2. The portion of the proceeds received
pursuant to the Convertible Preferred Stock Purchase Agreement, and not applied
to the Repurchase, will be used for general corporate purposes.
Except as otherwise provided in the Certificate of Incorporation of the
Company or the General Corporation Law of the State of Delaware, the Series A
Preferred will vote together with all other classes of voting capital stock of
the Company as a single class on all actions to be taken by the stockholders of
the Company. Each share of Series A Preferred entitles the holder thereof to
18.605 votes per share. Accordingly, the Investors collectively hold
approximately 64% of the voting capital stock of the Company.
In addition to the voting rights discussed above, each share of Series A
Preferred pays a dividend at an annual rate of interest of 9%, which dividends
may be payable in cash or in shares of Series A Preferred. Holders of the Series
A Preferred may convert each share of Series A Preferred into 18.605 shares of
Common Stock. Five years from the date of issuance, each share of Series A
Preferred will be converted automatically into Common Stock. At the option of
the Company, the Series A Preferred may be redeemed prior to the mandatory
conversion date if the price of the Common Stock closes above $8.0625 for twenty
consecutive trading days and notice is given within 60 days thereafter. The
redemption price will be $100 per share plus accrued dividends. In the event of
a redemption which occurs at the option of the Company prior to December 1,
2000, the redemption price shall also be increased by an amount equal to
one-half of the dividends that would have accrued or been payable through
December 1, 2000.
Item 5. Other Events.
Mr. Jonathan Guss has been named the Chief Executive Officer and Mr.
Michael Fleischer has been named President of the Company pursuant to the
Employment Agreements, dated November 26, 1997, between the Company and each of
Messrs. Guss and Fleischer, which are attached hereto as Exhibits 10.3 and 10.4,
respectively. Mr. John J. Egidio, the Company's acting President and Chief
Executive Officer will be leaving the Company to resume his role with Geotek.
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In connection with their appointment, Mr. Guss was granted an option to
acquire 162,943 shares of Common Stock and Mr. Fleischer was granted an option
to acquire 162,942 shares of Common Stock, in each case, at a purchase price of
$5.00 per share (collectively, the "Options"), pursuant to Option Agreements,
dated November 26, 1997, between the Company and each of Messrs. Guss and
Fleischer, which are attached hereto as Exhibits 10.5 and 10.6, respectively. On
each March 1, June 1, September 1, and December 1, commencing on June 1, 1999
and ending on September 1, 2000, the Options will vest and be exercisable with
respect to 23,000 of the shares which may be acquired upon exercise of such
Option, and with respect to the remainder of such shares, the Options will vest
and be excerisable on December 1, 2000.
In addition, D & S Capital, LLC, a limited liability company whose
interests are owned by Messrs. Guss and Fleischer, has acquired 46,295 shares of
Common Stock and a warrant to purchase 250,000 shares of Common Stock at an
exercise price of $5.00 per share, for an aggregate consideration of $250,000,
pursuant to a Common Stock and Warrant Purchase Agreement, dated November 26,
1997, between the Company and D & S Capital, LLC, which is attached hereto as
Exhibit 10.7. The warrant may be exercised on or after June 1, 1998 with respect
to 100,000 shares of Common Stock, on or after September 1, 1998 with respect to
an additional 45,000 shares of Common Stock, on or after December 1, 1998 with
respect to an additional 45,000 shares of Common Stock, and on or after March 1,
1999 with respect to an additional 60,000 shares of Common Stock. A copy of the
warrant is attached hereto as Exhibit 10.8. The proceeds from the sale of Common
Stock and warrants will be used for general corporate purposes.
Effective as of the closing of the Repurchase, the Company's Board of
Directors was reconstituted. The current members of the Company's Board of
Directors are: Messrs. Yoav Stern, Jeffery Schwarz, Jonathan Guss, Michael
Fleischer, Daniel Schwartz, Zivi Nedivi and David Jan Mitchell, with Messrs.
Stern and Schwarz serving as co-chairmen.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
- -------------- -----------
4.1 Certificate of Designation, Preferences and Rights of
Convertible Preferred Stock of Bogen Communications
International, Inc.
4.2 Certificate of Correction to the Certificate of Designation,
Preferences and Rights of Convertible Preferred Stock of Bogen
Communications International, Inc.
10.1 Stock Purchase Agreement, dated November 26, 1997, between the
Company and Geotek.
10.2 Convertible Preferred Stock Purchase Agreement, dated November
26, 1997, between the Company and the Investors.
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10.3 Employment Agreement, dated November 26, 1997, between the
Company and Mr. Jonathan Guss.
10.4 Employment Agreement, dated November 26, 1997, between the
Company and Mr. Michael Fleischer.
10.5 Option Agreement, dated November 26, 1997, between the Company
and Mr. Jonathan Guss.
10.6 Option Agreement, dated November 26, 1997, between the Company
and Mr. Michael Fleischer.
10.7 Common Stock and Warrant Purchase Agreement, dated November
26, 1997, between the Company and D & S Capital, LLC.
10.8 Warrant, dated November 26, 1997, issued by the Company to D &
S Capital, LLC.
99.1 Press release, dated November 26, 1997, issued by the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
(Registrant)
/s/ Yoav M. Cohen
-------------------------------------
Name: Yoav M. Cohen
Date:December 10, 1997 Title: Senior Vice President - Business Development and
Finance, Chief Financial Officer and Secretary
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\ Index to Exhibits
Exhibit
Number Description
- ------- -----------
4.1 Certificate of Designation, Preferences and Rights of Convertible
Preferred Stock of Bogen Communications International, Inc.
4.2 Certificate of Correction to the Certificate of Designation,
Preferences and Rights of Convertible Preferred Stock of Bogen
Communications International, Inc.
10.1 Stock Purchase Agreement, dated November 26, 1997, between the
Company and Geotek.
10.2 Convertible Preferred Stock Purchase Agreement, dated November 26,
1997, between the Company and the Investors.
10.3 Employment Agreement, dated November 26, 1997, between the Company
and Mr. Jonathan Guss.
10.4 Employment Agreement, dated November 26, 1997, between the Company
and Mr. Michael Fleischer.
10.5 Option Agreement, dated November 26, 1997, between the Company and
Mr. Jonathan Guss.
10.6 Option Agreement, dated November 26, 1997, between the Company and
Mr. Michael Fleischer.
10.7 Common Stock and Warrant Purchase Agreement, dated November 26, 1997,
between the Company and D & S Capital, LLC.
10.8 Warrant, dated November 26, 1997, issued by the Company to D & S
Capital, LLC.
99.1 Press release, dated November 26, 1997, issued by the Company.
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Exhibit 4.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF CONVERTIBLE PREFERRED STOCK
OF BOGEN COMMUNICATIONS INTERNATIONAL, INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), certifies pursuant to the authority contained in Article Fourth of
its Certificate of Incorporation, and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of Delaware, that the
Special Committee of its Board of Directors has adopted the following resolution
creating a series of its Convertible Preferred Stock, par value $.001 per share,
designated as "Series A Convertible Preferred Stock":
RESOLVED, that the Company shall, and does, designate a series of
preferred stock, which shall be known as the "Series A Convertible Preferred
Stock", the number of shares constituting the Series A Preferred Stock shall be
200,000 and the relative rights preferences and limitations of the Series A
Convertible Preferred Stock are as follows:
1. NUMBER OF SHARES. The series of Preferred Stock designated and known
as "Series A Preferred Stock" shall consist of 200,000 shares. Subject to the
reservation of such shares of preferred stock as is necessary for the payment of
dividends, as determined by the Board of Directors under Section 3 hereof, the
balance of the authorized shares of Preferred Stock may be divided into such
number of shares as the Board of Directors may determine with such rights,
preferences, privileges and restrictions as the Board of Directors may determine
in connection therewith.
2. VOTING. Except as may be otherwise provided in these terms of the
Series A Preferred Stock, the Certificate of Incorporation or by the provisions
of Delaware law, the Series A Preferred Stock shall vote together with all other
voting classes and series of stock of the Company as a single class on all
actions to be taken by the stockholders of the Company. Each share of Series A
Preferred Stock shall entitle the holder thereof to such number of votes per
share on each such action as shall equal the number of shares of Common Stock
(including fractions of a share) into which each share of Series A Preferred
Stock is then convertible.
3. DIVIDENDS. (a) Each holder of a share of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Company's Board of
Directors, out of the funds of the Company legally available therefor,
cumulative dividends during each Semi-Annual Dividend Period (as hereinafter
defined) at a per annum dividend rate per share equal to the product of (i) the
Redemption Value; and (ii) nine percent (9%); provided, however, that dividends
for any period during which any shares of Series A Preferred Stock shall be
outstanding for less than a full Semi-Annual Dividend Period (as defined below)
shall be paid, pro rata, based on the actual number of days such shares shall be
outstanding during such Semi-Annual Dividend Period ("Accrued Dividends"). As
used herein, "Semi-Annual Dividend Period" means the period from January 1,
through June 30, of each year and July 1, through December 31, of each year,
provided that the first Semi-Annual Dividend Period shall be the period
commencing on the date of initial issuance of shares of the Series A Preferred
Stock (other than Additional Shares (as defined below)) and ending on June 30,
1998.
(b) Except as provided below, each such dividend shall be paid
in cash on the 15th day of January and July next following the close of each
Semi-Annual Dividend Period (each a "Dividend Payment Date") commencing on July
15, 1998, to the holders of record of shares of Series A Preferred Stock as they
appear on the stock register of the Company on the last day of the relevant
Semi-Annual Dividend Period.
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Notwithstanding anything to the contrary herein, any part of, or all, dividends
payable on any particular Dividend Payment Date may be paid, at the option of
the Company, in lieu of cash, in additional whole or fractional shares of Series
A Preferred Stock ("Additional Shares") with a Redemption Value and Liquidation
Preference (as defined below) equal to the amount of such dividend. For purposes
of the accrual of dividends, the original issuance date of such Additional
Shares shall be the last day of the Semi-Annual Dividend Period on account of
which such Additional Shares were so issued. Prior to the Dividend Payment Date
on which there will be issued any Additional Shares as a dividend, the Company
will prepare and mail to each holder of Series A Preferred Stock a certificate
setting forth the determination of the Company to pay such dividend in Preferred
Stock together with a computation of the number of Additional Shares issuable in
payment of such dividend. A dividend payment in Additional Shares shall not be
considered paid if the Company has not caused share certificates representing
the Additional Shares to be delivered to the holders of the Series A Preferred
Stock within thirty (30) days after the applicable Dividend Payment Date.
(c) The amount of any dividends accrued on Series A Preferred
Stock at any Dividend Payment Date shall be deemed to be the amount of any
unpaid dividends accumulated thereon to and including such Dividend Payment
Date, whether or not earned or declared. Dividends in arrears shall bear
dividends as if such dividends in arrears had been declared and paid in
Additional Shares as set forth herein. Dividends in arrears for any past
Semi-Annual Dividend Periods may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to holders of record on such
date preceding the payment date thereof as may be fixed by the Board of
Directors of the Company or a duly authorized committee thereof (excluding any
nominees of the holders of Series A Preferred Stock).
(d) Unless otherwise approved by the vote or consent of the
holders of more than 50% of the Series A Preferred Stock outstanding at such
time, so long as any shares of Series A Preferred Stock shall remain
outstanding, no dividends shall be paid or declared, or other distributions made
(upon dissolution or otherwise), whether in cash or property or in obligations
of the Company, on any shares of the Common Stock or stock of any other series
of Preferred Stock of the Company over which the Series A Preferred Stock has a
priority in the distribution of assets in the event of any liquidation,
dissolution or winding up of the affairs of the Company ("Junior Preferred
Stock") (other than dividends payable solely in shares of Common Stock), nor
shall any shares of the Common Stock or Junior Preferred Stock be purchased,
redeemed, retired or otherwise acquired by the Company or any corporation or
other entity controlled by the Company for any consideration of any kind (or any
payment made to, or available for, a sinking fund for the redemption of any such
securities), other than purchases of Common Stock made by the Company pursuant
to an open market Common Stock repurchase plan approved by the Board of
Directors, and neither the Company nor any corporation or other entity
controlled by the Company shall incur any obligation for any of the foregoing.
4. LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, the holders of the shares
of Series A Preferred Stock shall be entitled (unless such Preferred Stock is
converted prior to the effective date of such event), before any distribution or
payment is made upon any Common Stock or Junior Preferred Stock, to be paid an
amount equal to the greater of (i) the Redemption Value per share of Series A
Preferred Stock plus, in the case of each share, an amount equal to all Accrued
Dividends unpaid thereon (whether or not declared) and any other dividends
declared but unpaid thereon, computed to the date payment thereof is made
available, such amount being sometimes referred to as the "Liquidation
Preference," or (ii) such amount of cash, securities or other property per share
of Series A Preferred Stock as would have been payable had each such share been
converted to, and treated equally with other shares of, Common Stock pursuant to
Section 6 immediately prior to such liquidation, dissolution or winding up (the
amounts to be paid pursuant to clauses (i) and (ii) being referred to herein as
the "Liquidation Payments.") The holders of Series A Preferred Stock shall not
be entitled to any further right of conversion or payment, other than as
provided in the preceding sentence. If upon such liquidation, dissolution or
winding up of the Company,
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whether voluntary or involuntary, the assets to be distributed among the holders
of Series A Preferred Stock pursuant to clause (i) above shall be insufficient
to permit payment to the holders of Series A Preferred Stock of the Liquidation
Preference, then the entire assets of the Company to be so distributed shall be
distributed ratably among the holders of Series A Preferred Stock. If, upon any
such liquidation, dissolution or winding up of the Company, the amount to be
distributed to the holders of Series A Preferred Stock is determined pursuant to
clause (ii) above, the assets of the Company may be distributed to the holders
of Series A Preferred Stock and Common Stock, ratably. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the amount of
the Liquidation Payment and the place where said Liquidation Payment shall be
payable, shall be given by mail, postage prepaid, or by telex to non-U.S.
residents, not less than twenty (20) business days prior to the payment date
stated therein, to the holders of record of Series A Preferred Stock, such
notice to be addressed to each such holder at its address as shown by the
records of the Company. The consolidation or merger of the Company into or with
any other entity or entities which results in the exchange of outstanding shares
of the Company for securities or other consideration issued or paid or caused to
be issued or paid by any such entity or affiliate thereof, the sale by the
Company of all or substantially all its assets or a sale by the Company of
shares of Common Stock which, after giving effect to the issuance of such
shares, represents fifty percent (50%) or more of the Company's outstanding
voting capital stock, shall be deemed to be a liquidation, dissolution or
winding up of the Company within the meaning of the provisions of this Section 4
unless the holders of more than 50% of the shares of the Series A Preferred
Stock notify the Company in writing at least ten (10) business days prior to
such event of their consent to such transaction. The provisions of this Section
4 shall not apply to any reorganization, merger or consolidation involving (1)
only a change in the state of incorporation of the Company, (2) a merger of the
Company with or into an eighty percent (80%) or more owned subsidiary of the
Company that is incorporated in the United States of America, or (3) any other
transaction approved by the Company's Board of Directors, which approval
includes a determination by two-thirds or more of the members of the Board, not
subject to the refusal provisions of Section 3.3(b) of the Convertible Preferred
Stock Purchase Agreement, dated November 26, 1997, that the transaction will not
have a material adverse effect on the rights and preferences of the holders of
the Preferred Stock as in effect immediately prior to the consummation of the
transaction. For purposes hereof, all other preferred stock, and all of the
Common Stock, shall rank on liquidation junior to the Series A Preferred Stock.
5. RESTRICTIONS ON SENIOR SECURITIES. At any time when shares of Series
A Preferred Stock are outstanding, except where the vote or written consent of
the holders of a greater number of shares of the Company is required by law or
by the Certificate of Incorporation, without the approval of the holders of more
than fifty percent (50%) percent of the then outstanding shares of Series A
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, the Company will not:
(a) Create or authorize the creation of any additional class or series
of shares of stock unless the same ranks junior to the Series A
Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Company, or increase the authorized
amount of the Series A Preferred Stock or increase the authorized
amount of any additional class or series of shares of stock unless the
same ranks junior to the Series A Preferred Stock as to the
distribution of assets on the liquidation, dissolution or winding up of
the Company, or create or authorize any obligation or security
convertible into shares of Series A Preferred Stock or into shares of
any other class or series of stock unless the same ranks junior to the
Series A Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Company, whether any such
creation, authorization or increase shall be by means of amendment to
the Certificate of Incorporation or by merger, consolidation or
otherwise;
(b) Redeem or otherwise acquire any shares of Series A Preferred Stock
except as expressly authorized in Section 7 hereof or pursuant to a
purchase offer made pro rata to all holders of the shares of Series
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A Preferred Stock on the basis of the aggregate number of outstanding
shares of Series A Preferred Stock then held by each such holder; or
(c) Amend the Certificate of Incorporation or adopt any votes of the
Board of Directors or any provision of the By-Laws of the Company which
will alter or change the rights, preferences or privileges of the
Series A Preferred Stock in any manner adverse to the interests of such
holders.
6. CONVERSIONS. The holders of shares of Series A Preferred Stock shall
have the following conversion rights:
A. Right to Convert; Automatic Conversion. Subject to the terms and
conditions of this Section 6, the holder of any share of Series A
Preferred Stock shall have the right, at its option at any time prior
to the close of business on the third (3rd) business day preceding any
Redemption Date (or if funds for redemption are not available or
reserved as required by 7C hereof, or upon any liquidation of the
Company, the close of business on the day preceding the day fixed for
payment of the Liquidation Payment distributable on the Series A
Preferred Stock), to convert each such share of Series A Preferred
Stock into eighteen and fifty-two one hundredths (18.52) shares of
fully paid and nonassessable shares of Common Stock based upon an
initial conversion price of $5.40 per share of Common Stock (the
"Conversion Price") subject to such adjustments as may be required
herein or are otherwise determined by the Board of Directors (excluding
those members subject to the refusal provisions of Section 3.3 of the
Convertible Preferred Stock Purchase Agreement) to be reasonably
necessary, in their good faith judgment, to preserve for the holders of
shares of Series A Preferred Stock the benefits and rights set forth
herein. Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a
stated number of whole or fractional shares of Series A Preferred Stock
into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Company at its principal office
(or such other office or agency of the Company as the Company may
designate by notice in writing to the holders of the Series A Preferred
Stock) at any time during its usual business hours on the date set
forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The conversion rights may be exercised at
any time, and from time to time. Any shares of Preferred Stock still
outstanding as of December 1, 2002 shall, without any action of the
Holders thereof or the Company, be automatically converted into Common
Stock, as set forth above.
B. Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in Subsection 6A and
surrender of the certificate or certificates for the share or shares of
Series A Preferred Stock to be converted, the Company shall issue and
deliver, or cause to be issued and delivered, to the holder, registered
in such name or names as such holder may direct, a certificate or
certificates for the number of whole shares of Common Stock issuable
upon the conversion of such share or shares of Series A Preferred
Stock. To the extent permitted by law, such conversion shall be deemed
to have been effected as of the close of business on the date on which
such written notice shall have been received by the Company and the
certificate or certificates for such share or shares shall have been
surrendered as aforesaid, and at such time the rights of the holder of
such share or shares of Series A Preferred Stock shall cease, and the
person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby.
C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares of Common Stock shall be issued upon conversion of Series A
Preferred Stock and no payment or adjustment shall be made upon any
conversion on account of any cash dividends on the Common Stock issued
upon such conversion.
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At the time of each conversion, the Company shall pay in cash an amount
equal to all unpaid Accrued Dividends on the shares of Series A
Preferred Stock surrendered for conversion to the date upon which such
conversion is deemed to take place. In case the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subsection 6A exceeds the number of shares
converted, the Company shall, upon such conversion, execute and deliver
to the holder, at the expense of the Company, a new certificate or
certificates for the number of shares of whole or fractional Series A
Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted. If any fractional share of
Common Stock would, except for the provisions of the first sentence of
this Subsection 6C, be delivered upon such conversion, the Company, in
lieu of delivering such fractional share, shall pay to the holder
surrendering the Series A Preferred Stock for conversion an amount in
cash equal to the Conversion Price multiplied by the fraction.
D. Reorganization, Reclassification or Stock Splits. If any capital
reorganization or reclassification or stock splits or dividends in the
form of capital stock of the Company shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to, or in exchange for, Common Stock,
then, as a condition of such reorganization or reclassification or
stock split, lawful and adequate provisions shall be made whereby
assurance shall be given that each holder of shares of Series A
Preferred Stock shall receive upon conversion of Preferred Stock such
shares of stock, securities or assets as may be issued or payable with
respect to, or in exchange for, a number of outstanding shares of such
Common Stock equal to the number of shares of such Common Stock
immediately theretofore receivable upon such conversion of such shares
of Series A Preferred Stock had such reorganization, reclassification
or stock split or dividends not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the
conversion rights) shall thereafter be applicable, as nearly as may be
possible, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.
E. Capital Reorganization, Merger or Sale of Assets. If at any time or
from time to time there shall be a capital reorganization of the Common
Stock (other than a recapitalization, reclassification or exchange of
shares provided for elsewhere in this Section 6) or a merger or
consolidation of the Company with or into another corporation, or the
Company is a party to a transaction which results in the sale by the
Company of all or substantially all of the Company's capital stock or
assets to any other person, then, as a part of such reorganization,
merger, or consolidation or sale, provision shall be made so that the
holders of the Series A Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A Preferred Stock the number of
shares of stock or other securities or property of the Company, or of
the successor Company resulting from such merger, consolidation or
sale, to which such holder would have been entitled if such holder had
converted its shares of Series A Preferred Stock immediately prior to
such capital reorganization, merger, consolidation or sale. In any such
case, appropriate adjustment shall be made in the application of the
provisions of this Section 6 to the end that the provisions of this
Section 6 (including any necessary adjustment of the Conversion Price,
then in effect and the number of shares of Common Stock or other
securities issuable upon conversion of such shares of Series A
Preferred Stock) shall be applicable after that event in as nearly
equivalent a manner as may be practicable.
F. Notices. In case at any time:
(1) the Company shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
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(2) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or a
consolidation or merger of the Company with or into, or a sale of all
or substantially all its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
or there shall be any other event, agreement or plan of the type
described in Sections 4, 5 or 6 hereof, then, in any one or more of
said cases, the Company shall give, by first class mail, postage
prepaid, or by telex to non-U.S. residents, addressed to each holder of
any shares of Series A Preferred Stock at the address of such holder as
shown on the books of the Company, (a) at least 20 business days' prior
written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or similar event and (b) in the
case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up or similar event,
at least 20 business days' prior written notice of the date when the
same shall take place. Such notice given in accordance with the
foregoing clause (a) shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and such notice given
in accordance with the foregoing clause (b) shall also specify the date
on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
G. Stock to be Reserved. The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares
of the Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Preferred Stock, and if at
any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, the Corporation
shall take such action as may be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
H. No Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued as Series A Preferred Stock.
I. Closing of Books. The Company will at no time close its transfer
books against the transfer of any Series A Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Preferred Stock in any manner which interferes with
the timely conversion of such Series A Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
J. Definition of Common Stock. As used in this Section 6, the term
"Common Stock" shall mean and include the Company's authorized Common
Stock, par value $.001 per share, as constituted on the date of filing
of these terms of the Series A Preferred Stock, and shall also include
any capital stock of any class of the Company thereafter authorized
which shall neither be limited to a fixed sum or
6
<PAGE> 7
percentage of par value in respect of the rights of the holders thereof
to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided that the shares of
Common Stock receivable upon conversion of shares of Series A Preferred
Stock shall include only shares designated as Common Stock of the
Company on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof,
the stock, securities or assets provided for in Section 6.
