Execution Copy
--------------
ASSET PURCHASE AGREEMENT
Dated December 10, 1998
among
SCITEX DIGITAL VIDEO, INC.
SCITEX DIGITAL VIDEO (EUROPE) LTD.
SCITEX DIGITAL VIDEO (ASIA PACIFIC), INC.
SCITEX DEVELOPMENT CORP.
SCITEX CORPORATION LTD.
and
ACCOM, INC.
TABLE OF CONTENTS
Page
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1 Agreement to Sell and Agreement to Purchase...........................................................1
1.1 Assets to be Conveyed......................................................................1
1.2 Excluded Assets............................................................................3
1.3 Assets of Seller's Affiliates..............................................................4
1.4 Further Assurances.........................................................................4
2. Consideration to be Paid by Buyer....................................................................4
2.1 Purchase Price for Acquisition Assets......................................................4
2.2 Severance Payments.........................................................................4
2.3 Additional Consideration...................................................................6
2.4 Specific Liabilities and Executory Liabilities Assumed by Buyer;
Indemnity for Post-Closing Liabilities Incurred by Buyer..............................7
2.5 Liabilities Not Assumed by Buyer...........................................................7
2.6 Allocation of Purchase Price...............................................................9
2.7 Use of Property by Buyer for Transition Period.............................................9
2.8 Revenue Payments..........................................................................10
3. Representations and Warranties of Seller and Parent.................................................11
3.1 Organization and Good Standing............................................................11
3.2 Authorization of Agreement; Capital Stock.................................................12
3.3 Ownership of Acquisition Assets...........................................................12
3.4 Financial Condition.......................................................................13
3.5 Property of Seller........................................................................14
3.6 Agreement Not in Breach of Other Instruments..............................................16
3.7 Labor and Employment Matters..............................................................16
3.8 Pension and Employee Benefit Plans........................................................17
3.9 Litigation and Compliance with Laws.......................................................17
3.10 Contracts and Other Instruments..........................................................19
3.11 Inventories..............................................................................20
3.12 Officers and Directors; Compensation of and Indebtedness to and
from Officers, Directors and Parents.................................................20
3.13 Powers of Attorney and Suretyships.......................................................20
3.14 Insurance................................................................................20
3.15 Customers................................................................................21
3.16 No Undisclosed Liabilities...............................................................21
3.17 Tax Matters..............................................................................21
3.18 Brokerage................................................................................22
3.19 Year 2000 Issues.........................................................................22
3.20 Accounts Receivable......................................................................22
3.21 Working Capital..........................................................................23
3.22 Knowledge................................................................................23
3.23 Investment Representations...............................................................23
4. Representations and Warranties of Buyer.............................................................24
4.1 Organization and Corporate Authority......................................................24
4.2 Agreement Not in Breach of Other Instruments..............................................24
4.3 Regulatory Approvals......................................................................24
4.4 Brokerage.................................................................................24
4.5 Valid Issue...............................................................................24
4.6 SEC Filings...............................................................................24
5. Closing.............................................................................................25
6. Certain Understandings and Agreements of the Parties................................................25
6.1 Condition to Transfer of Certain Contracts................................................25
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TABLE OF CONTENTS
Page
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6.2 Change of Name............................................................................25
6.3 Waiver of Compliance with Bulk Sales......................................................25
6.4 Covenant Not to Compete...................................................................25
6.5 Use of Name...............................................................................25
6.6 Parent and SDC Guarantee..................................................................26
6.7 Additional Insured........................................................................26
6.8 Access to Records for Tax Audits..........................................................26
6.9 Limitation on Certain Additional Indebtedness.............................................26
7. Closing Deliveries..................................................................................27
7.1 Seller's Deliveries.......................................................................27
7.2 Buyer's Deliveries........................................................................27
8. [Intentionally Omitted].............................................................................28
9. Indemnification; Survival of Representations and Warranties.........................................28
9.1 Indemnification/Survival of Representations and Warranties................................28
9.2 Indemnification Claims....................................................................30
9.3 Parent as Agent...........................................................................32
9.4 Nonexclusive Remedy.......................................................................33
9.5 Aid to Arbitration........................................................................33
9.6 Materiality...............................................................................34
10. [Intentionally Omitted]............................................................................34
11. Miscellaneous Provisions...........................................................................34
11.1 Construction.............................................................................34
11.2 Notices..................................................................................34
11.3 Assignment...............................................................................35
11.4 Amendments and Waivers...................................................................35
11.5 Remedies.................................................................................35
11.6 Attorneys' Fees..........................................................................35
11.7 Binding Nature of Agreement..............................................................36
11.8 Expenses.................................................................................36
11.9 Entire Agreement.........................................................................36
11.10 Severability............................................................................36
11.11 Counterparts............................................................................36
11.12 Section Headings........................................................................36
12. Submission to Jurisdiction; Agent for Service......................................................36
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Exhibits
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Exhibit A-1 Warrant for 250,000 shares of Common Stock
Exhibit A-2 Warrant for 750,000 shares of Common Stock
Exhibit B-1 Non-Negotiable Subordinated Promissory Note in the principal amount of $750,000
Exhibit B-2 Non-Negotiable Subordinated Promissory Note in the principal amount of
$1,315,000
Exhibit C-1 Noncompetition Agreement
Exhibit C-2 Investor Rights Agreement
Exhibit D Xxxx of Sale
Exhibit E-1 Seller Assignment and Assumption Agreement
Exhibit E-2-A Seller U.S. Patent Assignment
Exhibit E-2-B Parent U.S. Patent Assignment
Exhibit E-3-A Seller Foreign Patent Assignment
Exhibit E-3-B Parent Foreign Patent Assignment
Exhibit E-4-A Seller U.S. Patent Application Assignment
Exhibit E-4-B Parent U.S. Patent Application Assignment
Exhibit E-5-A Seller Foreign Patent Application Assignment
Exhibit E-5-B Parent Foreign Patent Application Assignment
Exhibit E-6-A Seller Registered Trademark and Trademark Application Assignment
Exhibit E-6-B Parent Registered Trademark and Trademark Application Assignment
Exhibit E-7-A Seller Unregistered and Foreign Trademark Assignment
Exhibit E-7-B Parent Unregistered and Foreign Trademark Assignment
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Schedules
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Schedule 1.1(a) Fixed Assets
Schedule 1.1(b) Intangible Personal Property
Schedule 1.1(c) Contracts, Leases, Sales Orders, Purchase Orders, Etc.
Schedule 1.1(d) Inventory
Schedule 1.1(f) Motor Vehicles and Other Rolling Stock
Schedule 1.1(g) Accounts Receivable
Schedule 1.1(h) Prepaid Items and Deposits
Schedule 1.1(i) Equity Ownership in Third Parties
Schedule 1.2(h) Excluded Logos and Taglines
Schedule 1.2(i) Other Excluded Assets
Schedule 1.3 Excluded Assets of Seller's Affiliates
Schedule 2.2(a) Transferred Employees
Schedule 2.2(b) Additional Non-Transferred Employee Severance Amount
Schedule 2.4(a) Trade Accounts Payable
Schedule 2.4(b) Other Assumed Liabilities
Schedule 2.5(e) Other Liabilities Not Assumed
Schedule 2.6 Purchase Price Allocation
Schedule 3.1 Subsidiaries, Etc. of Seller
Schedule 3.3 Ownership of Acquisition Assets
Schedule 3.4.3 Absence of Certain Changes
Schedule 3.4.4 Certain Accounting Items
Schedule 3.5.1 Real Property
Schedule 3.5.2 Tangible Personal Property
Schedule 3.5.3 Intangible Personal Property
Schedule 3.6 Breach
Schedule 3.7(a) Employee Plans and Agreements
Schedule 3.7(d) Severance Costs
Schedule 3.8 Pension and Employee Benefits
Schedule 3.9.1 Litigation
Schedule 3.9.2 Licenses, Permits and Authorizations
Schedule 3.10.1 Contracts and Other Instruments
Schedule 3.12.1 Officers and Directors
Schedule 3.12.2 Indebtedness to Insiders
Schedule 3.13 Powers of Attorney
Schedule 3.14 Insurance
Schedule 3.16 Undisclosed Liabilities
Schedule 3.17.4 Foreign Establishments
Schedule 3.19 Year 2000 Analysis
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of December 10, 1998 by and among Accom, Inc., a Delaware corporation
("Buyer"), Scitex Digital Video, Inc., a Massachusetts corporation ("Seller"),
Scitex Digital Video (Europe) Limited, a private limited company incorporated in
England and Wales ("SDVE"), Scitex Digital Video (Asia Pacific), Inc., a
California corporation ("SDVAP"), Scitex Development Corp., a Massachusetts
corporation ("SDC"), and Scitex Corporation Ltd., an Israel corporation (the
"Parent").
RECITALS
A. Seller is engaged in the business (the "Business") of developing,
manufacturing, marketing and selling digital video manipulation equipment and
non-linear video workstations for the video industry.
B. Seller owns all of the outstanding capital stock of SDVAP; SDC owns
all of the outstanding capital stock of Seller; and the Parent owns all of the
outstanding capital stock of SDC and SDVE.
C. Seller desires to sell to Buyer the Business, including certain of
the assets and liabilities of Seller, and Buyer desires to acquire the Business
and such assets and liabilities on the terms and conditions hereinafter set
forth.
D. Certain of the Acquisition Assets (as defined below) are held by
SDVAP, SDVE and the Parent and are to be transferred to the Buyer.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Agreement to Sell and Agreement to Purchase.
1.1 Assets to be Conveyed. On the Closing Date (as hereinafter
defined), Seller shall convey, transfer, assign, sell and deliver to Buyer, and
Buyer shall acquire, accept and purchase, all of the following assets,
properties and rights of Seller (hereinafter collectively referred to as the
"Acquisition Assets"):
(a) All of the computer equipment, video equipment,
cameras, test and measurement equipment, tooling and production features, test
fixtures, other equipment, furniture, fixtures and machinery owned or used by
Seller on the Closing Date (collectively, the "Fixed Assets"), whether or not
fully depreciated on the books and records of Seller, including, without
limitation, those assets set forth in Schedule 1.1(a) attached hereto;
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(b) All of Seller's right, title and interest in and
to (i) each patent and patent application, copyright, copyright application,
trademark, trademark application, service xxxx, service xxxx application, trade
name and trade name registration (in any such case, whether registered or to be
registered in the United States of America or elsewhere) applied for, issued to
or owned by Seller and (ii) all processes, inventions, trade secrets, trade
names, computer programs, software, software tools, formulae, know how and other
intangible personal property used by Seller in the Business (all of the
foregoing in this Section 1.1(b) being hereinafter referred to collectively as
the "Intangible Personal Property") including, without limitation those items
set forth in Schedule 1.1(b) attached hereto;
(c) Subject to Section 6.1 hereof, all of Seller's
right, title and interest in and to each real property lease, equipment or other
lease, license, contract, bid or proposal for contract, agreement, purchase or
sales order, indenture or commitment, warranty (express or implied) written or
oral, to which Seller is a party on the Closing Date or by which any of the
Acquisition Assets is then bound (collectively, the "Contracts"), including,
without limitation, those set forth on Schedule 1.1(c);
(d) All inventory of Seller used in the Business
which exists on the Closing Date whether or not located on Seller's property,
including without limitation, work-in-process, finished goods, demonstration
finished goods, rotation stock, work-in-process held at subcontractors, and
service parts (collectively, the "Inventory"), including without limitation, the
Inventory set forth on Schedule 1.1(d), which Inventory is subject to change
between the date hereof and the Closing Date in the ordinary course of Seller's
Business;
(e) All office supplies, safety equipment,
maintenance supplies and other similar items of Seller which exist on the
Closing Date, whether or not reflected in Seller's books and records;
(f) The motor vehicles and other rolling stock owned
by Seller on the Closing Date, including those which are listed in Schedule
1.1(f) attached hereto;
(g) All accounts receivable of Seller outstanding as
of the Closing Date, including without limitation, any of the accounts
receivable listed on Schedule 1.1(g) that are outstanding on the Closing Date;
(h) All prepaid items and other amounts of Seller
existing on the Closing Date which are specifically listed in Schedule 1.1(h)
and the security deposit with respect to the lease for the Grass Valley,
California facility;
(i) All capital stock, convertible securities,
partnership interests, participation interests and other equity ownership
interests in any corporation, entity or other third party, including without
limitation, the interests specifically listed in Schedule 1.1(i);
(j) The Business, together with all goodwill of the
Business, customer lists, sales brochures, computer software, books, records and
accounts,
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correspondence, production records, employment records and any confidential
information relating to or arising out of the Business;
(k) All of Seller's right, title and interest in and
to all federal, state and local licenses, permits and other governmental
authorizations relating to the Business, including without limitation those
listed in Schedule 3.9.2, to the extent the transfer thereof is permitted by
applicable law and governmental regulations; and
(l) Except as specifically provided in Section 1.2
hereof, all other assets and properties of Seller which exist on the Closing
Date, whether tangible or intangible, real or personal.
1.2 Excluded Assets. Notwithstanding Section 1.1 hereof,
Seller is not selling, and Buyer is not purchasing, pursuant to this Agreement,
any of the following (the "Excluded Assets"), all of which shall be retained by
Seller:
(a) Any cash of Seller;
(b) Seller's minute books, tax returns and other
corporate documents;
(c) Security deposits with respect to all real
property leases other than the lease for the Grass Valley, California facility;
(d) Any equity interest in SDVAP, SDVE and SDC;
(e) All Taxes withheld by Seller from its employees'
salaries and wages;
(f) All refunds from any federal, state or local
government or agency related to taxes paid by Seller with respect to taxable
periods (or portions thereof) prior to the Closing Date;
(g) Subject to the provisions of Section 6.7,
Seller's rights under all insurance policies naming Seller, SDC, SDVAP, SDVE or
the Parent as beneficiary;
(h) Subject to the provisions of Section 6.5, any
right, title or interest in the name "Scitex," or any trade names, trademarks,
identifying logos or service marks related thereto or employing the words
"Scitex" or any part or variation of any of the foregoing or any confusingly
similar trade names, trademark or logo, or any of the logos or taglines listed
on Schedule 1.2(h) used by Parent or its affiliates and also used by the Seller,
SDVAP or SDVE in connection with the Business;
(i) Those assets specifically set forth on Schedule
1.2(i); and
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(j) Intercompany receivables reflected on the books
of Seller, SDVAP, SDVE, SDC and Parent.
1.3 Assets of Seller's Affiliates. Notwithstanding the
provisions of Section 1.1, Acquisition Assets shall also include (a) any of the
items listed in Section 1.1 that are held by SDVE and SDVAP and (b) the
Intangible Personal Property of the Parent related to the Business, unless
listed on Schedule 1.3 or Schedule 1.2(h). The Parent, SDVE and SDVAP
acknowledge and agree that such items shall be transferred to Buyer at the
Closing and that they do not have any ownership or other interest in such items
following the Closing.
1.4 Further Assurances. From time to time after the Closing
(as hereinafter defined), Seller, SDVAP, SDVE, SDC and Parent will execute and
deliver to Buyer such instruments of sale, transfer, conveyance, assignment and
delivery, consents, assurances, powers of attorney and other instruments as may
be reasonably requested by Buyer in order to vest in Buyer all right, title and
interest of Seller in and to the Acquisition Assets and otherwise in order to
carry out the purpose and intent of this Agreement. From time to time after the
Closing, (i) upon Seller's request, Buyer will return to Seller any Excluded
Assets that are in the possession of Buyer or any of its Affiliates, and (ii)
during the period ending on the six-month anniversary of the Closing, Buyer will
use commercially reasonable efforts to inform Seller of its intention to destroy
any tax books and records relating to the conduct of the Business prior to the
Closing.
2. Consideration to be Paid by Buyer.
2.1 Purchase Price for Acquisition Assets. Subject to
adjustment as set forth in Section 2.8, the aggregate purchase price for the
Acquisition Assets and the Covenant Not to Compete (as hereinafter defined) (the
"Purchase Price") shall be (a) $7,550,000 plus (b) the Warrants described in
Section 2.3 plus (c) the Promissory Notes described in Section 2.3. Subject to
the provisions of Section 2.2, $7,550,000 of the Purchase Price shall be paid to
Seller by wire transfer of immediately available funds at the Closing to an
account designated by Seller.
2.2 Severance Payments.
(a) The employees of Seller who have accepted offers
of employment with Buyer prior to the date hereof for employment commencing
subsequent to the Closing Date (the "Transferred Employees") are set forth on
Schedule 2.2(a). Seller shall ensure that the employment of the Transferred
Employees by Seller shall cease on the Closing Date. The Transferred Employees
shall begin employment with Buyer effective as of the day following the Closing
Date. All of the employees (current or past) of Seller who have not been offered
employment by Buyer are referred to herein as "Non-Transferred Employees." All
of the employees of Seller who have been offered employment by Buyer as of the
Closing but who have not accepted such offer prior to the expiration thereof are
referred to herein as "Declining Employees." Buyer's offer of employment letters
to each
4
employee of Seller to whom Buyer is offering employment shall contain a
provision stating that if such employee's employment with Buyer is terminated by
Buyer within one (1) year of the Closing without cause then Buyer will pay to
such terminated employee the severance amount to which such employee would have
been entitled to on the Closing Date if he or she had been terminated without
cause under Seller's Severance Plan, a copy of which has been attached to
Schedule 3.8 ("Severance Plan").
(b) Without limiting the provisions of Section 2.5,
and subject to the succeeding sentence, Seller and Parent shall be liable for,
and shall promptly pay when due, all severance costs, termination payments, and
accrued or other liabilities to or with respect to any and all Non-Transferred
Employees (collectively "Non-Transferred Employee Severance Costs").
Notwithstanding the foregoing, Buyer shall be responsible for, and promptly
shall pay to Seller or Parent when requested to do so by Seller or Parent, or
reimburse Seller for, those Non-Transferred Employee Severance Costs above
$500,000 and listed on Schedule 2.2(b) (any such amounts greater than $500,000
and listed on Schedule 2.2(b) being the "Additional Non-Transferred Employee
Severance Amount"), excluding any amounts payable under Seller's employment
agreements with the Chief Executive Officer and the Chief Financial Officer
(which shall be the sole responsibility of Seller and Parent and shall not be
counted towards the $500,000 threshold amount referenced above). Buyer shall not
be responsible for any Non-Transferred Employee Severance Costs not listed on
Schedule 2.2(b), such amounts to be liabilities not assumed by Buyer pursuant to
Section 2.5. Any amounts owed to any employees as accrued vacation and/or under
Seller's Flexible Time Off benefit program (the "FTO Program") shall not be
included in Non-Transferred Employee Severance Costs or the Additional
Non-Transferred Employee Severance Amount.
(c) The obligations of Buyer under this Section 2.2
are conditioned specifically upon the accuracy in all material respects of the
representations and warranties of Seller and Parent set forth in Section 3.7(d)
that affect the magnitude of the Non-Transferred Employee Severance Costs,
Declining Employee Severance Costs or the Transferred Employee Severance Costs
(as defined below) or Buyer's liability with respect to such costs. Subject to
Section 2.2(f), in no event is Buyer assuming any obligation to pay any
severance costs, termination payments or accrued or other liabilities to any
Transferred Employee or with respect to any Transferred Employee's employment or
cessation of employment with Seller ("Transferred Employee Severance Costs"),
nor any Additional Non-Transferred Employee Severance Amount related to payments
made to any employee in excess of the standard payments under the
reduction-in-force policy of Seller described in Section 3.7(d). In addition, in
no event is Buyer assuming any obligation of Seller to pay any costs or other
liabilities owed to any employee (including former employee) of Seller under the
Worker Adjustment and Retraining Notification Act (the "WARN Act"). Subject to
Section 2.2(e), if any Transferred Employee (or group thereof) makes a claim
against Buyer for any Transferred Employee Severance Costs, or if any employee
(including former employee) of Seller makes a claim against Buyer for any
liabilities or obligations under the WARN Act, Buyer shall have the right to
tender the defense of such claim to Seller or Parent and Seller or Parent shall
have the obligation to defend, indemnify and hold harmless Buyer against such
5
Transferred Employee Severance Costs or liabilities or obligations under the
WARN Act and all costs reasonably incurred by Buyer in connection with such
claim. Any Transferred Employee Severance Costs or liabilities or obligations
due under the WARN Act shall not apply towards the threshold or maximum
indemnification amounts set forth in Section 9.1.5.
(d) Seller shall be responsible for any payments or
obligations under the FTO Program. Seller also shall be responsible for paying
any unpaid salary, sales commissions and expense reimbursements due Seller's
employees with respect to the period on or prior to the Closing Date. If any
Non-Transferred Employee, Declining Employee or Transferred Employee (or group
thereof) makes a claim against Buyer for any payments or obligations under the
FTO Program or any such other payments described in the preceding sentence,
Buyer shall have the right to tender the defense of such claim to Seller or
Parent and Seller or Parent shall have the obligation to defend, indemnify and
hold harmless Buyer against such amounts and all costs reasonably incurred by
Buyer in connection with such claim. Any such amounts shall not apply towards
the threshold or maximum indemnification amounts set forth in Section 9.1.5.
(e) Without limiting the provisions of Section 2.5,
Seller and Parent shall be liable for, and shall promptly pay when due, all
severance costs, termination payments, and accrued or other liabilities to or
with respect to any and all Declining Employees.
(f) Notwithstanding the provisions of Section 2.2(c),
Buyer shall assume and be responsible for any Transferred Employee Severance
Costs with respect to any Transferred Employee whose employment is terminated by
Buyer within one (1) year of the Closing Date without cause; provided, however,
that any Transferred Employee Severance Costs for which Buyer may become liable
under this Section 2.2(f) shall be limited to amounts that would have been due
as severance payments under Seller's Severance Plan to employees terminated
without cause, but nothing over such amounts, except for costs reasonably
incurred by Seller in connection with any claim for such amounts.
(g) Any amounts paid or payable by Buyer under this
Section 2.2 shall be treated by the parties as additions to the Purchase Price
for tax purposes.
2.3 Additional Consideration.
(a) Warrants. As additional consideration for the
acquisition of the Acquisition Assets, at the Closing, Buyer shall issue to
Seller warrants (the "Warrants"), in the form of Exhibits A-1 and A-2 hereto, to
purchase (a) 250,000 shares of the Common Stock, par value $0.001 per share, of
Buyer ("Common Stock"), at an exercise price of $1.00 per share and (b) 750,000
shares of Common Stock at an exercise price of $3.00 per share. The Warrants
shall be exercisable for a period of ten (10) years from the date of issuance.
The Warrants shall be redeemable by Buyer for a price of $0.01 per share under
certain circumstances as described in the Warrants.
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(b) Promissory Note. As additional consideration for
the acquisition of the Acquisition Assets, at the Closing, Buyer shall issue to
Seller two promissory notes (collectively, the "Promissory Notes") as follows:
(i) a promissory note in the principal amount of $750,000 in the form of Exhibit
B-1 hereto (the "$750K Promissory Note"), and (ii) a promissory note in the
principal amount of $1,315,000 in the form of Exhibit B-2 hereto.
2.4 Specific Liabilities and Executory Liabilities Assumed by
Buyer; Indemnity for Post-Closing Liabilities Incurred by Buyer. As further
consideration for consummation of the transactions contemplated hereby, subject
to Section 2.5 hereof, at the Closing Buyer shall assume and agree to thereafter
pay when due and discharge and indemnify Seller and hold Seller harmless with
respect to the following liabilities:
(a) The trade accounts payable set forth on Schedule
2.4(a) and any other trade accounts payable of Seller outstanding (whether
recorded or not) on the Closing Date that have been incurred in the ordinary
course of Seller's Business prior to the Closing Date (up to a maximum amount of
$50,000 above the amount of trade payables set forth on Schedule 2.4(a));
(b) Specific items included on Schedule 2.4(b); and
(c) The executory liabilities and obligations of
Seller to be performed after the Closing Date under each Contract.
Buyer shall further indemnify and hold harmless Seller, Parent, SDVE, SDVAP and
SDC with respect to any liability or obligation resulting from the operation by
Buyer of the Business after the Closing Date; provided, however, that Buyer
shall have no obligation to Seller with respect to any such obligation which
Seller, Parent, SDVE, SDVAP or SDC is otherwise obligated to indemnify Buyer
hereunder.
