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STOCK AND ASSET PURCHASE AGREEMENT
AMONG
MICROSOFT CORPORATION
SOFTIMAGE, INC.
AND
AVID TECHNOLOGY, INC.
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TABLE OF CONTENTS
Page
ARTICLE I. GENERAL...........................................................1
1.1. Purchase of the Softimage Shares.....................................1
1.2. Purchase of the Seller Assets........................................1
1.3. Further Assurances...................................................2
1.4. Purchase Price.......................................................2
1.5. Shareholder Voting Agreement.........................................2
1.6. Employee Options.....................................................2
1.7. Purchase Price.......................................................3
1.8. Elimination and Settlement of Intercompany Accounts; Cash
Balances...........................................................3
1.9. Contemporaneous Transactions.........................................3
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER.........3
2.1. Organization, Qualification and Corporate Power......................3
2.2. Capitalization.......................................................4
2.4. Financial Statements.................................................5
2.5. No Defaults..........................................................6
2.6. Litigation...........................................................6
2.7. No Material Adverse Change...........................................6
2.8. Absence of Undisclosed Liabilities...................................6
2.9. No Violations........................................................6
2.10. Employees and Others.................................................6
2.11. Employee Benefit Plans...............................................7
2.12. Product Warranty.....................................................8
2.13. Assets...............................................................8
2.14. Major Contracts......................................................9
2.15. Taxes...............................................................10
2.16. Interests of Officers...............................................11
2.17. Technology..........................................................11
2.18. Softimage Shares....................................................14
2.19. Material Relations..................................................14
2.20. Change of Control...................................................15
2.21. Real Property:......................................................15
2.22. Environmental.......................................................15
2.23. Permits.............................................................17
2.24. Accounts Receivable.................................................17
2.25. Powers of Attorney..................................................17
2.26. Insurance...........................................................17
2.27. Brokers' Fees.......................................................18
2.28. Books and Records...................................................18
2.29. Customers and Suppliers.............................................18
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BUYER....................19
3.1. Organization........................................................19
3.2. Capitalization of the Buyer.........................................19
3.3. Authority...........................................................19
3.4. Litigation..........................................................19
3.5. Reports and Financial Statements....................................20
3.6. No Material Adverse Change..........................................20
3.7. Brokers' Fees.......................................................20
3.8. Employee Options....................................................21
ARTICLE IV. COVENANTS OF THE COMPANY AND THE SELLER.........................21
4.1. Conduct of Business.................................................21
4.2. Consents............................................................24
4.3. Best Efforts........................................................24
4.4. Retention of Seller.................................................24
4.5. Retention of Company Assets.........................................24
ARTICLE V. COVENANTS OF THE BUYER...........................................24
5.1. Breach of Representations and Warranties............................24
5.2. Consents............................................................24
5.3. Best Efforts........................................................24
ARTICLE VI. ADDITIONAL AGREEMENTS...........................................25
6.1. Shareholders'.......................................................25
6.2. Access to Information...............................................25
6.3. Governmental Filings................................................25
6.4. Employees...........................................................26
6.6. No Public Announcements.............................................26
6.7. Company.............................................................27
6.8. Standstill Agreement................................................27
6.9. Seller No Hire Agreement............................................27
6.10. Buyer No Hire Agreement.............................................27
6.11. Company Financial Statements........................................27
6.12. Section 338 Election................................................27
6.13. Sales Tax...........................................................27
6.14. License Grants to Buyer.............................................27
ARTICLE VII. CONDITIONS PRECEDENT AND POST-CLOSING COVENANTS................28
7.1. Conditions to Each Party's..........................................28
7.2. Conditions to Obligations of the....................................29
7.3. Conditions to Obligation of the Seller and the Company..............30
7.4. Post-Closing Covenants..............................................31
ARTICLE VIII. INDEMNIFICATION...............................................33
8.1. Indemnity...........................................................33
8.2. Indemnity by Buyer..................................................34
8.3. Claims for Indemnification..........................................34
8.4. Defense by the Indemnifying Party...................................35
8.5. Survival of Representations; Claims for Indemnification.............35
8.6. Limitations.........................................................35
8.7. Exclusion...........................................................35
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER...............................35
9.1. Termination.........................................................35
9.2. Effect of Termination...............................................36
9.3. Amendment...........................................................36
9.4. Extension, Waiver...................................................36
ARTICLE X. GENERAL PROVISIONS...............................................36
10.1. Notices.............................................................36
10.2. Interpretation......................................................38
10.3. Counterparts........................................................38
10.4. Miscellaneous.......................................................38
10.5. Assignment..........................................................38
10.6. Governing Law.......................................................38
10.7. Language of Contract................................................38
INDEX OF DEFINED TERMS
Term Where Defined
Acquisition Transaction............................................4.1.5
Agreement.......................................................Preamble
Amalgamated Subsidiary.............................................7.1.4
Assets..............................................................2.13
Breach of Warranty...................................................8.1
Business Condition...................................................2.1
Buyer...........................................................Preamble
Buyer Common Stock...................................................1.4
Buyer Disclosure Schedule............................................3.3
Buyer Field.........................................................2.17
Buyer Reports........................................................3.5
Buyer's Most Recent Fiscal Period End................................3.5
Cancelled Employee Option Shares...................................7.4.1
Charter Documents....................................................2.1
Closing..............................................................1.1
Closing Date.........................................................1.7
Code................................................................2.11
Combination Agreement................................................6.7
Common Share....................................................Recitals
Company.........................................................Preamble
Company Assets......................................................2.13
Company Employees...................................................2.10
Company IP Assets...................................................2.17
Company Patents.....................................................2.17
Company Products....................................................2.17
Company Technology..................................................2.17
Company Trademarks..................................................2.17
Company Voting Debt..................................................2.2
Confidentiality Agreement............................................6.2
Consents.............................................................2.3
Contaminant.........................................................2.22
Contractor..........................................................2.10
Current Seller Products.............................................2.17
Deemed Company Employees............................................2.10
Director..........................................................7.2.11
Disclosure Schedule...........................................Article II
Employee Options..................................................1.6(a)
Employees...........................................................2.10
Encumbrances.........................................................2.2
Environmental Laws..................................................2.22
ERISA...............................................................2.11
ERISA Affiliate.....................................................2.11
Exchange Act.........................................................3.5
Exchangeable Shares.............................................Recitals
Financial Statements.................................................2.4
GAAP.................................................................2.4
Governmental Entity..................................................2.3
H&Q..................................................................3.7
HSR Act..............................................................2.3
Indemnified Party....................................................8.3
Intercompany Agreement...........................................2.14(j)
IP Encumbrance Exceptions...........................................2.13
Liabilities..........................................................2.8
Losses...............................................................8.1
Minister..........................................................7.2.12
Most Recent Balance Sheet............................................2.4
Most Recent Fiscal Period End........................................2.4
New Exchangeable Shares............................................7.1.4
Non-Option Shares.................................................1.6(a)
Note.................................................................1.4
Order...............................................................2.22
Ordinary Course of Business..........................................2.7
Permit..............................................................2.22
Permitted Sublicensees..............................................2.17
Plan................................................................2.11
Prospects............................................................2.1
Reorganization.....................................................7.1.4
Required Statutory Approvals.........................................2.3
Retained Assets.....................................................2.13
Return Periods......................................................2.15
Seller..........................................................Preamble
Seller Assets.......................................................2.13
Seller Licensed Patents.............................................2.17
Seller Licensed Technology..........................................2.17
Seller Options.......................................................2.2
Seller Products.....................................................2.17
Seller Transferred IP Assets........................................2.17
Seller Transferred Patents..........................................2.17
Seller Transferred Technology.......................................2.17
Seller Transferred Trademarks.......................................2.17
Shareholder Voting Agreement.........................................1.5
Shareholder Affiliate................................................1.1
Softimage Shares...................................................7.1.4
Subsidiary...........................................................1.1
Tax.................................................................2.15
Taxes...............................................................2.15
Technology..........................................................2.17
Third Party Technology..............................................2.17
Threshold Amount.....................................................8.6
Threshold Number..................................................1.6(b)
Unrestricted Employees...............................................6.4
Vesting Date......................................................1.6(a)
Violation............................................................2.3
Warrant..............................................................1.4
EXHIBIT AND SCHEDULE INDEX
Exhibit 1.4A Common Stock Purchase Warrant
Exhibit 1.4B Promissory Note
Exhibit 7.3.4 Registration Rights Agreement
I Disclosure Schedule
II Buyer Disclosure Schedule
STOCK AND ASSET PURCHASE AGREEMENT
Stock And Asset Purchase Agreement, Dated as of June 15, 1998 (this
"Agreement"), by and among Microsoft Corporation, a corporation incorporated
under the laws of Washington ("Seller"), Softimage, Inc., a company incorporated
under the laws of Quebec ("Company") and Avid Technology, Inc., a corporation
incorporated under the laws of Delaware ("Buyer").