7. REDEMPTION. The shares of Series A Preferred Stock shall be redeemed
as follows:
A. Subject to Section (E) below, the Company may, at the times and in
the manner set forth below, redeem for the Redemption Price (as defined
below) all or any part of the shares of Series A Preferred Stock
outstanding. Such redemption may only be made following a period of
twenty (20) consecutive trading days (a "Valuation Period") during
which, on each day, the closing bid price of the Common Stock on the
primary exchange on which Common Stock is traded on each such day,
exceeds one hundred and fifty percent (150%) of the then applicable
Conversion Price (an "Optional Redemption"). Any such Optional
Redemption shall be made only upon the giving by the Company of a
written notice to the holders of Preferred Stock (in the manner set
forth in C. below) given on or before the sixtieth (60) day following
the last day of the applicable Valuation Period. The applicable
"Redemption Price" for an Optional Redemption shall be the Redemption
Value of the Preferred Stock, plus all Accrued Dividends through the
Redemption Date, plus in the event of an Optional Redemption which
results in a Redemption Date prior to December 1, 2000, an amount, in
cash, equal to one-half (1/2) of the dividends that would have accrued
or been payable through December 1, 2000 if such Optional Redemption
had not occurred.
B. On and after any Redemption Date (unless default shall be made by
the Company in the payment of the applicable Redemption Price as herein
provided, in which event such rights shall be exercisable until such
default is cured), all rights in respect of the shares of Preferred
Stock to be redeemed, except the right to receive the applicable
Redemption Price as herein provided, shall cease and terminate and such
shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the
Company.
C. Notice of the redemption pursuant to this Section 7 shall be sent by
first-class certified mail, return receipt requested, postage prepaid,
to the holders of record of shares of Preferred Stock at their
respective addresses as the same shall appear on the books of the
Company. Such notice shall be mailed on a business day which is not
less than 15 nor more than 60 day calendar in advance of the applicable
Redemption Date. The Company shall be required to have available, not
less than two (2) business days prior to the Redemption Date, in escrow
or otherwise reserved, such funds as are necessary to pay the aggregate
Redemption Price to be due. At any time on or after the Redemption
Date, the holders of record of shares of Preferred Stock to be redeemed
on such Redemption Date in accordance with this Section 7 shall be
entitled to receive the applicable Redemption Price upon actual
delivery to the Company or its agents of the certificates representing
the shares to be redeemed.
D. The Company will not, and will not permit any subsidiary of the
Company to, purchase or acquire any shares of Preferred Stock otherwise
than pursuant to the terms of this Section 7 or pursuant to an offer
made on the same terms to all holders of Preferred Stock at the time
outstanding.
E. Anything contained in this Section 7 to the contrary
notwithstanding, the holders of shares of Preferred Stock to be
redeemed pursuant to this Section 7 shall have the right, exercisable
at any time
7
<PAGE> 8
up to the close of business on the third (3rd) business day preceding
the Redemption Date (unless default shall be made by the Company in the
payment of the Redemption Price as herein provided, in which event such
right shall be exercisable until such default is cured), to convert all
or any part of such shares to be redeemed as herein provided into
shares of Common Stock pursuant to Section 5 hereof. If, and to the
extent, any shares of Preferred Stock so entitled to redemption are
converted into shares of Common Stock by the holders thereof prior to
the close of business on the Redemption Date, the total number of
shares of Preferred Stock otherwise to be redeemed on such date shall
be reduced by the number of shares of Preferred Stock so converted.
8. AMENDMENTS. No provision of these terms of the Series A Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of more than 50% of the voting power of the then
outstanding shares of Series A Preferred Stock.
8
<PAGE> 9
IN WITNESS WHEREOF, said BOGEN COMMUNICATIONS INTERNATIONAL, INC. has
caused this Certificate of Designations, Preferences and Rights of Convertible
Preferred Stock to be duly executed by its Chief Financial Officer and Senior
Vice President - Business Development and Finance and attested to by its
Assistant Secretary and has caused its corporate seal to be affixed hereto, this
26th day of November, 1997.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By /s/ Yoav M. Cohen
-------------------------------------
Yoav M. Cohen,
Chief Financial Officer and Senior
Vice President - Business Development
and Finance
(Corporate Seal)
ATTEST:
/s/ Francis J. Elenio
- ----------------------------
Francis J. Elenio, Assistant
Secretary
<PAGE> 1
Exhibit 4.2
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
OF
CONVERTIBLE PREFERRED STOCK OF
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
Pursuant to Section 103(f) of the
General Corporation Law of the
State of Delaware
Bogen Communications International, Inc., a Delaware
corporation (the "Company"), does hereby certify that the Certificate of
Designation, Preferences and Rights of Convertible Preferred Stock of Bogen
Communications International, Inc. filed by the Company with the State of
Delaware on November 26, 1997 (the "Certificate of Designation") is an
inaccurate record of the corporate action referred to therein.
The inaccuracies in the Certificate of Designation consist of
a missing definition of "Redemption Value" in Section 3(a) of the Certificate
of Designation and an inaccurate conversion price in Section 6A of the
Certificate of Designation.
Section 3(a) of the Certificate of Designation is amended and
restated in its entirety as follows:
"3. DIVIDENDS. (a) Each holder of a share of Series A
Preferred Stock shall be entitled to receive, when, as and if
declared by the Company's Board of Directors, out of the funds
of the Company legally available therefor, cumulative
dividends during each Semi-Annual Dividend Period (as
hereinafter defined) at a per annum dividend rate per share
equal to the product of (i) $100 per share (the "Redemption
Value"); and (ii) nine percent (9%); provided, however, that
dividends for any period during which any shares of Series A
Preferred Stock shall be outstanding for less than a full
Semi-Annual Dividend Period (as defined below) shall be paid,
pro rata, based on the actual number of days such shares shall
be outstanding during such Semi-Annual Dividend Period
("Accrued Dividends"). As used herein, "Semi-Annual Dividend
Period" means the period from January 1, through June 30, of
each year and July 1, through December 31, of each year,
provided that the first Semi-Annual Dividend Period shall be
the period commencing on the date of initial issuance of
shares of the Series A Preferred Stock (other than Additional
Shares (as defined below)) and ending on June 30, 1998."
Section 6A of the Certificate of Designation is amended and
restated in its entirety as follows:
<PAGE> 2
"6. CONVERSIONS. The holders of shares of Series A
Preferred Stock shall have the following conversion rights:
A. Right to Convert; Automatic Conversion.
Subject to the terms and conditions of this Section
6, the holder of any share of Series A Preferred
Stock shall have the right, at its option at any time
prior to the close of business on the third (3rd)
business day preceding any Redemption Date, or if
funds for redemption are not available or reserved as
required by 7C hereof, or upon any liquidation of the
Company, the close of business on the day preceding
the day fixed for payment of the Liquidation Payment
distributable on the Series A Preferred Stock, to
convert each such share of Series A Preferred Stock
into eighteen and six hundred and five
one-thousandths (18.605) shares of fully paid and
nonassessable shares of Common Stock based upon an
initial conversion price of $5.375 per share of
Common Stock (the "Conversion Price") subject to such
adjustments as may be required herein or are
otherwise determined by the Board of Directors
(excluding those members subject to the recusal
provisions of Section 3.3 of the Convertible
Preferred Stock Purchase Agreement) to be reasonably
necessary, in their good faith judgment, to preserve
for the holders of shares of Series A Preferred Stock
the benefits and rights set forth herein. Such
rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder
elects to convert a stated number of whole or
fractional shares of Series A Preferred Stock into
Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the
Company at its principal office (or such other office
or agency of the Company as the Company may designate
by notice in writing to the holders of the Series A
Preferred Stock) at any time during its usual
business hours on the date set forth in such notice,
together with a statement of the name or names (with
address) in which the certificate or certificates for
shares of Common Stock shall be issued. The
conversion rights may be exercised at any time, and
from time to time. Any shares of Preferred Stock
still outstanding as of December 1, 2002 shall,
without any action of the Holders thereof or the
Company, be automatically converted into Common
Stock, as set forth above."
In all other respects, the Certificate of Designation remains
in full force and effect.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Certificate to
be duly executed by Yoav M. Cohen, its Senior Vice Presidents - Business
Development and Finance and Chief Financial Officer and attested to by Francis
J. Elenio, its Assistant Secretary, and has caused the corporate seal to be
affixed hereto this 9th day of December, 1997.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
--------------------------
Yoav M. Cohen,
Senior Vice President -
Business Development and Finance
and Chief Financial Officer
(Corporate Seal)
ATTEST
/s/ Francis J. Elenio
- ----------------------------
Francis J. Elenio, Secretary
<PAGE> 1
Exhibit 10.1
STOCK PURCHASE AGREEMENT
By and Between
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
and
GEOTEK COMMUNICATIONS, INC.
NOVEMBER 26, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS.............................................................. 1
2. THE PURCHASE............................................................. 2
2.1 Purchase.................................................... 2
2.2 Purchase Consideration...................................... 3
3. THE CLOSING.............................................................. 3
4. REPRESENTATIONS AND WARRANTIES OF GEOTEK................................. 4
4.1 Status and Authority........................................ 4
4.2 Conflicts, Consents and Approvals........................... 4
4.3 Title to Shares and Warrants................................ 5
4.4 Litigation.................................................. 5
4.5 Brokers..................................................... 6
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 6
5.1 Status and Authority........................................ 6
5.2 Conflicts, Consents and Approvals........................... 6
5.3 Securities Filings.......................................... 7
5.4 Absence of Certain Changes.................................. 7
5.5 Litigation.................................................. 8
5.6 Brokers..................................................... 8
6. ADDITIONAL AGREEMENTS.................................................... 8
6.1 Resignation of Directors and Officers....................... 8
6.2 Expenses of Transaction; Transfer Taxes..................... 8
6.3 Continuation of Medical and Financial Coverage.............. 9
6.4 Preserve Accuracy of Representations and Warranties......... 10
6.5 Cooperation................................................. 10
7. NON-COMPETITION BY GEOTEK................................................ 10
7.1 Covenants Against Competition............................... 10
7.2 Rights and Remedies Upon Breach............................. 14
7.3 Severability of Covenants................................... 14
7.4 "Blue-Pencilling"........................................... 15
7.5 Enforceability in Jurisdictions............................. 15
8. SURVIVAL................................................................. 15
9. CONDITIONS PRECEDENT..................................................... 16
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
9.1 Conditions to Obligation of Geotek.......................... 16
9.2 Conditions to Obligations of the Company.................... 17
10. TERMINATION.............................................................. 18
11. MISCELLANEOUS............................................................ 19
11.1 Notices..................................................... 19
11.2 Publicity................................................... 20
11.3 Further Assurances.......................................... 20
11.4 Severability................................................ 20
11.5 Entire Agreement............................................ 20
11.6 Amendments.................................................. 20
11.7 Waiver...................................................... 21
11.8 Captions.................................................... 21
11.9 No Third Party Beneficiary.................................. 21
11.10 Remedies Cumulative......................................... 21
11.11 Governing Law............................................... 22
11.12 Assignment.................................................. 22
11.13 Counterparts................................................ 22
</TABLE>
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<PAGE> 4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated as of the
____ day of November, 1997 by and among BOGEN COMMUNICATIONS INTERNATIONAL,
INC., a Delaware corporation (the "Company"), and GEOTEK COMMUNICATIONS, INC., a
Delaware corporation ("Geotek").
W I T N E S S E T H
WHEREAS, Geotek is the beneficial owner of 3,701,919 shares (the
"Shares") of the Common Stock, par value $.001 per share, of the Company (the
"Common Stock"), and warrants (the "Warrants") to purchase 200,000 shares of
Common Stock, which Shares and Warrants constitute all shares of capital stock
of the Company, and rights to acquire capital stock of the Company, held
beneficially or of record by Geotek; and
WHEREAS, Geotek wishes to sell such Shares and Warrants to the Company
and the Company wishes to purchase and acquire such Shares and Warrants from
Geotek.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements, representations and warranties hereinafter set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the meaning
indicated:
<PAGE> 5
"Governmental Authority" shall mean any foreign, federal, state or
local court, arbitration tribunal, legislative body, administrative agency or
commission, or other governmental or other regulatory authority, agency or
department.
"Material," whether capitalized or not, when used to qualify a
representation, warranty, or covenant contained in this Agreement shall mean,
unless otherwise defined, as the case may be and to the extent the context so
requires, that there is a reasonable probability under all the circumstances and
in view of the total mix of information available that a reasonable Person, in
the position of the party relying thereon, would attach importance to the matter
in question in deciding whether to enter into and consummate this Agreement in
accordance with the specific terms contained in this Agreement.
"Person" shall mean any natural person, corporation, organization,
partnership, association, joint-stock company, limited liability company, joint
venture, trust or government, or any agency or political subdivision of any
government.
2. THE PURCHASE
2.1 Purchase. Subject to the terms and conditions contained herein, on
the Closing Date (as defined in Section 3 hereof), Geotek shall sell, transfer,
assign, and convey the Shares and the Warrants to the Company, and shall deliver
to the Company a stock certificate or certificates representing all of the
Shares, duly endorsed in blank with duly executed stock powers attached, and the
certificates representing all of the Warrants, all in proper form for transfer
free and clear of any lien, encumbrance, security interest, pledge, charge,
option, claim, mortgage or any other encumbrance whatsoever (collectively, a
-2-
<PAGE> 6
"Lien") with respect thereto. The Company shall purchase, acquire and accept
each of Geotek's Shares and Warrants in exchange for the Purchase Consideration
set forth in Section 2.2.
2.2 Purchase Consideration. At the Closing (as defined in Section 3
hereof), in exchange for the Shares and the Warrants and against delivery of a
stock certificate or certificates representing the Shares and a certificate or
certificates representing the Warrants, the Company shall cause to be paid, by
receipt of funds by Geotek via wire transfer to an account designated by Geotek
in the aggregate amount of $18,500,000 (the "Purchase Consideration").
3. THE CLOSING
The closing of the transactions described herein (the
"Closing") shall take place at 10:00 a.m. on November 26, 1997 (the "Closing
Date") at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, New
York, New York 10020 or at such other time and place as shall be agreed to by
the parties. The Closing shall be effective as of the close of business on the
Closing Date. At the Closing, the parties shall deliver, or cause to be
delivered, such certificates, receipts or other documents or instruments as are
provided for in this Agreement and shall attend to such other matters as may be
reasonably required and are customary to comply with the terms of this
Agreement.
-3-
<PAGE> 7
4. REPRESENTATIONS AND WARRANTIES OF GEOTEK
Geotek represents and warrants to the Company as follows:
4.1 Status and Authority. Geotek is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Geotek has the full and unrestricted right, power and authority (a) to own each
of the Shares and the Warrants, (b) to execute and deliver this Agreement and
every other agreement, document or instrument contemplated hereby or in
connection with the transactions referred to herein (collectively, the "Related
Agreements") to which it is party, (c) to perform its obligations hereunder and
thereunder and (d) to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Related Agreements by Geotek and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Geotek. This Agreement and the Related Agreements have
been duly executed and delivered by Geotek and constitute the valid and binding
obligation of Geotek, enforceable against Geotek in accordance with their terms.
4.2 Conflicts, Consents and Approvals. The execution, delivery and
performance of this Agreement and the Related Agreements by Geotek do not and
will not result in (a) any conflict with any formative, organizational or
governing documents of Geotek, (b) any Material breach or violation of or
default under any law, rule, statute, regulation, judgment, order or decree or
any Material note, bond, mortgage, agreement, deed of trust, indenture, license,
permit, lease, loan agreement, contract, agreement or any other instrument or
arrangement to which Geotek is a party or by which Geotek or any of its
-4-
<PAGE> 8
properties or assets is bound or (c) the creation or imposition of any Liens on
any of the Shares or Warrants. No consent, approval or authorization of or
filing, registration, qualification, designation or declaration with, or notice
to, any Governmental Authority or any third party is required on the part of
Geotek in connection with the execution and delivery of this Agreement and the
Related Agreements or the consummation of the transactions contemplated hereby
and thereby, other than those consents and approvals which have been obtained.
4.3 Title to Shares and Warrants. Geotek owns all of the Shares and the
Warrants free and clear of all Liens, except to the extent that such Liens will
be removed prior to the Closing. The Shares and the Warrants constitute all of
the securities of the Company held by Geotek and its affiliates and Geotek has
no direct or indirect ownership interest in the Company except as beneficial
owner of the Shares and the Warrants. Except for this Agreement and the Voting
Agreement dated August 21, 1995, by and among Geotek, Yoav Stern, Joram D.
Rosenfeld and David Jan Mitchell, Geotek is not a party to any agreement
restricting the transfer or the voting of the Shares or the Warrants.
4.4 Litigation. There is no lawsuit, arbitration, action, claim,
investigation, hearing, charge, complaint, demand or administrative proceeding
either (a) pending in any court or before any Governmental Authority or
otherwise pending against Geotek or (b) to the knowledge of Geotek's officers or
directors, threatened, against Geotek, seeking to restrain, prohibit or
invalidate the sale of the Shares and/or the Warrants hereunder by Geotek to the
Company or the consummation of the transactions contemplated hereby or
-5-
<PAGE> 9
seeking damages in connection with such transactions or to place a lien on, or
otherwise encumber, the Shares and/or the Warrants.
4.5 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any Person acting on behalf of Geotek in such manner as to give rise to any
claim for any brokerage or finder's commission, fee or similar compensation
which would require payment by the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Geotek as follows:
5.1 Status and Authority. The Company is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the full and unrestricted right, power and authority to (a) execute
and deliver this Agreement and the Related Agreements to which it is party, (b)
to perform its obligations hereunder and thereunder and (c) to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Related Agreements by the Company and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary actions on the part of the Company. This Agreement
and the Related Agreements have been duly executed and delivered by the Company
and constitutes the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
5.2 Conflicts, Consents and Approvals. The execution, delivery and
performance of this Agreement and the Related Agreements by the Company do not
and will
-6-
<PAGE> 10
not result in (a) any conflict with any formative, organizational or governing
documents of the Company or (b) any Material breach or violation of or default
under any law, rule, statute, regulation, judgment, order or decree or any note,
bond, mortgage, agreement, deed of trust, indenture, license, permit, lease,
loan agreement, contract, agreement or any other instrument or arrangement to
which the Company is a party or by which the Company or any of its properties or
assets is bound. No consent, approval or authorization of or filing,
registration, qualification, designation or declaration with, or notice to, any
Governmental Authority or any third party is required on the part of the Company
in connection with the execution and delivery of this Agreement and the Related
Agreements or the consummation of the transactions contemplated hereby and
thereby, other than those consents and approvals which have been obtained.
5.3 Securities Filings. The Company has heretofore delivered to Geotek,
the Company's annual report on Form 10-K for its fiscal year ended December 31,
1996 and the Company's quarterly report on Form 10-Q for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 (collectively, the
"SEC Reports"). As of their respective filing dates, the SEC Reports filed
pursuant to the Securities Exchange Act of 1934 did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
5.4 Absence of Certain Changes. Except as disclosed in the SEC Reports,
at all times since September 30, 1997, the Company has conducted its business in
the ordinary course consistent with past practice and there has not been any
change, or any event,
-7-
<PAGE> 11
occurrence or development of a state of circumstances of facts, which could
reasonably be expected to have a Material adverse effect on the Company.
5.5 Litigation. There is no lawsuit, arbitration, action, claim,
investigation, hearing, charge, complaint, demand or administrative proceeding
either (a) pending in any court or before any Governmental Authority or
otherwise pending against the Company or (b) to the knowledge of the Company's
officers or directors, threatened, against the Company, seeking to restrain,
prohibit or invalidate the purchase of the Shares and/or the Warrants hereunder
by the Company from Geotek or the consummation of the transactions contemplated
hereby or seeking damages in connection with such transactions.
5.6 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out without the intervention
of any Person acting on behalf of the Company in such manner as to give rise to
any claim for any brokerage or finder's commission, fee or similar compensation
which would require payment by Geotek.
6. ADDITIONAL AGREEMENTS
6.1 Resignation of Directors and Officers. On the Closing Date, Geotek
shall cause each Person nominated to the Board of Directors of the Company by
it, including, without limitation, Yaron Eitan, John J. Egidio, Zvi Peled and
Robert Vecsler, to resign from all directorships and other positions such Person
holds with the Company.
6.2 Expenses of Transaction; Transfer Taxes. Geotek shall have no
liability or other responsibility to the Company, and the Company shall have no
liability or other responsibility to Geotek, for any costs or expenses relating
to this Agreement, the Related
-8-
<PAGE> 12
Agreements or the transactions contemplated hereby or thereby. Geotek shall pay
all stock transfer taxes, recording fees and other sales, transfer, use,
purchase or similar tax resulting from the transactions contemplated hereby.
6.3 Continuation of Medical and Financial Coverage. Geotek agrees to
(a) continue all medical benefits, other employee benefits and insurance
coverage, excluding directors' and officers' insurance, currently available to
the Company and its subsidiaries and its employees provided that the Company
reimburses Geotek for such benefits and coverage within 30 days of Geotek's
payment therefor to the carrier, upon presentation by Geotek to the Company of
expense statements, proof of payment and such other supporting information as
the Company may reasonably require, or in the case of group health, medical and
dental plans, the Company pays the carrier or provider directly, until the
earlier of (i) the date on which the Company notifies Geotek of its desire to
terminate any such coverage, or (ii) with respect to group health, medical and
dental plans, December 1, 1997, but only in the event that the Company is able
to enter into an agreement, effective December 1, 1997, with the providers of
Geotek's current group health, medical and dental plans on the same terms as are
currently available to the Company through Geotek and at no additional cost to
the Company, otherwise February 28, 1998, and, with respect to all other
insurance plans, January 1, 1998, and (b) cooperate with the Company and its
employees in connection with pursuing claims under all such insurance plans.
Geotek also agrees to continue to allow participation of the Company's and its
subsidiaries' employees under Geotek's 401(k) plan until April 30, 1998, or
sooner if the Company so elects. Geotek further agrees, at the direction of the
Company, to direct Merrill Lynch, Pierce, Fenner & Smith, Incorporated to
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<PAGE> 13
cooperate with the plan splitoff pursuant to which funds in Geotek's 401(k) plan
relating to the employees of the Company and any of its subsidiaries will be
transferred to a 401(k) plan of the Company. Nothing contained herein shall
obligate Geotek to match any contribution made after the date hereof to Geotek's
401(k) plan by any of the employees of the Company or any of its subsidiaries.
6.4 Preserve Accuracy of Representations and Warranties. Each of the
parties hereto shall refrain from taking any action that would render any of its
representations or warranties contained in this Agreement inaccurate through the
Closing Date. Each shall promptly notify the others if any action, suit or
proceeding shall be instituted or threatened against any such party to restrain,
prohibit or otherwise challenge the legality of any transaction contemplated by
this Agreement.
6.5 Cooperation. During the period prior to the Closing Date, Geotek
and the Company shall act diligently and reasonably, and shall cooperate with
each other in order to permit the consummation of the transactions contemplated
by this Agreement.