2.5 Liabilities Not Assumed by Buyer. Buyer shall not be
deemed by anything contained in this Agreement to have assumed and Seller and
Parent (jointly and severally) hereby agree to fully pay and perform in a prompt
and timely manner and to indemnify Buyer and hold Buyer harmless with respect
to:
(a) Any liabilities or obligations in respect of
Environmental Damages (as hereinafter defined in Section 3.9.3);
(b) Except for the trade accounts payable
specifically assumed pursuant to Section 2.4(a), any accounts payable or notes
payable of Seller, whether incurred for the purchase of any Acquisition Assets
or otherwise and any indebtedness of Seller, including any principal, interest
or other amount owing in respect of any such indebtedness, including without
limitation, any intercompany debt owed by Seller, SDC, SDVE or SDVAP to Parent
or any affiliate of Seller or Parent;
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(c) Except as set forth in Section 2.7, any liability
or obligation of Seller under the following leases: (i) all leases covering
offices in the United States (other than the Grass Valley, California lease),
including without limitation, the lease covering Seller's Redwood City,
California building (except to the extent Buyer has negotiated with the landlord
of such facility to assume obligations with respect thereto for occupancy after
the Closing Date), (ii) Seller's lease covering property in Hong Kong, (iii)
Seller's leases covering properties in Aldermaston, Great Britain, (iv) Seller's
leases covering Seller's Portman House properties at 00 Xxxxxxx Xxxx and 00
Xxxxxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxxx, and (v) Seller's leases covering its
Jericho, New York, Mt. Prospect, Illinois, and Los Angeles, California sales
offices. With respect to the Grass Valley, California lease of Seller, Buyer
shall assume and be liable for obligations under such lease with respect to
periods following the Closing Date, but shall not be responsible and does not
assume any liabilities, obligations or payments with respect to any period on or
prior to the Closing Date (except as expressly set forth in Section 2.7);
(d) Any accrued expenses of Seller not specifically
assumed pursuant to Section 2.4;
(e) Any of the items set forth on Schedule 2.5(e);
(f) Except as set forth in Section 11.8, any
liability of Seller for any foreign, federal, state or local income, franchise
or payroll taxes, state or local sales, use or property taxes or other taxes of
any kind or description;
(g) Any accrued or other liability to or with respect
to any employee relating to service prior to the Closing and any accrued or
other liability under any employment agreement or any other plan or agreement of
the type described in Section 3.7(a)(i), (ii) or (iii) with respect to any of
Seller's employees, past or present, except as specifically provided in Section
2.2 or Section 2.4;
(h) Any liability to any consultant or temporary
employee, whether or not pursuant to any agreement, with respect to service
prior to the Closing;
(i) Any liability or obligation (contingent or
otherwise) of Seller arising out of any pending or known threatened litigation,
whether or not set forth in Schedule 3.9.1, or arising out of any claim or
dispute under any Contract presently or heretofore in effect;
(j) Any liability or obligation of Seller to GSS
Array in connection with the dispute between Seller and GSS Array regarding
breach of contract allegations related to purchases of components and materials,
and any other matter related thereto;
(k) Any liability or obligation arising out of
defects in, or damages to persons or property arising from, products sold or
services provided or which were to be provided (but only for any such liability
or obligation arising solely out of the fact that such services were not timely
provided when due) by the Seller prior to the Closing Date;
8
(l) Any liability or obligation of Seller under any
Contract which are required to be paid or performed prior to the Closing Date;
(m) Any liability or obligation of Seller under any
contract or agreement not specifically assumed by Buyer pursuant to this
Agreement;
(n) Any negative cash balances, book overdrafts, held
checks or similar liabilities of Seller; and
(o) Any liabilities or obligations of Seller of any
nature whatsoever, whether or not known by Seller or Parent on the Closing Date,
unless specifically assumed by Buyer under Section 2.4.
2.6 Allocation of Purchase Price. The Purchase Price, the
liabilities assumed by Buyer pursuant to Section 2.4, and any amounts payable by
Buyer pursuant to Sections 2.2 and 2.8, shall be allocated among the Acquisition
Assets and the covenant not to compete in accordance with Schedule 2.6. The
Seller and Buyer shall jointly complete and separately file Form 8594 with their
respective federal income tax returns for the tax year in which the Closing Date
occurs in accordance with such allocation, and neither Buyer nor Seller shall
take a position on any income, transfer or gains tax return, before any
governmental agency charged with the collection of any such tax or in any
judicial proceeding that is in any manner inconsistent with the terms of any
such allocation without written consent of the other in each instance.
2.7 Use of Property by Buyer for Transition Period. During a
limited transition period following the Closing Date (as set forth below),
Seller shall permit Buyer to occupy and to operate the Business at the
facilities and locations set forth below. Seller shall take such steps as are
necessary and shall endeavor to make all necessary arrangements with landlords
to facilitate such occupancy. Buyer shall reimburse Seller for all actual
out-of-pocket rental and utility payments with respect to such facilities and
locations during such period. The transition period referred to above shall be
(a) thirty (30) days with respect to all regional offices of Seller in the
United States (other than the Grass Valley, California facility); (b) sixty (60)
days with respect to Seller's Hong Kong facility; and (c) sixty (60) days with
respect to Seller's Aldermaston, Great Britain facilities. Buyer has made
arrangements with the landlord of Seller's headquarters facility in Redwood
City, California to remain on the premises for a transition period. If the lease
payments due for the month of December 1998 under the Redwood City, California
and/or the Grass Valley, California facilities have not been paid as of the
Closing Date, then, if permitted by the landlord, such payments (but no late
fees) will be made by Buyer to the respective landlords and Buyer shall be
entitled to deduct from the cash portion of the Purchase Price to be paid at
Closing to Seller the pro rata portion of such payments for the period from
December 1, 1998 through the Closing Date.
9
2.8 Revenue Payments. In consideration for the purchase by
Buyer hereunder of all rights arising under certain bids, Seller shall be
entitled to receive from Buyer the following payments calculated in accordance
with this Section 2.8:
(a) For a period of five years from the Closing Date,
Buyer shall pay to Seller a percentage of the gross revenues of Buyer arising
from the following contracts, a copy of which shall be delivered to Buyer at
Closing: a revised bid, dated November 16, 1998, on Abekas products (including
Stratospheres with related software, 8150 switchers and 5100 DVEs) with Nvisage
as the United Kingdom contractor (collectively, the "Bluebird Contracts"). The
amounts payable under this Section 2.8 shall be calculated as set forth herein.
The amount payable by Buyer to Seller shall be (i) one percent (1%) of gross
revenues and (ii) a percentage of Gross Margin (as defined below) calculated as
follows (collectively, the "Revenue Payments"): (y) eight percent (8%) of
aggregate Gross Margin dollar amounts if the Gross Margin percentage is between
twenty-five percent (25%) and thirty-five percent (35%), inclusive, or (z)
twelve percent (12%) of aggregate Gross Margin dollar amounts if the Gross
Margin percentage is greater than thirty-five percent (35%). No Revenue Payments
based upon Gross Margin shall be due under a Bluebird Contract if the Gross
Margin percentage is below twenty-five percent (25%).
(b) For purposes of Section 2.8, "Gross Margin"
percentage shall be calculated by dividing (i) Gross Margin by (ii) net revenues
from products sold (net of returns and discounts) in accordance with U.S.
generally accepted accounting principles ("GAAP"), where Gross Margin is equal
to net revenues from products sold minus cost of goods sold, and where cost of
goods sold is deemed equal to 115% of the standard cost of materials purchased
with respect to such goods sold, and the gross revenues are calculated in
accordance with GAAP consistently applied by Buyer. The Gross Margin dollar
amount shall be the amount of net revenues from products sold minus the cost of
goods sold (as calculated above).
(c) The determination as to whether any Revenue
Payments are due shall be made on a biannual basis during the five-year period
and each biannual period shall be considered on a stand-alone basis for purposes
of the calculations hereunder. Within forty-five (45) days after the end of each
biannual period during the five-year period, Buyer shall prepare and deliver to
Seller a statement showing the calculation of the amount of Revenue Payments
arising during such previous biannual period. Buyer shall pay to Seller such
amount payable pursuant to Section 2.8(a), in immediately available funds, to an
account designated by Seller by written notice to Buyer not less than three days
before such payment is due. Buyer shall permit Seller and its representatives
reasonable access to the records of Buyer at all times during the sixty (60)
calendar days following Buyer's delivery of such statement to Seller and to
enable Seller to review and evaluate the bases for Buyer's calculation of the
Revenue Payments for such period, during regular business hours and upon
reasonable notice, and Seller shall have the right, at its own expense, to make
copies of any such records; provided, however, that any such access shall be had
in such a manner so as not to unreasonably interfere with the normal conduct of
Buyer's business; and provided, further, that Seller shall hold any such
information of Buyer in confidence. Seller may dispute the
10
items shown on such statement; provided, however, that Seller shall have
notified Buyer in writing of each disputed item, specifying the amount thereof
and setting forth in reasonable detail the basis for such dispute, within sixty
(60) calendar days of Buyer's delivery of such statement to Seller. In the event
of such a dispute, Buyer and Seller shall attempt in good faith to settle the
dispute within twenty-one (21) days. If no such agreement can be reached, then
the dispute shall be settled in accordance with the provisions of Section
9.2.3(b) of this Agreement without giving effect to the second clause of the
penultimate sentence of such section. Any payments due as a result of a
resolution of such dispute shall be due and payable in accordance with the
provisions of this section within five (5) days of final resolution of such
dispute.
(d) Buyer shall have the right to offset any Revenue
Payments due to Seller or Parent hereunder against any amounts due to Buyer (or
any Buyer Indemnitee, as defined in Section 9.1.1) from Seller, SDVAP, SDVE, SDC
or Seller under this Agreement, including without limitation, indemnification
obligations. Such offsets shall be subject to the maximum indemnification caps
set forth in Section 9.1.5. Notwithstanding the foregoing, Buyer may not
exercise its offset rights under this Section 2.8(d) against any indemnification
obligations unless and until Buyer has made a bona fide indemnification claim
pursuant to the procedures described in Section 9.2 of this Agreement and, if
Seller has disputed such claim, such claim has been submitted for resolution
under Section 9.2.3 of this Agreement.
(e) Any amounts paid or payable by Buyer under this
Section 2.8 shall be treated as additions to the Purchase Price for tax
purposes.
3. Representations and Warranties of Seller and Parent. Seller, SDVE,
SDVAP, SDC and Parent jointly and severally represent and warrant to Buyer as
set forth below in this Section 3. In addition, SDVE, SDVAP and Parent shall be
deemed to be making the representations and warranties under this Section 3 as
"Seller" with respect to any assets, liabilities or other matters which are
owned, held by or affect any of such parties. The representations and warranties
in this Section 3 are subject to the exceptions set forth on the schedules
hereto delivered by Seller and Parent to Buyer (the "Seller Disclosure
Schedule").
3.1 Organization and Good Standing. Seller is duly organized,
validly existing and in good standing under the laws of the State of
Massachusetts, with full corporate power to carry on the Business as it is now
and has since its organization been conducted and to own, lease or operate the
Acquisition Assets. There is no other jurisdiction in which the nature of the
Business or the character of the Seller's properties makes qualification to do
business in such jurisdiction necessary, except as otherwise would not have a
Material Adverse Effect. Except as set forth on Schedule 3.1, Seller has no
subsidiary and does not own any capital stock of or other equity interest in any
corporation, partnership or other entity. Parent is duly organized, validly
existing and in good standing under the laws of Israel. SDC is duly organized,
validly existing and in good standing under the laws of Massachusetts. SDVE is
duly organized, validly existing and in good standing under the laws of the
United Kingdom. SDVAP is duly organized, validly existing and in good standing
under the laws of California. Each of SDVE and SDVAP have full corporate power
11
to carry on the Business as it is now and has since its organization been
conducted and to own, lease or operate the Acquisition Assets it is transferring
to Buyer.
3.2 Authorization of Agreement; Capital Stock. Seller, SDVE,
SDVAP, SDC and Parent have all requisite power and authority to enter into this
Agreement and all other agreements and instruments to be executed by them in
connection herewith and to consummate the transactions contemplated hereby and
thereby. This Agreement and all other agreements and instruments to be executed
by Seller, SDVE, SDVAP, SDC or Parent in connection herewith have been (or upon
execution will have been) duly executed and delivered by Seller, SDVE, SDVAP,
SDC or Parent, as the case may be, have been effectively authorized by all
necessary action, corporate or otherwise, and constitute (or upon execution will
constitute) legal, valid and binding obligations of Seller, SDVE, SDVAP, SDC and
Parent, enforceable against Seller, SDVE, SDVAP, SDC and Parent in accordance
with their respective terms. SDC owns all of the outstanding capital stock of
Seller free and clear of any liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances, options or claims of any kind or
nature whatsoever (collectively, "Liens"), except for Permitted Liens (as
defined below) and there are no outstanding subscriptions, options, rights,
warrants, convertible securities or other agreements or commitments obligating
Seller to issue any additional shares of capital stock. As used herein,
"Permitted Liens" means (i) any statutory Lien arising in the ordinary course of
business by operation of law with respect to a liability that is not yet due or
delinquent and (ii) any minor imperfection of title or similar Lien which
individually or in the aggregate with other such Liens does not materially
impair the value of the property or asset subject to such Lien or the use of
such property or asset in the conduct of the Business.
3.3 Ownership of Acquisition Assets. Except as set forth on
Schedule 3.3, Seller is the lawful owner of or, in the case of leased assets,
has the right to use and transfer to Buyer, each of the Acquisition Assets, and
the Acquisition Assets are free and clear of all Liens, except for Permitted
Liens. The delivery to Buyer of the instruments of transfer of ownership
contemplated by this Agreement will vest good and marketable title to the
Acquisition Assets in Buyer, free and clear of all Liens, except for Permitted
Liens. The Acquisitions Assets include all assets, rights and interests used in
the Business other than the Excluded Assets and other than assets, rights and
interests which Seller has the right to use under the Contracts, and which Buyer
shall have the right to use after the Closing Date pursuant to the Contracts.
3.4 Financial Condition.
3.4.1 Financial Statements. Seller has furnished to
Buyer: (a) its audited financial statements at and for the years ended December
31, 1995, 1996 and 1997 consisting of balance sheets and the related statements
of operations, statements of cash flows and statements of stockholders' equity
(collectively, the "Annual Financial Statements"); and (b) unaudited balance
sheets and statements of operations at and for the nine-month period ended
September 30, 1998 (the "Interim Financial Statements"). The
12
Annual Financial Statements and Interim Financial Statements are hereinafter
referred to collectively as the "Financial Statements."
3.4.2 Accounting Standards. The Financial Statements:
(i) have been prepared in accordance with the books and records of Seller; (ii)
have been prepared in accordance with GAAP consistently applied throughout the
periods covered; (iii) reflect and provide adequate reserves and disclosures in
respect of all liabilities of Seller, including all contingent liabilities, as
of their respective dates to the extent required by GAAP; and (iv) present
fairly the financial position and results of operations of Seller at and for the
fiscal periods indicated therein.
3.4.3 Absence of Certain Changes. Except as set forth
on Schedule 3.4.3, since September 30, 1998 there has not been:
(i) any sale, distribution, transfer or
subjection to any Lien of any of Seller's assets, except sales of inventory in
the ordinary and usual course of business;
(ii) any increase in the salary or other
compensation payable or to become payable to any officer, director or employee,
or the declaration, payment, commitment or obligation of any kind for the
payment of a bonus or other additional salary, compensation or benefit;
(iii) any transaction by Seller not in the
ordinary and usual course of business;
(iv) any Material Adverse Effect (as defined
below in this Section 3.4.3);
(v) any damage, destruction or loss, whether
or not covered by insurance, which has a Material Adverse Effect;
(vi) any alteration in the manner in which
Seller keeps its books, accounts or records or in the accounting practices
therein reflected, including the recognition and computation of accrued
expenses;
(vii) the incurrence of any indebtedness for
borrowed money or any commitment to borrow money or any guaranty, direct or
indirect, of indebtedness of others, or any prepayment of long-term debt, except
for borrowings in the ordinary course of business under any revolving credit
facility with Seller's bank lender consistent in amounts with those reflected in
the Financial Statements for comparable periods;
(viii) a termination, or a threat of
termination known to Seller, or material modification of any material Contract
or the relationship of Seller with any material customer or supplier or the
occurrence of any material adverse event affecting any product or process used
by or in the Business;
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(ix) except as provided elsewhere herein, any
acquisitions or leases of or commitments to acquire or lease any realty, or any
item of personal property in excess of $35,000 in the aggregate, other than
inventory in the ordinary course of business; or
(x) any change in the operations, business or
manner of conducting the Business, other than changes in the ordinary and usual
course of business consistent with prior practice, none of which, individually
or in the aggregate, has had or is expected to have a Material Adverse Effect.
As used in this Agreement, "Material Adverse Effect" means any change
in or effect on the business of Seller that is or is reasonably likely to be
adverse to the business, operations, properties, condition (financial or
otherwise), assets or liabilities of Seller and which will or is reasonably
likely to result in costs, expenses or other Losses (as defined in Section 9.1
below) of more than $150,000 in the aggregate.
3.4.4 Schedules of Certain Accounting Items.
(a) Schedule 3.4.4 sets forth the following
aggregate amounts as of September 30, 1998 as reflected in the Interim Financial
Statements, each of which has been determined from the books and records of
Seller in accordance with GAAP applied consistently with the Financial
Statements:
(i) The amount of the accounts
receivable and reserves in respect thereof;
(ii) The amount of the prepaid items
and deposits;
(iii) The amount of the accounts
payable;
(iv) The amount of the accrued
expenses of Seller; and
(v) The amount of the "other current
liabilities" on Seller's balance sheet and a reasonably detailed itemization
thereof.
(b) The trade accounts payable of Seller to
be assumed by Buyer pursuant to Section 2.4(a) have been incurred by Seller in
the ordinary course of the Business. The amount of the trade accounts payable of
Seller to be assumed by Buyer (whether recorded or not) does not exceed
$1,584,891.
3.5 Property of Seller.
3.5.1 Real Property.
(a) Except for the real property and
buildings (collectively, the "Real Property") subject to the leases set forth on
Schedule 3.5.1 or subject to the leases
14
set forth in Section 2.5(c) hereof, there is no parcel of real property,
building or other improvement owned or leased by Seller or used in the Business.
(b) All of the buildings, fixtures and other
improvements located on the Real Property are in good operating condition and
repair, subject to normal wear and tear, and the operation thereof as presently
conducted is not in violation of any applicable building code, zoning ordinance
or other law or regulation.
3.5.2 Tangible Personal Property. There is listed in
Schedule 1.1(a) or Schedule 1.1(f) each item of tangible personal property
(other than Inventory) owned by Seller or in the possession of Seller which is
to be transferred to Buyer pursuant hereto having on the date hereof a
depreciated book value in excess of $5,000; and (ii) an identification of the
owner of, and any agreement relating to the use of, each item of tangible
personal property the rights to which are to be transferred to Buyer pursuant
hereto under leases or other similar agreements included in the Contracts.
Except as otherwise indicated on such Schedule 3.5.2, Seller owns all of the
tangible personal property used in the Business free and clear of all Liens,
except for Permitted Liens, and all such property will be transferred to Buyer
at the Closing free and clear of all Liens, except for Permitted Liens. Each
item of such tangible personal property is located on the Real Property and is
in good operating condition and repair subject to normal wear and tear which is
not material either individually or in the aggregate. Seller has performed
routine maintenance on all of the Fixed Assets in the ordinary course of
business and no deferral of such routine maintenance on the Fixed Assets has
occurred during the last three years prior to the date hereof.
3.5.3 Intangible Personal Property. There is listed
in Schedule 1.1(b), (i) an identification of each item of Intangible Personal
Property used by Seller in the conduct of the Business which is a registered
property of the owner of such Intangible Personal Property and (ii) a true and
complete list of all licenses or similar agreements or arrangements to which
Seller is a party either as licensee or licensor for each such item of
Intangible Personal Property. Seller or Parent owns all of such Intangible
Personal Property free and clear of all Liens, and, except as set forth in
Section 1.2, all such Intangible Personal Property will be transferred to Buyer
at the Closing free and clear of all Liens.
(a) Except as set forth on Schedule 3.5.3,
there have not been any claims, actions or other judicial or adversary
proceedings involving Seller or Parent concerning any of the Intangible Personal
Property, nor, to the best knowledge of Seller and Parent, is any such claim,
action or proceeding threatened;
(b) Seller has the right and authority to use
all items of Intangible Personal Property (including all trade names and any
variations thereof) in connection with the conduct of the Business in the manner
and in the jurisdictions presently conducted and to convey such right and
authority to Buyer, and such use does not conflict with, infringe upon or
violate any patent, copyright, trademark, trade secret, trade name or other
right of any other person, firm or corporation;
15
(c) Except as set forth on Schedule 3.5.3,
there are no outstanding, nor, to the best knowledge of Seller and Parent, are
there any threatened, disputes or disagreements with respect to any licenses or
similar agreements or arrangements included in the Intangible Personal Property;
and
(d) The conduct of the Business (including
the use by Seller of any trade names or any variations thereof) does not
conflict with any patent, copyright trademark, trade secret, trade name or other
similar rights of others.
3.6 Agreement Not in Breach of Other Instruments. Except as
set forth on Schedule 3.6, the execution, delivery and performance of this
Agreement by Seller and Parent and the consummation of the transactions
contemplated hereby will not result in a breach of any of the terms and
provisions of, or constitute a default under, or conflict with, any Contract or
any other material agreement, indenture or other instrument to which Seller or
Parent is a party or by which it is bound, the Articles of Incorporation or
Bylaws of Seller, or any judgment, decree, order or award of any court,
governmental body or arbitrator, or any law, rule or regulation applicable to
Seller or Parent.
3.7 Labor and Employment Matters.
(a) Except as set forth in Schedule 3.7(a) attached
hereto, there is no (i) collective bargaining agreement or other labor agreement
to which Seller is a party or by which it is bound; (ii) employment, profit
sharing, deferred compensation, bonus, stock option, stock purchase, retainer,
consulting, retirement, welfare, incentive or severance plan, policy or contract
to which Seller is a party or by which it is bound; or (iii) plan or agreement
under which "fringe benefits" (including, but not limited to, vacation plans or
programs, sick leave plans or programs, severance payments and related benefits)
are afforded any of such employees of Seller.
(b) No party to any such agreement, plan or contract
is in default with respect to any material term or condition thereof, nor has
any event occurred which through the passage of time or the giving of notice, or
both, would constitute a material default thereunder or would cause the
acceleration of any material obligation of any party thereto.
(c) Seller has complied with all applicable laws,
rules and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by appropriate governmental authorities and
has withheld and paid to the appropriate governmental authorities or is holding
for payment not yet due to such authorities, all amounts required to be withheld
from such employees of Seller and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing. There
is no (i) unfair labor practice complaint against Seller pending before the
National Labor Relations Board or any state or local agency or any basis for any
such complaint; (ii) pending labor strike or other material labor trouble
affecting Seller; (iii) labor
16
grievance pending against Seller or any basis for any such grievance; (iv)
pending representation question respecting the employees of Seller; (v) pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which Seller is a party; (vi) basis for which a claim may be made
under any collective bargaining agreement to which Seller is a party; (vii) or
any pending or, to the knowledge of Seller and Parent, threatened claim against
Seller regarding the discharge or dismissal of any employee and, to the
knowledge of Seller and Parent there is no basis for any such claim. All
reasonably anticipated material obligations of Seller (whether arising by
operation of law, by contract, by past custom or otherwise), for salaries,
vacation and holiday pay, sick pay, bonuses and other forms of compensation
payable to the officers, directors or other employees of Seller in respect of
the services rendered by any of them have been paid or adequate accruals
therefor have been made in the ordinary course of business in the Interim
Statements for obligations accrued through the date thereof, and in the books
and records of Seller for obligations accruing thereafter.
(d) Any and all Non-Transferred Employee Severance
Costs for each employee of Seller are set forth on Schedule 3.7(d). Seller's
Severance Policy applicable to all employees of Seller (unless superseded by a
written employment agreement that is listed on and attached to the Seller
Disclosure Schedule) has been provided to Buyer) provides that each employee
shall be entitled upon termination of employment by the Company in certain
circumstances to two weeks of salary plus an additional two weeks of salary for
each year of service at Seller. Seller has not made any statement or
representation agreeing to, or entered into any agreement with any employee
(past or current) providing for, any additional severance benefits beyond that
set forth in the preceding sentence.