RECITALS
The Seller owns (i) one common share (the "Common Share") of the Company,
such Common Share being the only issued and outstanding share of capital stock
of the Company (other than the Exchangeable Shares, as hereinafter defined), and
(ii) the Seller Assets, as defined in Section 2.13.
The Buyer desires to purchase (either directly and/or through its
designee), and the Seller desires to sell, the Softimage Shares (as defined in
Section 7.1.4), and the Seller Assets (as defined in Section 2.13) and to
acquire certain license rights from the Seller for the consideration set forth
below, subject to the terms and conditions of this Agreement.
The Board of Directors of the Company has agreed to call a meeting of its
shareholders, including the holders of Exchangeable Shares of the Company
outstanding on the date hereof (the "Exchangeable Shares"), to obtain any
approvals required in connection with the transactions contemplated hereby.
Intending to Be Legally Bound, and in consideration of the premises and
the mutual representations, warranties, covenants and agreements contained
herein, the Seller, the Company and the Buyer hereby agree as follows:
GENERAL I.
1.1. Purchase of the Softimage Shares. At the closing of the transactions
contemplated by this Agreement (the "Closing"), the Seller shall, or shall cause
its affiliate ("Shareholder Affiliate") to, sell, transfer, convey, assign and
deliver to the Buyer (or its designee), and the Buyer (or its designee) shall
purchase, acquire and accept the Softimage Shares from the Seller. At the
Closing, the Seller shall deliver to the Buyer (or its designee) certificates
evidencing all of the issued and outstanding Softimage Shares duly endorsed in
blank or with duly executed stock powers. As used herein, "Subsidiary" of any
party means a corporation or other entity of which such party directly or
indirectly owns or controls voting securities or other interests which are
sufficient to elect a majority of the Board of Directors or other managers of
such corporation or other entity.
1.2. Purchase of the Seller Assets. The Seller shall sell, transfer, convey,
assign and deliver to the Buyer (or its designee), and the Buyer (or its
designee) shall purchase, acquire and accept from the Seller all right, title
and interest in and to the Seller Assets. 1.3. Further Assurances. At any time
and from time to time after the Closing, at the Buyer's reasonable request and
without further consideration, the Seller shall promptly execute and deliver, or
cause to be executed and delivered, such instruments of sale, transfer,
conveyance, assignment and confirmation, and take all such other action as the
Buyer (or its designee) may reasonably request, more effectively to transfer,
convey and assign to the Buyer (or its designee), and to confirm the Buyer's (or
its designee's) title to, all of the Softimage Shares and Seller Assets, to put
the Buyer (or its designee) in actual possession and operating control of the
assets, properties and business of the Company and to carry out the purpose and
intent of this Agreement. 1.4. Purchase Price. At the Closing, the Buyer (or its
designee) shall deliver to the Seller or its designee (i) the sum of Seventy
Nine Million Dollars ($79,000,000) in cash, by cashier's or certified check or
by wire transfer of immediately available funds to an account designated by the
Seller; (ii) a warrant to purchase 1,155,235 shares of common stock, $.01 par
value per share, of the Buyer ("Buyer Common Stock") at an exercise price of
$47.65 per share, substantially in the form attached hereto as Exhibit 1.4A (the
"Warrant"); (iii) 2,344,490 shares of Buyer Common Stock, subject to adjustment
pursuant to Section 1.6(b) herein; and (iv) a Promissory Note in the principal
amount of Five Million Dollars ($5,000,000), subject to adjustment pursuant to
Section 1.6(b) herein, substantially in the form attached hereto as Exhibit 1.4B
(the "Note"). Unless otherwise specified herein, all currency amounts stated
herein shall mean U.S. Dollars. 1.5. Shareholder Voting Agreement.
Contemporaneously with the execution of this Agreement, a shareholder voting
agreement in the form attached as Exhibit 1.5 (the "Shareholder Voting
Agreement" ) shall be executed with Xxxxxx Xxxxxxxx pursuant to which he shall,
among other things, agree to vote in favor of the Reorganization and against
other Acquisition Transactions (as defined in Section 4.1.5) all Exchangeable
Shares over which he exercises voting power. 1.6. Employee Options. (a) As soon
as practicable after the Closing, subject to any necessary approvals of the
Quebec Securities Commission, the Buyer shall issue options (the "Employee
Options") to purchase up to 1,911,846 shares of Buyer Common Stock at an
exercise price of $0.01 per share to each of the employees of the Company listed
on Schedule 1.6, each such option to become exercisable in increments on the
dates set forth on Schedule 1.6 (each such date, a "Vesting Date"); provided
that no Employee Option shall be issued: (i) to any person listed on Schedule
1.6 who shall not be an employee of the Company or Buyer immediately after the
Closing, or (ii) to the extent that a Vesting Date, with respect to an Employee
Option, has occurred prior to the Closing Date. Shares of Buyer Common Stock
that would have been subject to an Employee Option but for the effect of clause
(i) or (ii) of the preceding sentence, are hereinafter referred to as
"Non-Option Shares." (b) The number of shares of Buyer Common Stock to be issued
to the Seller at the Closing pursuant to clause (iii) of Section 1.4 shall be
increased by the number of Non-Option Shares or 1,000,000 (the "Threshold
Number"), whichever is less. If the number of Non-Option Shares exceeds the
Threshold Number, the principal amount of the Note shall be increased by $39.71
for every Non-Option Share in excess of the Threshold Number. Closing and
Closing Date. The Closing shall take place at the offices of Xxxx and Xxxx LLP,
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, or such other place as the parties hereto may
agree on or prior to the fifth business day after satisfaction or waiver of the
last to be fulfilled of the conditions set forth in Article VII that by their
terms are not to occur prior to the Closing and not later than seven days after
the completion of the Reorganization (the "Closing Date").
1.7. Purchase Price Allocation. Prior to the Closing, the Buyer and Seller
shall mutually agree on the allocation of the purchase price.
1.8. Elimination and Settlement of Intercompany Accounts; Cash Balances.
Immediately prior to the Closing, all intercompany accounts between (i) the
Company and (ii) the Seller and any of its Subsidiaries shall be eliminated and
the Company shall have no further liability to the Seller or its Subsidiaries
with respect thereto. In addition, immediately prior to the Closing, the Company
shall pay to the Seller an amount equal to the cash balances of the Company
immediately prior to the Closing less any amounts required to be paid or
remitted by the Company after the Closing Date in respect of taxes collected,
withheld or payable by the Company for any period, or portion thereof, up to the
Closing Date. 1.9. Contemporaneous Transactions. The parties hereby agree that
each of the transactions contemplated by this Agreement to be performed at
Closing that is in fact consummated will, to the extent permitted by applicable
law and not otherwise provided for herein, be deemed to have been consummated
substantially contemporaneously with the other transactions that are in fact
consummated in connection with this Agreement.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
Each of the Seller and the Company, jointly and severally, represents and
warrants to the Buyer that the statements contained in this Article II are true
and correct, except as set forth in the disclosure schedule provided by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule"). The
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify other
paragraphs in this Article II only to the extent it is readily apparent from a
reading of the disclosure that such disclosure is applicable to such other
paragraphs. All references to knowledge of the Company or management of the
Company shall also be deemed to refer, respectively, to knowledge of the Seller
or management of the Seller.