7. NON-COMPETITION BY GEOTEK
7.1 Covenants Against Competition. Geotek acknowledges that (i) the
principal business of the Company and its subsidiaries is the development,
assembly and distribution of (a) sound processing equipment used for public
broadcast systems and speakers for outdoor use and home theater systems, (b)
office-based telecommunications PBX peripherals that provide voice mail, auto
attendant functions, music and message on hold, telephone accounting systems and
speech recognition for telephone systems and paging systems and (c)
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<PAGE> 14
any combination of the businesses described in clauses (a) and (b)
(collectively, the "Company Business"); (ii) the Company Business is
international in scope; (iii) Geotek was provided with information concerning
many confidential affairs of the Company not readily available to the public;
(iv) the agreements and covenants contained in this Article 7 are essential to
protect the business and goodwill of the Company; (v) the Company would not
enter into this Agreement and would not purchase the Shares and the Warrants but
for such covenants and agreements. In order to induce the Company to enter into
this Agreement, Geotek covenants and agrees that:
(a) Non-Compete. For a period of three years following the
Closing Date (the "Restricted Period"), Geotek shall not, in the United States
of America or in any foreign country, directly or indirectly, (i) engage in the
Company Business for its own account; or (ii) become interested in any Person
engaged in the Company Business, directly or indirectly, as a partner,
shareholder, principal, agent, trustee, consultant or in any other relationship
or capacity; provided, however, that Geotek may own, directly or indirectly,
solely as an investment, securities of any Person which are traded on any
national securities exchange or the NASDAQ National Market System if Geotek (a)
is not a controlling Person of, or a member of a group which controls, such
Person or (b) does not, directly or indirectly, own 1% or more of any class of
securities of such Person; provided, however, that nothing contained herein
shall be interpreted to preclude Geotek from continuing its current business
plan to provide integrated voice and data communications equipment and services
or to preclude Geotek from integrating its voice and data communication
equipment and services with any existing or future telecommunications equipment
or services; provided further, that
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<PAGE> 15
Geotek shall not use the Company's integrated voice and paging system known as
"NextPage" without the prior written consent of the Company in each instance or
without first purchasing or licensing "NextPage".
(b) Confidential Information. Geotek promises and agrees on
behalf of itself, its employees and directors that, either during the Restricted
Period or at any time thereafter, it shall keep secret and retain in strictest
confidence, and shall not use for the its own benefit or for the benefit of
others, any confidential information of the Company and its affiliates,
including, without limitation, trade "know-how," secrets, customer lists,
details of consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of manufacture,
technical processes, designs and design projects, inventions and research
projects and other business affairs of the Company and its affiliates
(collectively, "Confidential Information"), obtained by Geotek heretofore and
through the Closing Date; except for Confidential Information (i) which is in
the public domain, excluding Confidential Information which is in the public
domain as a result of any action taken by Geotek in violation of this Section
7.1(b); (ii) which the Company publicly discloses; or (iii) which Geotek
receives from a third party who is not violating a confidentiality obligation to
the Company.
(c) Property of the Company. All documents and other
materials, including, without limitation, original minute books of the Company
and its subsidiaries, original books and records of the Company, manually signed
agreements to which the Company is a party (other than those agreements to which
Geotek is also a party and with
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<PAGE> 16
respect to which the Company has a manually signed agreement in its possession),
the Company's tax returns since 1991, memoranda, notes, lists, records and other
documents or papers (and all copies thereof), including such items stored in
computer memories, on microfiche or by any other means, made or compiled by or
on behalf of Geotek, or made available to Geotek relating to the Company, are
and shall be the Company's property and shall be delivered, to the extent
available, to the Company promptly after the Closing or at any other time on
request, only to the extent such materials can be delivered without undue effort
or expense; provided, however, that the tax returns, accounting records, and
manually signed agreements to which the Company or any of its subsidiaries is a
party and Geotek is not a party shall be returned to the Company promptly after
the Closing without regard to the effort or expense required to return such
materials to the extent available and in the possession of Geotek or any of its
subsidiaries. Geotek further agrees (i) to cooperate and provide access to its
books and records in connection with any audit of the Company and/or its
subsidiaries; and (ii) to direct Glenn Deal, Esq., to transfer to an attorney
designated by the Company all records and files relating to any matters serviced
for the benefit of the Company.
(d) Employees of the Company. During the Restricted Period,
Geotek shall not, directly or indirectly hire, solicit or encourage to leave the
employment of the Company or any of its affiliates, any employee of the Company
or its affiliates or hire any such employee who has left the employment of the
Company or any of its affiliates within one year of the termination of such
employee's employment with the Company or any of its affiliates. Notwithstanding
anything to the contrary contained herein, Geotek may solicit and
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<PAGE> 17
hire John Egidio and Harry Paulison any time after the three-week anniversary
following the Closing.
(e) Consultants and Independent Contractors of the Company.
Except as agreed to in writing by the Company and Geotek, during the Restricted
Period, Geotek shall not, directly or indirectly, hire, solicit or encourage to
cease to work with the Company or any of its affiliates, any consultant, sales
representative and other person then under contract with the Company or any of
its affiliates; provided, however that Geotek may hire or solicit consultants
who in the ordinary course of such consultant's business provides services to
more than three clients at any one time.
7.2 Rights and Remedies Upon Breach. If Geotek breaches, or threatens
to commit a breach of, any of the provisions of Section 7.1 (the "Restrictive
Covenants"), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity, the right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and its affiliates and that money damages will
not provide an adequate remedy to the Company.
7.3 Severability of Covenants. Geotek acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographical and temporal
scope and in all other respects. If any court determines that any of the
Restrictive Covenants, or any parts
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<PAGE> 18
thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full effect, without regard to
the invalid portions.
7.4 "Blue-Pencilling". If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of
such provision or the area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
7.5 Enforceability in Jurisdictions. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction where the geographical scope of any alleged violations of the
Restrictive Covenants has been implicated. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants wholly unenforceable by reason
of the breadth of such scope or otherwise, it is the intention of the parties
that such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
8. SURVIVAL
The warranties and representations of Geotek set forth in Article 4 of
this Agreement and the warranties and representations of the Company set forth
in Article 5 of this Agreement shall survive the Closing and the consummation of
the transactions contemplated by this Agreement for a period of one year from
the date hereof.
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<PAGE> 19
9. CONDITIONS PRECEDENT
9.1 Conditions to Obligation of Geotek. The obligation of Geotek to
effect the transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing of the following conditions:
(a) The Company shall have performed in all Material respects
its obligations under this Agreement required to be performed by it at or prior
to the Closing;
(b) The representations and warranties of the Company
contained herein shall be true and correct in all Material respects at and as of
the Closing as if made at and as of such date;
(c) The Company shall have delivered to Geotek a certificate,
dated the Closing Date, signed by a duly authorized executive officer of the
Company, to the effect that, to the best knowledge, information and belief of
such officer, the conditions specified in Sections 9.1(a) and 9.1(b) have been
fulfilled;
(d) The Company shall have delivered to Geotek a release in
the form attached hereto as Exhibit A;
(e) The Company shall have delivered to Geotek a certificate
of the Secretary of the Company as to the resolutions of the Board of Directors,
incumbency of officers, execution of documents, Certificate of Incorporation and
By-laws of the Company;
(f) All required consents shall have been obtained and be in
full force and effect and Geotek shall have been furnished with appropriate
evidence of the granting of such approvals, authorizations and consents; and
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<PAGE> 20
(g) Geotek shall have received an opinion of McDermott, Will &
Emery, counsel for the Company, substantially in the form attached hereto as
Exhibit B.
9.2 Conditions to Obligations of the Company. The obligations of the
Company to effect the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing of the following conditions (in addition
to those specified in Section 9.1 hereof):
(a) Geotek shall have performed in all Material respects its
obligations required under this Agreement to be performed at or prior to the
Closing;
(b) The representations and warranties of Geotek contained
herein shall be true and correct in all Material respects at and as of the
Closing as if made at and as of such time;
(c) Geotek shall have delivered to the Company a certificate,
dated the Closing Date, signed by a duly authorized executive officer of Geotek,
to the effect that to the best knowledge, information and belief of such
officer, the conditions specified in Sections 9.2(a) and 9.2(b) have been
fulfilled;
(d) Geotek shall have delivered to the Company a certificate
of the Secretary of Geotek as to the resolutions of the Board of Directors,
incumbency of officers, execution of documents, Certificate of Incorporation and
By-laws of Geotek;
(e) The Company shall have received the resignations referred
to in Section 6.1 hereof;
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<PAGE> 21
(f) Geotek shall have delivered to the Company a release in
the form attached hereto as Exhibit C;
(g) All required consents, shall have been obtained and be in
full force and effect and the Company shall have been furnished with appropriate
evidence of the granting of such approvals, authorizations and consents; and
(h) The Company shall have received an opinion of Klehr,
Harrison, Harvey, Branzburg & Ellers, counsel for Geotek, substantially in the
form attached hereto as Exhibit D.
10. TERMINATION
This Agreement may be terminated and the Purchase contemplated hereby
may be abandoned at any time prior to the Closing by Geotek or the Company:
(a) if the Closing shall not have occurred on or before
December 1, 1997; provided, however, that the right to terminate this Agreement
under this Section 10.1(a) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(b) if any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, injunction or
other order which is in effect and is permanent and nonappealable and has the
effect of making the Purchase illegal or otherwise prohibiting consummation of
the Purchase. In the event of the termination and abandonment of this Agreement
pursuant to this clause (b), this Agreement shall forthwith
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<PAGE> 22
become void and have no effect, without any liability on the part of any party
or its directors or officers.
11. MISCELLANEOUS
11.1 Notices. Any notice, request, instruction, or other communication
to be given hereunder by any party to another shall be in writing and shall be
deemed to have been duly given if delivered by hand or sent by telecopier
(transmission confirmed), certified or registered mail (return receipt
requested), postage prepaid, or by overnight express service, addressed to the
respective party or parties at the following addresses:
If to Geotek: Geotek Communications, Inc.
102 Chestnut Ridge Road
Montvale, New Jersey 07645
Attn: Mr. Scott Bloom
Telecopier: (201) 930-1363
With a copy to: Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Attn: Stephen T. Burdumy, Esq.
Telecopier: (215) 568-6603
If to the Company: Bogen Communications International, Inc.
50 Spring Street
Ramsey, New Jersey 07446
Attn: Mr. Yoav M. Cohen
Telecopier: (201) 760-8771
With a copy to: McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attn: Cheryl V. Reicin, Esq.
Telecopier: (212) 547-5444
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<PAGE> 23
or to such other address or addresses as any party may designate to the others
by like notice as set forth above. Any notice given hereunder shall be deemed
given and received on the date of hand delivery or transmission by telecopier,
or five (5) days after mailing by certified or registered mail or one (1) day
after delivery to an overnight express service for next day delivery, as the
case may be.
11.2 Publicity. Except as may otherwise be required by law, no
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby shall be made without advance approval thereof by Geotek and
the Company.
11.3 Further Assurances. At any time and from time to time after the
Closing, at the request of any party and without further consideration, the
other parties hereto shall execute and deliver such other instruments of sale,
transfer, assignment, assumption and confirmation, and take such other action,
as may be reasonably necessary in order to carry out and implement more
effectively the provisions and purposes of this Agreement.
11.4 Severability. If any term, provision, covenant or restriction of
this Agreement, or any part thereof, is held by a court of competent
jurisdiction or any Governmental Authority to be invalid, void, unenforceable or
against public policy for any reason, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
11.5 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereby.
11.6 Amendments. This Agreement may be amended by Geotek or the Company
at any time by execution of a written instrument signed on behalf of all
parties.
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<PAGE> 24
11.7 Waiver. At any time prior to the Closing, the parties may waive
any inaccuracies in the representations and warranties contained herein or in
any document, certificate or writing delivered pursuant hereto or waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any such right, power and privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege.
11.8 Captions. The captions of the various Articles, Sections and
Exhibits of this Agreement have been inserted only for convenience of reference
and shall not be deemed to modify, explain, enlarge or restrict any provision of
this Agreement or affect the construction hereof.
11.9 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, and successors, any rights or remedies
under or by reason of this Agreement.
11.10 Remedies Cumulative. No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
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<PAGE> 25
11.11 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware,
without regard to conflict of laws of the State of Delaware.
11.12 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
11.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when a counterpart has been signed and delivered by each
of the parties, it being understood that all parties need not sign the same
counterpart.
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<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on this 26th day of November, 1997.
GEOTEK COMMUNICATIONS, INC.
By: /s/ Yoav M. Cohen
----------------------------
Name:
----------------------------
Title:
----------------------------
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yaron Eitan
----------------------------
Name:
----------------------------
Title:
----------------------------
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<PAGE> 1
Exhibit 10.2
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") is
entered into as of November 26, 1997, by and between Bogen Communications
International, Inc., a Delaware corporation, (the "Company") and the entities
set forth on Schedule A hereto, which are signatories to this Agreement (the
"Investors" or individually, an "Investor").
SECTION 1. DESCRIPTION OF THE TRANSACTION
1.1 DESCRIPTION OF SECURITIES. The Company agrees to issue to the
Investors 200,000 shares of its authorized but unissued Preferred Stock, $.001
par value per share, to be designated Series A Preferred Stock (the "Preferred
Shares"), for an aggregate purchase price of $20,000,000 (the "Purchase Price")
. The Preferred Shares will be convertible into shares of the Company's common
stock, $.001 par value per share (the "Common Stock"), in accordance with the
terms of the Designation (as defined in SECTION 1.3) . Any securities of the
Company issued or issuable upon conversion of the Preferred Shares (including
conversions of Preferred Shares issued as dividend payments on outstanding
Preferred Shares) are referred to as "Conversion Shares."
1.2 CLOSING. The closing (the "Closing") of the sale of the Preferred
Shares will take place at the offices of McDermott Will & Emery, 50 Rockefeller
Plaza, New York, NY, at 10:00 a.m., on the date of this Agreement, or such other
time and place as agreed to by the parties (the "Closing Date"). At the
Closing, the Company will deliver the Preferred Shares being acquired by the
Investors upon payment of the Purchase Price to the Company or the Company's
designees by wire transfer, by certified or bank cashier's check, or by other
form of payment acceptable to the Company. The Company will not be obligated to
sell any Preferred Shares unless the Investors purchase at the Closing all the
Preferred Shares described in SECTION 1.1 hereto.
1.3 CONDITIONS TO CLOSING. At or prior to the Closing, (a) the Company
shall have duly authorized and filed a Certificate of Designation Establishing
Series of Shares (the "Designation") with the Secretary of State of the State of
Delaware, substantially in the form attached hereto as Exhibit A; and
(b) the Company shall have delivered to the Investors:
(i) copies of (A) the resolutions of the Board of Directors of the
Company, or an authorized committee thereof, authorizing and approving
this Agreement, the Designation and all of the transactions and
agreements contemplated hereby, including resolutions specifically
acknowledging that the purchase of the Preferred Shares and Conversion
Shares is, and shall be considered at all times, a transaction approved
by the Company's Board of Directors for purposes of Delaware General
Corporation Law Section 203, and certified by the Secretary of the
Company as being true, correct, complete and in full force and effect
and unmodified as of the Closing Date, and (B) the Certificate of
Incorporation and Bylaws of the Company, each as amended to date; and
(C) copies of a fully executed and enforceable purchase agreement
between the Company and Geotek Communications Inc. ("Geotek") pursuant
to which the Company will purchase from Geotek for $18,500,000,
simultaneously with the Closing, all of the Company's Common Stock and
Common Stock Warrants then owned by Geotek, (but in no case not less
than 3,701,919 shares of Common Stock and 200,000 Common Stock
Warrants) (the "Geotek Purchase"); and (D) fully executed and
enforceable agreements providing for the full-time employment by the
Company of Jon Guss and Michael Fleischer (the "Executives") as senior
executives and directors of the Company; and (E) resignations from the
Company's Board of Directors of Yaron Eitan, Zvi Peled, John Egidio and
Robert Vecsler; and (F) votes of the Board of Directors, to be
effective immediately upon consummation of the Closing, providing for
(x) the setting of the size of the Board of Directors at
<PAGE> 2
seven (7), (y) the election of Jeffrey Schwarz and David Schwartz (the
"Investor Nominees") and the Executives to the Company's Board of
Directors, and (z) the election of one of the Investor Nominees to each
of the Executive Committee, Nominating Committee (if any), Compensation
Committee and Audit Committee (all of which shall have three members)
and the election of one of the Executives to the Executive Committee
and the Nominating Committee (if any).
(ii) a certificate of the Secretary of the Company certifying the names
of the officer or officers of the Company authorized to execute this
Agreement and any and all documents, agreements and instruments
contemplated herein; and
(iii) such other documents, instruments, and certificates as the
Investors may reasonably request including a legal opinion with respect
to certain matters set forth herein.
The Company acknowledges and agrees that the purpose and intent of the
transactions herein agreed to is to provide funds necessary for the simultaneous
consummation of the Geotek Purchase and for other general corporate purposes,
and that if for any reason the Geotek Purchase is not so consummated, then this
Agreement shall be canceled and of no further force and effect and all and every
part of the Purchase Price shall be immediately returned to the Investors,
without regard to the reasons for such non-consummation.
SECTION 2. REPRESENTATIONS OF THE COMPANY
As part of the basis of this Agreement, the Company represents to the
Investors that on the date hereof:
2.1 ORGANIZATION. The Company and each of its subsidiaries (each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and is
qualified to do business as a foreign corporation in all other jurisdictions
where the failure to so qualify would have a material adverse effect on the
Company.
2.2 CORPORATE POWER. The Company and each Subsidiary has all requisite
power and authority to own its respective properties and to carry on its
respective business as presently conducted and as proposed to be conducted. The
Company has all requisite corporate power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. The copies of the Certificate of Incorporation and Bylaws of the
Company, each as amended to date, which have been furnished to the Investor, are
correct and complete.
2.3 AUTHORIZATION. This Agreement and all documents executed pursuant
to this Agreement are valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms. The execution, delivery and
performance of this Agreement and the issuance of the Preferred Shares and the
Conversion Shares have been, or will be upon such issuance, duly authorized by
all necessary corporate action of the Company.
2.4 CAPITALIZATION. The authorized and issued capital stock of the
Company (including outstanding options and warrants, whether or not currently
exercisable) is as set forth in Schedule 2.4. All of the presently outstanding
shares of capital stock of the Company have been validly authorized and issued
and are fully paid and nonassessable. The Preferred Shares have been validly
authorized and, when delivered and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable and free of all encumbrances and
restrictions, except restrictions on transfer imposed by applicable securities
laws and/or this Agreement. The relative rights, preferences, restrictions and
other provisions relating to the Preferred Shares are as set forth in the
Designation. The Company has authorized and reserved for issuance upon
conversion of the Preferred Shares of its Common Stock sufficient for the
conversion of the Preferred Shares. Conversion Shares will be, when and
2
<PAGE> 3
if issued, validly authorized and issued, fully paid and nonassessable and free
of all encumbrances and restrictions, except restrictions on transfer imposed by
applicable securities laws and/or this Agreement.
2.5 PREEMPTIVE RIGHTS. There are no preemptive rights affecting the
issuance or sale of the Company's capital stock.
2.6 FINANCIAL STATEMENTS. The Company has filed with the Securities and
Exchange Commission (the "Commission") the audited consolidated financial
statements of the Company for the year ended December 31, 1996 and the unaudited
financial statements for the quarterly periods ended September 30, 1997. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied consistently, and present fairly the consolidated
financial condition of the Company as of the dates thereof, and the consolidated
results of operations of the Company for the period, or portion thereof, as
applicable, then ended (except, in the case of unaudited financial statements,
for year-end adjustments and footnotes). Since September 30, 1997, there has not
been any material adverse change, nor to the Company's knowledge is any such
change threatened, in the business, condition (financial or otherwise),
operations or properties, assets, or results of operation of the Company and its
Subsidiaries, taken as a whole.
2.7 EFFECT OF TRANSACTIONS. The Company's execution and delivery of
this Agreement, and its performance of the transactions contemplated by this
Agreement, will not, whether through consummation hereof, by the lapse of time,
the giving of notice or otherwise, (a) violate any judgment, decree or order, or
any material contract or obligation of the Company or any Subsidiary, (b)
violate any statute, rule or regulation of any federal, state or local
government or agency applicable to the Company or any Subsidiary, or any
material contract to which any employee of the Company or any Subsidiary is
bound, which violation, in each case, would have a material adverse effect on
the operations or financial condition of the Company, or (c) result in the
imposition of any material lien, charge, security interest or encumbrance upon
any property or assets of the Company or any Subsidiary.
2.8 BROKERAGE. Except as set forth on Schedule 2.8 hereto, there are no
claims for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement.
2.9 PUBLIC FILINGS. The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, and its Quarterly Reports on Form 10-Q for
the three-month periods ended March 31, 1997, June 30, 1997 and September 30,
1997, respectively, as amended, when they were filed with the Commission,
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
2.10 AMEX LISTING. The Company's Common Stock is listed for trading on
the American Stock Exchange, Inc. and no rules or regulations of the American
Stock Exchange, Inc. preclude or restrict in any way the execution and delivery
of this Agreement or the consummation of the transactions contemplated herein,
nor do such rules require shareholder or any other approval for the sale of the
Preferred Shares or the Conversion Shares.
2.11 DISCLOSURE. This Agreement, including the exhibits hereto, do not
contain any untrue statement of material fact or, when taken as a whole, omit
any material fact necessary in order to make the statements contained herein or
therein not misleading.
3
<PAGE> 4
2.12 CONSENTS, NOTICE. No consent, approval, order or authorization of
or declaration, registration or filing with any governmental body or any
nongovernmental person, including, without limitation, any creditor or
shareholder of the Company or any of its Subsidiaries, or any party to a
contract to which the Company or any Subsidiary is a party or any of their
respective assets is subject, is required in connection with the execution or
delivery by the Company of this Agreement, or the performance by the Company of
its obligations hereunder and thereunder, or as a condition to the legality,
validity or enforceability of this Agreement as the sale and issuance of the
Preferred Shares or Conversion Shares, except for such consents or approvals the
absence of which would not have a material effect on the Company operations,
financial condition or the transactions herein contemplated.
2.13 LITIGATION. There are no actions, suits, arbitrations,
investigations or proceedings pending, or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their Properties or rights of any of them. There is no judgment, decree,
injunction, rule or order of any government body or arbitrator outstanding
against the Company or any Subsidiary.
SECTION 3. REPRESENTATIONS OF THE INVESTORS
As part of the basis of this Agreement, each Investor for itself
severally hereby represents to the Company that on the date hereof:
3.1 AUTHORIZATION. The Investor has all requisite corporate or other
power and authority to enter into and perform this Agreement and the execution
of this Agreement and the documents executed by the Investor pursuant to this
Agreement have been authorized by all necessary corporate or other action on the
part of the Investor, have been executed and delivered, and constitute valid,
legal, binding agreements of the Investor enforceable against the Investor in
accordance with their terms. The copies of the Investor's partnership agreement,
operating agreement or charter authorizing its entry into this Agreement, and
furnished to the Company, are correct and complete.
3.2 INVESTMENT PURPOSE. The Investor is acquiring the Preferred Shares
for its own account, for investment, and not with a view to any "distribution"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act") . The Investor has no intention to make any transfer of the Preferred
Shares in violation of the Securities Act. No broker-dealer acted on behalf of
the Investor in connection with the offer or sale of the Preferred Shares.