3.8 Pension and Employee Benefit Plans. The Seller's pension
and employee benefit plans are set forth on Schedule 3.8. Neither Seller nor any
current ERISA Affiliate (as hereinafter defined) maintains, contributes to or
has an obligation to establish, or has ever maintained, contributed to or had an
obligation to establish, an employee pension benefit plan as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"). Any
employee welfare benefit plan maintained or contributed to by the Seller or any
current ERISA Affiliate has complied in all material respects with all
applicable law under ERISA and the Internal Revenue Code (the "Code") and has
not incurred any material liability under Section 4980(B) of the Code. In
addition, neither Seller nor any ERISA Affiliate has any present or future
obligation or liability under any multiemployer plan within the meaning of
Section 3(37) of ERISA. As used herein, the term "ERISA Affiliate" means any
company which, as of the relevant measuring date under ERISA is a member of a
controlled group of corporations or trades or businesses as defined in Sections
414(b) and (c) of the Code of which Seller is a member.
3.9 Litigation and Compliance with Laws.
3.9.1 Litigation Pending or Threatened. Except as set
forth in Schedule 3.9.1, there is no action, suit, arbitration, proceeding,
grievance or investigation, pending or, to the best knowledge of Seller and
Parent, threatened, before any court, tribunal,
17
panel, master or governmental agency, authority or body in which Seller is a
party or to which its respective businesses or properties are subject, nor is
Seller, Parent or any officer or employee of Seller enjoined from any action or
subject to any continuing restriction which may adversely affect the Business
including, without limitation, litigation with customers or with contractors or
suppliers who have performed work on or supplied equipment or materials relating
to the Business or the properties of Seller.
3.9.2 Violation of Law. Seller is not in violation of
any provision of any law, decree, order or regulation (including, without
limitation, those relating to antitrust or prohibiting other anti-competitive
business practices, those relating to employment practices, such as
discrimination, health and safety, and those relating to minority business
enterprises), applicable to Seller or the Business which violation would have a
Material Adverse Effect. Seller has all federal, state and local licenses,
permits and other governmental authorizations required in the conduct of the
Business and the operation of its properties of which the failure to have would
have a Material Adverse Effect. Such licenses, permits and other governmental
authorizations, including those obtained under applicable Environmental
Requirements (as hereinafter defined) are listed in Schedule 3.9.2. Except as
provided by this Agreement, no notice to, filing with, or approval or consent
of, any governmental agency or body issuing any of the permits, licenses or
other governmental authorizations, or otherwise having jurisdiction over Seller
or the Business or the operations or properties of the Business, is required in
order to permit the execution, delivery or performance of this Agreement, the
consummation of the transactions contemplated hereby or the sale, transfer and
delivery of the Acquisition Assets or the continuation of the Business after the
Closing. No present or, to the knowledge of Seller, prospective zoning or use
restriction will adversely affect the Business of Seller as now conducted or as
presently proposed to be conducted hereafter, and the present conduct of the
Business is not dependent upon any so-called "non-conforming use" exception or
any other exception which would terminate or otherwise be impaired by the
transactions contemplated hereby. Seller is not a party to or subject to any
consent decree issued by any governmental agency, authority or body. Seller has
obtained valid resale certificates from all customers who have purchased goods
from Seller without paying sales taxes, and Seller has otherwise complied with
all applicable sales and use tax laws.
3.9.3 Environmental Matters. Neither Seller nor
Parent nor, to the best knowledge of Seller and Parent, any prior owner, tenant,
occupant or user of the Real Property (as hereinafter defined), nor, to the best
knowledge of Seller and Parent, any other person or entity, has engaged in or
permitted any activities upon the Real Property involving the handling,
treatment, storage or use of any Hazardous Materials (as hereinafter defined) in
contravention of any Environmental Requirements. The Real Property and the
existing and prior uses and activities thereon and all activities and conduct of
business related thereto (including the Business), comply and have at all times
complied with all Environmental Requirements (as hereinafter defined). Neither
Seller or Parent nor, to the best knowledge of Seller and Parent, any other
owner, tenant, occupant or user of the Real Property has received any notice or
other communication concerning any alleged violation of Environmental
Requirements, or notice or other communication concerning alleged liability. For
the
18
purposes of this Agreement: (a) "Hazardous Materials" means any substance: (i)
the presence of which requires investigation or remediation under any applicable
federal, state or local statute, regulation, ordinance, order, action or policy
or common law; (ii) that is defined as a "hazardous waste" or "hazardous
substance" under any applicable federal, state or local statute, regulation or
ordinance; (b) "Environmental Damages" shall mean all claims, judgments,
damages, losses, penalties, fines, liabilities, liens, costs and expenses of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any good faith settlement or judgment, of whatever kind,
including without limitation reasonable attorneys' fees and disbursements and
consultants' fees, any of which are incurred at any time as a result a
contravention of any Environmental Requirements as set forth in the first
sentence of this Section 3.9 prior to the Closing Date and pertaining to the
Real Property, regardless of whether such Requirements arose prior to the
present ownership or operation of the Real Property; and (c) "Environmental
Requirements" shall mean all then applicable statutes, regulations, rules,
ordinances, licenses, permits, orders, approvals, plans and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, the states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment.
3.10 Contracts and Other Instruments.
3.10.1 Each Contract is a valid, binding and
enforceable agreement of Seller and, to the best knowledge of Seller and Parent,
the other parties thereto. There has not occurred any default under any Contract
on the part of Seller or, to the best knowledge of Seller and Parent, on the
part of the other parties thereto, and no event has occurred which, with the
giving of notice or the lapse of time, or both, would constitute any default
under any Contract. Except as set forth on Schedule 3.10.1, no consent of any
party to any Contract is required in order to permit the execution, delivery or
performance of this Agreement, the consummation of the transactions contemplated
hereby, or the sale, transfer or delivery of the Acquisition Assets or the
assumption of the liabilities to be assumed by Buyer under Section 2.4, nor will
the execution, delivery or performance of this Agreement, the consummation of
the transactions contemplated hereby or the sale, transfer and delivery of the
Acquisition Assets or the assumption of the liabilities to be assumed by Buyer,
result in a breach of any of the terms and provisions of, or constitute a
default under, or conflict with, or result in a modification of, any Contract of
Seller. Seller is not under any liability or obligation with respect to the
return of products sold by Seller which have been delivered to or at the
direction of any customer.
3.10.2 Schedule 1.1(c) attached hereto lists each
contract, agreement, purchase order, lease, license, indenture or commitment,
written or oral, to which Seller is a party or by which any of their assets are
bound, except: (A) agreements for the purchase by Seller of goods, materials,
supplies or services in the ordinary course of business involving less than
$25,000 in consideration in each such case; and (B) agreements for the sale of
goods or services in the ordinary course of business in which the sales price of
the goods to be sold and the services to be rendered pursuant to each such
agreement is less than $25,000
19
for each such agreement. True and complete copies of each of the Contracts, or
where they are oral, true and complete written summaries thereof, have been
delivered to Buyer by Seller.
3.11 Inventories. The inventories set forth in the Interim
Financial Statements at September 30, 1998 have been valued in accordance with
GAAP applied consistently with the most recent Annual Financial Statements.
Physical adjustments since September 30, 1998 have been correctly recorded in
the ordinary course of business in accordance with GAAP. The inventory is
adequate for the conduct of the Business.
3.12 Officers and Directors; Compensation of and Indebtedness
to and from Officers, Directors and Parents.
3.12.1 Schedule 3.12.1 attached hereto sets forth a
true and complete list of the names of and offices held by the officers and
directors of Seller. The current compensation of each of the officers and
employees of Seller (including salary, bonus, other incentive compensation and
other perquisites and benefits) has been disclosed in writing to Buyer, except
for any officer or employee whose aggregate compensation (paid by Seller in the
case of non-employee officers) is less than $40,000 per annum.
3.12.2 Except as set forth in Schedule 3.12.2, Seller
has no financial obligation and is not otherwise indebted to any person who is
an officer, director, shareholder or employee of Seller, or to any relative of
any such person or to any entity controlled directly or indirectly by, or
otherwise affiliated with, such person, in any amount whatsoever other than for
compensation for services rendered since the start of the current pay period of
Seller generally utilized for its employees and for business expenses, nor is
any director or shareholder of Seller, or any relative of such person or any
entity controlled directly or indirectly by, or otherwise affiliated with, such
person, indebted to Seller except for business reimbursement advances made in
the ordinary course of business.
3.13 Powers of Attorney and Suretyships. Except as set forth
on Schedule 3.13, Seller has no general or special powers of attorney
outstanding (whether as grantor or grantee thereof) and has no obligation or
liability (whether actual, accrued, accruing, contingent or otherwise) as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any person, other than powers of attorney granted
to legal counsel or other agents solely for the purpose of filing documents and
taking other administrative actions at the request of Seller in connection with
the registration by Seller of any of the Intangible Personal Property.
3.14 Insurance. Schedule 3.14 sets forth a true and correct
list of all insurance policies of any nature whatsoever maintained by Seller at
any time during the three (3) years prior to the date of this Agreement and the
annual or other premiums payable thereunder. All such insurance is on an
occurrence basis and will continue to provide coverage to Seller after the
Closing Date for occurrences prior to the Closing Date. There are no outstanding
requirements or recommendations by any insurance company that issued any
20
such policy or by any Board of Fire Underwriters or other similar body
exercising similar functions or by any governmental authority exercising similar
functions which requires or recommends any changes in the conduct of the
Business of, or any repairs or other work to be done on or with respect to any
of the properties or assets of, Seller. Seller has not received any notice or
other communication from any such insurance company within the three (3) years
preceding the date hereof canceling or materially amending or materially
increasing the annual or other premiums payable under any of said insurance
policies, and to the best knowledge of Seller and Parent, no such cancellation,
amendment or increase of premiums is threatened.
3.15 Customers. During the year ended December 31, 1997 and
the nine months ended September 30, 1998, not more than ten percent (10%) of the
revenues of Seller was attributable to any single customer or to any group of
affiliated customers.
3.16 No Undisclosed Liabilities. Except as and to the extent
specifically reflected or reserved against in the Interim Financial Statements
at September 30, 1998, and except for accounts payable to suppliers incurred
after September 30, 1998 in the ordinary and usual course of business consistent
in nature and amounts to the accounts payable reflected in the Financial
Statements for comparable periods, Seller has no material liability or
obligation of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including, without limitation, any liability
for taxes and interest, penalties and other charges payable with respect to any
such liability or obligation) required by GAAP to be reflected on the Interim
Financial Statements, other than as set forth on Schedule 3.16.
3.17 Tax Matters.
3.17.1 Seller has filed on a timely basis all Tax
Returns (as defined below) required to have been filed by it with respect to the
Business or the Acquisition Assets and has paid on a timely basis all Taxes with
respect to the Business or the Acquisition Assets as due. All such Tax Returns
are true, complete and correct in all material respects with respect to the
Business or the Acquisition Assets. No material liability for Taxes with respect
to the Business or the Acquisition Assets has been incurred by Seller or Parent
since September 30, 1998 other than in the ordinary course of its business.
Seller has not received notice that it is or may be subject to Tax with respect
to the Business or the Acquisition Assets in a jurisdiction in which it has not
filed or does not currently file Tax Returns with respect to the Business or the
Acquisition Assets. For purposes of this Agreement, "Tax Returns" means all
returns, reports, forms and other information filed or required to be filed with
respect to any and all Taxes. For purposes of this Agreement, "Taxes" shall mean
any and all foreign, federal, state, local and other taxes and duties (including
without limitation, income, sales, ad valorem, unitary, capital gains, transfer,
franchise, withholding, payroll, employment, excise and property taxes);
3.17.2 With respect to all amounts in respect of
Taxes imposed upon Seller, or for which Seller is or could be liable with
respect to the Business or the Acquisition
21
Assets, whether to taxing authorities (as, for example, under applicable law) or
to other persons or entities (as, for example, under tax allocation agreements),
and with respect to all taxable periods or portions of periods ending on or
before the Closing Date, all applicable Tax laws and agreements have been
complied with in all material respects, and all such Taxes required to be paid
by Seller to taxing authorities with respect to the Business or the Acquisition
Assets or others have been paid;
3.17.3 There are no liens for Taxes (other than for
current Taxes not yet due and payable) upon any of the Acquisition Assets;
3.17.4 Except as set forth on Schedule 3.17.4, the
Business does not have and has not had a permanent establishment in any foreign
country, as defined in any applicable Tax treaty or convention between the
United States of America and such foreign country, and has not engaged in a
trade or business within any foreign country; and
3.17.5 None of the Acquisition Assets is property
that is required to be treated as owned by any other Person pursuant to the
"safe harbor lease" provisions of former Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, and none of the Acquisition Assets is
"tax exempt use property" within the meaning of Section 168(h) of the Code.
3.18 Brokerage. Neither Seller nor any Parent has dealt with,
or is obligated to make any payment to, any finder, broker, investment banker or
financial advisor in connection with any of the transactions contemplated by
this Agreement or the negotiations looking toward the consummation of such
transactions, except for BT Alex. Xxxxx Incorporated (whose fees and expenses
will be paid by Seller or Parent).
3.19 Year 2000 Issues. All of Seller's products (including
products currently under development) and computer software will record, store,
process and calculate and present calendar dates falling on and after January 1,
2000, and will calculate any information dependent on or relating to such dates
in the same manner and with the same functionality, data integrity and
performance as the products or software record, store, process, calculate and
present calendar dates on or before December 31, 1999, or calculate any
information dependent on or relating to such dates (collectively "Year 2000
Compliant"). All of Seller's material products and computer software will lose
no functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000. All of Seller's internal computer systems,
including without limitation, its accounting systems, are Year 2000 Compliant.
The foregoing representations and warranties are qualified by the information
set forth in Schedule 3.19.
3.20 Accounts Receivable. The accounts receivable of Seller
existing on the date hereof arose, and those existing on the Closing Date will
have arisen, out of sales in the ordinary course of business and represent bona
fide indebtedness of the applicable
22
account debtor. The amount of the accounts receivable of Seller as of November
30, 1998, calculated in accordance with GAAP is $2,655,905.75.
3.21 Working Capital. The amount of Seller's (a) accounts
receivable (net of the provision for doubtful accounts), plus (b) Inventory (net
of reserves), minus (c) accounts payable is greater than $13,000,000, as
calculated in accordance with GAAP.
3.22 Knowledge. Certain of the representations and warranties
are made "to the best knowledge" or "to the knowledge." The parties hereto agree
that the meaning of such expression shall in all cases be understood as
comprising actual knowledge of (a) in the case of Seller, any of the following
individuals: Xxx Xxxxxx, Xxx XxXxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx
Lose and Xxx Xxxxxxxx, and (b) in the case of Parent, SDC, SDVAP and SDVE: Xxxx
Xxxxxx, Xxxxxx Xxxxxx or any executive officer or director of Parent, SDC, SDVAP
and SDVE; in each case after reasonable inquiry of such party's or parties'
employees and representatives and reasonable review of such party's or parties'
files, books and records.
3.23 Investment Representations
(a) Each of Seller and Parent is acquiring the
Warrants and/or the Promissory Note (together, the "Buyer Securities") for such
parties own account for investment purposes only and not with a view to, or for
resale in connection with, any distribution thereof in violation of the
Securities Act;
(b) By reason of Seller and Parent's business or
financial experience, each such party has the capacity to protect its own
interests in connection with the transactions contemplated by this Agreement;
and, such party is able to bear the economic risks of an investment in Buyer
Securities. Each of Seller and Parent understand that no public market now
exists for Buyer Securities and that no public market may ever exist for Buyer
Securities;
(c) Each of Seller and Parent acknowledges that it
has been given access to all Buyer documents records and other information it
has requested, and has been provided an opportunity to ask the management of
Buyer such questions as it deemed to be relevant to its decision to acquire
Buyer Securities;
(d) Each of Seller and Parent is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act; and
(e) Each of Seller and Parent acknowledges that Buyer
Securities will be subject to the restrictions on transfer and other provisions
contained in the Investor Rights Agreement attached hereto as Exhibit C-2 and
will bear a legend or legends to such effect.
23
4. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller and Parent that:
4.1 Organization and Corporate Authority. Buyer is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite power and authority to enter into this
Agreement and each of the agreements contemplated hereby and to consummate the
transactions contemplated hereby. This Agreement and all other agreements herein
contemplated to be executed in connection herewith have been (or upon execution
will have been) duly executed and delivered by Buyer, have been effectively
authorized by all necessary action, corporate or otherwise, and constitute (or
upon execution will constitute) legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms.
4.2 Agreement Not in Breach of Other Instruments. The
execution, delivery and performance of this Agreement and each of the agreements
contemplated hereby by Buyer and the consummation of the transactions
contemplated hereby will not result in a breach of any of the terms or
provisions of, or constitute a default under, or conflict with, any material
agreement, indenture or other instrument to which Buyer is a party or by which
it is bound, Buyer's Certificate of Incorporation or Bylaws, any judgment,
decree, order or award of any court, governmental body or arbitrator, or any
law, rule or regulation applicable to Buyer.
4.3 Regulatory Approvals. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by Buyer and which are necessary for the
consummation of the transactions contemplated by this Agreement have been
obtained and satisfied.
4.4 Brokerage. Buyer has not dealt with, and is not obligated
to make any payment to, any finder, broker or investment banker or financial
advisor in connection with any of the transactions contemplated by this
Agreement or the negotiations looking toward the consummation of such
transactions, except for EOS Capital (whose fees and expenses will be paid by
Buyer).
4.5 Valid Issue. All shares of common stock, par value $0.001
per share, of Buyer reserved for issuance upon exercise of the Warrants are duly
authorized and, upon issuance in accordance with the provisions of such
Warrants, will be validly issued, fully paid and nonassessable and free from all
taxes, liens, charges and security interests (other than liens and security
interests created by the holder thereof).
4.6 SEC Filings. Buyer has timely filed all forms, reports,
statements and documents required to be filed by it with the SEC through the
date of this Agreement (collectively and as amended, the "Buyer Reports"). Each
Buyer Report (a) was prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (b) did not at the
time it was filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the
24
statements made therein, in the light of the circumstances under which they were
made, not misleading.
5. Closing. The closing of the transactions herein contemplated (the
"Closing") shall, unless another date, time or place is agreed to in writing by
the parties hereto, take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP,
0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 at 10:00 a.m., local time, on
the date hereof (the "Closing Date").
6. Certain Understandings and Agreements of the Parties.
6.1 Condition to Transfer of Certain Contracts. At the Closing
Buyer may elect to close the transactions contemplated hereby notwithstanding
the fact that Seller may have failed to obtain consents to the transfer of one
or more Contracts which by their terms require the consent of any other
contracting party thereto to the assignment thereof to Buyer. The terms of this
Section 6.1 shall govern the transfer of the benefits of each such Contract.
Notwithstanding anything herein to the contrary, the parties hereto acknowledge
and agree that at the Closing the Seller will not assign to Buyer any such
Contract which by its terms requires the consent of any other contracting party
thereto unless each such consent has been obtained prior to the Closing Date.
With respect to each such unassigned Contract, after the Closing Date Seller
shall continue to deal with the other contracting party(ies) to such Contract as
the prime contracting party and shall use its reasonable efforts to obtain the
consent of all required parties to the assignment of such Contract, but Buyer
shall be entitled to the benefits of such Contract accruing after the Closing
Date to the extent that Seller may provide Buyer with such benefits without
violating the terms of such Contract; Buyer agrees to perform at its sole
expense all of the obligations of Seller to be performed under any such Contract
the benefits of which Buyer is receiving after the Closing Date. To the extent
requested by Seller or Parent, Buyer shall use reasonable efforts to assist
Seller and Parent in procuring such consents, approvals or waivers.
6.2 Change of Name. Promptly after the Closing Date Seller
will, and Parent will cause Seller to, change its name to a name not confusingly
similar to Scitex Digital Video, but shall not in any event be prohibited from
using the name Scitex.
6.3 Waiver of Compliance with Bulk Sales Laws. Buyer and
Seller hereby waive compliance with the requirements of any applicable bulk
sales laws of any jurisdiction.
6.4 Covenant Not to Compete. At the Closing, Seller and Parent
shall enter into the Noncompetition Agreement attached hereto as Exhibit C-1
(the "Covenant Not to Compete.")
6.5 Use of Name. Following the Closing, Buyer shall have the
sole and absolute right to use each of the trade names included in the
Intangible Personal Property and neither Seller nor Parent shall have the right
to use any of such trade names, other than "Scitex." Buyer and Seller further
acknowledge and agree that Buyer's use of the names listed above shall not in
any way be deemed or considered a violation or infringement of any rights that
Seller has in the trademark "Scitex" or any other trademark or service xxxx.
25
During the period from the Closing Date through the end of the 1999
International Broadcasting Conference ("IBC 1999"), Buyer shall have the right
to use the name "Scitex Digital Video" in connection with the Business;
provided, however, that Buyer shall not have the right to use such name or any
name including "Scitex" at any time after IBC 1999. The right to use the name
"Scitex Digital Video" or any trade name that includes "Scitex" during such
period shall include, among other things, the right to use such names in or on
products, packaging and marketing materials.
6.6 Parent and SDC Guarantee. Each of Parent and SDC hereby
agrees to use its best efforts to cause Seller, SDVE and SDVAP to satisfy all of
their respective obligations under this Agreement. Each of Parent and SDC,
jointly and severally, hereby unconditionally and irrevocably guarantees and
agrees to satisfy any and all obligations that Seller, SDVE and SDVAP have or
may have under this Agreement.
6.7 Additional Insured. Seller and Parent shall use
commercially reasonable efforts after the Closing to cause their respective
insurance providers to name Buyer as an additional insured under each of the
insurance policies covering the Business, and shall provide Buyer with evidence
thereof.
6.8 Access to Records for Tax Audits. If reasonably requested
by Seller or Parent in connection with an audit or other investigation by any
taxing agency or authority, Buyer shall (a) provide Seller or Parent with
access, during normal business hours and without disruption to Buyer's business,
to the books and records of Buyer required to comply with such audit or other
investigation and (b) make available for discussions with Seller or Parent such
employees of Buyer who may have information that is relevant to such audit or
other investigation, without disruption to Buyer's business (as determined by
Buyer in its discretion).
6.9 Limitation on Certain Additional Indebtedness. Buyer
hereby agrees that prior to paying the Promissory Notes in full, it will not (i)
refinance all loans, advances and extensions of credit under the Loan and
Security Agreement, dated the date hereof, between Buyer and LaSalle Business
Credit, Inc. ("LaSalle") (the "Loan Agreement") with similar borrowings from a
financial institution other than LaSalle, (ii) enter into a New Loan Facility
with LaSalle, or (iii) obtain a binding written commitment from a financial
institution other than LaSalle of funds to consummate a merger, asset sale or
other acquisition that is not permitted by or within the scope of Loan
Agreement. "New Loan Facility" shall mean one or more facilities that (i) are
made on an unsecured basis; (ii) are for the purpose of acquiring the stock or
assets of third parties out of the ordinary course of business; and/or (iii) are
not based on the value of collateral as determined by a third party appraiser.
The term "New Loan Facility" shall not include the revolving loan facility
described in the Loan Agreement or any increase in the maximum amount available
under such agreement provided that the amount of the loans thereunder are based
on Buyer's accounts receivable and inventory.
26
7. Closing Deliveries.
7.1 Seller's Deliveries. At the Closing, Seller shall deliver
to Buyer the following documents:
(a) A certificate executed by an officer of Seller,
SDVE, SDVAP, SDC and Parent certifying that all of the covenants and agreements
of Seller, SDVE, SDVAP, SDC and Parent, respectively, contained in this
Agreement and required to be performed by such party on or before the Closing
Date shall have been performed in all material respects;
(b) A fully executed copy of the Investor Rights
Agreement;
(c) A fully executed copy of the Covenant Not to
Compete;
(d) A fully executed copy of a Xxxx of Sale, an
Assignment and Assumption Agreement, and such other instruments of sale,
transfer, conveyance, assignment and delivery covering the Acquisition Assets or
any part thereof as Buyer may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment and delivery to Buyer of the
Acquisition Assets, including those documents attached as Exhibits D, E-1, and
E-2-A through E-7-B;
(e) All consents and approvals of third parties
required under the Contracts or otherwise in order to consummate the
transactions contemplated hereby, which consents and approvals shall be in forms
reasonably satisfactory to Buyer; and
(f) An opinion of counsel for Seller, SDVAP, SDVE,
SDC and Parent in form and substance reasonably satisfactory to and addressed to
Buyer and dated the date hereof (in rendering such opinions, counsel may rely
upon certificates of public officials and upon certificates of officers of
Seller as to factual matters and on opinions of other counsel of good standing,
whom such counsel believes to be reliable).