2.1. Organization, Qualification and Corporate Power The Company has no
Subsidiaries. The Company is a company or corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which a failure to so qualify would have a material adverse
effect on the Business Condition (as hereinafter defined) of the Company. The
Company has delivered to the Buyer complete and correct copies of the articles,
certificates and bylaws and/or other primary charter and organizational
documents (collectively, the "Charter Documents") of the Company as amended to
the date hereof. As used in this Agreement, "Business Condition" with respect to
any entity shall mean the business, financial condition, results of operations,
prospects and assets (without giving effect to the consequences of the
transactions contemplated by this Agreement) of such entity and its Subsidiaries
taken as a whole. As used in this Agreement with respect to any party,
"prospects" shall mean events, conditions, facts or developments which are known
to such party and which in the reasonable course of events are expected to have
a material effect on future operations of the business as presently conducted by
such party.
2.2. Capitalization. The authorized capital of the Company consists of an
unlimited number of Common Shares, no par value, of which one share is issued
and outstanding on the date hereof and held of record and beneficially by the
Seller (or its designee); an unlimited number of Preference Shares issuable in
one or more series, of which none are outstanding on the date hereof; and an
unlimited number of Exchangeable Shares, of which 539,429 are issued and
outstanding on the date hereof and held of record and beneficially by the
holders, and in the respective amounts, set forth on Schedule 2.2(a). No shares
are held by the Company in its treasury. The sole outstanding Common Share of
the Company has been, and upon issuance to the Seller the Softimage Shares shall
be (i) free and clear of all claims, liabilities, liens, pledges, charges,
encumbrances, equities of any kind, restrictions or prior assignments
(collectively, "Encumbrances") and (ii) validly issued, fully paid,
nonassessable and not subject to any preemptive rights, or to any agreement to
which the Company or the Seller or any of its Subsidiaries is a party or by
which the Company or the Seller or any of its Subsidiaries may be bound. Section
2.2(b) of the Disclosure Schedule sets forth a complete and accurate list of all
Employees (as defined in Section 2.10) who hold options to purchase shares of
common stock of the Seller ("Seller Options"), including the number of shares of
the Seller's common stock issuable under, and the vesting schedule of, each such
Seller Option. The Seller Options do not constitute obligations of the Company
and there are not, and there shall not be at the time of Closing, any options,
warrants, calls, conversion rights, commitments, agreements, contracts,
understandings, restrictions, arrangements or rights of any character to which
the Company is a party or by which it may be bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of the Company or obligating the Company to grant,
extend or enter into any such option, warrant, call, conversion right,
commitment, agreement, contract, understanding, restriction, arrangement or
right. The Company does not have outstanding any bonds, debentures, notes or
other indebtedness the holders of which have the right to vote with holders of
Common Shares on any matter, or any securities exercisable for or convertible
into securities having such voting rights (the "Company Voting Debt").
2.3. Authority The Company and the Seller have all requisite corporate power and
authority to enter into this Agreement and, subject to approval of the
Reorganization by the holders of Exchangeable Shares and any Required Statutory
Approvals (as hereinafter defined), to consummate the transactions contemplated
hereby. The execution and delivery by each of the Company and the Seller of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company and
the Seller, including the approval of the Board of Directors of the Company
subject only to the due approval of the Reorganization and other transactions
contemplated hereby by the holders of the Exchangeable Shares. This Agreement
has been duly executed and delivered by the Company and the Seller and
constitutes the valid and binding obligations of the Company and the Seller
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity (regardless of whether in equity or at law). The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on assets (any such conflict, violation,
default, right, loss or creation being referred to herein as a "Violation")
pursuant to (i) the Charter Documents of the Seller or the Company, (ii) except
as set forth in Section 2.3 of the Disclosure Schedule, any loan or credit
agreement, instrument, note, bond, mortgage, indenture, contract, license, lease
or other agreement applicable to the Seller, any of its Subsidiaries, the
Company or its properties or assets, or (iii) any statute, law, ordinance,
permit, concession, franchise, judgment, order, decree, rule or regulation
applicable to the Seller, any of its Subsidiaries, the Company or its properties
or assets, other than, in the case of (ii) and (iii), any such Violation which
individually or together with other Violations would not have a material adverse
effect on the Business Condition of the Company. No consent, approval, order or
authorization of or registration, declaration or filing with, or exemption by
(collectively "Consents"), any court, administrative agency or commission or
other governmental authority or instrumentality, whether domestic or foreign
(each a "Governmental Entity"), is required in connection with the execution and
delivery of this Agreement by the Seller or the Company or the consummation by
the Seller or the Company of the transactions contemplated hereby, except for
Consents, if any, relating to (i) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) the Investment Canada Act, (iii)
the Competition Act (Canada), and (iv) the Quebec Securities Commission's
approval of the issuance of the Employee Options (the filings and approvals
referred to in clauses (i) through (iv) being collectively referred to as the
"Required Statutory Approvals") and except for such other Consents which if not
obtained or given would not have a material adverse effect on the Business
Condition of the Company.
2.4. Financial Statements The Company has provided to the Buyer (a) the
unaudited balance sheets and statements of income for each of the last three
fiscal years for the Company; and (b) the unaudited balance sheet (the "Most
Recent Balance Sheet") and statement of income as of and for the nine months
ended as of March 31, 1998 (the "Most Recent Fiscal Period End"). Such financial
statements (collectively, the "Financial Statements") have been prepared in
accordance with Canadian generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby, fairly
present the financial condition and results of operations of the Company as of
the respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Company; provided, however, that
the Financial Statements referred to in clause (b) above are subject to normal
recurring year-end adjustments (which are not material) and do not include
footnotes.
2.5. No Defaults The Company is not, and has not received any notice that it
would be with the passage of time, in default or violation of any term,
condition or provision of (i) the Charter Documents of the Company; (ii) any
judgment, decree or order applicable to the Company; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license
or other instrument to which the Company is now a party or by which it or any of
its properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a material adverse effect on
the Business Condition of the Company.
2.6. Litigation There is no claim, action, suit or proceeding pending or
threatened, in writing, other than the intellectual property claims listed in
Section 2.17 of the Disclosure Schedule, which would, if adversely determined,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Company, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the Company
having, or which, insofar as reasonably can be foreseen, in the future could
have, any such effect. There is no investigation pending or, to the knowledge of
the Company threatened, against the Company, before any Governmental Entity. The
Disclosure Schedule sets forth, with respect to each pending action, suit,
proceeding or investigation to which the Company is a party that involves claims
reasonably expected to exceed $100,000, and with respect to each, sets forth the
forum, the parties, the subject matter and the amount of damages claimed.
2.7. No Material Adverse Change Since the Most Recent Fiscal Period End, the
Company has conducted its business in the ordinary course consistent with past
custom and practice (including with respect to frequency and amount) ("Ordinary
Course of Business") and there has not occurred: (i) any material adverse change
in the Business Condition of the Company; (ii) any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting the
Business Condition of the Company; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, shares or
property) with respect to the capital shares of the Company; (iv) any increase
or change in the compensation or benefits payable or to become payable by the
Company to any of its employees, consultants or contractors, except increases in
employee base pay in the Ordinary Course of Business; (v) any acquisition or
sale of a material amount of property of the Company, except in the Ordinary
Course of Business; or (vi) any increase or other modification of any bonus,
pension, insurance or other employee benefit plan, payment or arrangement
(including, but not limited to, the granting of stock options, restricted shares
awards or share appreciation rights) made to, for, or with any of its employees,
except increases in such employees' base pay in the Ordinary Course of Business
consistent with the Company's past practice.