3.3 RESTRICTIONS. (a) The Investor understands that because the
Preferred Shares and Conversion Shares have not been registered under the
Securities Act, it cannot dispose of any or all of the Preferred Shares and
Conversion Shares unless such Preferred Shares and Conversion Shares are
subsequently registered under the securities Act or exemptions from such
registration are available and that the Preferred Shares and Conversion Shares
will contain legends reflecting such limitations. The Investor acknowledges and
understands that, except as provided in SECTION 4 of this Agreement with respect
to the Conversion Shares, it has no independent right to require the Company to
register the Preferred Shares. The Investor understands that the Company may, as
a condition to the transfer of any of the Preferred Shares, require that the
request for transfer be accompanied by an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
does not result in a violation of the Securities Act, unless such transfer is
covered by an effective registration statement under the Securities Act.
(b) The Investor agrees and acknowledges that each of the Investor
Nominees, or any successor elected to the Board who is nominated at the request
of the holders of Preferred Shares, shall recuse themselves and be deemed
ineligible (both for quorum and voting purposes) on voting as Directors with
respect to the matters set forth in Section 3(b), 4, 6A and 7A of the
Designation and in Section 4.2 of the Agreement.
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<PAGE> 5
3.4 SOPHISTICATION. The Investor is knowledgeable and experienced in
business and financial matters and capable of evaluating the merits and risks of
the investment in the Preferred Shares, is able to bear the economic risk of
loss of its investment in the Company, has been granted the opportunity to make
a thorough investigation of the affairs of the Company, and has availed itself
of such opportunity either directly or through its authorized representatives.
3.5 PRIVATE OFFERING. The Investor has been advised that the Preferred
Shares have not been and are not being registered under the Securities Act or
under the "blue sky" laws of any jurisdiction and that the Company in issuing
the Preferred Shares and the Conversion Shares issuable upon conversion thereof
is relying upon, among other things, the representations and warranties of such
Investor contained in this SECTION 3 in concluding that such issuance is a
"private offering" and does not require compliance with the registration
provisions of the Securities Act. The Investor is an "accredited investor"
within the meaning of Rule 501 under the Securities Act.
SECTION 4. REGISTRATION RIGHTS
4.1 DEFINITIONS. For purposes of this Section 4: (a) the term
"Registrable Securities" means Conversion Shares which have not been previously
registered, or which have not previously been registered and remain subject to
an effective registration statement; and (b) the term "Holder" means any person
owning or having the right to acquire Registrable Securities.
4.2 REQUEST FOR REGISTRATION.
(a) If at any time the Company shall receive a written request from
Holders of the Applicable Percentage (as defined below) of Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act, then the Company shall use its best efforts to effect as
soon as practicable, after the receipt of such request, the registration under
the Securities Act of the number of such Registrable Securities which such
Holders (and any other Holders who may also thereafter elect to participate)
request to be registered. Without the prior written consent of the Holders
requesting a registration, neither the Company, nor any other person (other than
the other Holders), shall be entitled to include Common Stock in the
registrations made under this Section 4.2. The Company is obligated to effect
only three completed and effective registrations pursuant to this Section 4.2.
For purposes hereof, the "Applicable Percentage" shall be twenty percent (20%)
for the first such registration, forty percent (40%) for the second such
registration, and sixty percent (60%) for the third such registration. Any
request by a Holder hereunder shall be forwarded to other Holders within three
(3) days of receipt by the Company.
(b) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 4.2, a
certificate signed by an executive officer of the Company stating that in the
good faith judgment of the Board of Directors of the Company (excluding the
Investor Nominees) it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than one hundred
twenty (120) days after receipt of the request of the Holders; provided,
however, that the Company may not utilize this right more than once in any
twelve month period.
4.3 INCIDENTAL REGISTRATION. If (but without any obligation to do so)
the Company proposes at any time to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any shares of its capital stock or other securities under the Securities Act
(other than registrations relating solely to securities issued in connection
with mergers, acquisitions, exchange offers, dividend reinvestment plans,
employee stock ownership plans or stock option plans, thrift plans, pension
plans or other employee benefit plans, or a registration on any form which does
not include substantially the same
5
<PAGE> 6
information, other than information related to the selling shareholders or their
plan of distribution, as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company, the Company shall, subject to the
provisions of Section 4.8, cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be so
registered. If at any time after giving such written notice of its intention to
register any of its securities and 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, at its sole
election, the Company may give written notice of such determination to each
Holder and thereupon shall be relieved of its obligation to register any
Registrable Securities in connection with such registration.
4.4 RESERVED.
4.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 4
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred eighty (180) days.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) In the case of an underwritten public offering, furnish, at the
request of any Holder requesting registration of Registrable Securities pursuant
to this Section 4, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 4 (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in such form and
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<PAGE> 7
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in such form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters.
4.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 4 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
4.7 EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to this Section 4, including without limitation, all
registration, filing and qualification fees, printers and accounting fees and
fees and disbursements of counsel for the Company shall be borne by the Company;
provided, however, in the event the Company includes in any registration
statement shares for sale for its own account, it shall pay the pro rata portion
of any underwriting discounts and commission attributable to such securities for
its own account. Notwithstanding the immediately preceding sentence, the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 4.2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all Holders participating in such
withdrawn registration shall bear such expenses pro rata, but shall also be
entitled to reassert such one demand registration pursuant to Section 4.2);
provided, however, that if at the time of such withdrawal the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request, then
the Holders shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 4.2
4.8 UNDERWRITING REQUIREMENTS; CUTBACK. In connection with any offering
involving an underwriting of shares being issued by and sold on behalf of the
Company, the Company shall not be required under Section 4.3 to include any of
the Holders' securities in such underwriting unless they accept the customary
and reasonable terms of the underwriting as agreed upon between the Company and
the underwriters selected by it, and then only in such quantity as will not, in
the opinion of the underwriters, jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested to be included in such offering exceeds the amount of securities that
the underwriters reasonably believe compatible with the success of the offering,
then Holders may include in the offering only that number of such Registrable
Securities which the underwriters believe will not jeopardize the success of the
offering (the Registrable Securities so included to be apportioned pro rata
among the Holders according to the total amount of Registrable Securities
entitled to be included therein owned by each Holder or in such other
proportions as shall mutually be agreed to by such Holders); provided, however,
Registrable Securities shall be excluded from such offering only pro rata to the
same extent as securities proposed to be included for the account of persons
other than the Company in such offering.
4.9 INDEMNIFICATION AND CONTRIBUTION. In the event any Registrable
Securities are included pursuant to a registration statement under this Section
4:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) and
each person if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several) to which they or any of them may become subject
under the Securities Act, the Exchange Act or any other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a
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<PAGE> 8
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus (but only if such is not corrected in the final prospectus) contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading (but only if such is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Securities Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 4.9(a) shall not apply. to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims.
damages or liabilities joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Section 4.9(b), in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 4.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided that in no event shall any indemnity under this Section 7.9(b) exceed
the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
4.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 4.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel selected by the
indemnifying party, provided that the indemnified party consents to such
counsel, such consent to be not unreasonably withheld; provided, however, that
an indemnified party or parties shall have the right to retain their own
counsel, with the reasonable fees and expenses of one such counsel to be paid by
the indemnifying party with respect to all indemnified parties, if
representation of such indemnified party by the counsel retained by the
indemnifying party or parties, in the opinion of counsel appointed by the
indemnified party or parties, would be inappropriate due to an actual conflict
of interest between such indemnified party or parties and any other party or
parties represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 4.9, but the omission so to deliver
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<PAGE> 9
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 4.9.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 4.9(a) is
applicable but for any reason is held to be unavailable from the Company with
respect to all Holders or any Holder, the Company and the Holder or Holders, as
the case may be, shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted) to which the Company and one or more of the
Holders may be subject in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand, and the Holder or Holders on the
other, in connection with statements or omissions which resulted in such losses,
claims, damages or liabilities. Notwithstanding the foregoing, no Holder shall
be required to contribute any amount in excess of the net proceeds received by
such Holder from the Registrable Securities as the case may be, sold by such
Holder pursuant to the registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each person, if any, who controls a Holder within
the meaning of the Securities Act shall have the same rights to contribution as
such Holder.
(e) The obligations of the Company and Holders under this Section 4.9
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 4 or otherwise.
4.10 "MARKET STAND-OFF AGREEMENT". Each Investor hereby agrees that,
during the period of duration specified by the Company and an underwriter of
common stock or other securities of the Company (the "Stand-Off Period"),
following the effective date of a registration statement of the Company filed
under the Act covering securities to be sold by the Company, it shall not, to
the extent reasonably requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company of the class being offered and sold pursuant to such registration
statement held by it at any time during the Stand-Off Period except common stock
included in such registration; provided, however, that the Stand-Off Period
shall not exceed 180 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of the Stand-Off Period.
Notwithstanding the foregoing, the obligations described in this
Section 4.10 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be promulgated
in the future or any registration statement filed in connection with the merger
or consolidation of the Company, or the issuance of Company securities in
connection with its acquisition of another business or assets.
4.11 LETTER OR OPINION OF COUNSEL IN LIEU OF REGISTRATION. If in the
opinion of counsel for the Company, an Investor is able to sell all of his
Registrable Securities in a three-month period pursuant to Rule 144 under the
Securities Act, the Company will not be required to register any Registrable
Shares of that Investor, notwithstanding any provision of this Section 4 to the
contrary.
4.12 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 4
may be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of a majority of
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<PAGE> 10
the Registrable Securities then outstanding. An amendment or waiver effected in
accordance with this Section shall be binding upon each Holder of any securities
purchased under this Agreement at the time outstanding (including securities
into which such securities are convertible), each future Holder of all such
securities, and the Company.
SECTION 5. GENERAL
5.1 AMENDMENTS, WAIVERS AND CONSENTS. Any consents required and any
waiver, amendment or other action of the Investor or holder of the Preferred
Shares (or Conversion Shares) may be made only by consent(s) in writing signed
by the holders of a majority of the Preferred Shares (including, for such
purposes, any Conversion Shares that have not been sold to the public) . Any
amendment or waiver made according to this paragraph will be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted) and each
future holder. Any amendment or waiver by the Company must be made in writing.
5.2 SURVIVAL; ASSIGNABILITY OF RIGHTS. Except as set forth in Section
4, all representations and agreements of the parties made in this Agreement and
in the certificates, exhibits or other written information delivered or
furnished by one party to the other in connection with this Agreement will
survive the delivery of the Preferred Shares for a period of one (1) year.
5.3 GOVERNING LAW. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISIONS THEREOF.
5.4 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be taken to be an original; but such
counterparts will together constitute one document.
5.5 NOTICES AND DEMANDS. Any notice or demand which is permitted or
required hereunder will be deemed to have been sufficiently received (except as
otherwise provided herein) (a) upon receipt when personally delivered, (b) one
(1) day after sent by overnight delivery or telecopy providing confirmation or
receipt of delivery, or (c) three (3) days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested to the
addresses shown on the signature page of this Agreement, or at any other address
designated by such applicable party in writing.
5.6 SEVERABILITY. If any provision of this Agreement is held invalid
under applicable law, such provision will be ineffective to the extent of such
invalidity, and such invalid provision will be modified to the extent necessary
to make it valid and enforceable. Any such invalidity will not invalidate the
remainder of this Agreement.
5.7 EXPENSES. The Company will reimburse the Investors for one-half of
their legal expenses incurred in preparation of this Agreement and to consummate
effect the Closing in an amount that shall not exceed Fifteen Thousand Dollars
($15,000) and in all other respects, each of the Company and the Investors will
pay their respective costs and expenses that they incur with respect to the
negotiation, execution, delivery, amendment and/or performance of this
Agreement.
5.8 ENTIRE AGREEMENT. This Agreement (including the exhibits hereto)
and the agreements referenced as exhibits to this Agreement constitute the
entire agreement of the parties with respect to the subject matter thereof, and
supersede any prior agreements.
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<PAGE> 11
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
METROPOLITAN CAPITAL ADVISORS
INTERNATIONAL LIMITED
By:Metropolitan Capital Partners, III, L.P.
its Investment Advisor
By:Metropolitan Capital III, Inc.
its General Partner
By: /s/ Karen Finerman
--------------------------------
Karen Finerman, President
11
<PAGE> 12
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
BEDFORD FALLS INVESTORS, L.P.
By:Metropolitan Capital Advisors, L.P.
its General Partner
By:Metropolitan Capital Advisors, Inc.
its General Partner
By: /s/ Karen Finerman
-----------------------------------
Karen Finerman, President
12
<PAGE> 13
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
BGN INVESTORS, LLC
By: /s/ Jeffrey Schwarz
------------------------------------
Jeffrey Schwarz, Managing Member
13
<PAGE> 14
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
SCOGGIN CAPITAL MANAGEMENT, L.P.
By:S&E Partners, L.P.
its General Partner
By:Scoggin, Inc.
its General Partner
By: /s/ Curtis Schenker
------------------------------------------
Curtis Schenker, Chief Executive Officer
14
<PAGE> 15
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
SCOGGIN INTERNATIONAL FUND, LTD.
By: /s/ Curtis Schenker
----------------------------------------
Curtis Schenker, its Trading Advisor
15
<PAGE> 16
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
CAROLYN PARTNERS, L.P.
By: /s/ Curtis Schenker
---------------------------------------
Curtis Schenker, its General Partner
16
<PAGE> 17
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
YORK CAPITAL MANAGEMENT, L.P.
By: Dinan Management, LLC
its General Partner
By: /s/ James G. Dinan, Sr.
----------------------------------------
James G. Dinan, Sr., Managing Member
17
<PAGE> 18
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
YORK SELECT, L.P.
By: Dinan Management, LLC
its General Partner
By: /s/ James G. Dinan, Sr.
--------------------------------------
James G. Dinan, Sr., Managing Member
18
<PAGE> 19
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
YORK INVESTMENT LTD.
By: Dinan Management Corp.
its Investment Advisor
By: /s/ James G. Dinan
-------------------------
James G. Dinan, President
19
<PAGE> 20
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
HIGHBRIDGE INTERNATIONAL LDC
By: Highbridge Capital Management, Inc.
its Investment Advisor
By: /s/ Glenn R. Dubin
-----------------------------
Glenn R. Dubin, Co-Chairman
20
<PAGE> 21
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
WAVELAND PARTNERS, L.P.
By: Waveland Capital Management, L.P.
its General Partner
By: Clincher Capital Corporation
its General Partner
By: /s/ David S. Richter
------------------------------
David S. Richter, President
21
<PAGE> 22
The undersigned have executed this Agreement as of the day and year
first written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
GOTHAM CAPITAL III, L.P.
By: /s/ Joel Greenblatt
-----------------------------------
Joel Greenblatt, General Partner
22
<PAGE> 23
The undersigned have executed this Agreement as of the day and year first
written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
Name:
Title:
Address:
Telecopy:
INVESTOR:
ALFRED PARTNERS LLC
By: /s/ Joel Greenblatt
---------------------------------------
Joel Greenblatt, Managing Member
23
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 26, 1997, between
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), and JONATHAN GUSS (the "Executive").
WHEREAS, the Company wishes to employ the Executive; and
WHEREAS, the Executive wishes to be employed by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company employs the
Executive, for itself and its affiliates, to render exclusive and full time
services in such capacities as the Company's Board of Directors may assign, as
the Chief Executive Officer of the Company and, in connection therewith, to
comply with the stated policies of the Company and perform such duties
consistent with such position as the Executive shall reasonably be directed to
perform by the Company's Board of Directors. The Executive shall, together with
the President of the Company, be responsible for the implementation of the
overall direction, strategy and operations and administration of the business of
the Company with such powers and duties as are typically provided or reserved to
the senior executive officers of the Company under its by-laws and the General
Corporation law of the State of Delaware. Notwithstanding the Executive's
obligation to render exclusive and full time services to the Company, the
Executive may (i) hold and make passive investments, and (ii) continue to serve
as a non-employee director or advisor for those companies for which the
Executive currently serves as a director or advisor or engage in such
<PAGE> 2
other charitable, educational or business activities as may be otherwise
permitted by the Board of Directors of the Company; provided, that such
activities are not otherwise prohibited under Section 5.1.1.
1.2 Acceptance of Employment by the Executive. The Executive
accepts such employment and shall render the services described above. Subject
to election by the Company's Board of Directors as such, the Executive shall
also serve during all or any part of the Term (as defined below) as an officer
of the Company and of any of its subsidiaries, without any compensation therefor
other than as specified in this Employment Agreement. The Executive shall be
nominated to the Board of Directors of the Company and, subject to election by
the stockholders of the Company, shall serve as a director of the Company during
the Term, and at the discretion of the Company, shall serve as a director of any
one or more of the Company's subsidiaries, without any compensation therefor
other than as specified in this Agreement; provided, however, that if the
Executive is no longer employed by the Company as the Chief Executive Officer or
otherwise servicing the Company as a full-time consultant, the Executive shall,
upon request of the Company, promptly resign from the Board of Directors of the
Company and/or any of its subsidiaries.
1.3 Place of Employment. The Executive's place of employment
shall be Ramsey, New Jersey, or such other location as may be agreed upon by the
Executive and the Company, subject to such reasonable travel as the rendering of
the services hereunder may require.
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<PAGE> 3
2. Term of Employment. The term of the Executive's employment under
this Employment Agreement (the "Term") shall commence on the date hereof and
shall end on the third anniversary of the date hereof, unless sooner
terminated as herein provided.
3. Compensation.
3.1 Base Salary. As compensation for all services to be
rendered pursuant to this Employment Agreement, the Company shall pay the
Executive, during each year of the Term, a salary of not less than $200,000 per
annum (the "Annual Salary"), payable in accordance with the executive payroll
policies of the Company as from time to time in effect, less such deductions as
shall be required to be withheld by applicable law and regulations. Each year
the members of the Board of Directors of the Company (with the exception of the
Executive and Michael P. Fleischer) shall review the Annual Salary payable to
the Executive and may, but shall not be required to, increase the Annual Salary
or determine, in the discretion of the members of the Board of Directors (with
the exception of the Executive and Michael P. Fleischer), the cash bonus or
other compensation that may be payable to the Executive.
The Company agrees that beginning with the 1998 calendar year,
the Executive shall be entitled to participate in the Company's 401(k) plan
and/or a non-qualified deferred compensation plan or arrangement to be
established by the Company (the "Deferred Plan") and that employee contributions
shall be made to the 401(k) plan and the Deferred Plan, in such combination as
the Company may direct, in an aggregate amount of $30,000 annually; provided,
however, that if for any year the Executive is eligible for, and the Company
makes, matching contributions to its 401(k) plan (the "Matched Amount"), the
amount of the Executive's
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<PAGE> 4
compensation to be paid for such year into the Deferred Plan shall be reduced by
the Matched Amount divided by the Executive's individual combined city, state
and federal tax rate.
3.2 Stock Options. The Executive shall receive, within 30 days
of the execution of this Agreement a non-qualified option to purchase 162,943
shares of Common Stock, par value $.001 per share (the "Shares"), of the Company
(the "Option"). The per Share exercise price of the Option shall be $5.00.
The portion of the Option with respect to 23,000 Shares shall
vest on each March 1, June 1, September 1, and December 1, commencing on June 1,
1999 and ending on September 1, 2000, and the remaining portion of the Option
shall vest upon the conclusion of the Term of this Agreement; provided, however,
that in the event of a Change of Control the unvested portion of the Option
shall immediately vest; provided further, that in the event that the Executive
is terminated by the Company pursuant to Section 4.4 hereof, the unvested
portion of the Option, but in no event with respect to more than 47,990 Shares,
shall vest on the date of termination and the remaining unvested portion of the
Option shall be cancelled. If this Agreement shall be terminated for any other
reason, the Option, other than with respect to that portion of the Option which
has vested as of or prior to the date of termination, shall be cancelled. The
portion of the Option vested hereunder shall not expire sooner than the later of
(a) ten (10) years from the date of grant, or (b) one hundred and twenty (120)
days after the Executive ceases to render full-time services to the Company,
either as an employee or as a consultant.
For purposes of this Section 3.2, the term "Change of Control"
shall mean (i) any "person" (as such term is defined in Section 13(d) and 14(d)
of the Securities Exchange Act of
- 4 -
<PAGE> 5
1934, as amended (the "Exchange Act")), other than any person who acquired
shares of the Company's Series A Preferred Stock on the date hereof or any
affiliate thereof) becoming the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities (ii) any transaction as a
result of which the stockholders of the Company immediately before such
transaction or any affiliates of such stockholders cease to own at least fifty
percent (50%) of the voting stock of (x) the Company or (y) any entity that
results from the participation of the Company in a reorganization, liquidation
or any other form of corporate transaction; (iii) a merger, consolidation,
reorganization, liquidation or dissolution in which the Company does not
survive; or (iv) a sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company.
3.3 Limitations Imposed by Law. The provisions of this
Employment Agreement relating to the compensation to be paid to the Executive
shall be subject to any limitations provided by law or regulation which may from
time to time limit the compensation payable to the Executive.
3.4 Participation in Employee Benefits. Subject to the
acceptance of the Executive and his dependents by any applicable insurance
company or applicable benefit provider, the Executive shall be permitted during
the Term, if and to the extent eligible, to participate in any group life,
hospitalization or disability insurance plan, health program, loan program,
pension plan or similar benefit plan of the Company, and shall be entitled to
such vacation, personal time, car allowance and the like, which may be available
to other executives
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<PAGE> 6
of the Company and generally on the same terms as such other executives. In
addition to the benefit programs set forth above, the Company shall use
reasonable efforts, consistent with the Company's overall business interests, to
assist the Executive in accomplishing the effective exercise of the vested
portion of the Option, whether by cashless exercise, loans or otherwise, at the
Company's discretion.
3.5 Expenses. Subject to such policies as may from time to
time be established by the Company's Board of Directors, the Company shall pay
or reimburse the Executive for all reasonable expenses actually incurred or paid
by the Executive during the Term in the performance of the Executive's services
under this Employment Agreement upon presentation of expense statements or
vouchers or such other supporting information as it may require.
3.6 Relocation Expenses and Living Expenses. The Company shall
pay the Executive $20,000 as a relocation payment upon the Executive's
relocation to the Ramsey, New Jersey area.
4. Termination.
4.1 Termination upon Death. If the Executive dies during the
Term, this Employment Agreement shall terminate, except that the Executive's
legal representatives shall be entitled to receive all compensation and benefits
provided for under this Agreement accrued, earned or vested as of the period
ending on the last day of the month in which the Executive's death occurs;
provided, however, that nothing herein shall be construed as providing for the
vesting of options other than as set forth in Section 3.2 hereof.
4.2 Termination upon Disability. If, during the Term, the
Executive becomes physically or mentally disabled, whether totally or partially,
so that the Executive is unable
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<PAGE> 7
substantially to perform his services hereunder for (i) a period of three
consecutive months, or (ii) for shorter periods aggregating three months during
any six month period, the Company (as directed by a vote of the Board of
Directors, excluding the Executive and Michael P. Fleischer) may at any time
after the last day of the three consecutive months of disability or the day on
which the shorter periods of disability equal an aggregate of three months, by
ten (10) days' prior written notice to the Executive, terminate the Term of the
Executive's employment hereunder. Nothing in this Section 4.2 shall be deemed to
extend the Term. The Executive shall be entitled to all compensation and
benefits provided for under this Agreement accrued, earned or vested through the
date of termination; provided, however, that nothing herein shall be construed
as providing for the vesting of options other than as set forth in Section 3.2
hereof.