7.2 Buyer's Deliveries. At the Closing, Buyer shall deliver to
Seller the following documents:
(a) A certificate executed by an officer of Buyer
certifying that all of the covenants and agreements of Buyer contained in this
Agreement and required to be performed by Buyer on or before the Closing Date
shall have been performed in all material respects;
(b) A fully executed copy of the Investor Rights
Agreement;
(c) A fully executed copy of the Covenant Not to
Compete;
(d) A fully executed copy of the Assignment and
Assumption Agreements;
27
(e) The Warrants;
(f) The Promissory Notes; and
(g) An opinion of counsel for Buyer in form and
substance reasonably satisfactory to and addressed to the Seller and dated the
date hereof (in rendering such opinions, counsel may rely upon certificates of
public officials and upon certificates of officers of Buyer as to factual
matters and on opinions of other counsel of good standing, whom such counsel
believes to be reliable).
8. [Intentionally Omitted]
9. Indemnification; Survival of Representations and Warranties.
9.1 Indemnification/Survival of Representations and Warranties.
9.1.1 From and after the Closing Date, Buyer and each
of its Affiliates, officers, employees, directors and representatives
(collectively, the "Buyer Indemnitees") shall be indemnified and held harmless
by Seller, SDVAP, SDVE, SDC and Parent, jointly and severally, in accordance
with this Section 9, in respect of any and all Damages (as defined below)
proximately incurred by any Buyer Indemnitee as a result of:
(a) Any breach of any representation or
warranty of Seller, SDVAP, SDVE, SDC or Parent contained herein or in any
agreement or instrument delivered at the Closing by Seller, SDVAP, SDVE, SDC or
Parent;
(b) The breach of any covenant, agreement or
obligation of Seller, SDVAP, SDVE, SDC or Parent contained in this Agreement or
any other instrument (including the Covenant Not to Compete) contemplated by
this Agreement;
(c) Any and all Environmental Damages,
regardless of whether such Environmental Damages are incurred in connection with
any item which has been disclosed to Buyer and regardless of whether such
Environmental Damages are incurred as a result of a breach of the
representations and warranties in this Agreement and regardless of whether
resulting from a condition which is known or unknown by Seller, SDVAP, SDVE, SDC
or Parent on the date hereof;
(d) Any obligation of Seller or Parent under
Section 2.2;
(e) Any obligations or liabilities of the
Business or Seller, SDVAP, SDVE, SDC or Parent not specifically assumed by Buyer
pursuant to this Agreement, including each liability or obligation described in
Section 2.5; and
(f) Except as specifically provided in
Section 2.4, any obligations or liabilities relating to the conduct of the
Business prior to the Closing Date, including any liability or obligation
arising from any act, occurrence or event which occurs
28
prior to the Closing Date and any liability or obligation arising from any
products sold by the Business prior to the Closing Date.
9.1.2 From and after the Closing Date, Seller, SDVE,
SDVAP, SDC and Parent and each of their respective Affiliates, officers,
employees, directors and representatives (collectively, the "Seller
Indemnitees") shall be indemnified and held harmless by Buyer in respect of any
and all Damages reasonably and proximately incurred by any Seller Indemnitee as
a result of any misrepresentation and/or breach of any representation, warranty,
covenant or agreement made by Buyer in this Agreement or arising from any of the
Assumed Liabilities.
9.1.3 For purposes of this Agreement, the term
"Damages" means all demands, claims, actions or causes of action, assessments,
losses, damages, costs, expenses, liabilities, judgments, awards, fines,
sanctions, penalties, charges and amounts paid in settlement, including (y)
interest on cash disbursements in respect of any of the foregoing at a rate per
annum equal to the prime rate as published by Bank of America, NT&SA, compounded
quarterly, from the later to occur of (i) thirty (30) days from the date of
demand for payment hereunder, or (ii) the date each such cash disbursement is
made until the Person incurring the same shall have been indemnified in respect
thereof and (z) reasonable costs, fees and expenses of attorneys (including
allocation costs of in house counsel), experts, accountants, appraisers,
consultants, witnesses, investigators and any other agents of such Person.
Notwithstanding the foregoing, with respect to Damages incurred by Buyer or
Buyer Indemnitees that do not arise out of third party claims, the term
"Damages" shall not include punitive, special or consequential damages, except
in the case of fraud by Seller, SDVAP, SDVE, SDC or Parent, in which case
"Damages" may include punitive, special or consequential damages, and, with
respect to Damages incurred by Seller or Seller Indemnitees that do not arise
out of third party claims, the term "Damages" shall not include punitive,
special or consequential damages, except in the case of fraud by Buyer, in which
case "Damages" may include punitive, special or consequential damages.
9.1.4 All of the covenants, representations and
warranties entered into or made pursuant to this Agreement shall survive the
Closing and continue until 5:00 p.m., California time, on the twenty-eighth
(28th) month anniversary of the Closing Date (the "Representation Expiration
Date"), except for any representations and warranties regarding environmental or
tax matters, which representations and warranties shall survive until thirty
(30) days after the applicable statute of limitations.
9.1.5 Subject to Sections 2.2(c), 2.2(d) and 2.8(d),
the obligations of Seller, SDVAP, SDVE, SDC and Parent to indemnify the Buyer
Indemnitees pursuant to this Section 9 are subject to the provisions of Section
9.4 and the following limitations:
(a) No indemnification shall be made by
Seller, SDVAP, SDVE, SDC or Parent unless the aggregate amount of Damages
incurred by Buyer Indemnitees ("Buyer Damages") exceeds $150,000; provided,
however, that if the Buyer
29
Damages exceed $150,000, then the Buyer Indemnitees shall be indemnified for all
Buyer Damages, including without limitation, the initial $150,000 of Buyer
Damages;
(b) With respect to any claims for
indemnification made by any Buyer Indemnitee on or before the Note Offset
Termination Date (as defined in Section 9.4(a)), in no event shall the aggregate
indemnification obligations of Seller, SDVAP, SDVE, SDC and Parent to the Buyer
Indemnitees exceed $2,500,000;
(c) With respect to any claims for
indemnification made by any Buyer Indemnitee after the Note Offset Termination
Date but on or prior to the Representation Expiration Date, in no event shall
the aggregate indemnification obligations of Seller, SDVAP, SDVE, SDC and Parent
to the Buyer Indemnitees (together with any amounts paid or payable pursuant to
Section 9.1.5(b), the "Sellers' Indemnification Obligations") exceed an amount
equal to $2,000,000 minus the amount of all Seller Indemnification Obligations
paid to Buyer Indemnitees for claims made prior to the Note Offset Termination
Date;
(d) The indemnification caps set forth in
Sections 9.1.5(b) and (c) shall not apply to any claims by a Buyer Indemnitee
for Damages related to any liabilities not assumed by Buyer hereunder,
including, without limitation, (i) any and all Environmental Damages, regardless
of whether such Environmental Damages are incurred in connection with any item
which has been disclosed to Buyer and regardless of whether such Environmental
Damages are incurred as a result of a breach of the representations and
warranties in this Agreement and regardless of whether resulting from a
condition which is known or unknown by Seller, SDVAP, SDVE, SDC or Parent on the
date hereof, and (ii) any and all liabilities of Seller in respect of Taxes
imposed upon Seller, or for which Seller is or could be liable with respect to
the Business or the Acquisition Assets and with respect to all taxable periods
or portions of periods ending on or before the Closing Date; and
(e) The amount of any Buyer Damages shall be
reduced by any amount received by a Buyer Indemnitee with respect thereto under
any insurance coverage or from any other party alleged to be responsible
therefor.
9.2 Indemnification Claims.
9.2.1 Claims by Buyer. If Buyer or any Buyer
Indemnitee has a claim for indemnification hereunder, Buyer or such Buyer
Indemnitee shall deliver a notice (the "Indemnification Notice") to Parent: (A)
stating that Buyer has paid or properly accrued or reasonably anticipates that
it will have to pay or accrue Damages, and (B) specifying in reasonable detail
the individual items of Damages included in the amount so stated, the date each
such item was paid or properly accrued, or the basis for such anticipated
liability, and the nature of the misrepresentation, breach of warranty or
covenant or other matter to which such item is related.
9.2.2 Objections to Claims. Seller, SDVAP, SDVE, SDC
and Parent shall be obligated to satisfy, jointly and severally, their
indemnification obligations hereunder
30
within fifteen (15) days after Parent's receipt of the Indemnification Notice,
unless Parent shall object in a written statement to the claim made in the
Indemnification Notice, and such statement shall have been delivered to Buyer
prior to the expiration of such fifteen (15) day period.
9.2.3 Resolution of Conflicts; Arbitration.
(a) In case the Parent shall properly object
in writing to any claim or claims made in any Indemnification Notice, the Parent
and Buyer shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims.
(b) If no such agreement can be reached
after good faith negotiation within twenty-one (21) days, either Buyer or the
Parent may, by written notice to the other (the "Demand"), demand arbitration of
the matter unless the amount of the Damages is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by three arbitrators.
The parties agree that such arbitration shall be submitted to the Judicial
Arbitration and Mediation Services, Inc./Endispute ("JAMS/Endispute") in San
Jose, California, and shall be final, binding and nonappealable. The arbitration
will be conducted in accordance with the provisions of the Comprehensive
Arbitration Rules and Procedures of JAMS/Endispute in effect at the time of
filing of the Demand, except as specifically set forth herein. The parties
covenant that they shall participate in the arbitration in good faith, and that
they shall share equally in its costs. Buyer and the Parent shall each select
one arbitrator within fifteen (15) business days following the Demand, and the
two arbitrators so selected shall select a third arbitrator within fifteen (15)
business days thereafter, each of which arbitrators shall be independent. In the
event that either Buyer or the Parent fails to appoint an arbitrator within the
period prescribed, or such appointed arbitrators fail to appoint the third
arbitrator within the period prescribed, any such arbitrators that have not been
so appointed shall be appointed by JAMS/Endispute following written request of
either Buyer or the Parent. The arbitrators shall set a limited time period (not
to exceed ninety (90) days) and establish procedures designed to reduce the cost
and time for discovery while allowing the parties an opportunity, adequate in
the sole judgment of the arbitrators, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrators shall
rule upon motions to compel or limit discovery and shall have the authority to
impose sanctions, including attorneys fees and costs, to the same extent as a
competent court of law or equity, should the arbitrators determine that
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. Each party shall
submit to the arbitrators and exchange with each other in advance of the hearing
their last best offers regarding resolution of the dispute. The arbitrators
shall be limited to awarding only one or the other of the two offers submitted
and may not choose any other figure or compromise. The decision of a majority of
the three arbitrators as to the validity and amount of any claim in such
Indemnification Notice shall be binding and conclusive upon the parties to this
Agreement. Such decision shall be written and shall be supported by written
findings
31
of fact and conclusions which shall set forth the award, judgment, decree or
order awarded by the arbitrators.
9.3 Parent as Agent.
9.3.1 Power of Attorney. Parent shall serve as the
initial agent and attorney-in-fact for Seller, SDVAP, SDVE and SDC to give and
receive notices and communications, to authorize payment to Buyer or Buyer
Indemnitees hereunder in satisfaction of claims by Buyer, to object to such
payments, to agree to, negotiate, enter into settlements and compromises of, and
demand arbitration and comply with orders of courts and awards of arbitrators
with respect to such claims, and to take all actions necessary or appropriate in
the judgment of Parent for the accomplishment of the foregoing. Such agency may
be changed from time to time by Seller, SDVAP, SDVE, SDC and Parent upon not
less than thirty (30) days prior written notice to Buyer. Any vacancy in the
position of Parent as agent may be filled by approval of Seller and Parent.
Notices or communications to or from the Parent shall constitute notice to or
from Seller, SDVAP, SDVE, SDC and Parent.
9.3.2 Actions of the Parent. A decision, act, consent
or instruction of Parent shall constitute a decision, act, consent or
instruction on behalf of Seller, SDVAP, SDVE, SDC and Parent and shall be final,
binding and conclusive upon Seller, SDVAP, SDVE, SDC and Parent, and Buyer may
rely upon any such decision, act, consent or instruction of Parent as being the
decision, act, consent or instruction of Seller, SDVAP, SDVE, SDC and Parent.
Buyer hereby is relieved from any liability to any Person for any acts done by
them in accordance with such decision, act, consent or instruction of Parent.
9.3.3 Third-Party Claims. Seller, SDVAP, SDVE, SDC
and Parent's obligations to indemnify the Buyer Indemnitees hereunder are
subject to the following provisions: If Buyer becomes aware of a third-party
claim that Buyer believes, in good faith, may result in a demand by it for
indemnification, Buyer promptly shall notify Parent of such claim, and Parent,
as representative for Seller, SDVAP, SDVE, SDC and Parent, shall be entitled to
participate in any defense of such claim. Failure by Buyer to give prompt notice
of a claim hereunder shall not affect the obligations of Seller, SDVAP, SDVE,
SDC or Parent under this Section 9, except to the extent Seller or Parent is
materially prejudiced by such failure. Notwithstanding the immediately preceding
sentence, Buyer shall conduct such defense but shall not settle any such claim
without the prior written consent of Parent, such consent not to be unreasonably
withheld; provided, however, that, if the consent of Parent is so obtained, such
settlement of that portion of any such claim shall alone be determinative of the
amount of the claim.
9.3.4 Cooperation. Seller, SDVAP, SDVE, SDC and
Parent and the Buyer Indemnitees shall cooperate with each other as reasonably
requested by any party to this Agreement in connection with all aspects of any
investigation, defense, pre-trial activities, trial, compromise, settlement or
discharge or any claim in respect of which indemnity is sought pursuant to this
Section 9, including without limitation, by providing
32
the other party with reasonable access to employees and officers (including as
witnesses) and other relevant information.
9.4 Nonexclusive Remedy.
(a) Buyer may, but shall not be obligated to, satisfy
any claims of Buyer for indemnification hereunder by offset pursuant to the
provisions of Section 2.8(c) of this Agreement or by offset against any amount
outstanding under the $750K Promissory Note on or prior to the maturity date of
such promissory note, which is the sixteenth (16th) month anniversary of the
Closing Date (the "Note Offset Termination Date"). Prior to effecting any such
offset, Buyer shall notify Seller and Parent in writing of the indemnification
obligation which Buyer intends to fulfill by offset. Offsets may be made in such
amounts that are necessary in the reasonable judgment of Buyer, subject to
subsequent arbitration of the matter in the manner provided in Section 9.2.3
hereof, to satisfy any unsatisfied claims concerning facts and circumstances
existing prior to the Note Offset Termination Date specified in any
Indemnification Notice delivered to Parent on or prior to the Note Offset
Termination Date. Any additional amounts that may be due under Section 2.8 or
under the $750K Promissory Note (as applicable) shall be paid when due. As soon
as all such claims have been resolved and satisfied, Buyer shall pay to Seller
all outstanding amounts due under the $750K Promissory Note or under Section 2.8
(as applicable). Subject to the provisions of Sections 9.1.4 and 9.1.5, Buyer's
offset rights hereunder shall not be the exclusive remedy of Buyer or a Buyer
Indemnitee for any breaches of this Agreement. The limitations on
indemnification set forth in Section 9.1.4 and 9.1.5 shall not apply to claims
for fraud by Seller, SDVAP, SDVE, SDC or Parent in the making of any
representation or warranty contained herein.
(b) The exercise of the right of set-off by Buyer in
good faith, whether or not ultimately determined to be justified, shall not
constitute an event of default under the $750K Promissory Note. The right of
Buyer to offset against the $750K Promissory Note shall not exceed an amount
equal to $2,500,000 minus the amount of all Seller Indemnification Obligations
paid or previously offset up to the date of such offset, provided, however, that
such limitation shall not apply to any claims by a Buyer Indemnitee for Damages
related to any liabilities not assumed by Buyer hereunder, including, without
limitation, (i) any and all Environmental Damages, regardless of whether such
Environmental Damages are incurred in connection with any item which has been
disclosed to Buyer and regardless of whether such Environmental Damages are
incurred as a result of a breach of the representations and warranties in this
Agreement and regardless of whether resulting from a condition which is known or
unknown by Seller, SDVAP, SDVE, SDC or Parent on the date hereof, and (ii) any
and all liabilities of Seller in respect of Taxes imposed upon Seller, or for
which Seller is or could be liable with respect to the Business or the
Acquisition Assets and with respect to all taxable periods or portions of
periods ending on or before the Closing Date.
9.5 Aid to Arbitration. Any party hereto may request a court
of competent jurisdiction, as set forth in Section 12 hereof, to grant
provisional injunctive relief to such
33
party solely for the purpose of maintaining the status quo until the arbitrators
can render an award on the matter in question and such award can be confirmed by
a court having jurisdiction thereof.
9.6 Materiality. The parties agree that for all purposes of
this Agreement, unless specifically stated to the contrary, the dollar amounts
set forth in various provisions hereof, other than the purchase price hereunder,
shall not affect or determine the meaning of the term "material" or have any
bearing thereon.
10. [Intentionally Omitted]
11. Miscellaneous Provisions.
11.1 Construction. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware.
11.2 Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed to have been duly given when delivered to the party to whom
addressed or when sent by telecopy (as indicated by a telecopy confirmation and
if promptly confirmed by registered or certified mail, return receipt requested,
prepaid and addressed) to the parties, their successors in interest, or their
assignees at the following addresses, or at such other addresses as the parties
may designate by written notice in the manner aforesaid:
If to Buyer: Accom, Inc.
0000 X'Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: President
Fax: 000-000-0000
With copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
If to Seller, SDVE, SDVAP, SDC or Parent:
Scitex Corporation Ltd.
X.X. Xxx 000
Xxxxxxxx X 00000
Xxxxxx
Attn: President
Fax: 000-000-0-0000000
34
With copies to: Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
11.3 Assignment. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof nor any of the
documents executed in connection herewith may be assigned by any party without
the consent of the other parties, provided, however, that any party may freely
assign this Agreement to any party acquiring all or substantially all of the
stock or assets of such assigning party. In addition, notwithstanding the
foregoing, any party may assign its rights and obligations hereunder to any
entity controlling, controlled by or under common control with such party;
provided that no such assignment shall relieve or release such assigning party
from its obligations under this Agreement. Nothing contained herein, express or
implied, is intended to confer upon any person or entity other than the parties
hereto and their successors in interest and permitted assignees any rights or
remedies under or by reason of this Agreement unless so stated herein to the
contrary.
11.4 Amendments and Waivers. This Agreement and all Exhibits
and Schedules hereto may be modified only by a written instrument duly executed
by each party. No condition to any party's obligations and no breach of any
covenant, agreement, warranty or representation shall be deemed waived unless
expressly waived in writing by the party whose obligations are subject to such
condition or who might assert such breach. No waiver of any right hereunder
shall operate as a waiver of any other right or of the same or a similar right
on another occasion.
11.5 Remedies. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy.
Each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder now or hereafter existing at law or in equity or by
statute or otherwise, and the election by a party of one or more remedies shall
not constitute a waiver of the party's right to pursue any other available
remedies.
11.6 Attorneys' Fees. In the event that any action or
proceeding, including arbitration, is commenced by any party hereto for the
purpose of enforcing any provision of this Agreement, the parties to such
action, proceeding or arbitration may receive as part of any award, judgment,
decision or other resolution of such action, proceeding or arbitration their
costs and reasonable attorneys' fees as determined by the person or body making
such award, judgment, decision or resolution. Should any claim hereunder be
settled short of the commencement of any such action or proceeding, including
arbitration, the parties in such settlement shall be entitled to include as part
of the damages alleged to have been incurred reasonable costs of attorneys or
other professionals in investigation or counseling on such claim.
35
11.7 Binding Nature of Agreement. The Agreement includes each
of the Schedules and Exhibits which are referred to herein or attached hereto,
all of which are incorporated by reference herein. All the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective executors, heirs, legal representatives, successors
and assigns.
11.8 Expenses. The costs and expenses of Seller and Parent,
including the legal fees and disbursements of Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP
shall be borne by Seller and Parent. The costs and expenses of Buyer, including
the legal fees and disbursements of Xxxxxx, Xxxx & Xxxxxxxx LLP, shall be borne
by Buyer. All sales, use and transfer taxes and fees imposed in connection with
the transactions contemplated hereby shall be borne equally by Seller and Buyer.
The parties hereto shall use reasonable efforts to attempt to cooperate to
minimize any such sales, use and transfer taxes and fees.
11.9 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
11.10 Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
11.11 Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
11.12 Section Headings. The headings of each Section,
subsection or other subdivision of this Agreement are for reference only and
shall not limit or control the meaning thereof.
12. Submission to Jurisdiction; Agent for Service. EACH OF THE PARTIES
HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COUNTY OF SANTA XXXXX, STATE OF CALIFORNIA, AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT
EXECUTED HEREUNDER, OTHER THAN ANY ACTION OR PROCEEDING REQUIRED BY SECTION 9 TO
BE SUBMITTED TO ARBITRATION, SHALL BE LITIGATED IN SUCH COURTS, AND EACH OF THE
PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM
NON CONVENIENS TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO ALL
SUCH SERVICE OF PROCESS MADE IN THE MANNER SET FORTH IN SECTION 11.2. Nothing
contained in this Section 12 shall affect the right of any party to serve legal
process on any other party in any other manner permitted by law. Nothing
contained in this Section 12 shall affect the obligations of the parties with
respect to the arbitration of disputes under Section 9.
36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
ACCOM, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
------------------------------------
Title: Chief Executive Officer
------------------------------------
SCITEX DIGITAL VIDEO, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
SCITEX CORPORATION LTD.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Corporate Vice President
------------------------------------
SCITEX DEVELOPMENT CORP.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
SCITEX DIGITAL VIDEO (EUROPE) LTD.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
37
SCITEX DIGITAL VIDEO (ASIA PACIFIC), INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
38
EXHIBIT A-1
WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"). SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION
UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE
OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE
144.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN INVESTOR
RIGHTS AGREEMENT DATED AS OF THE DATE HEREOF. THE INVESTOR RIGHTS AGREEMENT
CONTAINS PROVISIONS REGARDING CERTAIN RESTRICTIONS ON THE VOTING AND TRANSFER OF
SUCH SECURITIES AND CERTAIN OTHER MATTERS. A COPY OF THE INVESTOR RIGHTS
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
ANY TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF THE
AGREEMENT IS NULL AND VOID.
WARRANT TO PURCHASE COMMON STOCK OF ACCOM, INC.
(Subject to Adjustment)
NO. C-1 December 10, 1998
THIS CERTIFIES THAT, for value received, Scitex Digital Video, Inc., a
Massachusetts corporation ("Scitex") or its permitted registered assigns
(together with Scitex, the "Holder"), is entitled, subject to the terms and
conditions of this Warrant, including, without limitation, Section 12 hereof, at
any time or from time to time after December 10, 1998 (the "Effective Date"),
and before 5:00 p.m. Pacific Time on the date of an Expiration Event (the
"Expiration Date"), to purchase from Accom, Inc., a Delaware corporation (the
"Company"), 250,000 shares of Common Stock of the Company (the "Shares") at a
price per share of $1.00 (the "Purchase Price"). Both the number of shares of
Common Stock purchasable upon exercise of this Warrant and the Purchase Price
are subject to adjustment and change as provided herein. This Warrant is issued
pursuant to that certain Asset Purchase Agreement dated as the date hereof by
and among the Company, Scitex, Scitex Corporation Ltd., and certain other
parties (the "Asset Purchase Agreement").
1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall
have the following respective meanings:
"Common Stock" shall mean the Company's Common Stock, $0.001 par value.
"Expiration Event" shall mean (a) 5:00 p.m. Pacific Time on December
10, 2008 or (b) the consummation of an acquisition of the Company by another
entity by means of any transaction or series of transactions (including, without
limitation, any reorganization, merger or consolidation) or the sale of all or
substantially all of the Company's assets or any other transaction, in which the
capital stock of the Company held by the Company's stockholders of record
immediately prior to such acquisition, sale or other transaction do not
represent, immediately after such acquisition or sale, at least fifty percent
(50%) of the voting power of the surviving or acquiring entity (such acquisition
or sale, an "Expiration Acquisition").