2.8. Absence of Undisclosed Liabilities The Company has no liabilities or
obligations (whether absolute, accrued or contingent) except (i) liabilities,
obligations or contingencies ("Liabilities") that are accrued or reserved
against in the Most Recent Balance Sheet or (ii) additional Liabilities reserved
against since the Most Recent Fiscal Period End that: (x) have arisen in the
Ordinary Course of Business; (y) are accrued or reserved against on the books
and records of the Company; and (z) amount in the aggregate to less than
$1,500,000.
2.9. No Violations. The business of the Company is not being conducted in
violation of any applicable law, rule or regulation, judgment, decree or order
of any Governmental Entity, except for any violations or practices, which,
individually or in the aggregate, have not had and will not have a material
adverse effect on the Business Condition of the Company.
2.10. Employees and Others. Section 2.10(a) of the Disclosure Schedule contains
a list of all employees of the Company (the "Company Employees"), along with
their respective positions and annual or other rates of compensation. Section
2.10(b) of the Disclosure Schedule contains a list of all employees of the
Seller or any Subsidiary of the Seller whose primary responsibility is to
provide services to the Company or otherwise participate in or contribute to the
business of the Company as presently conducted or proposed to be conducted (the
"Deemed Company Employees" and, together with the Company Employees, the
"Employees"). Each Employee, and each consultant or contractor of the Company or
the Seller who has provided any substantive intellectual property service with
respect to any Company IP Assets (defined in Section 2.17) or Seller Transferred
IP Assets (as defined in Section 2.17) (each, a "Contractor"), has entered into
a confidentiality and assignment of inventions agreement with the Company or the
Seller, a copy of the form of which has previously been delivered to the Buyer.
Section 2.10(c) of the Disclosure Schedule lists all Employees and all current
Contractors. No Employee or group of Employees has provided the Company with
written notice which indicates his or her intent to terminate employment with
the Company, the Seller or any of its Subsidiaries, as the case may be, other
than the Unrestricted Employees (as hereinafter defined), as to which no
representation or warranty is made, and other than such as individually or in
the aggregate would not have a material adverse effect on the Business Condition
of the Company. The Company is not a party to or bound by any collective
bargaining agreement, and has not experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes. Neither the
Seller nor the Company is aware of any organizational effort being made or
threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to any of the Employees. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, parachute payment, bonus or otherwise) becoming due
from the Company under any Plan (as hereinafter defined), agreement or
otherwise, to any director of the Company or Employee, (ii) materially increase
any benefits otherwise payable under any Plan or agreement, or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
2.11. Employee Benefit Plans. Except as disclosed in Section 2.11 of the
Disclosure Schedule, the Company does not have in effect and has not announced
or proposed to have in effect any bonus, deferred compensation, pension, profit
sharing, retirement, severance, stock option, group insurance, death benefit,
welfare or other employee benefit plan, arrangement or policy whether formal or
informal (as to any party hereto, a "Plan"), for the benefit of any of the
Company Employees or former employees of the Company. Section 2.11 of the
Disclosure Schedule contains an accurate and complete description of, and sets
forth the annual amount payable pursuant to, each of the Company Plans therein
described and the aggregate amounts unpaid under all such Plans as of the dates
thereof. Neither the Company nor the Seller has any commitment to create any
additional Plan covering any Company Employee. Each of such Plans is in effect
and the Company is in compliance with all laws, rules and regulations applicable
thereto. All Company Plans have been duly registered where required by, and are
in good standing under, all applicable legislation and the Company has fulfilled
its funding obligations under all such Plans. For each current Company Plan
under which benefits may be due to, or liabilities may exist in respect of
Employees or former employees of the Company, the Company and the Seller have
delivered to the Buyer accurate and complete copies, to the extent they exist,
of (i) all currently applicable Plan texts and agreements; (ii) all summary Plan
descriptions and material employee communications; (iii) the most recent annual
report; (iv) the most recent annual and periodic accounting of Plan assets; and
(v) the most recent actuarial valuation. Each Plan has been administered
substantially in accordance with its terms. All material reports, returns and
similar documents with respect to the Plans required to be filed with any
Governmental Entity or distributed to any Plan participant have been duly and
timely filed or distributed. To the Company's knowledge, there are no pending
investigations by any Governmental Entity, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Plans), suits or proceedings against or involving any Plan or asserting any
rights or claims to benefits under any Plan that could give rise to any material
liability to the Company. To the extent applicable, the Plans comply, in all
material respects, with the requirements of Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), and any Plan intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified and, to the Company's knowledge, nothing has occurred to cause the
loss of such qualified status. No Plan is covered by Title IV of ERISA or
Section 412 of the Code. To the Company's knowledge, there are no pending or
anticipated material claims against or otherwise involving any of the Plans and
no suit, action or other litigation (excluding claims for benefits incurred in
the ordinary course of Plan activities) has been brought against or with respect
to any such Plan. All material contributions, reserves or premium payments,
required to be made as of the date hereof to the Plans have been made or
provided for. Neither the Company nor the Seller has incurred any liability
under Subtitle C or D of Title IV of ERISA with respect to any single-employer
plan currently or formerly maintained by the Company or any entity (hereinafter,
"ERISA Affiliate") which is or was ever considered one employer with the Company
for purposes of Title IV of ERISA. Neither the Company nor any ERISA Affiliate
that is operating or has operated within the United States has ever been
obligated to contribute to a multiemployer plan. The Company has no obligations
for retiree health and life benefits under any Plan and there are no
restrictions on the rights of the Company to amend or terminate any Company Plan
without incurring any liability thereunder and no act or omission has occurred
and no condition exists that will result in any tax, excise tax, penalty or
other liability to the Company with respect to any employee benefit plan ever
maintained by an ERISA Affiliate. Neither the Company nor the Buyer shall incur
any liability under any Plan in connection with the Deemed Company Employees.
2.12. Product Warranty. No product manufactured, sold, leased, licensed or
delivered by the Company is subject to any guaranty, warranty, right of return
or other indemnity beyond the applicable standard terms and conditions of
license, sale or lease, which are set forth in Section 2.12 of the Disclosure
Schedule. Section 2.12 of the Disclosure Schedule sets forth the aggregate
expenses incurred by the Company in fulfilling its obligations under any
guaranty, warranty, right of return and indemnity provisions during each of the
fiscal years and the interim period covered by the Financial Statements; and the
Company is not aware of any product defect that could result in a significant
increase in such expenses as a percentage of sales in the future.