4.3 Termination for Cause. The Company (as directed by a vote
of the Board of Directors, excluding the Executive and Michael P. Fleischer, but
for which vote they are given at least one (1) day's prior written notice) may
at any time by written notice to the Executive terminate the Term of the
Executive's employment hereunder for "cause" (as defined herein) and the
Executive shall have no right to receive any compensation or benefit hereunder
on and after the effective date of such notice, other than compensation accrued,
earned or vested through the date of termination; provided, however, that
nothing herein shall be construed as providing for the vesting of options other
than as set forth in Section 3.2 hereof. For purposes hereof, "cause" shall mean
(i) an act or acts of personal dishonesty taken by the
Executive at the expense of or against the interests of the Company;
- 7 -
<PAGE> 8
(ii) violation by the Executive of his obligations under
this Agreement, including, without limitation, any failure or refusal to comply
with the oral or written policies or directives of the Company's Board of
Directors; provided, however, that if such violation may be substantially cured,
the Executive may not be terminated for cause unless the Executive fails to cure
such violation within a reasonable period of time after receipt of notice from
the Company of such violation;
(iii) any direct or indirect disclosure of any
confidential information or other special knowledge of the finances, business or
other affairs of the Company contrary to his obligations under Section 5.1.2;
(iv) the conviction of the Executive of a felony; or
(v) the conviction of the Executive of a serious
misdemeanor involving illegal use, possession or sale of drugs, larceny, crimes
of violence or sex offenses.
4.4 Involuntary Termination. Notwithstanding anything herein
to the contrary, the Company (as directed by a vote of the Board of Directors,
excluding the Executive and Michael P. Fleischer) shall have the right, at any
time upon 90 days' prior notice to the Executive, to terminate the Term of the
Executive's employment hereunder. If during the Term, the Company terminates the
Executive's employment other than for the reasons set forth in Sections 4.1, 4.2
and 4.3 hereof, it shall be deemed to be an involuntary termination and the
Company shall pay to the Executive (in addition to any accrued compensation or
expense reimbursements otherwise due) within ten business days following the
date of termination the following amounts as a full and final severance payment:
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<PAGE> 9
(i) four months salary, if such termination
occurs during the first year of the Term;
(ii) six months salary, if such termination
occurs during the second year of the Term;
and
(iii) the balance of the base salary payable
pursuant to this Agreement, but in no event
more than eight months salary, if such
termination occurs during the third year of
the Term.
4.5 Voluntary Termination. The Executive agrees to
provide the Company with 90 days notice prior to voluntarily terminating the
Term of the Executive's employment hereunder. At the end of such 90-day period,
this Agreement shall terminate automatically and the Company shall have no
further obligations to the Executive under this Agreement, other than those
obligations accrued, earned or vested by the Executive as of the date of the
termination.
4.6 Notice of Termination. Any notice of termination by
the Company for any reason or by the Executive for any reason shall be
communicated by a written notice which indicates (i) the specific termination
provision in this Agreement relied upon, (ii) the facts and circumstances
claimed to provide a basis for such termination, and (iii) the date or proposed
date of termination.
5. Certain Covenants of the Executive.
5.1 Covenants Against Competition. The Executive
acknowledges that (i) the principal business of the Company and its subsidiaries
is the development, assembly and distribution of sound processing equipment and
telecommunication peripherals (together with other related businesses which the
Company and its subsidiaries are in currently and which the
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<PAGE> 10
Company and its subsidiaries may become involved with during the Term, the
"Company Business"); (ii) the Company Business is international in scope; (iii)
his work for the Company will bring him, into close contact with many
confidential affairs not readily available to the public; and (iv) the Company
would not enter into this Agreement but for the agreements and covenants of the
Executive contained herein. In order to induce the Company to enter into this
Employment Agreement, the Executive covenants and agrees that:
5.1.1 Non-Compete. During the Term and for a period of two
years following the termination (whether for cause or otherwise) of the
Executive's employment with the Company or any of its affiliates, (the
"Restricted Period"), the Executive shall not, in the United States of America
or in any foreign country, directly or indirectly, (i) engage in the Company
Business for his own account; (ii) enter the employ of, or render any services
to, any person engaged in such activities; and (iii) become interested in any
person engaged in the Company Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that the Executive may own, directly or indirectly, solely as an investment,
securities of any person which are traded on any national securities exchange or
the NASDAQ National Market System if the Executive (a) is not a controlling
person of, or a member of a group which controls, such person or (b) does not,
directly or indirectly, own 1% or more of any class of securities of such
person.
5.1.2 Confidential Information. During and after the
Restricted Period, the Executive shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others except in
connection with the business and affairs of the Company, all
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<PAGE> 11
confidential matters of the Company and its affiliates. Such confidential
matters, include, without limitation, trade "know-how," secrets, customer lists,
details of consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of manufacture,
technical processes, designs and design projects, inventions and research
projects and other business affairs of the Company and its affiliates
(collectively, "Confidential Information"), learned by the Executive heretofore
or hereafter, and shall not disclose them to anyone outside of the Company and
its affiliates, either during or after employment by the Company or any of its
affiliates, except as required in the course of performing duties hereunder or
with the Company's express written consent.
5.1.3 Property of the Company. All documents and other
materials including, without limitation, memoranda, notes, lists, records and
other documents made or compiled by or made available to the Executive prior to
the commencement of employment hereunder or during the Term by the Company and
any copies thereof, whether or not containing Confidential Information, are and
shall be the property of the Company and shall, at the request of the Company,
be delivered to the Company promptly upon the termination of the Executive's
employment with the Company or any of its affiliates or at any other time on
request. Except as required in connection with the services to be performed
hereunder, the Executive agrees not to remove from the Company's premises,
without permission, any and all papers or drawings belonging to the Company,
including those prepared or worked on by him. All ideas, reports, and other
creative works conceived by the Executive during the Term and relating to
Company Business, shall be disclosed to the Company and shall be the sole
property of the Company.
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<PAGE> 12
5.1.4 Employees of the Company. During the Restricted Period,
the Executive shall not, directly or indirectly hire, solicit or encourage to
leave the employment of the Company or any of its affiliates, any employee of
the Company or its affiliates or hire any such employee who has left the
employment of the Company or any of its affiliates within one year of the
termination of such employee's employment with the Company or any of its
affiliates.
5.1.5 Consultants and Independent Contractors of the Company.
During the Restricted Period, the Executive shall not, directly or indirectly,
hire, solicit or encourage to cease to work with the Company or any of its
affiliates, any consultant, sales representative and other person then under
contract with the Company or any of its affiliates; provided, however, that the
Executive may hire or solicit consultants who in the ordinary course of such
consultant's business provide services to a broad client base.
5.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions of Section
5.1 (the "Restrictive Covenants"), the Company shall have the right and remedy
to have the Restrictive Covenants specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
affiliates and that money damages will not provide an adequate remedy to the
Company; provided, however, that such right and remedy shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company under
law or in equity.
5.3 Enforceability in Jurisdictions. The parties intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts
of any jurisdiction within the
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<PAGE> 13
geographical scope of such Restrictive Covenants. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination not bar or in any way affect the Company's right
to the relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
6. Executive's Representations. The Executive represents and warrants
to the Company that, except as specifically provided in Section 1 hereof, there
are no agreements or arrangements, whether written or oral, in effect which
would prevent the Executive from rendering exclusive services to the Company
during the Term. The Executive further represents, warrants and agrees with the
Company that as of the date hereof he has not made and will not make during the
Term any commitment to do any act in conflict with this Agreement, or take any
action that might divert from the Company any opportunity which would be in the
scope of any present or future business of the Company or any affiliate thereof.
7. Indemnification. The Company shall indemnify and hold harmless the
Executive from all claims, losses, liabilities, damages and causes of action
relating to or arising out of the Executive's performance, duties and
responsibilities to, for, or on behalf of the Company to the extent provided by
the Company's certificate of incorporation and by-laws, as amended from time to
time.
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<PAGE> 14
8. Other Provisions.
8.1 Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telecopied, or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally,
telecopied, or if mailed, two days after the date of mailing, as follows:
(i) if to the Company:
Bogen Communications International, Inc.
50 Spring Street
Ramsey, New Jersey 07446
Attention: Mr. Yoav M. Cohen
Telecopy: (201) 760-8771
with a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attention: Cheryl V. Reicin, Esq.
Telecopy: (212) 547-5357
(ii) if to the Executive, to:
Mr. Jonathan Guss
c/o Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 345-0400
with a copy to:
Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
Attention: Joseph F. Mazzella, Esq.
Telecopy: (617) 345-0400
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<PAGE> 15
8.2 Entire Agreement. This Employment Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.
8.3 Waivers and Amendments. This Employment Agreement may be
amended, modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
8.4 Governing Law. This Employment Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such State.
8.5 Assignment. Except as otherwise agreed to by the Company,
this Employment Agreement, and the Executive's rights and obligations hereunder,
may not be assigned by the Executive. The Company may assign this Employment
Agreement and its rights, together with its obligations hereunder, in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.
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<PAGE> 16
8.6 Counterparts. This Employment Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
8.7 Headings. The headings in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.
8.8 Severability. If any term, provision, covenant or
restriction contained in this Agreement, or any part thereof, is held by a court
of competent jurisdiction or any foreign, federal, state, county or local
government or any other governmental regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and in no way shall be
affected, impaired or invalidated. If any court construes any of the terms,
provisions, covenants or restrictions contained in this Agreement, including,
without limitation, the Restrictive Covenants, or any part thereof, to be
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and
shall be enforced.
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<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
--------------------------------------
Name:
Title:
/s/ JONATHAN GUSS
--------------------------------------
JONATHAN GUSS
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<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 26, 1997, between
BOGEN COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), and MICHAEL P. FLEISCHER (the "Executive").
WHEREAS, the Company wishes to employ the Executive; and
WHEREAS, the Executive wishes to be employed by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company employs the
Executive, for itself and its affiliates, to render exclusive and full time
services in such capacities as the Company's Board of Directors may assign, as
the President of the Company and, in connection therewith, to comply with the
stated policies of the Company and perform such duties consistent with such
position as the Executive shall reasonably be directed to perform by the
Company's Board of Directors. The Executive shall, together with the Chief
Executive Officer be responsible for the implementation of the overall
direction, strategy and operations and administration of the business of the
Company with such powers and duties as are typically provided or reserved to the
senior executive officers of the Company under its by-laws and the General
Corporation law of the State of Delaware. Notwithstanding the Executive's
obligation to render exclusive and full time services to the Company, the
Executive may (i) hold and make passive investments, and (ii) continue to serve
as a non-employee director or advisor for those companies for which the
Executive currently serves as a director or advisor or engage in such
<PAGE> 2
other charitable, educational or business activities as may be otherwise
permitted by the Board of Directors of the Company; provided, that such
activities are not otherwise prohibited under Section 5.1.1.
1.2 Acceptance of Employment by the Executive. The Executive
accepts such employment and shall render the services described above. Subject
to election by the Company's Board of Directors as such, the Executive shall
also serve during all or any part of the Term (as defined below) as an officer
of the Company and of any of its subsidiaries, without any compensation therefor
other than as specified in this Employment Agreement. The Executive shall be
nominated to the Board of Directors of the Company and, subject to election by
the stockholders of the Company, shall serve as a director of the Company during
the Term, and at the discretion of the Company, shall serve as a director of any
one or more of the Company's subsidiaries, without any compensation therefor
other than as specified in this Agreement; provided, however, that if the
Executive is no longer employed by the Company as the President or otherwise
servicing the Company as a full-time consultant, the Executive shall, upon
request of the Company, promptly resign from the Board of Directors of the
Company.
1.3 Place of Employment. The Executive's place of employment
shall be Ramsey, New Jersey, or such other location as may be agreed upon by the
Executive and the Company, subject to such reasonable travel as the rendering of
the services hereunder may require.
2. Term of Employment. The term of the Executive's employment
under this Employment Agreement (the "Term") shall commence on the date hereof
and shall end on the third anniversary of the date hereof, unless sooner
terminated as herein provided.
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<PAGE> 3
3. Compensation.
3.1 Base Salary. As compensation for all services to be
rendered pursuant to this Employment Agreement, the Company shall pay the
Executive, during each year of the Term, a salary of not less than $200,000 per
annum (the "Annual Salary"), payable in accordance with the executive payroll
policies of the Company as from time to time in effect, less such deductions as
shall be required to be withheld by applicable law and regulations. Each year
the members of the Board of Directors of the Company (with the exception of the
Executive and Jonathan Guss) shall review the Annual Salary payable to the
Executive and may, but shall not be required to, increase the Annual Salary or
determine, in the discretion of the members of the Board of Directors (with the
exception of the Executive and Jonathan Guss), the cash bonus or other
compensation that may be payable to the Executive.
The Company agrees that beginning with the 1998 calendar year,
the Executive shall be entitled to participate in the Company's 401(k) plan
and/or a non-qualified deferred compensation plan or arrangement to be
established by the Company (the "Deferred Plan") and that contributions shall be
made to the 401(k) plan and the Deferred Plan, in such combination as the
Company may direct, in an aggregate amount of $30,000 annually; provided,
however, that if the Executive is eligible for, and the Company for any year
makes, matching contributions to its 401(k) plan (collectively, the "Matched
Amount"), the amount of the Executive's compensation to be paid for such year
into the Deferred Plan shall be reduced by the Matched Amount, divided by the
Executive's individual combined city, state and federal tax rate.
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<PAGE> 4
3.2 Stock Options. The Executive shall receive, within 30 days
of the execution of this Agreement, non-qualified options to purchase 162,943
shares of Common Stock, par value $.001 per share (the "Shares"), of the Company
(the "Options"). The form of the Options shall be substantially in the form
issued to other employees of the Company, except as otherwise provided herein.
The per Share exercise price of the Options shall be $5.00.
23,000 Options shall vest on each March 1, June 1, September
1, and December 1, commencing on June 1, 1999 and ending on September 1, 2000,
and the remainder of the Options shall vest upon the conclusion of the Term of
this Agreement; provided, however, that in the event of a Change of Control all
unvested options shall immediately vest; provided further, that in the event
that the Executive is terminated by the Company pursuant to Section 4.4 hereof,
the remaining unvested Options, but in no event more than 47,990 Options, shall
vest on the date of termination and all unvested options shall be cancelled. If
this Agreement shall be terminated for any other reason, all Options, other than
those Options which have vested as of or prior to the date of termination, shall
be cancelled. Options vested hereunder shall not expire sooner than the later of
ten (10) years from the date of grant, or one hundred and twenty (120) days
after the Executive ceases to render full-time services to the Company, either
as an employee or as a consultant.
For purposes of this Section 3.2, the term "Change of Control"
shall mean (i) any "person" (as such term is defined in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than any person who acquired shares of the Company's Series A Preferred Stock on
the date hereof or any affiliate thereof) becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
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<PAGE> 5
of securities of the Company representing fifty percent (50%) or more of the
total voting power represented by the Company's then outstanding voting
securities (ii) any transaction as a result of which the stockholders of the
Company immediately before such transaction or any affiliates of such
stockholders cease to own at least fifty percent (50%) of the voting stock of
(x) the Company or (y) any entity that results from the participation of the
Company in a reorganization, liquidation or any other form of corporate
transaction; (iii) a merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive; or (iv) a sale, lease,
exchange or other disposition of all or substantially all the property and
assets of the Company.
3.3 Limitations Imposed by Law. The provisions of this
Employment Agreement relating to the compensation to be paid to the Executive
shall be subject to any limitations provided by law or regulation which may from
time to time limit the compensation payable to the Executive.
3.4 Participation in Employee Benefits. Subject to the
acceptance of the Executive and his dependents by any applicable insurance
company or applicable benefit provider, the Executive shall be permitted during
the Term, if and to the extent eligible, to participate in any group life,
hospitalization or disability insurance plan, health program, loan program,
pension plan or similar benefit plan of the Company, and shall be entitled to
such vacation, personal time, car allowance and the like, which may be available
to other executives of the Company and generally on the same terms as such other
executives. In addition to the benefit programs set forth above, the Company
shall use reasonable efforts, consistent with the Company's overall business
interests, to assist the Executive in accomplishing the effective
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<PAGE> 6
exercise of any vested options, whether by cashless exercise, loans or
otherwise, at the Company's discretion.
3.5 Expenses. Subject to such policies as may from time to
time be established by the Company's Board of Directors, the Company shall pay
or reimburse the Executive for all reasonable expenses actually incurred or paid
by the Executive during the Term in the performance of the Executive's services
under this Employment Agreement upon presentation of expense statements or
vouchers or such other supporting information as it may require.
3.6 Relocation Expenses and Living Expenses. The Company shall
pay the Executive $20,000 as a relocation payment upon the Executive's
relocation to the Ramsey, New Jersey area.
4. Termination.
4.1 Termination upon Death. If the Executive dies during the
Term, this Employment Agreement shall terminate, except that the Executive's
legal representatives shall be entitled to receive all compensation and benefits
provided for under this Agreement accrued, earned or vested as of the period
ending on the last day of the month in which the Executive's death occurs;
provided, however, that nothing herein shall be construed as providing for the
vesting of options other than as set forth in Section 3.2 hereof.
4.2 Termination upon Disability. If, during the Term, the
Executive becomes physically or mentally disabled, whether totally or partially,
so that the Executive is unable substantially to perform his services hereunder
for (i) a period of three consecutive months, or (ii) for shorter periods
aggregating three months during any six month period, the Company (as directed
by a vote of the Board of Directors, excluding the Executive and Jonathan Guss)
may
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<PAGE> 7
at any time after the last day of the three consecutive months of disability or
the day on which the shorter periods of disability equal an aggregate of three
months, by ten (10) days' written notice to the Executive, terminate the Term of
the Executive's employment hereunder. Nothing in this Section 4.2 shall be
deemed to extend the Term. The Executive shall be entitled to all compensation
and benefits provided for under this Agreement accrued, earned or vested through
the date of termination; provided, however, that nothing herein shall be
construed as providing for the vesting of options other than as set forth in
Section 3.2 hereof.
4.3 Termination for Cause. The Company (as directed by a vote
of the Board of Directors, excluding the Executive and Jonathan Guss, but for
which vote they are given at least one (1) day's written notice) may at any time
by written notice to the Executive terminate the Term of the Executive's
employment hereunder for "cause" (as defined herein) and the Executive shall
have no right to receive any compensation or benefit hereunder on and after the
effective date of such notice, other than compensation accrued, earned or vested
through the date of termination; provided, however, that nothing herein shall be
construed as providing for the vesting of options other than as set forth in
Section 3.2 hereof. For purposes hereof, "cause" shall mean
(i) an act or acts of personal dishonesty taken by the
Executive at the expense of or against the interests of the Company;
(ii) violation by the Executive of his obligations under
this Agreement, including, without limitation, any failure or refusal to comply
with the oral or written policies or directives of the Company's Board of
Directors; provided, however, that if such violation may be substantially cured,
the Executive may not be terminated for cause unless the Executive
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<PAGE> 8
fails to cure such violation within a reasonable period of time after receipt of
notice from the Company of such violation;
(iii) any direct or indirect disclosure of any
confidential information or other special knowledge of the finances, business or
other affairs of the Company contrary to his obligations under Section 5.1.2;
(iv) the conviction of the Executive of a felony; or
(v) the conviction of the Executive of a serious
misdemeanor involving illegal use, possession or sale of drugs, larceny, crimes
of violence or sex offenses.
4.4 Involuntary Termination. Notwithstanding anything herein
to the contrary, the Company (as directed by a vote of the Board of Directors,
excluding the Executive and Jonathan Guss) shall have the right, at any time
upon 90 days' prior notice to the Executive, to terminate the Term of the
Executive's employment hereunder. If during the Term, the Company terminates the
Executive's employment other than for the reasons set forth in Sections 4.1, 4.2
and 4.3 hereof, it shall be deemed to be an involuntary termination and the
Company shall pay to the Executive (in addition to any accrued compensation or
expense reimbursements otherwise due) within ten business days following the
date of termination the following amounts as a full and final severance payment:
(i) four months salary, if such termination occurs
during the first year of the Term;
(ii) six months salary, if such termination occurs
during the second year of the Term; and
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<PAGE> 9
(iii) the balance of the base salary payable pursuant to
this Agreement, but in no event more than eight
months salary, if such termination occurs during
the third year of the Term.
4.5 Voluntary Termination. The Executive agrees to provide the
Company with 90 days notice prior to voluntarily terminating the Term of the
Executive's employment hereunder. At the end of such 90-day period, this
Agreement shall terminate automatically and the Company shall have no further
obligations to the Executive under this Agreement, other than those obligations
accrued, earned or vested by the Executive as of the date of the termination.
4.6 Notice of Termination. Any notice of termination by the
Company for any reason or by the Executive for any reason shall be communicated
by a written notice which indicates (i) the specific termination provision in
this Agreement relied upon, (ii) the facts and circumstances claimed to provide
a basis for such termination, and (iii) the date or proposed date of
termination.
5. Certain Covenants of the Executive.
5.1 Covenants Against Competition. The Executive acknowledges
that (i) the principal business of the Company and its subsidiaries is the
development, assembly and distribution of sound processing equipment and
telecommunication peripherals (together with other related businesses which the
Company and its subsidiaries are in currently and which the Company and its
subsidiaries may become involved with during the Term, the "Company Business");
(ii) the Company Business is international in scope; (iii) his work for the
Company will bring him, into close contact with many confidential affairs not
readily available to the public; and (iv) the Company would not enter into this
Agreement but for the agreements and
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<PAGE> 10
covenants of the Executive contained herein. In order to induce the Company to
enter into this Employment Agreement, the Executive covenants and agrees that:
5.1.1 Non-Compete. During the Term and for a period of two
years following the termination (whether for cause or otherwise) of the
Executive's employment with the Company or any of its affiliates, (the
"Restricted Period"), the Executive shall not, in the United States of America
or in any foreign country, directly or indirectly, (i) engage in the Company
Business for his own account; (ii) enter the employ of, or render any services
to, any person engaged in such activities; and (iii) become interested in any
person engaged in the Company Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that the Executive may own, directly or indirectly, solely as an investment,
securities of any person which are traded on any national securities exchange or
the NASDAQ National Market System if the Executive (a) is not a controlling
person of, or a member of a group which controls, such person or (b) does not,
directly or indirectly, own 1% or more of any class of securities of such
person.
5.1.2 Confidential Information. During and after the
Restricted Period, the Executive shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others except in
connection with the business and affairs of the Company, all confidential
matters of the Company and its affiliates. Such confidential matters, include,
without limitation, trade "know-how," secrets, customer lists, details of
consultant contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition plans,
new personnel acquisition plans, methods of manufacture,
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<PAGE> 11
technical processes, designs and design projects, inventions and research
projects and other business affairs of the Company and its affiliates
(collectively, "Confidential Information"), learned by the Executive heretofore
or hereafter, and shall not disclose them to anyone outside of the Company and
its affiliates, either during or after employment by the Company or any of its
affiliates, except as required in the course of performing duties hereunder or
with the Company's express written consent.
5.1.3 Property of the Company. All documents and other
materials including, without limitation, memoranda, notes, lists, records and
other documents made or compiled by or made available to the Executive prior to
the commencement of employment hereunder or during the Term by the Company and
any copies thereof, whether or not containing Confidential Information, are and
shall be the property of the Company and shall, at the request of the Company,
be delivered to the Company promptly upon the termination of the Executive's
employment with the Company or any of its affiliates or at any other time on
request. Except as required in connection with the services to be performed
hereunder, the Executive agrees not to remove from the Company's premises,
without permission, any and all papers or drawings belonging to the Company,
including those prepared or worked on by him. All ideas, reports, and other
creative works conceived by the Executive during the Term and relating to
Company Business, shall be disclosed to the Company and shall be the sole
property of the Company.