"Fair Market Value" of a share of Common Stock as of a particular date
shall mean:
(a) If traded on a securities exchange or the Nasdaq National
Market, the Fair Market Value shall be deemed to be the average of the closing
prices of the Common Stock of the Company on such exchange or market over the
five (5) business days ending immediately prior to the applicable date of
valuation;
(b) If actively traded over-the-counter, the Fair Market Value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair Market Value
shall be the value thereof, as determined in good faith by the Company's Board
of Directors upon a review of relevant factors.
"Person" shall mean any individual, corporation, partnership, limited
liability company, trust or other entity or organization, including any
governmental authority or political subdivision thereof.
"Registered Holder" shall mean any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"SEC" shall mean the United States Securities and Exchange Commission.
"Warrant" shall mean this Warrant and any warrant delivered in
substitution or exchange therefor as provided herein.
2. EXERCISE OF WARRANT
2.1. Payment. Subject to compliance with the terms and conditions of
this Warrant and applicable securities laws, this Warrant may be exercised on or
before the Expiration Date by the delivery (including, without limitation,
delivery by facsimile) of the form of Notice of Exercise attached hereto as
Exhibit 1 (the "Notice of Exercise"), duly executed by the Holder, at the
principal office of the Company, and as soon as practicable after such date,
surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash, by check or by wire transfer; (ii)
by cancellation by the Holder of indebtedness of the Company to the Holder; or
(iii) by any combination of (i) and
2
(ii), of an amount equal to the product obtained by multiplying the number of
shares of Common Stock being purchased upon such exercise by the then effective
Purchase Price (the "Exercise Amount").
2.2. Net Issue Exercise. In lieu of the payment methods set forth in
Section 2.1(b) above, the Holder may elect to exchange all or some of the
Warrant for shares of Common Stock equal to the value of the amount of the
Warrant being exchanged on the date of exchange. If the Holder elects to
exchange this Warrant as provided in this Section 2.2, the Holder shall tender
to the Company the Warrant for the amount being exchanged, along with written
notice of the Holder's election to exchange some or all of the Warrant, and the
Company shall issue to the Holder the number of shares of the Common Stock
computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to
the Holder;
Y = the number of shares of Common Stock purchasable under the
amount of the Warrant being exchanged (as adjusted to the date
of such calculation);
A = the Fair Market Value of one share of the Company's Common
Stock; and
B = the Purchase Price (as adjusted to the date of such
calculation).
All references herein to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 2.2.
2.3. Stock Certificates; Fractional Shares. As soon as practicable on
or after any date of exercise of this Warrant pursuant to this Section 2, the
Company shall issue and deliver to the Person entitled to receive the same a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share equal to such fraction of the current Fair Market Value of one whole share
of Common Stock as of the date of exercise of this Warrant. No fractional shares
or scrip representing fractional shares shall be issued upon an exercise of this
Warrant.
2.4. Partial Exercise; Effective Date of Exercise. This Warrant may be
partially exercised only in amounts that result in the issuance of 50,000 or
more shares of Common Stock. In case of any partial exercise of this Warrant,
the Company shall cancel this Warrant upon surrender hereof and shall execute
and deliver a new Warrant of like tenor and date for the balance of the shares
of Common Stock purchasable hereunder. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above. The Person entitled to receive the
shares of Common Stock issuable upon exercise of this Warrant shall be treated
for all purposes as the holder of record of such shares as of the close of
business on the date the Holder is deemed to have exercised this Warrant.
3
3. VALID ISSUANCE; TAXES. All shares of Common Stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and non-assessable. The Company
shall not pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any certificate for shares of Common Stock in any
name other than that of the Registered Holder of this Warrant, and in such case
the Company shall not be required to issue or deliver any stock certificate or
security until such tax or other charge has been paid, or it has been
established to the Company's reasonable satisfaction that no tax or other charge
is due.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of any
of the following events:
4.1. Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares. The Purchase Price of this Warrant shall be proportionally decreased and
the number of shares of Common Stock issuable upon exercise of this Warrant (or
any shares of stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Company's Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company's Common
Stock.
4.2. Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. If the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Holder of this Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other distribution, shall
receive, in addition to the shares of Common Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares or all other additional stock available by
it as aforesaid during such period giving effect to all adjustments called for
by this Section 4.
4.3. Reclassification. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4. No adjustment shall be made pursuant to this Section 4.3 upon any
conversion or redemption of the Common Stock which is the subject of Section
4.5.
4
4.4. Adjustment for Capital Reorganization, Merger or Consolidation. If
all or any capital reorganization of the capital stock of the Company (other
than an Expiration Acquisition or a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), or any merger or
consolidation of the Company with or into another corporation (other than an
Expiration Acquisition), or the sale of all or substantially all the assets of
the Company (other than an Expiration Acquisition), then, and in each such case,
as a part of such reorganization, merger, consolidation, sale or transfer,
lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Purchase Price then in effect,
the number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 4. The foregoing provisions of
this Section 4.4 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
4.5. Conversion of Common Stock. If all or any portion of the
authorized and outstanding shares of Common Stock of the Company are redeemed or
converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Common Stock
otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon
exercise hereof at any time after the date on which the Common Stock is so
redeemed or converted, reclassified or ceases to exist (the "Termination Date"),
shall receive, in lieu of the number of shares of Common Stock that would have
been issuable upon such exercise immediately prior to the Termination Date, the
shares of Common Stock that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been
simultaneously converted immediately prior to the Termination Date, all subject
to further adjustment as provided in this Warrant. Additionally, the Purchase
Price shall be immediately adjusted to equal the quotient obtained by dividing
(a) the aggregate Purchase Price of the maximum number of shares of Common Stock
for which this Warrant was exercisable immediately prior to the Termination Date
by (b) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the Termination Date, all subject to further
adjustment as provided herein.
5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and
5
cancellation of this Warrant, the Company shall execute and deliver in lieu
thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated
Warrant.
6. RESERVATION OF COMMON STOCK. The Company hereby covenants that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, shall take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock or other
shares of capital stock of the Company issuable upon exercise of this Warrant.
All such shares shall be duly authorized, and when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights, except encumbrances or
restrictions arising under federal or state securities laws. Issuance of this
Warrant shall constitute full authority to the Company's officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock and Common Stock upon the
exercise of this Warrant.
7. TRANSFER AND EXCHANGE. The Warrant and any Common Stock issued upon exercise
of the Warrant is subject to, and may be transferred only in accordance with,
the Investor Rights Agreement (the "Investor Rights Agreement") dated as of the
date hereof by and between the Company and Scitex. In addition, this Warrant and
all rights hereunder may be transferred only in compliance with all applicable
securities laws and upon surrender of this Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer. Upon any permitted partial transfer, the Company shall issue and
deliver to the Registered Holder a new Warrant or Warrants with respect to the
shares of Common Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Registered
Holder hereof as the owner for all purposes.
8. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that,
absent an effective registration statement filed with the SEC under the
Securities Act of 1933, as amended (the "1933 Act"), covering the disposition or
sale of this Warrant or the Common Stock issued or issuable upon exercise hereof
or the Common Stock issuable upon conversion thereof, as the case may be, and
registration or qualification under applicable state securities laws, such
Holder shall not sell, transfer, pledge, or hypothecate any or all such Warrants
or Common Stock, as the case may be, unless either (a) the Company has received
an opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is not required in connection with
such disposition or (b) the sale of such securities is made pursuant to SEC Rule
144.
9. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants: (a) that any shares of stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired for investment
6
only and not with a view to, or for sale in connection with, any distribution
thereof; (b) that the Holder has had such opportunity as such Holder has deemed
adequate to obtain from representatives of the Company such information as is
necessary to permit the Holder to evaluate the merits and risks of its
investment in the Company; (c) that the Holder is able to bear the economic risk
of holding such shares as may be acquired pursuant to the exercise of this
Warrant for an indefinite period; (d) that the Holder understands that the
shares of stock acquired pursuant to the exercise of this Warrant or acquired
upon conversion thereof shall not be registered under the 1933 Act (unless
otherwise required pursuant to exercise by the Holder of the registration
rights, if any, previously granted to the Registered Holder) and shall be
"restricted securities" within the meaning of SEC Rule 144 and that the
exemption from registration under Rule 144 shall not be available for at least
one year from the date of exercise of this Warrant, subject to any special
treatment by the SEC for exercise of this Warrant pursuant to Section 2.2, and
even then shall not be available unless a public market then exists for the
stock, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and (e)
that all stock certificates representing shares of stock issued to the Holder
upon exercise of this Warrant or upon conversion of such shares may have affixed
thereto a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN
INVESTOR RIGHTS AGREEMENT DATED AS OF DECEMBER 10, 1998. THE INVESTOR
RIGHTS AGREEMENT CONTAINS PROVISIONS REGARDING CERTAIN RESTRICTIONS ON
THE VOTING, AND TRANSFER OF SUCH SECURITIES AND CERTAIN OTHER MATTERS.
A COPY OF THE INVESTOR RIGHTS AGREEMENT IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OF THE SECURITIES
EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF THE AGREEMENT IS NULL AND
VOID.
10. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company. In
the
7
absence of affirmative action by such Holder to purchase Common Stock by
exercise of this Warrant, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of the Holder hereof shall cause such Holder
hereof to be a stockholder of the Company for any purpose.
11. REGISTRATION RIGHTS. All shares of Common Stock or other shares of capital
stock of the Company issuable upon exercise of this Warrant shall be
"Registrable Securities" or such other definition of securities entitled to
registration rights pursuant to the Investor Rights Agreement, dated as of the
date hereof, between the Company and the Holder, and are entitled, subject to
the terms and conditions of that agreement, to all registration rights granted
to holders of Registrable Securities thereunder.
12. CALL OF WARRANTS. If, at any time following the six-month anniversary of the
date hereof, the Common Stock has traded on any securities exchange, Nasdaq
National Market or over-the-counter market for 20 consecutive trading days at a
price of 140% of the Purchase Price, the Company shall have the right, upon ten
(10) days' written notice, to call this Warrant or any portion thereof for
redemption at a price of $0.01 per Share then outstanding under this Warrant.
The Company shall mail the notice of any call for redemption pursuant to the
preceding paragraph to the Holders not less than ten (10) days prior to the date
scheduled for redemption (such date scheduled for redemption, the "Call Date").
Such notice shall state the date, place and price of such call. Each Holder
shall continue to have the right to exercise the Warrant until 5:00 p.m.,
Pacific Time, on the second business day preceding the Call Date. Payment of the
redemption price set forth above may be made by cash, check or wire transfer.
13. NOTICES. All notices and other communications from the Company to the Holder
shall be given in accordance with the Investor Rights Agreement.
14. NOTICES OF RECORD DATE. In case:
14.1. the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
this Warrant), for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any shares of
stock of any class or any other securities or to receive any other right whether
in connection with any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation or otherwise; or
14.2. the number of shares of Common Stock (or other stock or
securities at the time receivable upon exercise of this Warrant) to be issued
upon exercise of this Warrant is adjusted in any manner whatsoever that results
in a 10% or greater change in such number of shares; or
14.3. of any voluntary dissolution, liquidation or winding-up of the
Company; or
14.4. of any redemption or conversion of all outstanding Common Stock;
8
then, and in each such case, the Company shall mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (a)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant),
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up, and in each case setting forth the
adjustment to the Common Stock to be effective pursuant to such action. Such
notice shall be delivered at least twenty-one (21) days prior to the date
therein specified.
15. MARKET STAND-OFF AGREEMENT. In addition to any restrictions in the Investor
Rights Agreements, the Holder agrees, upon request of the Company's underwriter
in connection with an underwritten public offering of the Company's securities,
not to sell or otherwise transfer or dispose of any securities of the Company
held by the Holder for up to a 30 day period prior to and a 150 day period
following the effective date of such underwritten public offering.
16. MISCELLANEOUS.
16.1. Construction. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
16.2. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
16.3. Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
16.4. Section Headings. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
16.5. Saturdays, Sundays and Holidays. If the Expiration Date falls on
a Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
[The remainder of this page is intentionally left blank.]
9
IN WITNESS WHEREOF, the parties hereto have executed this Warrant on
the date first above written.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SIGNATURE PAGE TO WARRANT
10
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
ACCOM, INC. WARRANT NO. C-1
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of Accom, Inc., as provided for therein, and (check the
applicable box):
|_| Tenders herewith payment of the exercise price in full in the form of
cash or a certified or official bank check in same-day funds in the
amount of $____________ for _________ such securities.
|_| Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________
of such securities, according to the following calculation:
X = Y (A-B) ( ) = (____) [(_____) - (_____)]
------- --------------------------
A (_____)
Where X = the number of shares of Common Stock to be issued to
the Holder;
Y = the number of shares of Common Stock purchasable under the
amount of the Warrant being exchanged (as adjusted to the date
of such calculation);
A = the Fair Market Value of one share of the Common Stock;
and
B = the Purchase Price (as adjusted to the date of such
calculation).
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name: _____________________________________________
Address: _____________________________________________
Signature: _____________________________________________
Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
11
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant WARRANT NO. C-1
or a portion thereof)
For value received, hereby sells, assigns and transfers unto
________________________ the within Warrant or a portion thereof, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint ____________________________ attorney, to transfer said Warrant or
such portion thereof on the books of the within-named Company with respect to
the number of shares of Common Stock set forth below, with full power of
substitution in the premises:
-------------------------- ----------------------- -----------------------------
Name(s) of Assignee(s) Address # of Warrants
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
And if said number of shares of Common stock shall not be all the shares of
Common Stock represented by the Warrant, a new Warrant is to be issued in the
name of said undersigned for the balance remaining of the shares of Common Stock
registered by the Warrant.
Dated: ________________________________________________
Signature: ________________________________________________
Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to SEC Rule 17Ad-15.
12
EXHIBIT A-2
WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"). SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION
UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE
OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE
144.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN INVESTOR
RIGHTS AGREEMENT DATED AS OF THE DATE HEREOF. THE INVESTOR RIGHTS AGREEMENT
CONTAINS PROVISIONS REGARDING CERTAIN RESTRICTIONS ON THE VOTING AND TRANSFER OF
SUCH SECURITIES AND CERTAIN OTHER MATTERS. A COPY OF THE INVESTOR RIGHTS
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
ANY TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF THE
AGREEMENT IS NULL AND VOID.
WARRANT TO PURCHASE COMMON STOCK OF ACCOM, INC.
(Subject to Adjustment)
NO. C-2 December 10, 1998
This Certifies That, for value received, Scitex Digital Video, Inc., a
Massachusetts corporation ("Scitex") or its permitted registered assigns
(together with Scitex, the "Holder"), is entitled, subject to the terms and
conditions of this Warrant, including, without limitation, Section 12 hereof, at
any time or from time to time after December 10, 1998 (the "Effective Date"),
and before 5:00 p.m. Pacific Time on the date of an Expiration Event (the
"Expiration Date"), to purchase from Accom, Inc., a Delaware corporation (the
"Company"), 750,000 shares of Common Stock of the Company (the "Shares") at a
price per share of $3.00 (the "Purchase Price"). Both the number of shares of
Common Stock purchasable upon exercise of this Warrant and the Purchase Price
are subject to adjustment and change as provided herein. This Warrant is issued
pursuant to that certain Asset Purchase Agreement dated as the date hereof by
and among the Company, Scitex, Scitex Corporation Ltd., and certain other
parties (the "Asset Purchase Agreement").
1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall
have the following respective meanings:
"Common Stock" shall mean the Company's Common Stock, $0.001 par value.
"Expiration Event" shall mean (a) 5:00 p.m. Pacific Time on December
10, 2008 or (b) the consummation of an acquisition of the Company by another
entity by means of any transaction or series of transactions (including, without
limitation, any reorganization, merger or consolidation) or the sale of all or
substantially all of the Company's assets or any other transaction, in which the
capital stock of the Company held by the Company's stockholders of record
immediately prior to such acquisition, sale or other transaction do not
represent, immediately after such acquisition or sale, at least fifty percent
(50%) of the voting power of the surviving or acquiring entity (such acquisition
or sale, an "Expiration Acquisition").
"Fair Market Value" of a share of Common Stock as of a particular date
shall mean:
(a) If traded on a securities exchange or the Nasdaq National
Market, the Fair Market Value shall be deemed to be the average of the closing
prices of the Common Stock of the Company on such exchange or market over the
five (5) business days ending immediately prior to the applicable date of
valuation;
(b) If actively traded over-the-counter, the Fair Market Value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair Market Value
shall be the value thereof, as determined in good faith by the Company's Board
of Directors upon a review of relevant factors.
"Person" shall mean any individual, corporation, partnership, limited
liability company, trust or other entity or organization, including any
governmental authority or political subdivision thereof.
"Registered Holder" shall mean any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"SEC" shall mean the United States Securities and Exchange Commission.
"Warrant" shall mean this Warrant and any warrant delivered in
substitution or exchange therefor as provided herein.
2. EXERCISE OF WARRANT
2.1. Payment. Subject to compliance with the terms and conditions of
this Warrant and applicable securities laws, this Warrant may be exercised on or
before the Expiration Date by the delivery (including, without limitation,
delivery by facsimile) of the form of Notice of Exercise attached hereto as
Exhibit 1 (the "Notice of Exercise"), duly executed by the Holder, at the
principal office of the Company, and as soon as practicable after such date,
surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash, by check or by wire transfer; (ii)
by cancellation by the Holder of indebtedness of the Company to the Holder; or
(iii) by any combination of (i) and
2
(ii), of an amount equal to the product obtained by multiplying the number of
shares of Common Stock being purchased upon such exercise by the then effective
Purchase Price (the "Exercise Amount").
2.2. Net Issue Exercise. In lieu of the payment methods set forth in
Section 2.1(b) above, the Holder may elect to exchange all or some of the
Warrant for shares of Common Stock equal to the value of the amount of the
Warrant being exchanged on the date of exchange. If the Holder elects to
exchange this Warrant as provided in this Section 2.2, the Holder shall tender
to the Company the Warrant for the amount being exchanged, along with written
notice of the Holder's election to exchange some or all of the Warrant, and the
Company shall issue to the Holder the number of shares of the Common Stock
computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to
the Holder;
Y = the number of shares of Common Stock purchasable under the
amount of the Warrant being exchanged (as adjusted to the date
of such calculation);
A = the Fair Market Value of one share of the Company's Common
Stock; and
B = the Purchase Price (as adjusted to the date of such
calculation).
All references herein to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 2.2.
2.3. Stock Certificates; Fractional Shares. As soon as practicable on
or after any date of exercise of this Warrant pursuant to this Section 2, the
Company shall issue and deliver to the Person entitled to receive the same a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share equal to such fraction of the current Fair Market Value of one whole share
of Common Stock as of the date of exercise of this Warrant. No fractional shares
or scrip representing fractional shares shall be issued upon an exercise of this
Warrant.
2.4. Partial Exercise; Effective Date of Exercise. This Warrant may be
partially exercised only in amounts that result in the issuance of 50,000 or
more shares of Common Stock. In case of any partial exercise of this Warrant,
the Company shall cancel this Warrant upon surrender hereof and shall execute
and deliver a new Warrant of like tenor and date for the balance of the shares
of Common Stock purchasable hereunder. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above. The Person entitled to receive the
shares of Common Stock issuable upon exercise of this Warrant shall be treated
for all purposes as the holder of record of such shares as of the close of
business on the date the Holder is deemed to have exercised this Warrant.
3
3. VALID ISSUANCE; TAXES. All shares of Common Stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and non-assessable. The Company
shall not pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any certificate for shares of Common Stock in any
name other than that of the Registered Holder of this Warrant, and in such case
the Company shall not be required to issue or deliver any stock certificate or
security until such tax or other charge has been paid, or it has been
established to the Company's reasonable satisfaction that no tax or other charge
is due.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of any
of the following events:
4.1. Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares. The Purchase Price of this Warrant shall be proportionally decreased and
the number of shares of Common Stock issuable upon exercise of this Warrant (or
any shares of stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Company's Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company's Common
Stock.
4.2. Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. If the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Holder of this Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other distribution, shall
receive, in addition to the shares of Common Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares or all other additional stock available by
it as aforesaid during such period giving effect to all adjustments called for
by this Section 4.
4.3. Reclassification. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4. No adjustment shall be made pursuant to this Section 4.3 upon any
conversion or redemption of the Common Stock which is the subject of Section
4.5.
4
4.4. Adjustment for Capital Reorganization, Merger or Consolidation. If
all or any capital reorganization of the capital stock of the Company (other
than an Expiration Acquisition or a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), or any merger or
consolidation of the Company with or into another corporation (other than an
Expiration Acquisition), or the sale of all or substantially all the assets of
the Company (other than an Expiration Acquisition), then, and in each such case,
as a part of such reorganization, merger, consolidation, sale or transfer,
lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Purchase Price then in effect,
the number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 4. The foregoing provisions of
this Section 4.4 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant. If the per-share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
4.5. Conversion of Common Stock. If all or any portion of the
authorized and outstanding shares of Common Stock of the Company are redeemed or
converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Common Stock
otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon
exercise hereof at any time after the date on which the Common Stock is so
redeemed or converted, reclassified or ceases to exist (the "Termination Date"),
shall receive, in lieu of the number of shares of Common Stock that would have
been issuable upon such exercise immediately prior to the Termination Date, the
shares of Common Stock that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been
simultaneously converted immediately prior to the Termination Date, all subject
to further adjustment as provided in this Warrant. Additionally, the Purchase
Price shall be immediately adjusted to equal the quotient obtained by dividing
(a) the aggregate Purchase Price of the maximum number of shares of Common Stock
for which this Warrant was exercisable immediately prior to the Termination Date
by (b) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the Termination Date, all subject to further
adjustment as provided herein.
5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and
5
cancellation of this Warrant, the Company shall execute and deliver in lieu
thereof a new Warrant of like tenor as the lost, stolen, destroyed or mutilated
Warrant.
6. RESERVATION OF COMMON STOCK. The Company hereby covenants that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, shall take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock or other
shares of capital stock of the Company issuable upon exercise of this Warrant.
All such shares shall be duly authorized, and when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights, except encumbrances or
restrictions arising under federal or state securities laws. Issuance of this
Warrant shall constitute full authority to the Company's officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock and Common Stock upon the
exercise of this Warrant.
7. TRANSFER AND EXCHANGE. The Warrant and any Common Stock issued upon exercise
of the Warrant is subject to, and may be transferred only in accordance with,
the Investor Rights Agreement (the "Investor Rights Agreement") dated as of the
date hereof by and between the Company and Scitex. In addition, this Warrant and
all rights hereunder may be transferred only in compliance with all applicable
securities laws and upon surrender of this Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer. Upon any permitted partial transfer, the Company shall issue and
deliver to the Registered Holder a new Warrant or Warrants with respect to the
shares of Common Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Registered
Holder hereof as the owner for all purposes.
8. RESTRICTIONS ON TRANSFER. The Holder, by acceptance hereof, agrees that,
absent an effective registration statement filed with the SEC under the
Securities Act of 1933, as amended (the "1933 Act"), covering the disposition or
sale of this Warrant or the Common Stock issued or issuable upon exercise hereof
or the Common Stock issuable upon conversion thereof, as the case may be, and
registration or qualification under applicable state securities laws, such
Holder shall not sell, transfer, pledge, or hypothecate any or all such Warrants
or Common Stock, as the case may be, unless either (a) the Company has received
an opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is not required in connection with
such disposition or (b) the sale of such securities is made pursuant to SEC Rule
144.
9. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants: (a) that any shares of stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired for investment
6
only and not with a view to, or for sale in connection with, any distribution
thereof; (b) that the Holder has had such opportunity as such Holder has deemed
adequate to obtain from representatives of the Company such information as is
necessary to permit the Holder to evaluate the merits and risks of its
investment in the Company; (c) that the Holder is able to bear the economic risk
of holding such shares as may be acquired pursuant to the exercise of this
Warrant for an indefinite period; (d) that the Holder understands that the
shares of stock acquired pursuant to the exercise of this Warrant or acquired
upon conversion thereof shall not be registered under the 1933 Act (unless
otherwise required pursuant to exercise by the Holder of the registration
rights, if any, previously granted to the Registered Holder) and shall be
"restricted securities" within the meaning of SEC Rule 144 and that the
exemption from registration under Rule 144 shall not be available for at least
one year from the date of exercise of this Warrant, subject to any special
treatment by the SEC for exercise of this Warrant pursuant to Section 2.2, and
even then shall not be available unless a public market then exists for the
stock, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and (e)
that all stock certificates representing shares of stock issued to the Holder
upon exercise of this Warrant or upon conversion of such shares may have affixed
thereto a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN
INVESTOR RIGHTS AGREEMENT DATED AS OF DECEMBER 10, 1998. THE INVESTOR
RIGHTS AGREEMENT CONTAINS PROVISIONS REGARDING CERTAIN RESTRICTIONS ON
THE VOTING, AND TRANSFER OF SUCH SECURITIES AND CERTAIN OTHER MATTERS.