2.13. Assets. (i) The Company IP Assets, (ii) other assets owned or leased by
the Company (collectively, with the Company IP Assets, the "Company Assets"),
(iii) the Seller Transferred IP Assets, and (iv) all material personal property
owned or leased by the Seller or any of its Subsidiaries which is used primarily
in the business of the Company (collectively, with the Seller Transferred IP
Assets, the "Seller Assets"), including the assets listed on Schedule 2.13A and
assets, including computer and other personal property, used by the Deemed
Company Employees primarily in the business of the Company (the assets described
in clauses (i) through (iv) being referred to collectively herein as the
"Assets"), the Seller Licensed Technology, the Seller Licensed Patents, the
Third Party Technology and software of the Seller widely available for under
$1,000 are all of the assets necessary for the conduct of the Company's business
as presently conducted except for third party patents (other than the patents
owned by Lex Computer and Management Corp. referred to in Section 2.17) and
third party trademarks. Section 2.13B of the Disclosure Schedule sets forth a
list of certain personal property currently owned or possessed by the Company
but which will be retained by the Seller (the "Retained Assets") and not
included as Company Assets, Seller Assets or Assets at Closing. Each Asset
(exclusive of any software that is in development) is free from material
defects, has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes for which it presently is used. The Company is, and at
the Closing will be, the true and lawful owner of the Company Assets (other than
the leased Company Assets), with valid title thereto, free and clear of any
Encumbrance (subject to any patent cross licenses of the Seller and any prior
licenses granted by the Seller or the Company in connection with the
distribution of products of the Seller or the Company in the Ordinary Course of
Business (the "IP Encumbrance Exceptions"). The Seller is, and at the Closing
will be, the true and lawful owner of the Seller Assets (other than the leased
Seller Assets). The Seller has, and at the Closing will have, the right to sell
and transfer to the Company, the Buyer and/or the Buyer's designee valid title
to the Seller Assets, free and clear of any Encumbrance (subject to the IP
Encumbrance Exceptions). The delivery to the Company, the Buyer or the Buyer's
designee of the instruments of transfer of ownership contemplated by this
Agreement with respect to the Seller Assets will vest valid title to the Seller
Assets free and clear of any Encumbrance (subject to the IP Encumbrance
Exceptions).
2.14. Major Contracts. Except as otherwise disclosed in Section 2.14 of the
Disclosure Schedule neither the Company nor, for purposes of paragraphs (a) and
(b) below, the Seller, is a party to or subject to:
(a) Any employment or services contract or arrangement providing for future
compensation, written or oral, with any Employee or director of the Company
which (i) exceeds $100,000 per annum, and (ii) is not terminable by it on 30
days' notice or less without penalty or obligation to make payments related to
such termination; (b) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation, retirement payments,
profit-sharing, or the like exceeding $100,000; (c) Any joint venture agreement
or arrangement or any other agreement which has involved or is expected to
involve a sharing of profits of $100,000 or more to other persons; (d) Any
original equipment manufacturer agreement, distribution agreement, volume
purchase agreement or manufacturing agreement, written or oral, in which the
amount involved exceeds annually $100,000, or is expected to exceed in the
aggregate over the life of the agreement, $1,000,000 or pursuant to which the
Company has granted or received manufacturing rights, most favored nation
pricing provisions or exclusive marketing rights related to any product, group
of products or territory; (e) Any lease for immovable (or real) property or
moveable (or personal) property in which the amount of payments which the
Company is required to make on an annual basis exceeds $150,000; (f) Any
material agreement, license, franchise, permit, indenture or authorization
(other than one which has been terminated or performed in its entirety and not
renewed) which may be, by its terms, terminated, impaired or adversely affected
by reason of the execution of this Agreement, the approval of the Reorganization
or the consummation of the transactions contemplated hereby or thereby; (g)
Except for trade indebtedness and intercompany debt between the Seller and the
Company incurred in the Ordinary Course of Business, any instrument evidencing
or related in any way to indebtedness incurred in the acquisition of companies
or other entities or indebtedness for borrowed money by way of direct loan, sale
of debt securities, purchase money obligation, conditional sale, guarantee, or
otherwise which individually is in the amount of $100,000 or more; (h) Any
material license agreement, either as licensor or licensee (excluding
nonexclusive hardware and software licenses granted to customers or end-users in
the Ordinary Course of Business); (i) Any contract containing covenants
purporting to limit the Company's freedom to compete in any line of business or
market segment in any geographic area; or (j) Any agreement or other arrangement
with the Seller or any of the Seller's Subsidiaries, other than the License and
Services Agreement dated as of June 27, 1994 between the Company and the Seller
(the "Intercompany Agreement").
All contracts, plans, arrangements, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments listed in the Disclosure Schedule pursuant to this Section 2.14 are
valid and in full force and effect; the Company has not, nor to the knowledge of
the Company has any other party thereto, breached any material provisions
thereof; and the Company is not in default in any material respect under the
terms thereof.
2.15. Taxes. The Company has duly and timely filed (or caused to be filed) all
tax returns, reports and information statements required to be filed by it under
United States or Canadian federal, provincial, state or local laws or any other
laws, which returns, reports and statements are true, correct and complete in
all material respects. All taxes of the Company required to be paid in respect
of the periods covered by such returns ("Return Periods") have either been paid
or fully accrued on the books of the Company. There is no material difference
between the amounts of the book basis and the tax basis of any assets of the
Company that is not reflected in an appropriate accrual of deferred tax
liability on the books of the Company. Section 2.15 of the Disclosure Schedule
accurately sets forth the last year for which the Company's U.S. federal or
state or Canadian federal or provincial income tax returns, respectively, have
been audited and any years which are the subject of a pending audit by the
Internal Revenue Service or Revenue Canada and any applicable provincial, state
or local agencies. Except as set forth in Section 2.15 of the Disclosure
Schedule, (i) the Company has not been the subject of any audit, tax
investigation, assessment or reassessment, and (ii) the Company is not aware of
any proposed, pending or threatened assessment, reassessment or tax
investigation. For the purposes of this Agreement, the terms "tax" and "taxes"
shall include all United States and Canadian federal, provincial, state, local
or foreign (other than United States or Canada) taxes, assessments, duties,
tariffs, including without limitation all income, franchise, property,
production, sales, use, payroll, license, withholding, excise, gross receipts
and other taxes, as well as any interest, additions or penalties relating
thereto and any interest in respect of such additions or penalties. The Company
will provide the Buyer or its designated representative true and correct copies
of all tax returns that have been filed by the Company, information statements,
reports and work papers as requested by the Buyer, other than documents subject
to a privilege. The Company has also provided all other tax data in its
possession reasonably requested by the Buyer in writing.
There are no liens for taxes upon the assets of the Company, the Seller
Assets except for taxes that are not yet payable. Except as set forth in Section
2.15 of the Disclosure Schedule, the Company has not entered into any
agreements, waivers or other arrangements in respect of the statute of
limitations in respect of its taxes or tax returns. The Company has withheld and
paid over to the proper taxing authority all taxes required to be withheld in
respect of wages, salaries and other payments to all employees, consultants,
contractors, officers and directors and persons that are not Canadian residents.
The Company has timely remitted to the appropriate tax authority all amounts
collected by it on account of Goods and Services Taxes (as defined under the
Excise Tax Act (Canada)), Quebec Sales Tax (as defined in the Act respecting the
Quebec Sales Tax) and any retail sales tax. The Company has never been, and is
not now, a party to any tax sharing or tax allocation agreement and has no
liability for the tax obligations of any other entity.
2.16. Interests of Officers. None of the Seller's or the Company's officers or
directors has any material interest in any of the Assets, including without
limitation, any invention, copyright, trademark or trade name, used in or
pertaining to the business of the Company or any supplier, distributor or
customer of the Company.
2.17. Technology. The following capitalized terms shall have the respective
meanings ascribed to them below:
"Technology" means copyrights, mask works and applications and
registrations for any of the foregoing, as well as trade secrets, schematics,
technology, know-how, computer software, programs, tangible and intangible
proprietary information and materials and all other intellectual property rights
other than patents, patent applications, trademarks, service marks, trade names,
and domain names.
"Company Technology" means any and all Technology owned by the Company.
"Company Patents" means the patents and patent applications owned by
Company as identified in Section 2.17A of the Disclosure Schedule.
"Company Trademarks" means the trademarks, service marks, trade names, and
domain names owned by the Company as identified in Section 2.17B of the
Disclosure Schedule.
"Seller Transferred Technology" means any and all Technology owned by
Seller immediately prior to Closing and (1) authored or otherwise developed by:
(a) employees, contractors and/or consultants of Company; (b) Seller's
employees, contractors and/or consultants while such employees, contractors
and/or consultants were: (i) working on Company premises, (ii) working on the
development or support of Company Products, or (iii) otherwise authorized to act
and acting on behalf of the Company; or (2) purchased by Seller prior to the
Closing Date for use solely in Company Products.