5.1.4 Employees of the Company. During the Restricted Period,
the Executive shall not, directly or indirectly hire, solicit or encourage to
leave the employment of the Company or any of its affiliates, any employee of
the Company or its affiliates or hire any such employee who has left the
employment of the Company or any of its affiliates within one
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<PAGE> 12
year of the termination of such employee's employment with the Company or any of
its affiliates.
5.1.5 Consultants and Independent Contractors of the Company.
During the Restricted Period, the Executive shall not, directly or indirectly,
hire, solicit or encourage to cease to work with the Company or any of its
affiliates, any consultant, sales representative and other person then under
contract with the Company or any of its affiliates; provided, however, that the
Executive may hire or solicit consultants who in the ordinary course of such
consultant's business provide services to a broad client base.
5.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions of Section
5.1 (the "Restrictive Covenants"), the Company shall have the right and remedy
to have the Restrictive Covenants specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
affiliates and that money damages will not provide an adequate remedy to the
Company; provided, however, that such right and remedy shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company under
law or in equity.
5.3 Enforceability in Jurisdictions. The parties intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts
of any jurisdiction within the geographical scope of such Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties that such determination not bar or
in any way affect the Company's right to the relief provided above in the courts
of any other
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<PAGE> 13
jurisdiction within the geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other respective jurisdictions,
such Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
6. Executive's Representations. The Executive represents and warrants
to the Company that, except as specifically provided in Section 1 hereof, there
are no agreements or arrangements, whether written or oral, in effect which
would prevent the Executive from rendering exclusive services to the Company
during the Term. The Executive further represents, warrants and agrees with the
Company that as of the date hereof he has not made and will not make during the
Term any commitment to do any act in conflict with this Agreement, or take any
action that might divert from the Company any opportunity which would be in the
scope of any present or future business of the Company or any affiliate thereof.
7. Indemnification. The Company shall indemnify and hold harmless the
Executive from all claims, losses, liabilities, damages and causes of action
relating to or arising out of the Executive's performance, duties and
responsibilities to, for, or on behalf of the Company to the extent provided by
the Company's certificate of incorporation and by-laws, as amended from time to
time.
8. Other Provisions.
8.1 Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telecopied, or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally,
telecopied, or if mailed, two days after the date of mailing, as follows:
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<PAGE> 14
(i) if to the Company:
Bogen Communications International, Inc.
50 Spring Street
Ramsey, New Jersey 07446
Attention: Mr. Yoav M. Cohen
Telecopy: (201) 760-8771
with a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attention: Cheryl V. Reicin, Esq.
Telecopy: (212) 547-5357
(ii) if to the Executive, to:
Mr. Michael P. Fleischer
c/o Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 345-0400
with a copy to:
Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
Attention: Joseph F. Mazzella, Esq.
Telecopy: (617) 345-0400
8.2 Entire Agreement. This Employment Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.
8.3 Waivers and Amendments. This Employment Agreement may be
amended, modified, superseded, cancelled, renewed or extended, and the terms and
conditions
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<PAGE> 15
hereof may be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
8.4 Governing Law. This Employment Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such State.
8.5 Assignment. Except as otherwise agreed to by the Company,
this Employment Agreement, and the Executive's rights and obligations hereunder,
may not be assigned by the Executive. The Company may assign this Employment
Agreement and its rights, together with its obligations hereunder, in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.
8.6 Counterparts. This Employment Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
8.7 Headings. The headings in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.
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<PAGE> 16
8.8 Severability. If any term, provision, covenant or
restriction contained in this Agreement, or any part thereof, is held by a court
of competent jurisdiction or any foreign, federal, state, county or local
government or any other governmental regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and in no way shall be
affected, impaired or invalidated. If any court construes any of the terms,
provisions, covenants or restrictions contained in this Agreement, including,
without limitation, the Restrictive Covenants, or any part thereof, to be
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and
shall be enforced.
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<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date first above written.
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
By /s/ Yoav M. Cohen
--------------------------------------
Name:
Title:
/s/ MICHAEL P. FLEISCHER
--------------------------------------
MICHAEL P. FLEISCHER
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<PAGE> 1
Exhibit 10.5
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION
THIS STOCK OPTION (the "Option") is granted as of November 26,
1997 (the "Date of the Grant"), by BOGEN COMMUNICATIONS INTERNATIONAL, INC. a
Delaware corporation (the "Company"), to MR. JON GUSS (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Board of Directors has determined that it would
be in the best interests of the Company to grant to the Optionee the
non-qualified stock options documented herein in order to induce him to enter
the employ of the Company.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant. Subject to the terms and conditions hereinafter set
forth, the Company, with the approval of the Board, hereby grants to the
Optionee, as of the Date of the Grant, an Option to purchase all or any part of
an aggregate of 162,943 shares of the Company's Common Stock, par value $.001
(the "Option Shares"), at the purchase price of $5.00 per share (the "Option
Price"). This Option is not intended to be an "incentive stock option" within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code").
2. Term.
(a) General Rule. The Option granted hereunder shall expire
in all events, on the tenth anniversary of the date hereof, unless sooner
terminated under subsection 2(b) below.
(b) Termination of Employment. If the full time employment
by, or other full time service of the Optionee to, the Company and its
Affiliates (as defined below) should terminate for any reason other than death,
then the Option shall terminate one hundred and twenty (120) days from the date
such employment or service terminates. In the event of the death of the
Optionee, the Option shall terminate one year from the date of death of the
Optionee and may be exercised by the estate or representative of the Optionee.
During such one hundred and twenty (120) day or one-year period, as applicable,
the Option shall be exercisable only to the extent that it was exercisable on
the date of termination of employment or service or date of death of the
Optionee, as applicable, as set forth in Section 3 hereof.
3. Vesting of Option. On each March 1, June 1, September 1,
and December 1, commencing on June 1, 1999 and ending on September 1, 2000, the
Option shall
<PAGE> 2
vest and be exercisable with respect to 23,000 of the Option Shares, and the
Option with respect to the remainder of the Option Shares shall vest and be
exercisable on December 1, 2000; provided, however, that in the event of a
Change of Control the unvested portion of the Option shall immediately vest;
provided further, that in the event that the Optionee is terminated by the
Company pursuant to Section 4.4 of the Employment Agreement, dated November __,
1997, ("Employment Agreement") between the Company and the Optionee (or any
successor agreement thereto), the remaining unvested portion of the Option, but
in no event with respect to more than 47,990 Option Shares, shall vest on the
date of termination. If the Employment Agreement shall be terminated for any
other reason, the Option, other than with respect to that portion of the Option
which has vested as of or prior to the date of termination, shall be cancelled.
For purposes of this Section 3, the term "Change of Control"
shall mean (i) any "person" (as such term is defined in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than any person who acquired shares of the Company's Series A Preferred Stock on
the date hereof or any affiliate thereof) becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities
(ii) any transaction as a result of which the stockholders of the Company
immediately before such transaction or any affiliates of such stockholders cease
to own at least fifty percent (50%) of the voting stock of (x) the Company or
(y) any entity that results from the participation of the Company in a
reorganization, liquidation or any other form of corporate transaction; (iii) a
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive; or (iv) a sale, lease, exchange or other disposition
of all or substantially all the property and assets of the Company.
4. Manner of Exercise.
(a) The Optionee may exercise the Option with respect to
all or any part of the number of Option Shares then exercisable hereunder by
providing to the Company written notice of the exercise in the form attached
hereto as Exhibit A, delivered or mailed to the Secretary or Assistant Secretary
of the Company at its principal office. The notice of exercise shall specify the
number of Option Shares as to which the Option is to be exercised and the date
of exercise thereof, which date shall be at least five (5) days after the giving
of such notice unless an earlier time shall have been mutually agreed upon.
(b) Full payment by the Optionee of the Option Price for
the Option Shares purchased shall be made on or before the exercise date
specified in the notice; provided, however, that the minimum number of Option
Shares with respect to which the Option may be exercised at any one time shall
be 500, unless the number of Option Shares with respect to which the Option is
being exercised is the total number of Option Shares subject to exercise under
the Option at the time. If the Option is being exercised with respect to less
than all the Option Shares then appropriate notations shall be made on Schedule
1 hereto by the Company's Secretary or Assistant Secretary and returned to the
Optionee. The Option Price of the Option
2
<PAGE> 3
Shares as to which the Option shall be exercised shall be paid to the Company at
the time of exercise either in cash or in shares of Stock previously owned by
the Optionee at the time of exercise and having a total Fair Market Value (as
such term is defined below) as of the close of the business day immediately
preceding the date of delivery of the notice of election to exercise the Option
equal to the Option Price, or in a combination of cash and such shares. Any
shares of Stock being delivered must be accompanied by a duly executed
assignment to the Company, in blank, or with stock powers attached, together
with a written representation that such shares of Stock are owned by the
Optionee free and clear of all liens, claims and encumbrances and such other
representations as the Company shall reasonably determine. Only whole shares of
Stock with a Fair Market Value up to, but not exceeding, the Option Price of the
Option Shares to which the Option is being exercised will be accepted hereunder.
Delivery of shares of Stock may be made at the offices of the Company or at the
offices of the transfer agent appointed for the transfer of shares of Stock of
the Company. It shall be a condition to the Company's obligation to deliver
Option Shares upon exercise of any portion of the Option that the Optionee pay,
or make provision satisfactory to the Company for the payment of, any taxes
which the Company is obligated to withhold or collect with respect to such
exercise or otherwise with respect to the Option. For purposes of this Paragraph
4, "Fair Market Value" of a share of Stock shall mean the closing market price
as reported on the American Stock Exchange or other recognized market source on
the applicable date of reference hereunder, or if there is no sale on such date,
then the closing market price as reported on the American Stock Exchange or
other recognized market source on the last previous day on which a sale is
reported.
On the exercise date specified in the Optionee's notice or as
soon thereafter as is practicable, the Company shall cause to be delivered to
the Optionee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as the Company
may elect) upon full payment for such Option Shares.
(c) If, on or before the date of exercise specified in the
Option Notice, the Optionee fails to pay for any Option Shares specified in such
notice or fails to accept delivery thereof, the Optionee's right to purchase
such Option Shares may be terminated by the Company. The date specified in the
Optionee's notice as the date of exercise shall be deemed the date of exercise
of the Option, provided that payment in full for the Option Shares to be
purchased upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of the Company.
If the Company shall, at any time prior to the expiration of
the Option and prior to the exercise thereof: (a) declare or pay to the holders
of Stock a dividend payable in any kind of shares of stock of the Company; or
(b) change or divide or otherwise reclassify its Stock into the same or
different number of shares with or without par value, or into shares of any
class or classes; or (c) consolidate or merge with, or transfer all or
substantially all of its property to, any other corporation; or (d) make any
distribution of its assets to holders of its Stock as a liquidation or partial
liquidation dividend or by way of return of capital; then, upon the
3
<PAGE> 4
subsequent exercise of the Option, the Optionee shall receive for the exercise
price, in addition to or in substitution for the Option Shares which he would
otherwise then be entitled upon such exercise, such additional shares of Stock
or scrip of the Company, or such reclassified shares of Stock of the Company, or
such shares of the securities or assets of the company resulting from such
consolidation or merger or transfer of such assets of the Company, which he
would have been entitled to receive had he exercised the Option prior to the
happening of any of the foregoing events.
6. Covenants. Neither the Option nor the Option Shares for
which the Option may be exercised have been registered under the Securities Act
of 1933 or the securities law of any state of the United States. The Option has
been, and any Option Shares acquired upon exercise of the Option will be,
acquired for investment and not with a view to distribution or resale, and may
not be sold, pledged, hypothecated, alienated or otherwise assigned or
transferred without an effective registration statement for the Option or Option
Shares under the Securities Act of 1933 or an opinion of counsel satisfactory to
the Company that registration is not required under such Act. All certificates
for Option Shares shall be subject to such stop orders and other restrictions or
conditions as the Board of Directors or a designated committee thereof may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange or NASDAQ System upon which the
Common Stock is then listed and any applicable federal or state securities laws
with the advice of Company Counsel. Any Option Shares issued upon the exercise
of the Option prior to any registration thereof shall bear a legend
substantially in the following form:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933. These shares have
been acquired for investment and not with a view to
distribution or resale, and may not be sold, pledged,
hypothecated, alienated or otherwise assigned or transferred
without an effective registration statement for such shares
under the Securities Act of 1933 or an opinion of counsel for
the Corporation that registration is not required under such
Act."
7. No Rights as Stockholder.
Neither the Optionee nor any personal representative shall
have any rights as a stockholder with respect to any Option Shares covered by
the Option until he shall have become the holder of record of such Option
Shares, and no adjustment shall be made for dividends of any kind or other
rights for which the record date is prior to the date upon which the Optionee
shall become a holder of record, except as provided in paragraph 5 hereof.
8. Non-Transferability of Option.
During the Optionee's lifetime, the Option hereunder shall be
exercisable only by the Optionee or a guardian or legal representative of the
Optionee, and the Option shall not be
4
<PAGE> 5
transferable except, in case of the death of the Optionee and subject to the
provisions of paragraph 2, by will or the laws of descent and distribution, nor
shall the Option be subject to attachment, execution or other similar process;
provided, however, that at the discretion of the Board this Option may be
transferred to members of the Optionee's immediate family or trusts or family
partnerships for the benefit of such persons, subject to the terms and
conditions established by the Board. In the event of (a) any attempt by the
Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred, the
Company may terminate the Option by notice to the Optionee and it shall
thereupon become null and void.
9. Employment not Affected.
Neither the granting of the Option nor its exercise shall be
construed as granting to the Optionee any right with respect to continued
employment by the Company. Except as may otherwise be limited by a written
agreement between the Company and the Optionee, the right of the Company to
terminate at will the Optionee's employment with it at any time (whether by
dismissal, discharges, retirement or otherwise) is specifically reserved by the
Company and acknowledged by the Optionee.
10. Notice.
Any notice to the Company provided for in this instrument
shall be addressed to it in care of its Secretary or Assistant Secretary at its
office at 50 Spring Street, Ramsey, New Jersey 07446, and any notice to the
Optionee shall be addressed to the Optionee at the current address shown on the
payroll records of the Company. Any notice shall be deemed to be duly given if
and when properly addressed and posted by registered or certified mail, postage
prepaid.
11. Administration.
All questions of interpretation with respect to this Option
shall be determined by the Company's Board of Directors ("Board"). The Board's
determination shall be legal, binding and conclusive.
12. Amendment of Option.
This Option may not be amended without the consent of the
Optionee except to comply with applicable federal or state securities laws,
rules and regulations.
13. GOVERNING LAW.
THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS
INSTRUMENT SHALL EXCLUSIVELY BE GOVERNED BY AND DETERMINED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
5
<PAGE> 6
14. TAX TREATMENT.
This Option is not intended to qualify as an "incentive stock
option" under Section 422A of the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the Company has granted this Option on the
day and year first above written.
Attest: BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
- -------------------------------------- -------------------------------------
Yoav M. Cohen
Chief Financial Officer
(Corporate Seal)
Witness: ACCEPTED BY:
/s/ Jon Guss
- -------------------------------------- ---------------------------------------
Jon Guss
6
<PAGE> 7
SCHEDULE 1
NOTATIONS AS TO PARTIAL EXERCISE
<TABLE>
<CAPTION>
Date of Number of Balance of Company Notation Date
Exercise Shares Shares Secretary or
Purchased on Option Asst. Secretary
Signature
<S> <C> <C> <C> <C>
</TABLE>
1
<PAGE> 8
SCHEDULE A
STOCK OPTION EXERCISE FORM
------------------------------
(Date)
Bogen Communications International, Inc.
50 Spring Street
Ramsey, New Jersey 07446
Attention: Secretary/Assistant Secretary
Dear Sirs:
The undersigned elects to exercise the Option to purchase ___________
shares, $.001 par value, of the Common Stock ("Common Stock") of Bogen
Communications International, Inc. ("Bogen") under and pursuant to the Stock
Option Agreement between Bogen and the undersigned dated as of November 26,
1997.
Delivered herewith in payment of the option price is:
1. a check in the amount of $__________ and/or
2. certificates for ________ shares of Common Stock of Bogen valued at
$_______________ with appropriate stock powers attached thereto, which
shares are owned by the undersigned free and clear of all liens, claims
and encumbrances.
If the shares of Common Stock to be delivered to the undersigned upon
this exercise of the Option granted under the Agreement, are not subject to a
current registration statement filed under the Securities Act of 1933, as
amended (the "Act"), the undersigned hereby represents and agrees that all of
the shares of Common Stock being purchased hereunder are being acquired for
investment and not with the view to the sale or distribution thereof, and that
the undersigned understands that such shares of Common Stock are not currently
registered under the Act and may not be sold, pledged, hypothecated, alienated
or otherwise assigned or transferred in the absence of registration under the
Act or an opinion of counsel for Bogen to the effect that such registration is
not required under the Act.
1
<PAGE> 9
Please deliver the certificates for the shares being issued hereunder
to:
------------------------------------------------
------------------------------------------------
------------------------------------------------
Very truly yours,
------------------------
Optionee
2
<PAGE> 1
Exhibit 10.6
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION
THIS STOCK OPTION (the "Option") is granted as of November 26, 1997
(the "Date of the Grant"), by BOGEN COMMUNICATIONS INTERNATIONAL, INC. a
Delaware corporation (the "Company"), to MR. MICHAEL FLEISCHER (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Board of Directors has determined that it would be in
the best interests of the Company to grant to the Optionee the non-qualified
stock options documented herein in order to induce him to enter the employ of
the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant. Subject to the terms and conditions hereinafter set forth,
the Company, with the approval of the Board, hereby grants to the Optionee, as
of the Date of the Grant, an Option to purchase all or any part of an aggregate
of 162,942 shares of the Company's Common Stock, par value $.001 (the "Option
Shares"), at the purchase price of $5.00 per share (the "Option Price"). This
Option is not intended to be an "incentive stock option" within the meaning of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Term.
(a) General Rule. The Option granted hereunder shall expire in
all events, on the tenth anniversary of the date hereof, unless sooner
terminated under subsection 2(b) below.
(b) Termination of Employment. If the full time employment by,
or other full time service of the Optionee to, the Company and its Affiliates
(as defined below) should terminate for any reason other than death, then the
Option shall terminate one hundred and twenty (120) days from the date such
employment or service terminates. In the event of the death of the Optionee, the
Option shall terminate one year from the date of death of the Optionee and may
be exercised by the estate or representative of the Optionee. During such one
hundred and twenty (120) day or one-year period, as applicable, the Option shall
be exercisable only to the extent that it was exercisable on the date of
termination of employment or service or date of death of the Optionee, as
applicable, as set forth in Section 3 hereof.
3. Vesting of Option. On each March 1, June 1, September 1, and
December 1, commencing on June 1, 1999 and ending on September 1, 2000, the
Option shall
<PAGE> 2
vest and be exercisable with respect to 23,000 of the Option Shares, and the
Option with respect to the remainder of the Option Shares shall vest and be
excerisable on December 1, 2000; provided, however, that in the event of a
Change of Control the unvested portion of the Option shall immediately vest;
provided further, that in the event that the Optionee is terminated by the
Company pursuant to Section 4.4 of the Employment Agreement, dated November __,
1997, ("Employment Agreement") between the Company and the Optionee (or any
successor agreement thereto), the remaining unvested portion of the Option, but
in no event with respect to more than 47,990 Option Shares, shall vest on the
date of termination. If the Employment Agreement shall be terminated for any
other reason, the Option, other than with respect to that portion of the Option
which has vested as of or prior to the date of termination, shall be cancelled.
For purposes of this Section 3, the term "Change of Control" shall
mean (i) any "person" (as such term is defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
any person who acquired shares of the Company's Series A Preferred Stock on the
date hereof or any affiliate thereof) becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities
(ii) any transaction as a result of which the stockholders of the Company
immediately before such transaction or any affiliates of such stockholders cease
to own at least fifty percent (50%) of the voting stock of (x) the Company or
(y) any entity that results from the participation of the Company in a
reorganization, liquidation or any other form of corporate transaction; (iii) a
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive; or (iv) a sale, lease, exchange or other disposition
of all or substantially all the property and assets of the Company.
4. Manner of Exercise.
(a) The Optionee may exercise the Option with respect to all
or any part of the number of Option Shares then exercisable hereunder by
providing to the Company written notice of the exercise in the form attached
hereto as Exhibit A, delivered or mailed to the Secretary or Assistant Secretary
of the Company at its principal office. The notice of exercise shall specify the
number of Option Shares as to which the Option is to be exercised and the date
of exercise thereof, which date shall be at least five (5) days after the giving
of such notice unless an earlier time shall have been mutually agreed upon.
(b) Full payment by the Optionee of the Option Price for the Option
Shares purchased shall be made on or before the exercise date specified in the
notice; provided, however, that the minimum number of Option Shares with respect
to which the Option may be exercised at any one time shall be 500, unless the
number of Option Shares with respect to which the Option is being exercised is
the total number of Option Shares subject to exercise under the Option at the
time. If the Option is being exercised with respect to less than all the Option
Shares then appropriate notations shall be made on Schedule 1 hereto by the
Company's Secretary or Assistant Secretary and returned to the Optionee. The
Option Price of the Option
2
<PAGE> 3
Shares as to which the Option shall be exercised shall be paid to the Company at
the time of exercise either in cash or in shares of Stock previously owned by
the Optionee at the time of exercise and having a total Fair Market Value (as
such term is defined below) as of the close of the business day immediately
preceding the date of delivery of the notice of election to exercise the Option
equal to the Option Price, or in a combination of cash and such shares. Any
shares of Stock being delivered must be accompanied by a duly executed
assignment to the Company, in blank, or with stock powers attached, together
with a written representation that such shares of Stock are owned by the
Optionee free and clear of all liens, claims and encumbrances and such other
representations as the Company shall reasonably determine. Only whole shares of
Stock with a Fair Market Value up to, but not exceeding, the Option Price of the
Option Shares to which the Option is being exercised will be accepted hereunder.
Delivery of shares of Stock may be made at the offices of the Company or at the
offices of the transfer agent appointed for the transfer of shares of Stock of
the Company. It shall be a condition to the Company's obligation to deliver
Option Shares upon exercise of any portion of the Option that the Optionee pay,
or make provision satisfactory to the Company for the payment of, any taxes
which the Company is obligated to withhold or collect with respect to such
exercise or otherwise with respect to the Option. For purposes of this Paragraph
4, "Fair Market Value" of a share of Stock shall mean the closing market price
as reported on the American Stock Exchange or other recognized market source on
the applicable date of reference hereunder, or if there is no sale on such date,
then the closing market price as reported on the American Stock Exchange or
other recognized market source on the last previous day on which a sale is
reported.
On the exercise date specified in the Optionee's notice or as soon
thereafter as is practicable, the Company shall cause to be delivered to the
Optionee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as the Company
may elect) upon full payment for such Option Shares.
(c) If, on or before the date of exercise specified in the Option
Notice, the Optionee fails to pay for any Option Shares specified in such notice
or fails to accept delivery thereof, the Optionee's right to purchase such
Option Shares may be terminated by the Company. The date specified in the
Optionee's notice as the date of exercise shall be deemed the date of exercise
of the Option, provided that payment in full for the Option Shares to be
purchased upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of the Company.