A COPY OF THE INVESTOR RIGHTS AGREEMENT IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OF THE SECURITIES
EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF THE AGREEMENT IS NULL AND
VOID.
10. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company. In
the
7
absence of affirmative action by such Holder to purchase Common Stock by
exercise of this Warrant, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of the Holder hereof shall cause such Holder
hereof to be a stockholder of the Company for any purpose.
11. REGISTRATION RIGHTS. All shares of Common Stock or other shares of capital
stock of the Company issuable upon exercise of this Warrant shall be
"Registrable Securities" or such other definition of securities entitled to
registration rights pursuant to the Investor Rights Agreement, dated as of the
date hereof, between the Company and the Holder, and are entitled, subject to
the terms and conditions of that agreement, to all registration rights granted
to holders of Registrable Securities thereunder.
12. CALL OF WARRANTS. If the Common Stock has traded on any securities exchange,
Nasdaq National Market or over-the-counter market for 20 consecutive trading
days at a price of 140% of the Purchase Price, the Company shall have the right,
upon ten (10) days' written notice, to call this Warrant or any portion thereof
for redemption at a price of $0.01 per Share then outstanding under this
Warrant. The Company shall mail the notice of any call for redemption pursuant
to the preceding paragraph to the Holders not less than ten (10) days prior to
the date scheduled for redemption (such date scheduled for redemption, the "Call
Date"). Such notice shall state the date, place and price of such call. Each
Holder shall continue to have the right to exercise the Warrant until 5:00 p.m.,
Pacific Time, on the second business day preceding the Call Date. Payment of the
redemption price set forth above may be made by cash, check or wire transfer.
13. NOTICES. All notices and other communications from the Company to the Holder
shall be given in accordance with the Investor Rights Agreement.
14. NOTICES OF RECORD DATE. In case:
14.1. the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
this Warrant), for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any shares of
stock of any class or any other securities or to receive any other right whether
in connection with any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation or otherwise; or
14.2. the number of shares of Common Stock (or other stock or
securities at the time receivable upon exercise of this Warrant) to be issued
upon exercise of this Warrant is adjusted in any manner whatsoever that results
in a 10% or greater change in such number of shares;; or
14.3. of any voluntary dissolution, liquidation or winding-up of the
Company; or
14.4. of any redemption or conversion of all outstanding Common Stock;
8
then, and in each such case, the Company shall mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (a)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant),
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up, and in each case setting forth the
adjustment to the Common Stock to be effected pursuant to such action. Such
notice shall be delivered at least twenty-one (21) days prior to the date
therein specified.
15. MARKET STAND-OFF AGREEMENT. In addition to any restrictions in the Investor
Rights Agreements, the Holder agrees, upon request of the underwriter in
connection with an underwritten public offering of the Company's securities, not
to sell or otherwise transfer or dispose of any securities of the Company held
by the Holder for up to a 30 day period prior to and a 150 day period following
the effective date of such underwritten public offering.
16. MISCELLANEOUS.
16.1. Construction. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
16.2. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
16.3. Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
16.4. Section Headings. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
16.5. Saturdays, Sundays and Holidays. If the Expiration Date falls on
a Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
9
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10
IN WITNESS WHEREOF, the parties hereto have executed this Warrant on
the date first above written.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SIGNATURE PAGE TO WARRANT
11
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
ACCOM, INC. WARRANT NO. C-2
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of Accom, Inc., as provided for therein, and (check the
applicable box):
|_| Tenders herewith payment of the exercise price in full in the form of
cash or a certified or official bank check in same-day funds in the
amount of $____________ for _________ such securities.
|_| Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________
of such securities, according to the following calculation:
X = Y (A-B) ( ) = (____) [(_____) - (_____)]
------- --------------------------
A (_____)
Where X = the number of shares of Common Stock to be issued to
the Holder;
Y = the number of shares of Common Stock purchasable under the
amount of the Warrant being exchanged (as adjusted to the date
of such calculation);
A = the Fair Market Value of one share of the Common Stock;
and
B = the Purchase Price (as adjusted to the date of such
calculation).
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name: _____________________________________________
Address: _____________________________________________
Signature: _____________________________________________
Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
12
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant WARRANT NO. C-2
or a portion thereof)
For value received, hereby sells, assigns and transfers unto
________________________ the within Warrant or a portion thereof, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint ____________________________ attorney, to transfer said Warrant or
such portion thereof on the books of the within-named Company with respect to
the number of shares of Common Stock set forth below, with full power of
substitution in the premises:
-------------------------- ----------------------- -----------------------------
Name(s) of Assignee(s) Address # of Warrants
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
-------------------------- ----------------------- -----------------------------
And if said number of shares of Common stock shall not be all the shares of
Common Stock represented by the Warrant, a new Warrant is to be issued in the
name of said undersigned for the balance remaining of the shares of Common Stock
registered by the Warrant.
Dated: ________________________________________________
Signature: ________________________________________________
Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to SEC Rule 17Ad-15.
13
EXHIBIT B-1
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
$750,000 December 10, 1998
FOR VALUE RECEIVED, Accom, Inc., a Delaware corporation ("Maker"),
promises to pay to Scitex Digital Video, Inc., a Massachusetts corporation
("Payee"), in lawful money of the United States of America, the principal sum of
Seven Hundred Fifty Thousand ($750,000) together with interest in arrears on the
unpaid principal balance at a variable annual rate equal to the Xxxxxxx Xxxxx
Money Market Rate set forth in the Wall Street Journal, which rate shall be
established and adjusted as necessary at the beginning of each calendar quarter
during the term of this note. Interest shall be calculated on the basis of a
year of 365 or 366 days, as applicable, and charged for the actual number of
days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of an Asset Purchase Agreement dated as the date
hereof by and among Maker, Payee and certain other parties (the "Agreement") and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
1. PAYMENTS
1.1 Principal and Interest. Subject to Sections 1 and 3 hereof, the
principal amount of this Note then outstanding shall be due and payable on the
Note Offset Termination Date. Accrued, unpaid interest on the unpaid principal
balance of this Note shall be due and payable together with the payment of
principal as described above.
1.2 Manner of Payment. All payments of principal and interest on this
Note shall be made by wire transfer to such accounts as specified by Payee,
promptly upon request of Maker, or by check at Scitex America, Xxxxx Xxx Xxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, or at such other place in the United States
of America as Payee shall designate to Maker in writing. If any payment of
principal or interest on this Note is due on a day which is not a Business Day,
such payment shall be due on the next succeeding Business Day, and such
extension of time shall be taken into account in calculating the amount of
interest payable under this Note. "Business Day" means any day other than a
Saturday, Sunday or legal holiday in the State of California.
1.3 Optional Prepayment. Maker may, without premium or penalty, at any
time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.4 Right of Set-Off. At any time, Maker shall have the right to
withhold and set-off against any amount due hereunder the amount of any claim
for indemnification or payment of
damages to which Maker may be entitled under the Agreement as provided in
Section 9.4 thereof. Upon the exercise of Maker's right of set-off, such set-off
shall be considered a payment of the unpaid principal balance of this Note.
2. DEFAULTS.
2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for five (5)
Business Days after Payee notifies Maker thereof writing; provided, however,
that the exercise by Maker in good faith of its right of set-off pursuant to
Section 1.5 above, whether or not ultimately determined to be justified, shall
not constitute an Event of Default.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; or (iv) make an assignment for the
benefit of its creditors.
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case; (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties; or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
2.2 Remedies. Upon the occurrence of an Event of Default hereunder
(unless all Events of Default have been cured or waived by Payee), Payee may, at
its option, (i) by written notice to Maker, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon, immediately
due and payable regardless of any prior forbearance, and (ii) exercise any and
all rights and remedies available to it under applicable law, including, without
limitation, the right to collect from Maker all sums due under this Note. Maker
shall pay all reasonable attorneys' fees incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note.
3. SUBORDINATION.
3.1 Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner set forth in the
Subordination Agreement dated the date hereof between LaSalle Business Credit,
Inc. ("LaSalle") and Payee (the "Subordination Agreement"), in right of payment
to the prior payment in full of all Maker's Senior Indebtedness, as hereinafter
defined.
3.2 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean any and all indebtedness now or at any time or times
hereafter owing by Maker to LaSalle
2
(whether absolute or contingent, direct or indirect and howsoever evidenced
including, without limitation, all interest thereon) and all other demands,
claims, liabilities or causes of action for which Maker may now or at any time
or times hereafter in any way be liable to LaSalle, whether under any agreement,
instrument or document executed and delivered or made by Maker to LaSalle or
otherwise.
3.3 Effect of Subordination. Subject to the terms of the Subordination
Agreement and subject to the rights of the holders or payees of Senior
Indebtedness under this Section 3 to receive cash, securities or other
properties otherwise payable or deliverable to Payee of this Note, nothing
contained in this Section 3 shall impair, as between Maker and Payee, the
obligation of Maker, subject to the terms and conditions hereof, to pay to Payee
the principal hereof and interest hereon as and when the same become due and
payable, or shall prevent Payee of this Note, upon default hereunder, from
exercising all rights, powers and remedies otherwise provided herein or by
applicable law.
3.4 Undertaking. By its acceptance of this Note, Payee agrees to
execute and deliver such documents as may be reasonably requested from time to
time by Maker or the lender of any Senior Indebtedness in order to implement the
foregoing provisions of this Section 3.
4. MISCELLANEOUS.
4.1 Waiver. The rights and remedies of Payee under this Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Note shall be effective unless in a writing signed by Payee. Neither the
failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part, by a waiver or renunciation of the
claim or right unless in a writing, signed by Payee; (b) no waiver that may be
given by Payee will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on Maker will be deemed to be a waiver
of any obligation of Maker or of the right of Payee to take further action
without notice or demand as provided in this Note.
4.2 Notices. Any notice required or permitted to be given hereunder
shall be given in accordance with Section 11.2 of the Agreement.
4.3 Severability. Any provision of this Note which is invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Note invalid,
illegal or unenforceable in any other jurisdiction.
4.4 Governing Law. This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
3
4.5 Parties In Interest. This Note shall bind Maker and its successors
and assigns. This Note shall not be assigned or transferred by Maker or Payee
without the express prior written consent of Maker, except by operation of law
or in connection with the sale of all or substantially all of the stock or
assets of Maker or Payee (as applicable).
4.6 Section Headings, Construction. The headings of each Section,
subsection or other subdivision of this Note are for reference only and shall
not limit or control the meaning thereof. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Note unless
otherwise specified. All words used in this Note will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the words "hereof" and "hereunder" and similar references refer to
this Note in its entirety and not to any specific section or subsection hereof.
[The remainder of this page is intentionally left blank.]
4
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
5
EXHIBIT B-2
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
$1,315,000 December 10, 1998
FOR VALUE RECEIVED, Accom, Inc., a Delaware corporation ("Maker"),
promises to pay to Scitex Digital Video, Inc., a Massachusetts corporation
("Payee"), in lawful money of the United States of America, the principal sum of
One Million Three Hundred Fifteen Thousand Dollars ($1,315,000) together with
interest in arrears on the unpaid principal balance at an annual rate equal to
10% as adjusted pursuant to and in the manner provided below. Interest shall be
calculated on the basis of a year of 365 or 366 days, as applicable, and charged
for the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of an Asset Purchase Agreement dated as the date
hereof by and among Maker, Payee and certain other parties (the "Agreement") and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
1. PAYMENTS
1.1 Principal and Interest. Subject to Sections 1 and 3 hereof,
(a) On March 31, 1999 and on June 30, 1999, Maker shall make a
payment of principal in the amount of $300,000 (or such lesser amount as may
then be outstanding hereunder).
(b) Commencing on September 30, 1999, and on each December 31,
March 31, June 30 and September 30 thereafter until the principal amount and
accrued but unpaid interest under this Note is paid, Maker shall make a payment
of principal in the amount of $150,000 (or such lesser amount as may then be
outstanding hereunder).
(c) Accrued, unpaid interest on the unpaid principal balance
of this Note, as of any of the above payments of principal, shall be due and
payable with such payment.
1.2 Manner of Payment. All payments of principal and interest on this
Note shall be made by wire transfer to such accounts as specified by Payee,
promptly upon request of Maker, or by check at Scitex America, Xxxxx Xxx Xxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, or at such other place in the United States
of America as Payee shall designate to Maker in writing. If any payment of
principal or interest on this Note is due on a day which is not a Business Day,
such payment shall be due on the next succeeding Business Day, and such
extension of time shall be taken into account in calculating the amount of
interest payable under this Note. "Business Day" means any day other than a
Saturday, Sunday or legal holiday in the State of California.
1.3 Optional Prepayment. Maker may, without premium or penalty, at any
time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.4 Mandatory Prepayments.
(a) Certain Definitions.
For purposes of Sections 1.4(a) and 1.4(b), the
following terms shall have the following meaning:
(i) "Excess Availability" shall have the meaning
as defined for such term in the Loan and Security Agreement, dated as of
December 10, 1998, between Maker and LaSalle Business Credit, Inc. ("LaSalle"),
as it may be amended, renewed, extended or restated (the "Loan Agreement"), and
shall be that amount as calculated by and as acceptable to LaSalle as of the
appropriate date.
(ii) The "Revolver Balance" shall meaning the total
outstanding Revolving Loans (as defined in the Loan Agreement) as calculated by
and as acceptable to LaSalle as of the appropriate date.
(iii) The "Sweep Amount" shall be the Excess
Availability minus $1,500,000, as of the appropriate date, and as otherwise
complies with Section 14(a) of the Loan Agreement.
(b) Sweep Prepayment. Beginning on June 30, 1999 and on or
near the last day of each month thereafter, Maker will calculate the Sweep
Amount as of such date. Subject to Section 3 hereof, within 30 days of such
date, Maker shall pay Payee such Sweep Amount in accordance with Section 1.2.
Any such mandatory prepayments of the Sweep Amount shall be applied to
installments of principal in inverse order of their maturity.
1.5 Interest Rate Increase. Commencing on July 1, 1999, the interest
rate shall be increased to 11%, and the interest rate shall be increased by 1%
on each October 1, January 1, April 1 and July 1 thereafter, up to a maximum
interest rate of 16%.
2. DEFAULTS.
2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for five (5)
Business Days after Payee notifies Maker thereof writing.
2
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; or (iv) make an assignment for the
benefit of its creditors.
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case; (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties; or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
2.2 Remedies. Upon the occurrence of an Event of Default hereunder
(unless all Events of Default have been cured or waived by Payee), Payee may, at
its option, (i) by written notice to Maker, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon, immediately
due and payable regardless of any prior forbearance, and (ii) exercise any and
all rights and remedies available to it under applicable law, including, without
limitation, the right to collect from Maker all sums due under this Note. Maker
shall pay all reasonable attorneys' fees incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note.
3. SUBORDINATION.
3.1 Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner set forth in the
Subordination Agreement dated the date hereof between LaSalle Business Credit,
Inc. ("LaSalle") and Payee (the "Subordination Agreement"), in right of payment
to the prior payment in full of all Maker's Senior Indebtedness, as hereinafter
defined.
3.2 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean any and all indebtedness now or at any time or times
hereafter owing by Maker to LaSalle (whether absolute or contingent, direct or
indirect and howsoever evidenced including, without limitation, all interest
thereon) and all other demands, claims, liabilities or causes of action for
which Maker may now or at any time or times hereafter in any way be liable to
LaSalle, whether under any agreement, instrument or document executed and
delivered or made by Maker to LaSalle or otherwise.
3.3 Effect of Subordination. Subject to the terms of the Subordination
Agreement and subject to the rights of the holders or payees of Senior
Indebtedness under this Section 3 to receive cash, securities or other
properties otherwise payable or deliverable to Payee of this Note, nothing
contained in this Section 3 shall impair, as between Maker and Payee, the
obligation of Maker, subject to the terms and conditions hereof, to pay to Payee
the principal hereof and interest hereon as and when the same become due and
payable, or shall prevent Payee of this Note, upon default hereunder, from
exercising all rights, powers and remedies otherwise provided herein or by
applicable law.
3
3.4 Undertaking. By its acceptance of this Note, Payee agrees to
execute and deliver such documents as may be reasonably requested from time to
time by Maker or the lender of any Senior Indebtedness in order to implement the
foregoing provisions of this Section 3.
4. MISCELLANEOUS.
4.1 Waiver. The rights and remedies of Payee under this Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Note shall be effective unless in a writing signed by Payee. Neither the
failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part, by a waiver or renunciation of the
claim or right unless in a writing, signed by Payee; (b) no waiver that may be
given by Payee will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on Maker will be deemed to be a waiver
of any obligation of Maker or of the right of Payee to take further action
without notice or demand as provided in this Note.
4.2 Notices. Any notice required or permitted to be given hereunder
shall be given in accordance with Section 11.2 of the Agreement.
4.3 Severability. Any provision of this Note which is invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Note invalid,
illegal or unenforceable in any other jurisdiction.
4.4 Governing Law. This Note shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
4.5 Parties In Interest. This Note shall bind Maker and its successors
and assigns. This Note shall not be assigned or transferred by Maker or Payee
without the express prior written consent of Maker, except by operation of law
or in connection with the sale of all or substantially all of the stock or
assets of Maker or Payee (as applicable).
4.6 Section Headings, Construction. The headings of each Section,
subsection or other subdivision of this Note are for reference only and shall
not limit or control the meaning thereof. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Note unless
otherwise specified. All words used in this Note will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the words "hereof" and "hereunder" and similar references refer to
this Note in its entirety and not to any specific section or subsection hereof.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
5
EXHIBIT C-1
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of December
10, 1998 by and among Accom, Inc., a Delaware corporation ("Buyer"), Scitex
Digital Video, Inc., a Massachusetts corporation ("Seller"), Scitex Corporation
Ltd., a corporation formed under the laws of Israel ("Parent"), Scitex
Development Corp., a Massachusetts corporation ("Scitex Development"), Scitex
Digital Video (Asia Pacific), Inc., a California corporation ("Scitex Asia"),
and Scitex Digital Video (Europe) Ltd., a private limited company formed under
the laws of England ("Scitex Europe"). Each of Seller, Parent, Scitex
Development, Scitex Asia and Scitex Europe shall be referred to as a
"Covenantor" and collectively as the "Covenantors."
RECITALS
A. Buyer, Seller and Parent and certain other parties have entered into
the Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. As a condition to its willingness to enter into the Asset Purchase
Agreement and in consideration of a portion of the Purchase Price set forth in
Section 2.1 of the Asset Purchase Agreement, Buyer has required that each of the
Covenantors agree, and each Covenantor has agreed, to the covenants not to
compete in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Agreement and to induce the Buyer to consummate
the transactions contemplated by the Asset Purchase Agreement, each Covenantor
agrees and covenants as follows:
1. Noncompetition.
(a) During the period commencing on the date hereof and ending
on the expiration of seven (7) years following the date hereof, the Covenantor
shall not, directly or indirectly (including without limitation, through any
subsidiary or other Affiliate (as defined herein) of the Covenantor), own,
manage, operate, control or otherwise engage or participate in or be connected
as a partner, lender or creditor (other than credit arrangements in the ordinary
course of business operations), guarantor, advisor, or consultant in, any
business that competes against the business of designing, manufacturing, selling
and supporting digital video editing and disk recording tools and virtual set
systems, including, but not limited to, tools and systems for the professional
video and television production, post production, distribution, effects
generation and multimedia marketplaces (the "Business").
(b) Consistent with the foregoing provisions of Section 1(a),
the Covenantors or any subsidiaries of the Covenantors may own (i) such shares
of such companies as listed
Schedule A hereto, provided that in no event shall any of the Covenantors (or
any of their respective Affiliates) acquire any additional ownership interest
(or right to acquire any ownership interest) in such companies (except as
specifically set forth in the footnote to Schedule A with respect to Scidel
Technologies) and (ii) securities in any publicly held corporation that may be
deemed to compete with the Business, but, with respect to clause (ii) only to
the extent the Covenantors and their subsidiaries, in the aggregate, do not own,
of record or beneficially, more than 2% of the outstanding beneficial ownership
of such publicly held corporation.
(c) The restrictions set forth in this Section 1 shall apply
worldwide (the "Business Area").
2. Nonsolicitation and Non-Hiring of Employees. For the period
commencing on the date hereof and ending on the expiration of seven (7) years
following the date hereof, the Covenantor shall not, either on its own account
or for any Person (including without limitation, through any subsidiary or other
Affiliate of the Covenantor), solicit, interfere with, or endeavor to cause any
employee of the Business conducted by Buyer to leave his or her employment or
induce or attempt to induce any such employee to terminate or breach his or her
employment agreement, if any, except pursuant to, and in connection with,
general advertisements (whether published in newspapers, posted on the intranet
or otherwise distributed to the general public) announcing the general
availability of employment opportunities with the Covenantor so long as such
advertisements are not specifically targeted to the employees of Buyer or its
subsidiaries or other Affiliates. For the period commencing on the date hereof
and ending on the expiration of three (3) years following the date hereof, the
Covenantor shall not, either on its own account or for any Person (including
without limitation, through any subsidiary or other Affiliate of the
Covenantor), hire any employee or consultant of the Buyer.
3. Nonsolicitation of Customers. For the period commencing on the date
hereof and ending on the expiration of ten (10) years months following the date
hereof, the Covenantor shall not, directly or indirectly (including without
limitation, through any subsidiary or other Affiliate of the Covenantor),
solicit, induce or attempt to induce any past, current or future customer of the
Business in the Business Area to cease doing business in whole or in part with
Buyer with respect to the products developed, sold or licensed by the Business.
4. Stay of Time. In the event a court of competent jurisdiction or
other Person mutually selected by the parties to resolve any dispute
(collectively a "Court") has determined that the Covenantor has violated the
provisions of this Agreement, the running of the time period of such provisions
so violated shall (if and only if no damages have been or ultimately are imposed
on Covenantor with respect to such violation) be automatically suspended as of
the date of such violation and shall resume on the date that the Court
determines that such violation has permanently ceased.
5. Injunctive Relief. The remedy at law for any breach of this
Agreement is and will be inadequate, and in the event of a breach or threatened
breach by the Covenantor of the provisions of this Agreement, Buyer shall be
entitled to an injunction restraining the Covenantor from violating the
provisions of this Agreement. Nothing herein contained shall be construed as
prohibiting Buyer from pursuing any other remedies available to it or them for
such breach or
2
threatened breach, including, without limitation, the recovery of damages from
the Covenantor and indemnification under Section 9 of the Asset Purchase
Agreement.
6. Separate Covenants. This Agreement shall be deemed to consist of a
series of separate covenants, one for each line of business carried on by the
Business in each county, state, country or other region included within the
Business Area. The parties expressly agree that the character, duration and
geographical scope of this Agreement are reasonable in light of the corporate
form of the Covenantors and in light of the circumstances as they exist on the
date upon which this Agreement has been executed. However, should a
determination nonetheless be made by a court of competent jurisdiction at a
later date that the character, duration or geographical scope of this Agreement
is unreasonable in light of the circumstances as they then exist, then it is the
intention and the agreement of each Covenantor that this Agreement shall be
construed by the court in such a manner as to impose only those restrictions on
the conduct of each Covenantor which are reasonable in light of the
circumstances as they then exist and as are necessary to assure Buyer of the
intended benefit of this Agreement. If, in any judicial proceeding, a court
shall refuse to enforce all of the separate covenants deemed included herein
because, taken together, they are more extensive than necessary to assure Buyer
of the intended benefit of this Agreement, it is expressly understood and agreed
between the parties hereto that those of such covenants which, if eliminated,
would permit the remaining separate covenants to be enforced in such proceeding
shall, for the purpose of such proceeding, be deemed eliminated from the
provisions hereof.
7. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "Affiliate" of any Person, means (i) any other Person
controlling, controlled by or under common control with such Person, (ii) any
executive officer of such Person or of any Affiliate of such Person and (iii)
any immediate family member of any executive officer of such Person or any
executive officer of any Affiliate of such Person.