"Seller Transferred Patents" means the Seller owned patents, patent
applications and inventions of the Company or Seller conceived by employees,
contractors or consultants of the Company prior to the Closing and sold to Buyer
pursuant to this Agreement. The aforementioned patents and patent applications
are identified in Section 2.17C of the Disclosure Schedule.
"Seller Transferred Trademarks" means the Seller owned trademarks, service
marks, trade names, and domain names to be sold to Buyer as identified in
Section 2.17D of the Disclosure Schedule.
"Seller Licensed Technology" means the Seller owned or licensable
Technology set forth in Section 2.17E of the Disclosure Schedule.
"Seller Licensed Patents" means any claims in patent applications and
patents owned or licensable (without the payment of further compensation or
other obligations that cannot be fulfilled by Buyer) by Seller as of the Closing
Date which claims read on Company's Products.
"Company Products" means (i) any and all products and services created or
under development, as of the date of Closing, by or for Company or its
Subsidiaries; and (ii) any and all products and services marketed, distributed
and/or licensed by or for Company or its Subsidiaries, as of the date of
Closing, under any of their trademarks or trade names.
"Third Party Technology" means the Technology and other intellectual
property set forth in Section 2.17F of the Disclosure Schedule which Technology
and intellectual property is (i) contained in Company's Products, and (ii) owned
or controlled by third parties. "Seller Products" means (i) any and all existing
and future products and services created, or under development, by or for Seller
or its Subsidiaries; and (ii) any and all existing and future products and
services marketed, distributed and/or licensed by or for Seller or its
Subsidiaries, under any of their trademarks or trade names. For the avoidance of
doubt, Company shall not constitute a Subsidiary of Seller for purposes of this
Agreement.
"Current Seller Products" means those Seller Products that are in beta or
final release form immediately prior to Closing.
"Buyer Field" means systems, processes and software primarily relating to
(i) the capture, creation, manipulation, and/or management of film, video or
other motion images or audio (including, without limitation, still-frame images
intended to be used in motion images); (ii) storage, transmission or display of
film, video or other motion images or audio in connection with any of the
functions of (i) above or (iii) news or broadcast production. Examples of
products which may include such systems, processes and software are (i) the
following Avid products: Media Composer, Film Composer, Avid Xpress for
Macintosh, MCXpress for Windows NT, Avid Cinema, Media Illusion, Matador,
Elastic Reality, NewsCutter, Airplay, Media Server, Avid News, Pro Tools,
AudioMedia, and Audio Vision; and the following Company Products: SOFTIMAGE/DS,
SOFTIMAGE/3D, SOFTIMAGE/3D-EXTREME, TOONZ and SOFTIMAGE/XXXXX.
Immediately following the Closing, the Company, the Buyer and/or the
Buyer's designees shall (i) own exclusively all right, title and interest in and
to all Company IP Assets (as defined below) and all Seller Transferred IP Assets
(as defined below) free and clear of any Encumbrance (subject to the IP
Encumbrance Exceptions) and (ii) except as provided in Section 2.17G of the
Disclosure Schedule enjoy all rights to Third Party Technology which any of the
Company, the Seller or its Subsidiaries has or shall have acquired prior to the
Closing. As a result of such ownership and enjoyment of license rights,
immediately following the Closing, the Company and the Buyer shall own or hold a
license to all Technology necessary, except as provided in Section 2.17H of the
Disclosure Schedule and except for patents owned by third parties, to carry on
the business of the Company as previously or currently operated or contemplated
by the Seller or the Company to be operated in the future.
Section 2.17A of the Disclosure Schedule lists all patents owned by the
Company; Section 2.17B lists all trademarks, trade names, service marks, domain
names and any registrations and applications for the foregoing owned by the
Company; Section 2.17I lists all registered copyrights and the applications for
registered copyrights owned by the Company; Section 2.17C of the Disclosure
Schedule lists all patents and patent applications which have been applied for
in the names of employees, contractors or consultants of the Company prior to
the Closing; Section 2.17D of the Disclosure Schedule lists all trademarks,
service marks, trade names and domain names owned by the Seller and used
primarily in Company Products; Section 2.17J of the Disclosure Schedule lists
all registered copyrights and applications for registered copyrights included in
the Seller Transferred Technology; and Section 2.17E lists all Seller Licensed
Technology being licensed to the Buyer under this Agreement. Section 2.17K of
the Disclosure Schedule lists (i) all of the Company's currently marketed
(directly or indirectly) products; and (ii) all material licenses, sublicenses
and other agreements relating to Third-Party Technology, including the
identities of the parties thereto, a description of the nature and subject
matter thereof, the applicable royalty and the term thereof. Neither the Seller
nor the Company is, or as a result of the execution and delivery of this
Agreement or performance of their respective obligations hereunder will be, in
violation of any material license, sublicense or agreement described in Section
2.17K of the Disclosure Schedule. With respect to the Company Technology,
Company Patents and Company Trademarks (the "Company IP Assets") and the Seller
Transferred Technology, Seller Transferred Patents and Seller Transferred
Trademarks (the "Seller Transferred IP Assets"), the Company, in the case of the
Company IP Assets, and the Seller, in the case of the Seller Transferred IP
Assets, is the sole and exclusive owner of, with all right, title, and interest
in and to (free and clear of any Encumbrance (subject to the IP Encumbrance
Exceptions)) such Company IP Assets or Seller Transferred IP Assets, as the case
may be, and has sole and exclusive rights (subject to the IP Encumbrance
Exceptions) (and is not contractually obligated to pay any compensation to any
third party in respect thereof) for the use thereof in connection with the
Company Products in respect of which such Company IP Assets or Seller
Transferred IP Assets are being used. The Company Technology, the Seller
Transferred Technology, and the Company Products do not infringe or
misappropriate the intellectual property rights or any other right or interest
(other than patent or trademark rights) of any person or entity. Except as set
forth in Section 2.17L of the Disclosure Schedule neither the Seller nor Company
has received any written claim (i) that the Company Technology, the Seller
Transferred Technology, the Company Trademarks, the Seller Transferred
Trademarks or any Company Products infringe or misappropriate any intellectual
property right or any other right or interest of any person or entity, or (ii)
challenging the ownership, validity or effectiveness of any intellectual
property right related to the Company Products, proposed products, Company
Technology or Seller Transferred Technology. To the Company's and Seller's
knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company IP Assets or Seller IP Assets by any
third party, employee or former employee other than matters of routine piracy,
including those listed on Section 2.17M of the Disclosure Schedule. Each of the
Seller and the Company has taken all steps reasonably necessary to protect its
right, title and interest in and to, respectively, the Seller IP Assets and the
Company IP Assets. Except as set forth in Schedule 2.17H, the Company Assets,
the Seller Licensed Technology, the Seller Assets, the Third Party Technology
and software of the Seller widely available for under $1,000 constitute all of
the Technology necessary to (i) conduct the Company's business as presently
conducted and (ii) develop and distribute all products currently being developed
by the Company. The Company does not require any additional licenses under U.S.
Patent Nos. 4,937,685; 4,939,594; 4,949,193; 4,960,044; and 4,979,050 of Lex
Computer and Management Corp. to exploit any Company Products.
2.18. Softimage Shares. The Seller has valid title to the issued and outstanding
Common Share of the Company and, at the Closing, the Seller shall have valid
title to the Softimage Shares. At the Closing, the Softimage Shares shall be the
only issued and outstanding shares of the capital of the Company and, when
transferred to the Buyer pursuant hereto, shall be validly issued, fully paid,
non-assessable and free and clear of any and all covenants, conditions,
restrictions, voting trust arrangements, liens, charges, Encumbrances, options
or any other rights whatsoever.