If the Company shall, at any time prior to the expiration of the
Option and prior to the exercise thereof: (a) declare or pay to the holders of
Stock a dividend payable in any kind of shares of stock of the Company; or (b)
change or divide or otherwise reclassify its Stock into the same or different
number of shares with or without par value, or into shares of any class or
classes; or (c) consolidate or merge with, or transfer all or substantially all
of its property to, any other corporation; or (d) make any distribution of its
assets to holders of its Stock as a liquidation or partial liquidation dividend
or by way of return of capital; then, upon the
3
<PAGE> 4
subsequent exercise of the Option, the Optionee shall receive for the exercise
price, in addition to or in substitution for the Option Shares which he would
otherwise then be entitled upon such exercise, such additional shares of Stock
or scrip of the Company, or such reclassified shares of Stock of the Company, or
such shares of the securities or assets of the company resulting from such
consolidation or merger or transfer of such assets of the Company, which he
would have been entitled to receive had he exercised the Option prior to the
happening of any of the foregoing events.
6. Covenants. Neither the Option nor the Option Shares for which the
Option may be exercised have been registered under the Securities Act of 1933 or
the securities law of any state of the United States. The Option has been, and
any Option Shares acquired upon exercise of the Option will be, acquired for
investment and not with a view to distribution or resale, and may not be sold,
pledged, hypothecated, alienated or otherwise assigned or transferred without an
effective registration statement for the Option or Option Shares under the
Securities Act of 1933 or an opinion of counsel satisfactory to the Company that
registration is not required under such Act. All certificates for Option Shares
shall be subject to such stop orders and other restrictions or conditions as the
Board of Directors or a designated committee thereof may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange or NASDAQ System upon which the Common Stock is
then listed and any applicable federal or state securities laws with the advice
of Company Counsel. Any Option Shares issued upon the exercise of the Option
prior to any registration thereof shall bear a legend substantially in the
following form:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933. These shares have been acquired
for investment and not with a view to distribution or resale, and
may not be sold, pledged, hypothecated, alienated or otherwise
assigned or transferred without an effective registration statement
for such shares under the Securities Act of 1933 or an opinion of
counsel for the Corporation that registration is not required under
such Act."
7. No Rights as Stockholder.
Neither the Optionee nor any personal representative shall have any
rights as a stockholder with respect to any Option Shares covered by the Option
until he shall have become the holder of record of such Option Shares, and no
adjustment shall be made for dividends of any kind or other rights for which the
record date is prior to the date upon which the Optionee shall become a holder
of record, except as provided in paragraph 5 hereof.
8. Non-Transferability of Option.
During the Optionee's lifetime, the Option hereunder shall be
exercisable only by the Optionee or a guardian or legal representative of the
Optionee, and the Option shall not be
4
<PAGE> 5
transferable except, in case of the death of the Optionee and subject to the
provisions of paragraph 2, by will or the laws of descent and distribution, nor
shall the Option be subject to attachment, execution or other similar process;
provided, however, that at the discretion of the Board this Option may be
transferred to members of the Optionee's immediate family or trusts or family
partnerships for the benefit of such persons, subject to the terms and
conditions established by the Board. In the event of (a) any attempt by the
Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred, the
Company may terminate the Option by notice to the Optionee and it shall
thereupon become null and void.
9. Employment not Affected.
Neither the granting of the Option nor its exercise shall be
construed as granting to the Optionee any right with respect to continued
employment by the Company. Except as may otherwise be limited by a written
agreement between the Company and the Optionee, the right of the Company to
terminate at will the Optionee's employment with it at any time (whether by
dismissal, discharges, retirement or otherwise) is specifically reserved by the
Company and acknowledged by the Optionee.
10. Notice.
Any notice to the Company provided for in this instrument shall be
addressed to it in care of its Secretary or Assistant Secretary at its office at
50 Spring Street, Ramsey, New Jersey 07446, and any notice to the Optionee shall
be addressed to the Optionee at the current address shown on the payroll records
of the Company. Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage prepaid.
11. Administration.
All questions of interpretation with respect to this Option shall be
determined by the Company's Board of Directors ("Board"). The Board's
determination shall be legal, binding and conclusive.
12. Amendment of Option.
This Option may not be amended without the consent of the Optionee
except to comply with applicable federal or state securities laws, rules and
regulations.
13. GOVERNING LAW.
THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS
INSTRUMENT SHALL EXCLUSIVELY BE GOVERNED BY AND DETERMINED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
5
<PAGE> 6
14. TAX TREATMENT.
This Option is not intended to qualify as an "incentive stock
option" under Section 422A of the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the Company has granted this Option on the day
and year first above written.
Attest: BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
- --------------------------------------- -----------------------------
Yoav M. Cohen
Chief Financial Officer
(Corporate Seal)
Witness: ACCEPTED BY:
/s/ Michael Fleischer
- --------------------------------------- -----------------------------
Michael Fleischer
6
<PAGE> 7
SCHEDULE 1
NOTATIONS AS TO PARTIAL EXERCISE
Date of Number of Balance of Company Notation Date
Exercise Shares Shares Secretary or -------------
- -------- Purchased on Option Asst. Secretary
--------- --------- Signature
---------
1
<PAGE> 8
SCHEDULE A
STOCK OPTION EXERCISE FORM
------------------------------
(Date)
Bogen Communications International, Inc.
50 Spring Street
Ramsey, New Jersey 07446
Attention: Secretary/Assistant Secretary
Dear Sirs:
The undersigned elects to exercise the Option to purchase ___________
shares, $.001 par value, of the Common Stock ("Common Stock") of Bogen
Communications International, Inc. ("Bogen") under and pursuant to the Stock
Option Agreement between Bogen and the undersigned dated as of November 26,
1997.
Delivered herewith in payment of the option price is:
1. a check in the amount of $__________ and/or
2. certificates for ________ shares of Common Stock of Bogen valued at
$_______________ with appropriate stock powers attached thereto, which
shares are owned by the undersigned free and clear of all liens, claims
and encumbrances.
If the shares of Common Stock to be delivered to the undersigned upon this
exercise of the Option granted under the Agreement, are not subject to a current
registration statement filed under the Securities Act of 1933, as amended (the
"Act"), the undersigned hereby represents and agrees that all of the shares of
Common Stock being purchased hereunder are being acquired for investment and not
with the view to the sale or distribution thereof, and that the undersigned
understands that such shares of Common Stock are not currently registered under
the Act and may not be sold, pledged, hypothecated, alienated or otherwise
assigned or transferred in the absence of registration under the Act or an
opinion of counsel for Bogen to the effect that such registration is not
required under the Act.
1
<PAGE> 9
Please deliver the certificates for the shares being issued hereunder to:
------------------------------------------------
------------------------------------------------
------------------------------------------------
Very truly yours,
------------------------
Optionee
2
<PAGE> 1
Exhibit 10.7
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This COMMON STOCK AND WARRANT PURCHASE AGREEMENT ("Agreement") is entered
into as of November 26, 1997, by and between Bogen Communications International,
Inc., a Delaware corporation, (the "Company") and D & S Capital, LLC (the
"Investor").
SECTION 1. DESCRIPTION OF THE TRANSACTION
1.1 DESCRIPTION OF SECURITIES. The Company agrees to issue to the
Investors 46,295 shares of its authorized but unissued common stock, $.001 par
value per share (the "Common Stock") and warrants to purchase 250,000 shares of
Common Stock (in the form attached hereto as Exhibit A) (the "Warrants"), for an
aggregate purchase price of $250,000 (the "Purchase Price"). The Warrants will
be convertible into shares of the Company's common stock, $.001 par value per
share (the "Common Stock"), in accordance with the terms set forth therein. Any
securities of the Company issued or issuable upon exercise of the Warrants are
referred to as "Warrant Shares."
1.2 CLOSING. The closing (the "Closing") of the sale of the Common Stock
and Warrants will take place at the offices of McDermott Will & Emery, 50
Rockefeller Plaza, New York, NY, at 10:00 a.m., on the date of this Agreement,
or such other time and place as agreed to by the parties (the "Closing Date").
At the Closing, the Company will deliver the Common Stock and Warrants being
acquired by the Investor upon payment of the Purchase Price to the Company by
certified or bank cashier's check, or by other form of payment acceptable to the
Company.
1.3 CONDITIONS TO CLOSING. At or prior to the Closing, the Company shall
have delivered to the Investor:
(i) copies of (A) the resolutions of the Board of Directors of the
Company, or an authorized committee thereof, authorizing and approving
this Agreement and the issuance of the Common Stock and Warrants; and (B)
votes of the Board of Directors, to be effective immediately upon
consummation of the Closing, providing for (x) the setting of the size of
the Board of Directors at seven (7), (y) the election of Jon Guss and
Michael Fleischer (the "Investor Nominees") to the Company's Board of
Directors, and (z) the election of one of the Investor Nominees to the
Executive Committee and the Nominating Committee (if any).
SECTION 2. REPRESENTATIONS OF THE COMPANY
As part of the basis of this Agreement, the Company represents to the
Investors that on the date hereof:
2.1 ORGANIZATION. The Company and each of its subsidiaries (each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and is
qualified to do business as a foreign corporation in all other jurisdictions
where the failure to so qualify would have a material adverse effect on the
Company.
2.2 CORPORATE POWER. The Company and each Subsidiary has all requisite
power and authority to own its respective properties and to carry on its
respective business as presently conducted and as proposed to be conducted. The
Company has all requisite corporate power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement.
<PAGE> 2
2.3 AUTHORIZATION. This Agreement and all documents executed pursuant to
this Agreement are valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms. The execution, delivery and
performance of this Agreement and the issuance of the Common Stock and the
Warrant Shares have been, or will be upon such issuance, duly authorized by all
necessary corporate action of the Company.
2.4 CAPITALIZATION. All of the presently outstanding shares of capital
stock of the Company have been validly authorized and issued and are fully paid
and nonassessable. The Common Stock has been validly authorized and, when
delivered and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable and free of all encumbrances and restrictions, except
restrictions on transfer imposed by applicable securities laws and/or this
Agreement. The Company has authorized and reserved for issuance upon exercise of
the Warrants, Common Stock sufficient for the exercise of the Warrants. Warrant
Shares will be, when and if issued, validly authorized and issued, fully paid
and nonassessable and free of all encumbrances and restrictions, except
restrictions on transfer imposed by applicable securities laws and/or this
Agreement.
2.5 PREEMPTIVE RIGHTS. There are no preemptive rights affecting the
issuance or sale of the Company's capital stock.
2.6 FINANCIAL STATEMENTS. The Company has filed with the Securities and
Exchange Commission (the "Commission") the audited consolidated financial
statements of the Company for the year ended December 31, 1996 and the unaudited
financial statements for the quarterly periods ended September 30, 1997. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied consistently, and present fairly the consolidated
financial condition of the Company as of the dates thereof, and the consolidated
results of operations of the Company for the period, or portion thereof, as
applicable, then ended (except, in the case of unaudited financial statements,
for year-end adjustments and footnotes). Since September 30, 1997, there has not
been any material adverse change, nor to the Company's knowledge is any such
change threatened, in the business, condition (financial or otherwise),
operations or properties, assets, or results of operation of the Company and its
Subsidiaries, taken as a whole.
2.7 EFFECT OF TRANSACTIONS. The Company's execution and delivery of this
Agreement, and its performance of the transactions contemplated by this
Agreement, will not, whether through consummation hereof, by the lapse of time,
the giving of notice or otherwise, (a) violate any judgment, decree or order, or
any material contract or obligation of the Company or any Subsidiary, (b)
violate any statute, rule or regulation of any federal, state or local
government or agency applicable to the Company or any Subsidiary, or any
material contract to which any employee of the Company or any Subsidiary is
bound, which violation, in each case, would have a material adverse effect on
the operations or financial condition of the Company, or (c) result in the
imposition of any material lien, charge, security interest or encumbrance upon
any property or assets of the Company or any Subsidiary.
2.8 BROKERAGE. There are no claims for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement.
2.9 PUBLIC FILINGS. The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, and its Quarterly Reports on Form 10-Q for
the three-month periods ended March 31, 1997, June 30, 1997 and September 30,
1997, respectively, as amended, when they were filed with the Commission,
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
2
<PAGE> 3
2.10 AMEX LISTING. The Company's Common Stock is listed for trading on the
American Stock Exchange, Inc. and no rules or regulations of the American Stock
Exchange, Inc. preclude or restrict in any way the execution and delivery of
this Agreement or the consummation of the transactions contemplated herein, nor
do such rules require shareholder or any other approval for the sale of the
Common Stock, the Warrants or the Warrant Shares.
2.11 DISCLOSURE. This Agreement, including the exhibits hereto, do not
contain any untrue statement of material fact or, when taken as a whole, omit
any material fact necessary in order to make the statements contained herein or
therein not misleading.
2.12 CONSENTS, NOTICE. Except for those which have been obtained prior to
the date hereof, no consent, approval, order or authorization of or declaration,
registration or filing with any governmental body or any nongovernmental person,
including, without limitation, any creditor or shareholder of the Company or any
of its Subsidiaries, or any party to a contract to which the Company or any
Subsidiary is a party or any of their respective assets is subject, is required
in connection with the execution or delivery by the Company of this Agreement,
or the performance by the Company of its obligations hereunder and thereunder,
or as a condition to the legality, validity or enforceability of this Agreement
as the sale and issuance of the Common Stock, the Warrants or the Warrant
Shares, except for such consents or approvals the absence of which would not
have a material effect on the Company operations, financial condition or the
transactions herein contemplated.
2.13 LITIGATION. There are no actions, suits, arbitrations, investigations
or proceedings pending, or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries or any of their properties
or rights of any of them. There is no judgment, decree, injunction, rule or
order of any government body or arbitrator outstanding against the Company or
any Subsidiary.
SECTION 3. REPRESENTATIONS AND AGREEMENTS OF THE INVESTOR
As part of the basis of this Agreement, the Investor represents to the
Company that on the date hereof:
3.1 AUTHORIZATION. The Investor has all requisite corporate or other power
and authority to enter into and perform this Agreement and the execution of this
Agreement and the documents executed by the Investor pursuant to this Agreement
have been authorized by all necessary corporate or other action on the part of
the Investor, have been executed and delivered, and constitute valid, legal,
binding agreements of the Investor enforceable against the Investor in
accordance with their terms.
3.2 INVESTMENT PURPOSE. The Investor is acquiring the Common Stock and
Warrants for its own account, for investment, and not with a view to any
"distribution" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Investor has no intention to make any transfer of the
Common Stock or Warrants in violation of the Securities Act. No broker-dealer
acted on behalf of the Investor in connection with the offer or sale of the
Common Stock and/or Warrants.
3.3 TRANSFER RESTRICTIONS; COMPANY REDEMPTION RIGHT. (a) The Investor
understands that because the Common Stock, the Warrants and Warrant Shares have
not been registered under the Securities Act, it cannot dispose of any or all of
the Common Stock and Warrant Shares unless such Common Stock, the Warrants and
Warrant Shares are subsequently registered under the securities Act or
exemptions from such registration are available and that the Common Stock, the
Warrants and Warrant Shares will contain legends reflecting such limitations.
The Investor acknowledges and understands that, except as provided in SECTION 4
of this Agreement with respect to the Registerable Securities (as defined in
Section 4.1 hereof), it has no independent right to require the Company to
register the Common Stock or Warrant Shares. The Investor understands that the
Company may, as a condition to the transfer of any of the Common Stock, the
Warrants or
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Warrant Shares, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance satisfactory to the Company, to the
effect that the proposed transfer does not result in a violation of the
Securities Act, unless such transfer is covered by an effective registration
statement under the Securities Act.
(b) The Investor agrees that it shall not, without the prior consent of
the Company, sell, transfer or assign (but that it may pledge as collateral) any
of the 46,295 shares of Common Stock purchased hereunder so long as either of
the Investor Nominees shall be a director or officer of the Company; provided,
however, the restriction set forth herein shall expire on the second (2nd)
anniversary of the date hereof.
(c) The Company shall have the right to elect to redeem, repurchase or
otherwise acquire from the Investor for $.001 per share any portion of the
Warrant which is, as of the date of the Company's notice of such election, not
exercisable or transferable under the terms of Section 1 of the Warrant;
provided, however, that such right of the Company shall not be available to it
until the expiration of one hundred twenty (120) days following the date on
which neither of the Investor Nominees shall be a member of the Company's Board
of Directors.
3.4 SOPHISTICATION. The Investor is knowledgeable and experienced in
business and financial matters and capable of evaluating the merits and risks of
the investment in the Common Stock and Warrants, is able to bear the economic
risk of loss of its investment in the Company, has been granted the opportunity
to make a thorough investigation of the affairs of the Company, and has availed
itself of such opportunity either directly or through its authorized
representatives.
3.5 PRIVATE OFFERING. The Investor has been advised that the Common Stock
and Warrants have not been and are not being registered under the Securities Act
or under the "blue sky" laws of any jurisdiction and that the Company in issuing
the Common Stock and Warrants is relying upon, among other things, the
representations and warranties of such Investor contained in this SECTION 3 in
concluding that such issuance is a "private offering" and does not require
compliance with the registration provisions of the Securities Act. The Investor
is an "accredited investor" within the meaning of Rule 501 under the Securities
Act.
SECTION 4. REGISTRATION RIGHTS
4.1 DEFINITIONS. For purposes of this Section 4: (a) the term "Registrable
Securities" means the Common Stock and the Warrant Shares; and (b) the term
"Holder" means any person owning or having the right to acquire Registrable
Securities.
4.2 REQUEST FOR REGISTRATION.
(a) If at any time the Company shall receive a written request from
Holders of a majority of the Registrable Securities then outstanding that the
Company file a registration statement under the Securities Act, then the Company
shall use its best efforts to effect as soon as practicable, after the receipt
of such request, the registration under the Securities Act of the number of such
Registrable Securities which such Holders (and any other Holders who may also
elect to participate within 10 days thereafter) request to be registered.
Without the prior written consent of the Holders requesting a registration,
neither the Company, nor any other person (other than the other Holders), shall
be entitled to include Common Stock in the registrations made under this Section
4.2. The Company is obligated to effect one completed and effective registration
pursuant to this Section 4.2.
(b) Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 4.2, a certificate
signed by an executive officer of the Company stating that in the good faith
judgment of the Board of Directors of the Company (excluding the Investor
Nominees) it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such
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<PAGE> 5
filing for a period of not more than one hundred twenty (120) days after receipt
of the request of the Holders; provided, however, that the Company may not
utilize this right more than once in any twelve month period.
4.3 INCIDENTAL REGISTRATION. If (but without any obligation to do so) the
Company proposes at any time to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any shares of its capital stock or other securities under the Securities Act
(other than a registration relating solely to securities issued in connection
with mergers, acquisitions, exchange offers, dividend reinvestment plans,
employee stock ownership plans or stock option plans, thrift plans, pension
plans or other employee benefit plans, or a registration on any form which does
not include substantially the same information, other than information related
to the selling shareholders or their plan of distribution, as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company, the Company
shall, subject to the provisions of Section 4.8, cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder has
requested to be so registered. If at any time after giving such written notice
of its intention to register any of its securities and 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, at
its sole election, the Company may give written notice of such determination to
each Holder and thereupon shall be relieved of its obligation to register any
Common Stock in connection with such registration.
4.4 RESERVED.
4.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 4 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred eighty (180) days.
(b) Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
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<PAGE> 6
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) In the case of an underwritten public offering, furnish, at the
request of any Holder requesting registration of Registrable Securities pursuant
to this Section 4, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 4 (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in such form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in such form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters.
4.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 4 with
respect to the Registrable Securities of any selling Holder that such Holder
shall have furnished to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
4.7 EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to this Section 4, including without limitation, all
registration, filing and qualification fees, printers and accounting fees and
fees and disbursements of counsel for the Company shall be borne by the Company;
provided, however, in the event the Company includes in any registration
statement shares for sale for its own account, it shall pay the pro rata portion
of any underwriting discounts and commissions attributable to such securities
for its own account. Notwithstanding the immediately preceding sentence, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 4.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Holders participating
in such withdrawn registration shall bear such expenses pro rata, but shall also
be entitled to reassert such one demand registration pursuant to Section 4.2);
provided, however, that if at the time of such withdrawal the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request, then
the Holders shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 4.2.
4.8 UNDERWRITING REQUIREMENTS; CUTBACK. In connection with any offering
involving an underwriting of shares being issued by and sold on behalf of the
Company, the Company shall not be required under Section 4.3 to include any of
the Holders' securities in such underwriting unless they accept the customary
and reasonable terms of the underwriting as agreed upon between the Company and
the underwriters selected by it, and then only in such quantity as will not, in
the opinion of the underwriters, jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested to be included in such offering exceeds the amount of securities that
the underwriters reasonably believe compatible with the success of the offering,
then Holders may include in the offering only that number of such Registrable
Securities which the underwriters believe will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
Holders according to the total amount of securities entitled to be included
therein owned by each Holder or in such other proportions as shall mutually be
agreed to by such Holders); provided, however, Registrable Securities shall be
excluded from such offering only pro rata to the same extent as securities
proposed to be included for the account of other persons other than the Company
in such offering.
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<PAGE> 7
4.9 INDEMNIFICATION AND CONTRIBUTION. In the event any Registrable
Securities are included pursuant to a registration statement under this Section
4:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) and
each person if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several) to which they or any of them may become subject
under the Securities Act, the Exchange Act or any other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus (but only if such is not
corrected in the final prospectus) contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading (but only if such is not corrected in the final
prospectus), or (iii) any violation or alleged violation by the Company in
connection with the registration of Registrable Securities under the Securities
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 4.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, any other Holder
selling securities in such registration statement and any controlling person of
any such underwriter or other Holder, against any losses, claims, damages or
liabilities joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 4.9(b), in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 4.9(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided that in no
event shall any indemnity under this Section 7.9(b) exceed the net proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 4.9
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 4.9, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel selected by the indemnifying party, provided
that the indemnified party consents to such counsel, such consent to be not
unreasonably withheld; provided, however,
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<PAGE> 8
that an indemnified party or parties shall have the right to retain their own
counsel, with the reasonable fees and expenses of one such counsel to be paid by
the indemnifying party with respect to all indemnified parties, if
representation of such indemnified party or parties by the counsel retained by
the indemnifying party, in the opinion of counsel appointed by the indemnified
party or parties, would be inappropriate due to actual or potential differing
interests between such indemnified party or parties and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 4.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 4.9.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 4.9(a) is
applicable but for any reason is held to be unavailable from the Company with
respect to all Holders or any Holder, the Company and the Holder or Holders, as
the case may be, shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted) to which the Company and one or more of the
Holders may be subject in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand, and the Holder or Holders on the
other, in connection with statements or omissions which resulted in such losses,
claims, damages or liabilities. Notwithstanding the foregoing, no Holder shall
be required to contribute any amount in excess of the net proceeds received by
such Holder from the Registrable Securities as the case may be, sold by such
Holder pursuant to the registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each person, if any, who controls a Holder within
the meaning of the Securities Act shall have the same rights to contribution as
such Holder.
(e) The obligations of the Company and Holders under this Section 4.9
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 4 or otherwise.
4.10 "MARKET STAND-OFF AGREEMENT". The Investor hereby agrees that, during
the period of duration specified by the Company and an underwriter of common
stock or other securities of the Company (the "Stand-Off Period"), following the
effective date of a registration statement of the Company filed under the Act
covering securities to be sold by the Company, it shall not, to the extent
reasonably requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company of
the class being offered and sold pursuant to such registration statement held by
it at any time during the Stand-Off Period except common stock included in such
registration; provided, however, that the Stand-Off Period shall not exceed 180
days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instruments with respect to the Registrable Securities of the
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of the Stand-Off Period.