(b) "Person" means any natural person, corporation,
partnership, limited liability company, firm, association, trust, "group" within
the meaning of Section 13(d)(3) of the Exchange Act, government, governmental
agency, or other legal entity, whether acting in an individual, fiduciary or
other capacity.
8. Miscellaneous Provisions.
(a) Construction. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware.
(b) Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be given in accordance
with the Asset Purchase Agreement.
(c) Assignment. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof nor any of the
documents executed in connection herewith may be assigned by any party without
the consent of the other parties; however, that
3
Buyer may assign its rights hereunder, without the consent of any Covenantor, to
any entity that acquires or succeeds to the Business. Nothing contained herein,
express or implied, is intended to confer upon any Person other than the parties
hereto and their successors in interest and permitted assignees any rights or
remedies under or by reason of this Agreement unless so stated herein to the
contrary.
(d) Amendments and Waivers. This Agreement may be modified
only by a written instrument duly executed by each party. No condition to any
party's obligations and no breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party whose obligations are subject to such condition or who might assert such
breach. No waiver of any right hereunder shall operate as a waiver of any other
right or of the same or a similar right on another occasion.
(e) Survival. The covenants, agreements, warranties and
representations entered into or made pursuant to this Agreement, irrespective of
any investigation made by or on behalf of any party, shall be continuing.
(f) Attorneys' Fees. In the event that any action or
proceeding, including arbitration, is commenced by any party hereto for the
purpose of enforcing any provision of this Agreement, the parties to such
action, proceeding or arbitration may receive as part of any award, judgment,
decision or other resolution of such action, proceeding or arbitration their
costs and reasonable attorneys' fees as determined by the Person making such
award, judgment, decision or resolution. Should any claim hereunder be settled
short of the commencement of any such action or proceeding, including
arbitration, the parties in such settlement shall be entitled to include as part
of the damages alleged to have been incurred reasonable costs of attorneys or
other professionals in investigation or counseling on such claim.
(g) Binding Nature of Agreement. This Agreement includes each
of the Schedules and Exhibits which are referred to herein or attached hereto,
all of which are incorporated by reference herein. All the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective executors, heirs, legal representatives, successors
and assigns.
(h) Entire Agreement. This Agreement, together with the Asset
Purchase Agreement and the ancillary documents executed in connection therewith,
contains the entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter hereof.
(i) Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
(j) Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such
4
counterparts shall together constitute but one and the same instrument.
(k) Section Headings. The headings of each Section, subsection
or other subdivision of this Agreement are for reference only and shall not
limit or control the meaning thereof.
(l) Acquisition of Covenantor. Notwithstanding any of the
other provisions of this Agreement, if a Covenantor is acquired by or otherwise
combined with an unaffiliated third party (an "Acquiror"), pursuant to a sale of
all or substantially all of the assets of such Covenantor or other transaction
in which the shareholders of such Covenantor immediately prior to such
transaction do not own 50% or more of the outstanding equity of the Acquiror (or
the surviving corporation in a merger), then such Acquiror shall not be deemed
to be bound by the provisions hereof, but Covenantor and any business that was
operated by Covenantor prior to such acquisition or after such acquisition shall
continue to be bound by the provisions of this Agreement.
9. Submission to Jurisdiction; Agent for Service. EACH OF THE
PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF SANTA XXXXX, STATE OF CALIFORNIA, AND IRREVOCABLY
AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY
AGREEMENT OR INSTRUMENT EXECUTED HEREUNDER SHALL BE LITIGATED IN SUCH COURTS,
AND EACH OF THE PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE IN THE MANNER SET FORTH IN SECTION
8(b). Nothing contained in this Section 9 shall affect the right of any party to
serve legal process on any other party in any other manner permitted by law.
5
IN WITNESS WHEREOF, the parties have executed this Noncompetition
Agreement as of the date first written above.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX CORPORATION LTD.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DEVELOPMENT CORP.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
6
SCITEX DIGITAL VIDEO
(ASIA PACIFIC), INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DIGITAL VIDEO (EUROPE) LTD.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
7
SCHEDULE A
Shares owned
Name of Company, Jurisdiction as of the date hereof
----------------------------------------- -------------------------------------
True Vision, Inc., 1,820,000 shares of common stock
a Delaware corporation
Scidel Technologies Ltd., 420,700 Ordinary Shares;
an Israeli corporation 199,900 Deferred Shares;
22,086 Preferred B Shares;
Warrants for 11,043 [____] shares (1)
Pitango Multimedia Ltd., 199,000 Ordinary Shares
an Israeli corporation
_____________________________________
(1) The Covenantors may, in the aggregate, acquire up to a 50% ownership
interest in Scidel Technologies.
EXHIBIT C-2
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered
into as of December 10, 1998 by and among Accom, Inc., a Delaware corporation
(the "Company"), and Scitex Digital Video, Inc., a Massachusetts corporation
(the "Investor").
RECITALS
A. The Investor has agreed to acquire from the Company, and the Company
has agreed to issue to the Investor, two Warrants (the "Warrants") on the terms
and conditions set forth in the Asset Purchase Agreement dated as the date
hereof by and among the Company, Scitex Corporation Ltd., a Massachusetts
corporation, the Investor and certain other parties (the "Asset Purchase
Agreement").
B. As a condition to the issuance of the Warrants to the Investor, the
Issuer has agreed to certain restrictions related to the ownership of stock of
the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Acquisition of Additional Shares, Voting, Transfer and Other
Restrictions.
1.1 Certain Definitions. All capitalized terms used but not defined in
this Agreement shall have the meaning as defined for such term in the Asset
Purchase Agreement. In addition, as used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" of any Person, means (i) any other Person
controlling, controlled by or under common control with such Person, (ii) any
director or executive officer of such Person or of any Affiliate of such Person
and (iii) any immediate family member of any director or executive officer of
such Person or any director or executive officer of any Affiliate of such
Person.
"Asset Purchase Closing" means the Closing as defined in the
Asset Purchase Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
"Common Stock" means the Company's common stock, $0.001 par
value.
"Company Securities" mean any option, warrant, other right to
acquire Voting Securities or other capital stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
"Effective Period" means the period from the date of this
Agreement until December ___, 2008.
"Investor Shares" means the Warrants and the Common Stock or
other shares of capital stock issued upon exercise of the Warrants.
"Person" means any natural person, corporation, partnership,
limited liability company, firm, association, trust, "group" within the meaning
of Section 13(d)(3) of the Exchange Act, government, governmental agency, or
other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Permitted Transferee" means, with respect to each Person
bound by the terms of this Agreement, (i) in respect of the Investor, any
descendant, Affiliate or associate (as such term is defined in Rule 405 of the
Securities Act) of the Investor or any other Permitted Transferee of such
Affiliate; (ii) the Company; (iii) in the event of the dissolution, liquidation
or winding up of any such Person that is a corporation or a partnership, the
partners of a partnership that is such Person, the stockholder of a corporation
that is such Person or a successor partnership all of the partners of which or a
successor corporation all of the stockholder of which are the Persons who were
the partners of such partnership or the stockholder of such corporation
immediately prior to the dissolution, liquidation or winding up of such Person;
(iv) a transferee by testamentary or intestate disposition; (v) a transferee by
inter vivos transfer to the transferring Person's spouse, children and/or other
lineal descendants; (vi) a trust transferee by inter vivos transfer, the
beneficiaries of which are the transferring Person, spouse, children and/or
other lineal descendants; (vii) a successor nominee or trustee for the
beneficial owner of the shares for which such Person acts as nominee or trustee,
as the case may be, or (viii) a Person who acquires all or substantially all of
the stock or assets of such Person; provided, however, that any such Permitted
Transferee shall have agreed in writing in form and substance satisfactory to
the Company to be bound by, and hold the Registrable Securities acquired by it
subject to, the terms of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, as the same shall be in
effect at the time.
"Total Voting Power" at any time means the total combined
voting power in the general election of directors of all the Voting Securities
then outstanding.
"Transfer" means any sale, transfer, pledge, encumbrance or
other disposition.
"Voting Securities" means any shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of directors.
2
1.2 Acquisition of Additional Shares.
(a) The Investor covenants and agrees with the Company that,
during the Effective Period, the Investor will not, and will not permit any of
its Affiliates, in either case without the prior written consent of the Company,
to acquire Beneficial Ownership of any Company Securities other than the
Investor Shares.
(b) If at any time, as the result of any transaction or
circumstances, the Investor and its Affiliates shall acquire Beneficial
Ownership of any Company Securities other than the Investor Shares,
inadvertently or otherwise, in violation of this Agreement, then the Investor
shall promptly take such action as may be necessary or appropriate to divest
such Beneficial Ownership of Company Securities.
1.3. Voting; Irrevocable Proxy; Further Assurances. The Investor
covenants and agrees with the Company that:
(a) During the Effective Period, at all meetings of the
stockholders of the Company, in the election of directors and upon any and all
matters, which may be submitted to a vote or approval of the stockholders of the
Company, at any stockholder's regular or special meeting or in any action taken
by written consent of the stockholders of the Company taken without a meeting,
the Investor shall (or, with respect to Voting Securities Beneficially Owned by
its Affiliates, shall use its best efforts to) (i) cause all Voting Securities
Beneficially Owned by it or its Affiliates to be present or represented for the
purpose of establishing a quorum and (ii) cause all Voting Securities
Beneficially Owned by it or any of its Affiliates to be voted in accordance with
the instructions of the majority of the Board of Directors of the Company. The
provisions of this Section 1.3(a) shall remain in effect regardless of the
effectiveness of the Proxy granted pursuant to Section 1.3(b) below, including
if for any reason the Proxy is deemed void, unlawful or otherwise ineffective.
(b) Contemporaneously with the Investor's execution and
delivery of this Agreement, the Investor shall grant and deliver to the Company
an irrevocable proxy with respect to all present and future Investor Shares in
the form attached hereto as Exhibit A (the "Proxy"), pursuant to the provisions
of Section 212 of the Delaware General Corporation Law. The Investor
acknowledges and affirms that the Proxy is given as a condition of this
Agreement and the Asset Purchase Agreement and as such is coupled with an
interest in the Investor Shares and is irrevocable. Pursuant to the Proxy,
Investor grants to the person named therein (the "Proxy Holder") the right to
vote, or to execute and deliver written consents or otherwise act with respect
to, any and all Voting Securities eligible to vote on any manner submitted to
the stockholders of the Company at the Proxy Holder's sole and absolute
discretion, to the same effect and extent as the Investor might or could do
under any applicable laws or regulations governing the rights and powers of a
Delaware corporation. The Proxy shall remain in effect during the Effective
Period.
(c) The Investor agrees to perform in good faith such further
acts and execute such further documents and instruments as may be required to
vest in the Company and the Proxy Holder the power to carry out and give effect
to the provisions of this Agreement and the Proxy.
3
1.4. Further Restrictions on Conduct. The Investor covenants and agrees
with the Company that, during the Effective Period, neither it nor any of its
Affiliates shall:
(a) initiate, propose, make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" to vote, or seek to
influence any Person with respect to the voting of, any Company Securities, or
become a "participant" in a "solicitation" or "election contest" (as such terms
are defined or used in Regulation 14A under the Exchange Act), in any election
contest with respect to the election or removal of the members of the Board,
except for any of the foregoing actions taken in support of any recommendation
of the Board;
(b) other than a transaction permitted by Section 1.5(b)(iv)
hereof, solicit, offer, seek or propose to acquire shares of Company Securities
in excess of the number of shares permitted by this Agreement, whether directly
or indirectly through a tender offer, proxy or consent solicitation, exchange
offer, merger proposal or otherwise; or
(c) become a member of a "group" within the meaning of Section
13(d)(3) of the Exchange Act with any person other than the Investor and its
Affiliates.
1.5 Restrictions on Transfer. The Investor covenants and agrees with
the Company that:
(a) until the third anniversary of the date of this Agreement,
the Investor will not Transfer any of the Investor Shares to any Person other
than a Permitted Transferee except through;
(i) a Transfer through a bona fide underwritten
public offering registered under the Securities Act effected in accordance with
the provisions of Section 2.4 hereof, with an underwriter or underwriters and
pursuant to procedures reasonably acceptable to the Company, intended to achieve
a broad public distribution of the Investor Shares covered thereby; or
(ii) Transfers in normal and customary
open-market transactions on a national securities exchange, provided that the
total number of Investor Shares so transferred by the Investor in any one-week
period shall not exceed the greater of (a) one percent (1%) of the outstanding
shares of the Common Stock or (b) twenty percent (20%) of the average weekly
trading volume for Common Stock for the four weeks immediately preceding the
week in which the relevant Transfer occurs.
(b) after the third anniversary of the date of this Agreement,
the Investor will not Transfer any Investor Shares except through:
(i) a Transfer through a bona fide underwritten
public offering registered under the Securities Act effected in accordance with
the provisions of Section 2 hereof, with an underwriter or underwriters and
pursuant to procedures reasonably acceptable to the Company, intended to achieve
a broad public distribution of the Investor Shares covered thereby;
4
(ii) Transfers in normal and customary
open-market transactions on a national securities exchange, provided that the
total number of Investor Shares so transferred by the Investor in any one-week
period shall not exceed the greater of (a) one percent (1%) of the outstanding
shares of the Common Stock or (b) twenty percent (20%) of the average weekly
trading volume for Common Stock for the four weeks immediately preceding the
week in which the relevant Transfer occurs;
(iii) a Transfer of the Investor Shares, other
than pursuant to (ii) above, provided that: (A) the aggregate number of Investor
Shares so Transferred in any transaction or series of related transactions with
any Person does not exceed five percent (5%) of the Company Securities then
outstanding and (B) the Person to whom the Investor Shares are transferred does
not and will not, as the result of such Transfer, Beneficially Own Company
Securities aggregating more than five percent (5%) of the total number of
Company Securities then outstanding;
(iv) a Transfer of all or substantially all of
the Investor Shares in a transaction involving the opportunity for all holders
of Company Securities other than the Investor to dispose of all or a
proportionate part of such Company Securities for the same consideration as, and
on terms and conditions not materially less favorable than those available to
the Investor; or
(v) a Transfer by the Investor to a Permitted
Transferee.
2. Registration Rights.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement
(b) Registrable Securities. The term "Registrable Securities"
means any Common Stock or other shares of capital stock of the Company (i)
issued or to be issued upon exercise of the Warrants and (ii) issued by way of
stock dividend or stock split or other distribution, recapitalization or
reclassification with respect to, or in exchange for, or in replacement of, any
other Registrable Securities (such shares referred to herein as the "Warrant
Shares"). Notwithstanding the foregoing, "Registrable Securities" shall exclude
any Registrable Securities sold by a person in a transaction in which rights
under this Section 2 are not assigned in accordance with this Agreement or any
Registrable Securities sold in a public offering, whether sold pursuant to Rule
144 promulgated under the Securities Act, or in a registered offering, or
otherwise.
(c) Registrable Securities Then Outstanding. The number of
shares of "Registrable Securities then outstanding" shall mean the number of
shares of Common Stock of the Company that are Registrable Securities and (l)
are then issued and outstanding or (2) are
5
then issuable pursuant to an exercise of the Warrants or pursuant to conversion
of securities issuable pursuant to an exercise of the Warrants.
(d) Holder. For purposes of this Section 2, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public or pursuant to Rule 144 promulgated under the Securities Act or
any permitted assignee of record of such Registrable Securities to whom rights
under this Section 2 have been duly assigned in accordance with this Agreement.
(e) SEC. The term "SEC" or "Commission" means the U.S.
Securities and Exchange Commission.
2.2 Demand Registration.
(a) Request by Holders. If the Company shall at any time after
the first anniversary of the date hereof receive a written request from any of
the Holders of the Registrable Securities then outstanding that the Company file
a registration statement under the Securities Act covering the registration of
Registrable Securities pursuant to this Section 2.2, then the Company shall,
within fifteen (15) business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all Holders, and effect, as
soon as practicable, the registration under the Securities Act of all
Registrable Securities that Holders request to be registered and included in
such registration by written notice given such Holders to the Company within
fifteen (15) days after receipt of the Request Notice, subject only to the
limitations of this Section 2.2; provided that the Registrable Securities
requested by all Holders to be registered pursuant to such request must be at
least fifty percent (50%) of all Registrable Securities then outstanding; and
provided further that the Company shall not be obligated to effect any such
registration if the Company has, within the six (6) month period preceding the
date of such request, already effected a registration under the Securities Act
pursuant to this Section 2.2, or in which the Holders had an opportunity to
participate pursuant to the provisions of Section 2.3 if at least 50% of the
number of Registrable Securities as to which registration was requested by the
Holders were registered therein.
(b) Underwriting. If the Holders initiating the registration
request under this Section 2.2 ("Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice referred to in subsection 2.2(a). In addition, the right of any
Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting by the Company and reasonably
acceptable to a majority of the Holders participating in such offering. Such
underwriting agreement shall include a market stand-off agreement of up to 180
days if required by such underwriter. Notwithstanding any other provision of
this Section 2.2, if the underwriter
6
advises the Company in writing that marketing factors require a limitation of
the number of securities to be underwritten then the Company shall so advise all
Holders of Registrable Securities which would otherwise be registered and
underwritten pursuant hereto, and the number of Registrable Securities that may
be included in the underwriting shall be reduced as required by the underwriter
and allocated among the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then outstanding held by each
Holder requesting registration (including the initiating Holders). If any such
exclusion causes less than 50% of the number of shares of Registrable Securities
as to which registration was requested by the Holders to be registered, such
registration may be withdrawn at the request of a majority of the Holders of
Registrable Securities to be included in such offering and, if so withdrawn
within ten (10) days after such Holders are notified of such exclusion, such
registration shall not constitute a request for registration under Section
2.2(e). Any Registrable Securities excluded and withdrawn from such underwriting
shall be withdrawn from the registration.
(c) Maximum Number of Demand Registrations. The Company shall
be obligated to effect only two (2) such registrations pursuant to this Section
2.2.
(d) Deferral. Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting the filing of a registration statement
pursuant to this Section 2.2, a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board, it would be materially detrimental to the Company for such registration
statement to be filed, then 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 Initiating Holders; provided, however, that the Company
may not utilize this right more than once in any twelve (12) month period.
(e) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.2, including without limitation all
federal and state securities and "blue sky" registration fees, filing and
qualification fees, printer's and accounting fees, and fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders and legal fees of counsel for any of the
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.2 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers. In addition, each Holder shall bear such
Holders' legal fees, in connection with such offering by the Holders.
Notwithstanding the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 2.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered, unless the Holders
of a majority of the Registrable Securities to be registered pursuant to such
request agree that such registration constitutes the use by the Holders of one
(1) demand registration pursuant to this Section 2.2 (in which case such
registration shall also constitute the use by all Holders of Registrable
Securities of one (l) such demand registration); provided, further, however,
that if at the time of such withdrawal, such Holders have learned of a material
adverse change in the condition, business, or prospects of the Company not known
to the Holders at the time of their request for such registration and have
withdrawn their request for registration
7
with reasonable promptness after learning of such material adverse change, then
the Holders shall not be required to pay any of such expenses and such
registration shall not constitute the use of a demand registration pursuant to
this Section 2.2.
(e) Notwithstanding any provision of this Agreement, the
Company shall not be obligated to effect any registration pursuant to this
Section 2.2 if at the time of any request for such registration, the Registrable
Securities are not listed for trading on the New York Stock Exchange, Nasdaq
National Market or any other equivalent United States stock market or exchange.
2.3 Piggyback Registrations.
(a) The Company shall notify all Holders of Registrable
Securities in writing at least thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any registration under Section 2.2
of this Agreement, to any employee benefit plan, to any corporate reorganization
or to a sale solely in connection with a Rule 145 transaction or a registration
statement which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities) and will afford each such Holder an opportunity to
include in such registration statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by
such Holder shall within fifteen (15) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities such Holder
wishes to include in such registration statement. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(b) Underwriting. If a registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriters selected by the Company for such
underwriting (including a market stand-off agreement of up to 180 days if
required by such underwriters) on terms no less favorable to such Holders than
available to the Company if the Company is participating in such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, then the managing underwriters may
exclude shares from the registration and the underwriting, and the number of
shares that may be
8
included in the registration and the underwriting shall be allocated, first to
the Company, and second, to each of the Holders requesting inclusion of their
Registrable Securities in such registration statement and each of the other
holders of Common Stock with similar registration rights, if any, on a pro rata
basis based on the total number of Registrable Securities then held by each such
Holder and Common Stock of any other holder participating in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, the Holder and the partners
and retired partners of such Holder, or the estates and family members of any
such partners and retired partners and any trusts for the benefit of any of the
foregoing persons, and for any Holder that is a corporation, the Holder and all
corporations that are affiliates of such Holder shall be deemed to be a single
"Holder," and any pro rata reduction with respect to such "Holder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "Holder," as defined in this
sentence.
(c) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.3, including without limitation all
federal and state securities and "blue sky" registration fees, filing and
qualification fees, printer's and accounting fees, and fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders and legal fees of counsel for any of the
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.3 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers. In addition, each Holder shall bear such
Holders' legal fees, in connection with such offering by the Holders.
(d) Not Demand Registration. Registration pursuant to this
Section 2.3 shall not be deemed to be a demand registration as described in
Section 2.2 above. Except as otherwise provided herein, there shall be no limit
on the number of times the Holders may request registration of Registrable
Securities under this Section 2.3.
2.4 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, provided, however, that the
Company shall not be required to keep any such registration statement effective
for more than one hundred twenty (120) days. Prior to filing a registration
statement or prospectus relating to the sale of Registrable Securities, or any
amendments or supplements thereto, the Company will furnish to counsel
representing the Holders of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed, which
documents will be subject to the review of such counsel within five (5) business
days after receipt thereof.
9
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to keep such registration
statement effective during the distribution period and comply with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
of the SEC thereunder with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such number of copies of such
registration statement, and of each amendment and supplement thereto, such
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 the Registrable
Securities owned by them that are included in such registration.
(d) Use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of each of the 50 states of the United States (or
such jurisdictions as each seller shall reasonably request), or obtain
appropriate exemptions therefrom, and keep such state securities/"blue sky"
registrations effective, or keep the appropriate exemption therefrom effective,
during the effective period of such registration statement, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller in accordance with their intended
method of distribution thereof, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this case (d), it would
not be obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction.
(e) Notify promptly each seller of any such Registrable
Securities covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (b) of this Section 2.4, of the Company's
becoming aware that 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 in light of the circumstances then existing, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
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;
(f) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen months)
after the effective date of the registration statement, if required, an earnings
statement which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
10
(g) (i) Use reasonable efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is then listed,
if any, if such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange and desired by the
Company; and (ii) use reasonable efforts to provide a transfer agent and
registrar for such Registrable Securities covered by such registration statement
not later than when such distribution so requires an agent or registrar, if any;
(h) to the extent permitted by the rules of the AICPA, if
requested by the underwriters in any underwritten offering, use reasonable
efforts to obtain for such underwriters a "cold comfort" letter or letters from
the Company's independent public accountants in customary form;
(i) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) notify the Holders of Registrable Securities included in
such registration statement promptly (i) when the registration statement, or any
post-effective amendment to the amendment prospectus shall have been filed, (ii)
of the receipt of any comments from the SEC and (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of the registration statement or
of any order preventing or suspending the use of any preliminary prospectus, or
of the suspension of the qualification of the registration statement for
offering or sale in any jurisdiction, or of the institution or threatening of
any proceedings for any of such purposes;
(k) if requested by the managing underwriter or agent or any
Holder of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, without limitation, the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent and any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon practicable after being notified
of the matters incorporated in such prospectus supplement or post-effective
amendment;
(l) cooperate with the Holders of Registrable Securities
covered by the registration statement and the managing underwriter or agent, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities sold under the
registration statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter or agent, if any, or
such Holders may request;
11
(m) obtain for delivery to the Holders of Registrable
Securities being registered and to the underwriter or agent an opinion or
opinions of counsel for the Company in customary form and in form, substance and
scope reasonably satisfactory to such Holders, underwriters or agents and their
counsel; and
(n) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD.
2.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2.2 or 2.3
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to timely effect the
Registration of their Registrable Securities.