2.19. Material Relations. To the Company's knowledge, none of the parties to any
of the contracts identified in the Disclosure Schedule pursuant to Section 2.14
has terminated, or expressed an intent to materially reduce or terminate the
amount of its business with the Company in the future.
2.20. Change of Control At or prior to Closing, each of the Seller and the
Company will have taken all action necessary relating to the Seller Options to
provide that the occurrence of the transactions contemplated by this Agreement
shall not entitle holders thereof to any right to receive any benefit from the
Company or the Buyer other than the right to receive an Employee Option.
2.21. Real Property. The Company owns no real property. Section 2.21 of the
Disclosure Schedule lists and describes briefly all real property leased or
subleased by or to the Company or included in the Seller Assets, and lists the
term of such lease, any extension and expansion options and the rent payable
thereunder. The Company and the Seller have delivered to the Buyer correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 2.21 of the Disclosure Schedule. With respect to each lease and sublease
listed in Section 2.21 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable and
in full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing;
(c) no party to the lease or sublease is in breach or default, and no event
has occurred which, with or without notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not subleased, assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold; and
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities.
2.22. Environmental.
(a) To the best of the Company's knowledge, all property leased or occupied
by the Company and the businesses conducted thereon by the Company are in
compliance with all Environmental Laws (as hereinafter defined); the Company has
accurately disclosed all information and filed all notices or reports required
under any Environmental Laws (if any) to the environmental Governmental
Entities; the Company is not required to have any Permits (as hereinafter
defined) for the operation of its business under Environmental Laws other than
those listed in the Disclosure Schedule;
(b) No Contaminant (as hereinafter defined) has been released into the
environment by the Company, or deposited, discharged, placed or disposed of in
contravention of any Environmental Laws by the Company at, on or near any
property owned, leased or occupied by the Company or, to the best of the
Company's knowledge, by any other person, in contravention of any Environmental
Law; to the best of the Company's knowledge, no Company property has been used
at any time by any person as a landfill or waste disposal site;
(c) The Company has not used, handled, treated, stored, recycled,
transported or disposed of any Contaminant on any property owned, leased or
occupied by the Company in contravention of any Environmental Law;
(d) The Company has not received any written notice, namely a notice of
correction, notice of infraction or Order issued under any Environmental Law
from any Governmental Entity or court;
(e) The Company has not received any written claim, demand or suit from any
third person alleging that the Company property or the operations or activities
carried out thereon is not in compliance with Environmental Laws;
(f) The Company has not received any written notice of claim or other
written notification that it is or may be subject to or responsible for any
cleanup or other remediation of a Contaminant present on any the Company
property;
(g) To the best of the Company's knowledge, there have been no
environmental inspections, investigations, studies, audits, tests, reviews or
other analyses, the purpose of which was to discover, identify or otherwise
characterize the condition of the soil, groundwater, air, or presence of
asbestos, PCB materials or urea formaldehyde at any property owned, leased or
occupied by the Company;
(h) To the best of the Company's knowledge, there is no asbestos present in
any property presently owned, leased or operated by the Company, and no asbestos
has been removed from any the Company property while such property was owned,
leased or operated by the Company;
(i) To the best of the Company's knowledge, there is no PCB or urea
formaldehyde insulation present on any property presently owned, leased or
operated by the Company, whether above ground, underground or within a structure
thereon; and
(j) To the best of the Company's knowledge, there are no underground
storage tanks, active or abandoned, on, in or under any property and no
underground storage tanks have been closed or removed from any property which
are or have been owned, leased or occupied by the Company.
"Contaminant" means any substance, waste, solid, liquid or gaseous matter
deemed hazardous, dangerous or toxic, any hazardous waste, any solid waste, any
pollutant or any contaminant under any Environmental Laws.
"Environmental Laws" means all applicable United States or Canadian
federal, provincial, state, municipal, regional or local statute, regulation,
Order, bylaw, policy, directive or Permit relating to the environment or its
protection, including without limitation, the Environment Quality Act (Quebec)
and the Canadian Environmental Protection Act (Canada).
"Order" means legally binding orders, decisions, directives, declarations,
injunctions, decrees, writs, judgments, rulings, awards or the like rendered by
any Governmental Entity, court or arbitrator having jurisdiction.
"Permit" means all permits, licenses, certificates of authorization,
authorizations, approvals, consents and the like issued by any Governmental
Entity which are held by the Company in connection with the Company property and
the business conducted thereon.
2.23. Permits Section 2.23 of the Disclosure Schedule sets forth a list of all
Permits. Such listed Permits are the only Permits that are required for the
Company to conduct its business as presently conducted or as proposed to be
conducted, except for those the absence of which would not have any material
adverse effect on the Business Condition of the Company. Each such Permit is in
full force and effect and, to the best of the knowledge of the Company, no
suspension or cancellation of such Permit is threatened and there is no basis
for believing that such Permit will not be renewable upon expiration. Each such
Permit will continue in full force and effect following the Closing.
2.24. Accounts Receivable. All accounts receivable of the Company reflected on
the Most Recent Balance Sheet are valid receivables subject to no setoffs or
counterclaims and are collectible net of the applicable reserve for bad debts on
the Most Recent Balance Sheet. All accounts receivable reflected in the
financial or accounting records of the Company that have arisen since the Most
Recent Fiscal Period End are valid receivables subject to no setoffs or
counterclaims and are collectible, net of a reserve for bad debts, in an amount
proportionate to the reserve shown on the Most Recent Balance Sheet.
2.25. Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
2.26. Insurance. Section 2.26 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is or has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
three years:
(a) the name of the insurer, the name of the policyholder and the
name of each covered insured;
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage;
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements; and
(e) all pending claims made against such insurance policies. Each such
insurance policy is enforceable and in full force and effect; such policy will
continue to be enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect on the date
hereof; the Company is not in breach or default (including with respect to the
payment of premiums or the giving of notices) under such policy, and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration, under
such policy; and the Company has not received any notice from the insurer
disclaiming coverage or reserving rights with respect to a particular claim or
such policy in general. The Company has not incurred any loss, damage, expense
or liability covered by any such insurance policy for which it has not properly
asserted a claim under such policy. The Company is covered by insurance in scope
and amount customary and reasonable for the business in which it is engaged.
2.27. Brokers' Fees. The Company has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
2.28. Books and Records. The minute books and other similar records of the
Company contain true and complete records of all actions taken at any meetings
of the Company's stockholders, Board of Directors or any committee thereof and
of all written consents executed in lieu of the holding of any such meeting. The
books and records of the Company accurately reflect in all material respects the
assets, liabilities, business, financial condition and results of operations of
the Company.
2.29. Customers and Suppliers. No material supplier of the Company has indicated
within the past year that it will stop, or decrease the rate of, supplying
materials, products or services to the Company and no material customer of the
Company has indicated within the past year that it will stop, or decrease the
rate of, buying, leasing or licensing materials, products or services of the
Company. Section 2.29 of the Disclosure Schedule sets forth a list of (a) each
customer that accounted for more than one percent (1%) of the revenues of the
Company during the last full fiscal year or the interim period through the Most
Recent Fiscal Period End and the amount of revenues attributable to such
customer during each such period and (b) each supplier that is the sole supplier
of any material product or component to the Company.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller and the Company as
follows:
3.1. Organization The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware, and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which a failure to so qualify
would have a material adverse effect on the Business Condition of the Buyer.
3.2. Capitalization of the Buyer. On the date hereof, the Buyer's authorized
capital stock consists of 50,000,000 shares of Buyer Common Stock, and as of the
close of business on June 5, 1998, 24,309,004 of such shares were issued and
outstanding, and 1,000,000 shares of Preferred Stock, $0.01 par value per share,
none of which is issued and outstanding.