Notwithstanding the foregoing, the obligations described in this Section
4.10 shall not apply to a registration relating solely to employee benefit plans
on Form S-1 or Form S-8 or similar forms which may be promulgated in the future,
or a registration relating solely to a Commission Rule 145 transaction on Form
S-14 or Form S-15 or similar forms which may be promulgated in the future or any
registration statement filed in connection with the merger or consolidation of
the Company, or the issuance of Company securities in connection with its
acquisition of another business or assets.
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<PAGE> 9
4.11 LETTER OR OPINION OF COUNSEL IN LIEU OF REGISTRATION. If in the
opinion of counsel for the Company, the Investor is able to sell all of its
Registrable Securities in a three-month period pursuant to Rule 144 under the
Securities Act, the Company will not be required to register any Registrable
Securities of the Investor, notwithstanding any provision of this Section 4 to
the contrary.
4.12 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 4 may
be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. An amendment or waiver effected in accordance with
this Section shall be binding upon each Holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future Holder of all such securities, and the
Company.
SECTION 5. GENERAL
5.1 AMENDMENTS, WAIVERS AND CONSENTS. Any consents required and any
waiver, amendment or other action of the Investor made only by consent(s) in
writing signed by the Investor. Any amendment or waiver made according to this
paragraph will be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities have been converted) and each future holder. Any amendment or waiver
by the Company must be made in writing.
5.2 SURVIVAL; ASSIGNABILITY OF RIGHTS. Except as set forth in Section 4,
all representations and agreements of the parties made in this Agreement and in
the certificates, exhibits or other written information delivered or furnished
by one party to the other in connection with this Agreement will survive for a
period of one (1) year.
5.3 GOVERNING LAW. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISIONS THEREOF.
5.4 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be taken to be an original; but such
counterparts will together constitute one document.
5.5 NOTICES AND DEMANDS. Any notice or demand which is permitted or
required hereunder will be deemed to have been sufficiently received (except as
otherwise provided herein) (a) upon receipt when personally delivered, (b) one
(1) day after sent by overnight delivery or telecopy providing confirmation or
receipt of delivery, or (c) three (3) days after being sent by certified or
registered mail, postage and charges prepaid, return receipt requested to the
addresses shown on the signature page of this Agreement, or at any other address
designated by such applicable party in writing.
5.6 SEVERABILITY. If any provision of this Agreement is held invalid under
applicable law, such provision will be ineffective to the extent of such
invalidity, and such invalid provision will be modified to the extent necessary
to make it valid and enforceable. Any such invalidity will not invalidate the
remainder of this Agreement.
5.7 EXPENSES. The Company will reimburse the Investor for one-half of its
legal expenses incurred in connection with the preparation of this Agreement and
the consummation of the Closing in an amount that shall not exceed Seven
Thousand Five Hundred Dollars ($7,500) and in all other respects, each of the
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<PAGE> 10
Company and the Investor will pay their respective costs and expenses that they
incur with respect to the negotiation, execution, delivery, amendment and/or
performance of this Agreement.
5.8 ENTIRE AGREEMENT. This Agreement (including the exhibits hereto) and
the agreements referenced as exhibits to this Agreement constitute the entire
agreement of the parties with respect to the subject matter thereof, and
supersede any prior agreements.
The undersigned have executed this Agreement as of the day and year first
written above.
COMPANY:
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
---------------------
Name:
Title:
Address:
Telecopy:
INVESTOR:
D&S CAPITAL, LLC
By: /s/ Michael Fleischer
---------------------
Name:
Title:
Address:
Telecopy:
10
<PAGE> 1
Exhibit 10.8
BOGEN COMMUNICATIONS INTERNATIONAL, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1 250,000 Shares
FOR VALUE RECEIVED, Bogen Communications International, Inc., a
Delaware corporation (the "COMPANY"), hereby certifies that D & S Capital, LLC
(the "PURCHASER") or its permitted successors and assigns, is entitled to
purchase from the Company, at any time or from time as specified in Section 1
below, commencing June 1, 1998 (the "COMMENCEMENT DATE") and prior to 5:00 P.M.,
New York City time, on January 1, 2003, Two Hundred and Fifty Thousand (250,000)
fully paid and non-assessable shares of the common stock, $.001 par value per
share, of the Company for an aggregate purchase price of $1,250,000 (computed on
the basis of $5.00 per share). (Hereinafter, (i) said common stock, together
with any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "COMMON STOCK," (ii)
the shares of the Common Stock purchasable hereunder or under any other Warrant
(as hereinafter defined) are referred to individually as a "WARRANT SHARE" and
collectively as the "WARRANT SHARES," (iii) the aggregate purchase price payable
for the Warrant Shares hereunder is referred to as the "AGGREGATE WARRANT
PRICE," (iv) the price payable for each of the Warrant Shares hereunder is
referred to as the "PER SHARE WARRANT PRICE," (v) this Warrant and all Warrants
hereafter issued in exchange or substitution for this Warrant or such similar
Warrants are referred to as the "WARRANTS" and (vi) the holder of this Warrant
is referred to as the "Holder" and the holder of this Warrant and all other
Warrants or Warrant Shares issued upon the exercise of any Warrant are referred
to as the "HOLDERS".) The Aggregate Warrant Price is not subject to adjustment.
The Per Share Warrant Price is subject to adjustment as hereinafter provided; in
the event of any such adjustment, the number of Warrant Shares shall be adjusted
by dividing the Aggregate Warrant Price by the Per Share Warrant Price in effect
immediately after such adjustment. This Warrant is being issued in connection
with the purchase by the Purchaser of 46,295 shares of Common Stock of the
Company, at the same time, under that certain Common Stock Purchase and Warrant
Agreement of even date herewith (the "Purchase Agreement"), and is subject to
the terms and conditions set forth therein.
1. EXERCISE OF WARRANT. This Warrant may be exercised in whole
or in part as follows: (i) up to 100,000 total Warrant Shares may be purchased
at any time, or from time to time, on or after the Commencement Date and prior
to January 1, 2003; (ii) up to 145,000 total Warrant Shares (decreased by the
number of Warrant Shares so purchased in accordance with (i) above) may be
purchased at any time, or from time to time, on or after September 1, 1998 and
prior to January 1, 2003; (iii) up to 190,000 total Warrant Shares (decreased by
the number of Warrant Shares so purchased in accordance with (i) and (ii) above)
may be purchased at any time, or from time to time, on or after December 1, 1998
and prior to January 1, 2003; and (iv) any Warrant Shares representing that
portion of this Warrant not so exercised as set forth in (i), (ii) or (iii)
above may be purchased at any time or from time to time on or after March 1,
1999 and prior to January 1, 2003. Exercise of this Warrant by the Holder shall
be made by the surrender of this
<PAGE> 2
Warrant (with the subscription form at the end hereof, or a reasonable facsimile
thereof, duly executed) at the address set forth in Subsection 9(a) hereof,
together with proper payment of the Aggregate Warrant Price, or the
proportionate part hereof if this Warrant is exercised in part. Payment for
Warrant Shares shall be made by certified or official bank check payable to the
order of the Company. If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock, and the Holder is
entitled to receive a new Warrant covering the Warrant Shares which have not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon such surrender of this Warrant,
the Company will (a) issue a certificate or certificates in the name of the
Holder (or any designee of the Holder to whom the Warrant is transferred in
accordance with Section 6 hereof) for the largest number of whole shares of the
Common Stock to which the Holder shall be entitled and, if this Warrant is
exercised in whole, in lieu of any fractional share of the Common Stock to which
the Holder shall be entitled, pay to the Holder cash in an amount equal to the
fair value of such fractional share (determined in such reasonable manner as the
members of the Board of Directors of the Company (other than any person who,
directly or indirectly, has a beneficial ownership interest in this Warrant)
shall determine), and (b) deliver the other securities and properties receivable
upon the exercise of this Warrant, or the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of this Warrant.
Notwithstanding anything herein to the contrary, this Warrant shall become fully
exercisable upon the occurrence of a "Change of Control" (as defined below). For
purposes hereof, the term "Change of Control" shall mean (i) any "person" (as
such term is defined in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), other than any person who acquired
shares of the Company's Series A Preferred Stock on the date hereof or any
affiliate thereof) becoming the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities (ii) any transaction as a
result of which the stockholders of the Company immediately before such
transaction or any affiliates of such stockholders cease to own at least fifty
percent (50%) of the voting stock of (x) the Company or (y) any entity that
results from the participation of the Company in a reorganization, liquidation
or any other form of corporate transaction; (iii) a merger, consolidation,
reorganization, liquidation or dissolution in which the Company does not
survive; or (iv) a sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Company.
2. RESERVATION OF WARRANT SHARES. The Company agrees that,
prior to the expiration of this Warrant, the Company will at all times have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer and free and clear of all preemptive rights and rights of first
refusal.
3. PROTECTION AGAINST DILUTION. (a) If the Company shall at
any time prior to the expiration of the Warrant and prior to the exercise
thereof: (a) declare or pay to the holders of Common Stock a dividend payable in
any kind of shares of stock of the Company; or (b) change or divide or otherwise
reclassify its Common Stock into the same or different number
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<PAGE> 3
of shares with or without par value, or into shares of any class or classes; or
(c) consolidate or merge with, or transfer all or substantially all of its
property to, any other corporation; or (d) make any distribution of its assets
to holders of its Common Stock as a liquidation or partial liquidation dividend
or by way of return of capital; then, upon the subsequent exercise of the
Warrant, the Holder shall receive for the exercise price, in addition to or in
substitution for the Warrant Shares which the Holder would otherwise then be
entitled upon such exercise, such additional shares of Common Stock or scrip of
the Company, or such reclassified shares of Common Stock of the Company, or such
shares or securities or assets of the entity resulting from such consolidation
or merger or transfer of such assets of the Company, which the Holder would have
been entitled to receive had the Holder exercised the Warrant prior to the
happening of any of the foregoing events.
(b) If the Board of Directors of the Company shall
(i) declare any dividend or other distribution with respect to the Common Stock,
other than a cash dividend, (ii) offer to the holders of shares of Common Stock
any additional shares of Common Stock, any securities convertible into or
exercisable for shares of Common Stock or any rights to subscribe thereto, or
(iii) propose a dissolution, liquidation or winding up of the Company, the
Company shall mail notice thereof to the Holders of the Warrants not less than
15 days prior to the record date fixed for determining stockholders entitled to
participate in such dividend, distribution, offer or subscription right or to
vote on such dissolution, liquidation or winding up.
(c) If at any time or from time to time the Company
shall take any action affecting its Common Stock or any other capital stock of
the Company, not otherwise described in any of the foregoing subsections of this
Section 3, then, if the failure to make any adjustment would, in the reasonable
opinion of the members of the Board of Directors of the Company (other than any
person who, directly or indirectly, has a beneficial ownership interest in this
Warrant), have a materially adverse effect upon the rights of the Holder of the
Warrant, the number of shares of Common Stock or other stock comprising a
Warrant Share, or the Per Share Warrant Price, shall be adjusted in such manner
and at such time as the members of the Board of Directors of the Company (other
than any person who, directly or indirectly, has a beneficial ownership interest
in this Warrant) may in good faith determine to be equitable under the
circumstances.
(d) Upon any adjustment or modification of the rights
of the Holder of Warrant in accordance with this Section 3, the Company shall
promptly cause its Chief Financial Officer to provide a notice to the Holder
setting forth such adjustment or modification, a brief statement of the facts
requiring such adjustment or modification and the manner of computing the same.
4. FULLY PAID STOCK; TAXES. The Company agrees that the shares
of the Common Stock, or any other capital stock, represented by each and every
certificate for Warrant Shares delivered on the exercise of this Warrant shall,
at the time of such delivery, be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive rights or rights of first refusal,
and the Company will take all such actions as may be necessary to assure that
the par value or stated value, if any, per share of the Common Stock is at all
times equal to or
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<PAGE> 4
less than the then Per Share Warrant Price. The Company further covenants and
agrees that it will pay, when due and payable, any and all Federal and state
stamp, original issue or similar taxes which may be payable in respect of the
issue of any Warrant Share or certificate therefor.
5. TRANSFER RESTRICTIONS. This Warrant may only be sold,
transferred or assigned by the Holder only to the extent to which, and at such
times as it is, exercisable pursuant to Section 1 above (subject to compliance
with the provisions of the Securities Act of 1933, as amended) and is so
transferable only upon the books of the Company which it shall cause to be
maintained for this purpose. In the event this Warrant is transferred in part by
the Holder, the Company shall issue a new Warrant to the Holder covering the
Warrant Shares which have not been so transferred and setting forth the
proportionate part of the Aggregate Warrant Price applicable to the Warrant
Shares. The Company shall permit any Holder of a Warrant or his duly authorized
attorney, upon written request during ordinary business hours, to inspect and
copy or make extracts from its books showing the registered holders of Warrants.
All Warrants issued upon the transfer or assignment of this Warrant will be
dated the same date as this Warrant, and all rights of the Holder thereof shall
be identical to those of the Holder set forth herein and in the Purchase
Agreement, to the extent applicable.
6. LOSS, ETC., OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new Warrant of
like date, tenor and denomination.
7. WARRANT HOLDER NOT SHAREHOLDER. Except as otherwise
provided herein, this Warrant does not confer upon the Holder any right to vote
or to consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
8. INFORMATION TO HOLDER. The Company agrees that it shall
deliver to the Holder promptly after their becoming available copies of all
financial statements, reports and proxy statements which the Company shall have
sent to its stockholders generally.
9. NOTICES. All notices and other communications required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally, or sent by recognized overnight
courier or by certified mail, return receipt requested, postage paid, to the
parties hereto as follows:
(a) if to the Company at 50 Spring Street, Ramsey,
New Jersey 07446 Attn.: Chief Financial Officer or such other address as the
Company has designated in writing to the Holder, with a copy to McDermott, Will
& Emery, 50 Rockefeller Plaza, New York, New York 10020 Attn.: Cheryl V. Reicin,
Esq. or
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<PAGE> 5
(b) if to the Holder at D & S Capital, LLC, c/o
Joseph Mazzella, Esq., Lane Altman & Owens, LLP, 101 Federal Street, Boston,
Massachusetts 02110, or such other address as the Holder has designated in
writing to the Company according to the notice provisions hereunder.
10. HEADINGS. The headings of this Warrant have been inserted
as a matter of convenience and shall not affect the construction hereof.
11. APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the law of the State of New York without giving
effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, Bogen Communications International, Inc., has
caused this Warrant to be signed by its President and its corporate seal to be
hereunto affixed and attested by its Chief Financial Officer and Assistant
Secretary as of the 26th day of November, 1997.
BOGEN COMMUNICATIONS
INTERNATIONAL, INC.
By: /s/ Yoav M. Cohen
---------------------------------------------------
Yoav M. Cohen, Chief Financial Officer, Senior Vice
President - Business Development and Finance
ATTEST:
/s/ Francis J. Elenio
- ---------------------------
Francis J. Elenio
Assistant Secretary
[Corporate Seal]
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<PAGE> 6
ASSIGNMENT
FOR VALUE RECEIVED _________________ hereby sells, assigns and
transfers _______________________ unto the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_______________________________, attorney, to transfer said Warrant on the books
of Bogen Communications International, Inc.
Dated: _____________________________
Signature: _________________________
Address:_________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________ hereby assigns and
transfers unto _______________________ the right to purchase _________________
shares of the Common Stock of ___________________________ covered by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced thereby, and does irrevocably constitute and appoint
_______________________________, attorney, to transfer that part of said Warrant
on the books of Bogen Communications International, Inc.
Dated: _____________________________
Signature: _________________________
Address:_________________________
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<PAGE> 7
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant pursuant to
Section 1)
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant for, and to purchase
thereunder ___________________________________, shares of Common Stock, as
provided for in Section l, and tenders herewith payment of the purchase price in
full in the form of cash or a certified or official bank check in the amount of
$___________.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name __________________________________________________
(Please Print Name, Address and Social Security No.)
Address ______________________________________________
Social _______________________________________________
Security Number
Signature ____________________________________________
NOTE: The above signature should correspond
exactly with the name on the first page of
this Warrant or with the name of the assignee
appearing in the assignment form below.
Date _________________________________________________
And if said number of shares shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned for the balance remaining of the shares purchasable
thereunder.
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<PAGE> 1
Exhibit 99.1
CONTACT: Yoav M. Cohen, CFO
(201) 934-8500
Yoav Stern, Co-Chairman
(415) 956-9949
FOR IMMEDIATE RELEASE
BOGEN COMMUNICATIONS INTERNATIONAL PURCHASES GEOTEK COMMUNICATIONS'
64% STAKE IN BOGEN FOR $18.5 MILLION IN CASH
JONATHAN GUSS and MICHAEL P. FLEISCHER, NAMED CEO and PRESIDENT, RESPECTIVELY
FOUR NEW MEMBERS NAMED to BOARD OF DIRECTORS;
YOAV STERN and JEFFREY SCHWARZ NAMED CO-CHAIRMEN
RAMSEY, NEW JERSEY -- November 26, 1997 -- Bogen Communications International,
Inc. (AMEX: BGN) today announced that it has purchased approximately 3.7
million shares of its own common stock and 200,000 common stock purchase
warrants from Geotek Communications, Inc. (NASDAQ: GOTK) for $18.5 million, or
approximately $4.90 per share of common stock purchased. To finance this
transaction, Bogen arranged for a group of investors, including Metropolitan
Capital and Bedford Falls Investors LP (collectively "The Investors"), to
purchase 200,000 Convertible Preferred Shares of Bogen for $20 million in cash,
or $100.00 per share. The residual $1.5 million received by Bogen over and
above the $18.5 million will be used by the Company for general corporate
purposes.
Each newly issued Preferred Share is convertible into approximately 18.5 shares
of Bogen common stock. The Preferred Shares pay a dividend at the annual rate
of 9%; dividends may be paid in cash or in kind, at the Company's choice. The
Convertible Preferred Shares carry a term of 5 years. At the end of that period
the Preferred Shares will automatically convert into common stock. The
Preferred Shares may be redeemed by Bogen at any time prior to the expiration
of the term provided Bogen's common stock price closes at or above $8.10 for 20
consecutive trading days.
NEW CEO AND PRESIDENT
Concurrently, the Company announced that effective immediately, Jonathan Guss,
38, has been named Chief Executive Officer and Michael P. Fleischer, 41,
President. In addition, Yoav M. Cohen, VP-Finance and Chief Financial Officer,
was recently promoted to Senior VP-Finance and Business Development and CFO.
Mr. John Egidio, Bogen's acting President and CEO since July 1997 will be
leaving the Company to resume his role with Geotek.
A company owned solely by Messrs. Guss and Fleischer has also invested
$250,000 in Bogen in exchange for restricted common stock and warrants.
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<PAGE> 2
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Bogen Communications
November 26, 1997
The two new Bogen executives have been founders and sole principals of Active
Management Group, Inc., (AMG), a firm specializing in management of middle
market industrial companies. As AMG's President and CEO, Messrs. Guss and
Fleischer led firms in the metalworking and industrial services sectors,
achieving superior returns for investors. Additionally since 1994, Mr. Guss has
served on the Board of Directors of Alliant Techsystems, Inc., a Fortune
500-defense contractor. Together with Mr. Fleischer, who served as a director
until 1995, they led an effort that identified approximately $100 million in
profit improvements for Alliant.
Over the past 16 years, Jonathan Guss has served in an executive capacity or as
a consultant to industrial and financial services companies facing complex
strategic, sales, and marketing issues and has engineered growth of companies in
a variety of manufacturing and service businesses. Between 1981 and 1990, Mr.
Guss was a consultant with the Chicago and New York offices of Booz-Allen &
Hamilton, Inc., as part of the Strategy and Financial Services practices. Mr.
Guss received an MBA with Distinction from the Harvard Graduate School of
Business, and a Bachelor's Degree in Economics, Phi Beta Kappa, from Reed
College.
Michael P. Fleischer brings 12 years of senior level management experience
helping companies resolve complex operational issues. From 1984 to 1990, Mr.
Fleischer was a consultant with McKinsey & Company, Inc. and helped lead the
development of McKinsey's work in Operational Effectiveness and Information
Technology. He managed engagements for numerous industrial clients including
automobile engine manufacturers, jet engine makers and machine tool producers,
as well as operational improvement work for companies in the telecommunications
and financial services sectors. Mr. Fleischer received an MBA from Harvard
Business School and his undergraduate degree from Colgate University. Prior to
attending Harvard, he served in Washington D.C. as a Foreign Service Officer and
as an aide to the Under Secretary of State and did a tour of duty in Africa.
Earlier, Mr. Fleischer was a legislative assistant to a member of the U.S. House
of Representatives.
In a joint statement, Messrs. Fleischer and Guss commented, "We are joining
Bogen's team and investing in the Company personally because we believe that we
have identified a significant opportunity within a highly fragmented market
niche. By expanding upon Bogen's core competencies, we feel the Company will be
better positioned to implement an attractive growth strategy with inherent
accretive shareholder value."
BOARD RECONSTITUTED
The new Board of Directors of Bogen, comprised of seven members, will include
Mr. Jeffrey Schwarz, Managing Director of Metropolitan Capital and Bedford Falls
Investors LP. Mr. Schwarz and Mr. Yoav Stern, Managing Partner of Helix Capital
and a Member of Bogen's Executive Committee will serve as Co- Chairmen of the
Board.
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<PAGE> 3
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Bogen Communications
November 26, 1997
The board will also include:
- Messrs. Guss and Fleischer, in addition to their executive
capacities.
- Zivi R. Nedivi, who is the Founder, President & CEO of
Kellstrom Industries, Inc. (NASDAQ: KELL), a leader in the airborne
equipment segments of the international aviation services after-
market. Before founding Kellstrom in 1990, Mr. Nedivi held various
positions in commercial aviation enterprises. Earlier, he was an
advisor to the Israeli Air Industry on human engineering issues and a
fighter pilot with the Israeli Air Force.
- David Mitchell, a prior member of the Board and the Audit Committee,
and one other Board member to be designated by The Investors.
In a joint statement made by Messrs. Stern and Schwarz, they remarked, "Bogen
management and personnel have been leading the Company with very good results
since early 1996. However, a critical component of Bogen's future strategy for
growth entails an active acquisition program. By eliminating Bogen's status as a
subsidiary, the Company will eventually not be restricted in its ability to
consummate acquisitions using the pooling-of-interests accounting treatment.
Most importantly, we look forward to the new management, new shareholder group
and the public shareholders sharing the common objective of having the Company
focus on increasing shareholder value through the profitable growth of Bogen's
business. For these reasons we view this transaction as a positive event which
will appropriately position management to effectively implement the strategy."
Mr. Stern added, "On behalf of Bogen's Board, its shareholders and its
employees, we would like to thank the Geotek board representatives, most
especially Yaron Eitan, Geotek's Chairman & CEO, who is now stepping down as
Chairman of Bogen, for his wise counsel, and years of devoted service to Bogen."
Bogen Communications International, Inc., based in Ramsey, New Jersey, with a
subsidiary in Munich, Germany, develops, manufactures and markets
telecommunications peripherals and sound processing equipment. Bogen's products
are sold to commercial, industrial, professional and institutional customers in
North America and Europe.
Except for the historical information contained in this release, statements in
this release constitute forward-looking statements that are subject to various
risks and uncertainties. Certain factors may cause actual results to differ
materially from those contained in the forward looking statements, including
those risks detailed from time-to-time in the Company's reports on file at the
Securities and Exchange Commission.
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