2.6 Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2.2 or 2.3:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners, officers,
directors and Affiliates of each Holder, any underwriter (as determined in the
Securities Act) for such Holder and each person, if any, who controls, is under
common control or is controlled by such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended, (the
"1934 Act"), against any and all losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, the 1934
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof whether or not such identified party
is a party thereto) 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 or 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 (in the case of a
prospectus, in light of the circumstances under which they
were made) not misleading, or
(iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any federal or
state securities law or any rule or regulation promulgated
under the Securities Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer, director or
Affiliate thereof, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as
12
incurred, in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 2.6(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 through an instrument or document provided by such
Holder, partner, officer, director, underwriter or controlling person of such
Holder specifically stating that it is for use in preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any indemnified party and shall survive
the transfer of such securities by such seller.
(b) By Selling Holders. To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its Affiliates, each of its officers who have signed the
registration statement, each person, if any, who controls or is under common
control or controlled by the Company within the meaning of the Securities Act,
any underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder within the meaning of the Securities Act or the
1934 Act, against any and all losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto whether or not such identified
party is a party 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 specifically stating that it is for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, Affiliate,
controlling person, underwriter or other Holder, partner, officer, director or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however,
that the indemnity agreement contained in this subsection 2.6(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; and provided, further, that the
total amounts payable in indemnity by a Holder under this Section 2.6(b) in
respect of any Violation shall not exceed the net proceeds received by such
Holder in the registered offering out of which such Violation arises; provided
further, however, that such Holder shall not be obligated to provide such
indemnity to the extent that such losses, claims or liabilities result from the
failure of the Company to promptly amend or take action to correct or supplement
any such registration statement or prospectus on the basis of corrected or
supplemental information furnished in writing to the Company by such Holder
expressly for such purpose. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any
indemnified party.
13
(c) Notice. Promptly after receipt by an indemnified party
under this Section 2.6 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 2.6,
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 mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party 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 shall relieve such indemnifying party of
liability to the indemnified party under this Section 2.6 to the extent the
indemnifying party is prejudiced as a result thereof, but the omission so to
deliver written notice to the indemnified party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.6.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of the Company and Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.6 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.6; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided, however,
that, in any such case: (A) no such Holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement;
14
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
(f) Survival. The obligations of the Company and Holders under
this Section 2.6 shall survive until the first anniversary of the completion of
any offering of Registrable Securities in a registration statement, regardless
of the expiration of any statutes of limitation or extensions of such statutes.
2.7 Termination of the Company's Obligations. The Company shall have no
obligations pursuant to Sections 2.2 or 2.3 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to Section
2.2 or 2.3 more than three (3) years after the date of the exercise of either
Warrant or, if, in the opinion of counsel to the Company, all such Registrable
Securities proposed to be sold by a Holder may then be sold under Rule 144 in
any three month period without exceeding the volume limitations thereunder.
2.8 Transfer of Registration Rights. The registration rights may only
be transferred to a Holder reasonably acceptable to the Company that acquires
all of the Investor's Registrable Securities or to any party acquiring all or
substantially all of the stock or assets of a Holder.
2.9 Rule 144 and Rule 144A. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the 1934 Act and
the rules and regulations adopted by the SEC thereunder (or, if the Company is
not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 and Rule
144A under the Securities Act, as such rules may be amended from time to time or
(ii) any similar rule or regulation hereafter adopted by the SEC.
3. Miscellaneous Provisions
3.1 Construction. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
3.2 Notices.
All notices, requests, demands and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been duly
given when delivered to the party to whom addressed or when sent by telecopy (as
indicated by a telecopy confirmation and if promptly confirmed by registered or
certified mail, return receipt requested, prepaid and addressed) to the parties,
their successors in interest, or their assignees at the following addresses, or
at such other addresses as the parties may designate by written notice in the
manner aforesaid:
15
If to Buyer: Accom, Inc.
0000 X'Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: President
Fax: 000-000-0000
With copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
If to Investor: Scitex Corporation Ltd.
X.X. Xxx 000
Xxxxxxxx X 00000
Xxxxxx
Attn: President
Fax: 000-000-0-0000000
With copies to: Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
3.3 Assignment. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof nor any of the
documents executed in connection herewith may be assigned by any party without
the consent of the other parties provided, however, that any party may freely
assign this Agreement to any party acquiring all or substantially all of the
stock or assets of such assigning party. Nothing contained herein, express or
implied, is intended to confer upon any person or entity other than the parties
hereto and their successors in interest and permitted assignees any rights or
remedies under or by reason of this Agreement unless so stated herein to the
contrary.
3.4 Amendments and Waivers. This Agreement and all exhibits may be
modified only by a written instrument duly executed by each party. No condition
to any party's obligations and no breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party whose obligations are subject to such condition or who might assert such
breach. No waiver of any right hereunder shall operate as a waiver of any other
right or of the same or a similar right on another occasion.
3.5 Survival. The covenants, agreements, warranties and representations
entered into or made pursuant to this Agreement, irrespective of any
investigation made by or on behalf of any party, shall be continuing.
3.6 Remedies. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy. Each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder now or hereafter existing at law or in equity or by statute or
otherwise, and the election by a party of one or more remedies shall not
constitute a waiver of the party's right to pursue any other available remedies.
16
3.7 Attorneys' Fees. In the event that any action or proceeding,
including arbitration, is commenced by any party hereto for the purpose of
enforcing any provision of this Agreement, the parties to such action,
proceeding or arbitration may receive as part of any award, judgment, decision
or other resolution of such action, proceeding or arbitration their costs and
reasonable attorneys' fees as determined by the person or body making such
award, judgment, decision or resolution. Should any claim hereunder be settled
short of the commencement of any such action or proceeding, including
arbitration, the parties in such settlement shall be entitled to include as part
of the damages alleged to have been incurred reasonable costs of attorneys or
other professionals in investigation or counseling on such claim.
3.8 Binding Nature of Agreement. The Agreement includes each of the
exhibits which are referred to herein or attached hereto, all of which are
incorporated by reference herein. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective executors, heirs, legal representatives, successors and assigns.
3.9 Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof.
3.10 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
3.11 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
3.12 Section Headings. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
[The remainder of this page is intentionally left blank.]
17
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Right Agreement on the date first above written.
ACCOM, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
EXHIBIT A
IRREVOCABLE PROXY
Scitex Digital Video, Inc., a Massachusetts corporation (the
"Investor"), as of the date hereof, is the holder of a warrant for 250,000
shares of common stock of Accom, Inc., a Delaware corporation (the "Company"),
and a warrant for 750,000 shares of common stock of the Company (together such
warrants, the "Warrants").
The Investor hereby irrevocably (to the fullest extent permitted by
law) appoints and constitutes Xxxxxx Xxxxxx and Xxxxx Xxxxx, and each of them,
the attorneys and proxies of the Investor with full power of substitution and
resubstitution, to the fullest extent of the Investor's rights with respect to
(i) all the shares of capital stock of Company owned by the Investor as of the
date of this proxy and (ii) any and all other shares of capital stock of Company
which the Investor may acquire at any time after the date hereof, including any
shares of Common Stock of the Company acquired pursuant to the Warrants. The
shares of the capital stock of the Company referred to in clauses (i) and (ii)
of the immediately preceding sentence are collectively referred to herein as the
"Shares." If an individual named as a proxy above ceases to serve as a director
or officer of the Company, then such person shall no longer be a proxy
hereunder, and a replacement proxy shall be appointed by the Board of Directors
of the Company, which person shall be a director or officer of the Company.
Upon the execution hereof, all prior proxies given by the Investor with
respect to any of the Shares are hereby revoked, and no subsequent proxies will
be given with respect to any of the Shares. This proxy is given as a condition
to the Investor Rights Agreement, dated as of December ___, 1998, by and between
the Company and the Investor (the "Investor Rights Agreement"), and the Asset
Purchase Agreement (as defined in the Investor Rights Agreement) and as such is
coupled with an interest in the Shares and is irrevocable. Capitalized terms
used but not otherwise defined in this proxy have the meanings ascribed to such
terms in the Investor Rights Agreement.
The attorneys and proxies named above shall be empowered, and are
entitled to exercise this proxy, to vote all of the Shares at any time and from
time to time for so long as the Investor Beneficially Owns any Company
Securities in accordance with Section 1.3 of the Investor Rights Agreement at
any regular or special meeting of the stockholders of the Company, however
called, and in any action by written consent of stockholders of the Company
without a meeting.
IN WITNESS WHEREOF, the Investor has executed this proxy as of December
___, 1998.
SCITEX DIGITAL VIDEO, INC.
By:
----------------------------------------
Name: Xxxx Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
EXHIBIT D
XXXX OF SALE
This Xxxx of Sale (this "Xxxx of Sale") is made as of December 10, 1998
by Scitex Digital Video, Inc., a Massachusetts corporation ("Seller") in favor
of Accom, Inc., a Delaware corporation ("Buyer").
RECITALS
Seller, Buyer and certain other parties have entered into the Asset
Purchase Agreement dated as the date hereof (the "Asset Purchase Agreement").
All capitalized terms used but not defined herein shall have the meaning as
defined for such term in the Asset Purchase Agreement. In accordance with the
Asset Purchase Agreement, Seller desires to sell, convey and deliver to Buyer
the Acquired Assets.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Buyer to consummate
the transactions contemplated by the Asset Purchase Agreement, Seller hereto
agrees as follows:
1. By this Xxxx of Sale, Seller does hereby sell, transfer, convey,
assign and deliver to Buyer, all of Seller's right, title and interest in and to
all of the Acquisition Assets, to have and to hold the Acquisition Assets unto
Buyer and its successors and permitted assigns, to and for its and their proper
use and benefit, forever.
2. Seller hereby covenants with Buyer and its successors and permitted
assigns that, from time to time after the date hereof, Seller will execute and
deliver to Buyer such instruments of sale, transfer, conveyance, assignment and
delivery, consents, assurances, powers of attorney and other instruments as may
be requested by Buyer in order to vest in Buyer all of Seller's right, title and
interest in and to the Acquisition Assets and carry out the purpose and intent
of this Xxxx of Sale and the Asset Purchase Agreement.
3. This Xxxx of Sale is executed and delivered pursuant to the Asset
Purchase Agreement and shall be governed by and interpreted according to the
terms thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Xxxx of Sale
on the date first above written.
ACCOM, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
------------------------------------------
Name: Xxxx Xxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
2
EXHIBIT E-1
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") dated as of
December 10, 1998 is made by and between Scitex Digital Video, Inc., a
Massachusetts corporation ("Assignor") and Accom, Inc., a Delaware corporation
("Assignee").
RECITAL
A. Assignor, Assignee and certain other parties entered into the Asset
Purchase Agreement dated as the date hereof (the "Asset Purchase Agreement").
B. Pursuant to the Asset Purchase Agreement, Assignor has agreed to
assign and Assignee has agreed to assume certain of the rights and obligations
of Assignor.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, the parties
hereto agree as follows:
1. From and after the date hereof, Assignee agrees to observe, perform
and discharge, and assumes and agrees to be bound by, the terms, restrictions,
obligations and duties of Assignor under the contracts and agreements listed on
Exhibit A hereto (the "Assumed Obligations"), but only to the extent such
obligations or duties are applicable to and accrue with respect to, or are to be
performed in, periods subsequent to the date hereof.
2. Assignor hereby sells, conveys, transfers and assigns to Assignee
all of Assignor's rights, duties and obligations under the Assumed Obligations.
3. Except as set forth herein or as expressly provided in the Asset
Purchase Agreement, Assignee shall not assume, and shall not be obligated to
pay, discharge, perform or otherwise satisfy, any obligation, debt, or
liability, contingent or otherwise, of Assignor.
4. Assignor and Assignee shall each execute, acknowledge (if
appropriate) and deliver, or cause the execution, acknowledgment and delivery
of, such further documents and instruments as may reasonably be requested by the
other party hereto to implement the purposes of this Agreement.
5. All capitalized terms used but not defined herein shall have the
meaning given to them in the Asset Purchase Agreement.
6. This Agreement is executed and delivered pursuant to the Asset
Purchase Agreement and shall be governed by and interpreted in accordance with
the Asset Purchase Agreement.
7. Miscellaneous Provisions.
(a) Construction. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware.
(b) Amendments and Waivers. This Agreement may be modified
only by a written instrument duly executed by each party. No condition to any
party's obligations and no breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party whose obligations are subject to such condition or who might assert such
breach. No waiver of any right hereunder shall operate as a waiver of any other
right or of the same or a similar right on another occasion.
(c) Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
(d) Section Headings. The headings of each Section, subsection
or other subdivision of this Agreement are for reference only and shall not
limit or control the meaning thereof.
2
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
ACCOM, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SCITEX DIGITAL VIDEO, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
3
EXHIBIT A
Assumed Obligations
Agreements, each as amended Customer Dated as of
--------------------------------------------------------------------------------
4
EXHIBIT E-2-A
U.S. PATENT ASSIGNMENT
This Patent Assignment (this "Assignment") is made as of December 10,
1998 by Scitex Digital Video, Inc., a Massachusetts corporation ("Assignor") to
Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patents issued by the United States Patent and Trademark Office and set
forth on Exhibit A hereto (the "Patents"), together with the goodwill of the
business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patents,
including any foreign counterparts, divisions, continuations or reissues
thereof, together with the goodwill of the business pertaining thereto, the same
to be held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Patents, along with the right to xxx for
and collect such damages for the use and benefit of Assignee and its successors,
assigns and other legal representatives.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EXHIBIT A
EXHIBIT E-2-B
U.S. PATENT ASSIGNMENT
This Patent Assignment (this "Assignment") is made as of December 10,
1998 by Scitex Corporation Ltd., an Israel corporation ("Assignor") to Accom,
Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patents issued by the United States Patent and Trademark Office and set
forth on Exhibit A hereto (the "Patents"), together with the goodwill of the
business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patents,
including any foreign counterparts, divisions, continuations or reissues
thereof, together with the goodwill of the business pertaining thereto, the same
to be held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Patents, along with the right to xxx for
and collect such damages for the use and benefit of Assignee and its successors,
assigns and other legal representatives.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXHIBIT A
EXHIBIT E-3-A
FOREIGN PATENT ASSIGNMENT
This Patent Assignment (this "Assignment") is made as of December 10,
1998 by Scitex Digital Video, Inc., a Massachusetts corporation ("Assignor") to
Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patents issued by certain foreign patent and trademark offices and set
forth on Exhibit A hereto (the "Patents"), together with the goodwill of the
business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patents,
including any foreign counterparts, divisions, continuations or reissues
thereof, together with the goodwill of the business pertaining thereto, the same
to be held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Patents, along with the right to xxx for
and collect such damages for the use and benefit of Assignee and its successors,
assigns and other legal representatives.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
EXHIBIT E-3-B
FOREIGN PATENT ASSIGNMENT
This Patent Assignment (this "Assignment") is made as of December 10,
1998 by Scitex Corporation Ltd., an Israel corporation ("Assignor") to Accom,
Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patents issued by certain foreign patent and trademark offices and set
forth on Exhibit A hereto (the "Patents"), together with the goodwill of the
business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patents,
including any foreign counterparts, divisions, continuations or reissues
thereof, together with the goodwill of the business pertaining thereto, the same
to be held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Patents, along with the right to xxx for
and collect such damages for the use and benefit of Assignee and its successors,
assigns and other legal representatives.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
EXHIBIT E-4-A
U.S. PATENT APPLICATION ASSIGNMENT
This Patent Application Assignment (this "Assignment") is made as of
December 10, 1998 by Scitex Digital Video, Inc., a Massachusetts corporation
("Assignor") to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patent applications filed with the United States Patent and Trademark
Office and set forth on Exhibit A hereto (the "Patent Applications"), together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patent
Applications and any patents that may issue therefrom, including any foreign
counterparts, divisions, continuations, or reissues of such patents, together
with the goodwill of the business pertaining thereto, the same to be held by
Assignee for Assignee's own use and enjoyment, and for the use and enjoyment of
Assignee's successors, assigns and other legal representatives, as fully and
entirely as the same would have been held and enjoyed by Assignor if this
Assignment and sale had not been made; together with all claims for damages by
reason of past infringements of the Patent Applications, along with the right to
xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests the Commissioner of Patents
and Trademarks of the United States, and any officer of any country or countries
foreign to the United States, whose duty it is to issue patents or other
evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT A
EXHIBIT E-4-B
U.S. PATENT APPLICATION ASSIGNMENT
This Patent Application Assignment (this "Assignment") is made as of
December 10, 1998 by Scitex Corporation Ltd., an Israel corporation ("Assignor")
to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patent applications filed with the United States Patent and Trademark
Office and set forth on Exhibit A hereto (the "Patent Applications"), together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patent
Applications and any patents that may issue therefrom, including any foreign
counterparts, divisions, continuations, or reissues of such patents, together
with the goodwill of the business pertaining thereto, the same to be held by
Assignee for Assignee's own use and enjoyment, and for the use and enjoyment of
Assignee's successors, assigns and other legal representatives, as fully and
entirely as the same would have been held and enjoyed by Assignor if this
Assignment and sale had not been made; together with all claims for damages by
reason of past infringements of the Patent Applications, along with the right to
xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests the Commissioner of Patents
and Trademarks of the United States, and any officer of any country or countries
foreign to the United States, whose duty it is to issue patents or other
evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EXHIBIT A
EXHIBIT E-5-A
FOREIGN PATENT APPLICATION ASSIGNMENT
This Patent Application Assignment (this "Assignment") is made as of
December 10, 1998 by Scitex Digital Video, Inc., a Massachusetts corporation
("Assignor") to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patent applications filed with certain foreign patent and trademark
offices and set forth on Exhibit A hereto (the "Patent Applications"), together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patent
Applications and any patents that may issue therefrom, including any foreign
counterparts, divisions, continuations, or reissues of such patents, together
with the goodwill of the business pertaining thereto, the same to be held by
Assignee for Assignee's own use and enjoyment, and for the use and enjoyment of
Assignee's successors, assigns and other legal representatives, as fully and
entirely as the same would have been held and enjoyed by Assignor if this
Assignment and sale had not been made; together with all claims for damages by
reason of past infringements of the Patent Applications, along with the right to
xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests any officer of any country
or countries foreign to the United States, whose duty it is to issue patents or
other evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
EXHIBIT E-5-B
FOREIGN PATENT APPLICATION ASSIGNMENT
This Patent Application Assignment (this "Assignment") is made as of
December 10, 1998 by Scitex Corporation Ltd., an Israel corporation ("Assignor")
to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B. Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the patent applications filed with certain foreign patent and trademark
offices and set forth on Exhibit A hereto (the "Patent Applications"), together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Patent
Applications and any patents that may issue therefrom, including any foreign
counterparts, divisions, continuations, or reissues of such patents, together
with the goodwill of the business pertaining thereto, the same to be held by
Assignee for Assignee's own use and enjoyment, and for the use and enjoyment of
Assignee's successors, assigns and other legal representatives, as fully and
entirely as the same would have been held and enjoyed by Assignor if this
Assignment and sale had not been made; together with all claims for damages by
reason of past infringements of the Patent Applications, along with the right to
xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests any officer of any country
or countries foreign to the United States, whose duty it is to issue patents or
other evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
EXHIBIT E-6-A
REGISTERED TRADEMARK
AND TRADEMARK APPLICATION ASSIGNMENT
This Registered Trademark and Trademark Application Assignment (this
"Assignment") is made as of December 10, 1998 by Scitex Digital Video, Inc., a
Massachusetts corporation ("Assignor") to Accom, Inc., a Delaware corporation
("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the trademarks registered with (the "Registered Trademarks") and the
trademark applications filed with (the "Trademark Applications") the United
States Patent and Trademark Office and set forth on Exhibit A hereto, together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Registered
Trademarks and the Trademark Applications, together with the goodwill of the
business pertaining thereto, the same to be held by Assignee for Assignee's own
use and enjoyment, and for the use and enjoyment of Assignee's successors,
assigns and other legal representatives, as fully and entirely as the same would
have been held and enjoyed by Assignor if this Assignment and sale had not been
made; together with all claims for damages by reason of past infringements of
the Registered Trademarks and the Trademark Applications, along with the right
to xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests the Commissioner of Patents
and Trademarks of the United States, and any officer of any country or countries
foreign to the United States, whose duty it is to issue trademarks or other
evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT A
EXHIBIT E-6-B
REGISTERED TRADEMARK
AND TRADEMARK APPLICATION ASSIGNMENT
This Registered Trademark and Trademark Application Assignment (this
"Assignment") is made as of December 10, 1998 by Scitex Corporation Ltd., an
Israel corporation ("Assignor") to Accom, Inc., a Delaware corporation
("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the trademarks registered with (the "Registered Trademarks") and the
trademark applications filed with (the "Trademark Applications") the United
States Patent and Trademark Office and set forth on Exhibit A hereto, together
with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Registered
Trademarks and the Trademark Applications, together with the goodwill of the
business pertaining thereto, the same to be held by Assignee for Assignee's own
use and enjoyment, and for the use and enjoyment of Assignee's successors,
assigns and other legal representatives, as fully and entirely as the same would
have been held and enjoyed by Assignor if this Assignment and sale had not been
made; together with all claims for damages by reason of past infringements of
the Registered Trademarks and the Trademark Applications, along with the right
to xxx for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives.
2. Assignor hereby authorizes and requests the Commissioner of Patents
and Trademarks of the United States, and any officer of any country or countries
foreign to the United States, whose duty it is to issue trademarks or other
evidence or forms of intellectual property protection or applications as
aforesaid, to issue the same to Assignee and its successors, assigns and other
legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EXHIBIT A
EXHIBIT E-7-A
UNREGISTERED AND FOREIGN TRADEMARK ASSIGNMENT
This Unregistered and Foreign Trademark Assignment (this "Assignment")
is made as of December 10, 1998 by Scitex Digital Video, Inc., a Massachusetts
corporation ("Assignor") to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the unregistered and foreign trademarks set forth on Exhibit A hereto (the
"Trademarks"), together with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Trademarks,
together with the goodwill of the business pertaining thereto, the same to be
held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Trademarks, along with the right to xxx
for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives; provided.
2. Assignor hereby authorizes and requests any officer of any country
or countries foreign to the United States, whose duty it is to issue trademarks
or other evidence or forms of intellectual property protection or applications
as aforesaid, to issue the same to Assignee and its successors, assigns and
other legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX DIGITAL VIDEO, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
EXHIBIT E-7-B
UNREGISTERED AND FOREIGN TRADEMARK ASSIGNMENT
This Unregistered and Foreign Trademark Assignment (this "Assignment")
is made as of December 10, 1998 by Scitex Corporation Ltd., an Israel
corporation ("Assignor") to Accom, Inc., a Delaware corporation ("Assignee").
RECITALS
A. Assignor, Assignee and certain other parties have entered into the
Asset Purchase Agreement dated as the date hereof (the "Asset Purchase
Agreement").
B Pursuant to Section 1.1(b) of the Asset Purchase Agreement, Assignor
desires to assign to Assignee all of Assignor's right, title and interest in and
to the unregistered and foreign trademarks set forth on Exhibit A hereto (the
"Trademarks"), together with the goodwill of the business pertaining thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained in the Asset Purchase Agreement and the
covenants and agreements in this Assignment and to induce Assignee to consummate
the transactions contemplated by the Asset Purchase Agreement, Assignor hereto
agrees as follows:
1. Assignor does hereby sell, transfer, convey, assign and deliver to
Assignee all of Assignor's right, title and interest in and to the Trademarks,
together with the goodwill of the business pertaining thereto, the same to be
held by Assignee for Assignee's own use and enjoyment, and for the use and
enjoyment of Assignee's successors, assigns and other legal representatives, as
fully and entirely as the same would have been held and enjoyed by Assignor if
this Assignment and sale had not been made; together with all claims for damages
by reason of past infringements of the Trademarks, along with the right to xxx
for and collect such damages for the use and benefit of Assignee and its
successors, assigns and other legal representatives; provided.
2. Assignor hereby authorizes and requests any officer of any country
or countries foreign to the United States, whose duty it is to issue trademarks
or other evidence or forms of intellectual property protection or applications
as aforesaid, to issue the same to Assignee and its successors, assigns and
other legal representatives in accordance with the terms of this instrument.
IN WITNESS WHEREOF, Assignee has executed this Assignment on the date
first above written.
SCITEX CORPORATION LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledgment by Notary Public
State of California
County of Santa Xxxxx
On this ________ day of December, 1998, before me, the undersigned
Notary Public, personally appeared , personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
Seal: Signature:
Name: , Notary Public
EXHIBIT A