3.3. Authority The Buyer has all requisite corporate power and authority to
enter into this Agreement. The execution and delivery by the Buyer of this
Agreement and the consummation of the agreements contemplated hereby to be
entered into by the Buyer have been duly authorized by all necessary corporate
action on the part of the Buyer, including the approval of the Board of
Directors of the Buyer. This Agreement has been duly executed and delivered by
the Buyer and constitutes the valid and binding obligation of the Buyer
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity (regardless of whether in equity or at law). The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any Violation of (i)
the Charter Documents of the Buyer, (ii) except as set forth in Section 3.3 of
the disclosure schedule provided by the Buyer to the Seller on the date hereof
(the "Buyer Disclosure Schedule"), any loan or credit agreement, instrument,
note, bond, mortgage, indenture, contract, license, lease or other agreement
applicable to the Buyer or its properties or assets, or (iii) any statute, law,
ordinance, permit, concession, franchise, judgment, order, decree, rule or
regulation applicable to the Buyer or its properties or assets, other than, in
the case of (ii) and (iii), any such Violation which individually or together
with other Violations would not have a material adverse effect on the Business
Condition of the Buyer. No Consent of any Governmental Entity is required in
connection with the execution and delivery of this Agreement by the Buyer or the
consummation by the Buyer of the transactions contemplated hereby, except for
Consents, if any, relating to Required Statutory Approvals and except for such
other Consents which if not obtained or given would not have a material adverse
effect on the Business Condition of the Buyer.
3.4. Litigation. Except as set forth in Section 3.4 of the Buyer Disclosure
Schedule, there is no claim, action, suit or proceeding pending or, to the
knowledge of the Buyer, threatened, which would, if adversely determined,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Buyer, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the Buyer or
any of its Subsidiaries having, or which, insofar as reasonably can be foreseen,
in the future could have, any such effect. Except as set forth in Section 3.4 of
the Buyer Disclosure Schedule, there is no investigation pending or, to the
knowledge of the Buyer threatened, against the Buyer or any Subsidiary of the
Buyer, before any Governmental Entity. Section 3.4 of the Buyer Disclosure
Schedule sets forth, with respect to any pending action, suit, proceeding, or
investigation, other than those disclosed in the Buyer Reports, to which the
Buyer or any of its Subsidiaries is a party and which involves claims reasonably
expected to exceed $250,000, and with respect to each, sets forth the forum, the
parties, the subject, and the amount of damages claimed.
3.5. Reports and Financial Statements. The Buyer has previously furnished to the
Seller complete and accurate copies, as amended or supplemented, of its (a)
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as filed
with the SEC, and (b) all other reports filed by the Buyer under Section 13 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
SEC since December 31, 1997 (such reports are collectively referred to herein as
the "Buyer Reports"), including Buyer's report on Form 10-Q for the quarter
ended March 31, 1998 ("Buyer's Most Recent Fiscal Period End"). The Buyer
Reports constitute all of the documents required to be filed by the Buyer under
Section 13 of the Exchange Act with the SEC since December 31, 1997. As of their
respective dates, the Buyer Reports did not contain any 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, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the Buyer
included in the Buyer Reports (i) comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer and its Subsidiaries as of the respective dates thereof
and for the periods referred to therein, and (iv) are consistent with the books
and records of the Buyer.
3.6. No Material Adverse Change. Since the Buyer's Most Recent Fiscal Period
End, the Company has conducted its business in the Ordinary Course of Business
and there has not occurred: (i) any material adverse change in the Business
Condition of the Buyer; (ii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the Business Condition
of the Buyer; (iii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, shares or property) with respect to the
capital shares of the Buyer; or (iv) any acquisition or sale of property of the
Buyer in excess of $75,000,000, except in the Ordinary Course of Business.
3.7. Brokers' Fees. Other than fees and commission to be paid to Xxxxxxxxx &
Xxxxx ("H&Q") under the Letter Agreement by and between the Buyer and H&Q dated
May 12, 1998, the Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
3.8. Employee Options. At the time of issuance of the Employee Options, the
Board of Directors of the Buyer will have taken all necessary action to validly
authorize the issuance of the Employee Options and to duly reserve from the
authorized but unissued shares of Buyer Common Stock the shares of Buyer Common
Stock issuable upon exercise of the Employee Options.
COVENANTS OF THE COMPANY AND THE SELLER
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, the Company and the
Seller agree (except as expressly contemplated by this Agreement or with the
Buyer's prior written consent) that:
4.1. Conduct of Business.
4.1.1 Ordinary Course. The Company shall carry on its businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers, consultants and employees and preserve its relationships with
customers, suppliers, distributors and others having business dealings with the
Company. The Company shall promptly notify the Buyer of any event or occurrence
or emergency not in the Ordinary Course of Business or material and adverse to
the Business Condition of the Company. Neither the Company nor the Seller, as
the case may be, shall:
(a) accelerate, amend or change the period of exercisability or vesting of
options granted under any Company or Seller stock option plan (including any
discretionary acceleration of the exercise periods of the Employee Options) or
authorize cash payments in exchange for any options granted under any of such
plan;
(b) in the case of the Company, enter into any commitment or transaction
not in the Ordinary Course of Business which (1) is to be performed over a
period longer than six months in duration, (2) provides for a purchase of assets
for a purchase price in excess of $250,000, or (3) if in effect on the date
hereof or at the time of the Closing, would be required to be listed in Section
2.14 of the Disclosure Schedule;
(c) make any offer, or enter into any agreement, commitment or other
transaction, for the hiring of employees, consultants or contractors of the
Company, without the prior written consent of the Senior Vice President of Human
Resources of the Buyer, who shall respond within three (3) business days after
receipt of a written notice of such proposed hire from the Company;
(d) grant any severance or termination pay to any officer or director or,
except as required by law, to any employee of the Company;
(e) except in the Ordinary Course of Business, transfer to any person or
entity any material rights to the Company Assets;
(f) except in the Ordinary Course of Business and other than transfers
between or among the Seller and the Company, transfer to any person or entity
any material rights to the Seller Assets;
(g) enter into or amend any agreements pursuant to which any other party is
granted exclusive marketing, distribution or manufacturing rights of any type or
scope with respect to any hardware or software products of the Company;
(h) except in the Ordinary Course of Business with prior notice to the
Buyer or as expressly contemplated by this Agreement, terminate any contracts,
arrangements, plans, agreements, leases, licenses, franchises, permits,
indentures, authorizations, instruments and commitments listed on the Disclosure
Schedule pursuant to Section 2.14, or amend or otherwise change the terms
thereof; and
(i) in the case of the Company, commence a lawsuit other than: (i) for the
routine collection of bills, (ii) for software piracy, (iii) for a breach of
this Agreement; or (iv) in such cases where the Company in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of the Company's business, provided the Company consults with
the Buyer prior to filing such suit.
4.1.2 Dividends; Changes in Shares. The Company shall not (i) declare or pay any
dividends on or make other distributions (whether in cash, shares or property)
in respect to any of its capital shares, (ii) split, combine or reclassify any
of its capital shares or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for capital shares of the Company
other than pursuant to the Reorganization, (iii) repurchase or otherwise
acquire, directly or indirectly, any of its capital shares other than those held
by Seller, or (iv) propose any of the foregoing.
4.1.3 Issuance of Securities. The Company shall not issue, deliver, or sell, or
authorize, propose or agree to, or commit to the issuance, delivery, or sale of
any of its capital shares of any class, any Company Voting Debt or any
securities convertible into its capital shares or Company Voting Debt, any
options, warrants, calls, conversion rights, commitments, agreements, contracts,
understandings, restrictions, arrangements or rights of any character obligating
it to issue any such capital shares, Company Voting Debt or other convertible
securities.
4.1.4 Governing Documents. Other than pursuant to the Reorganization, the
Company shall not amend its Charter Documents.
4.1.5 Exclusivity; Acquisition Proposals. Unless and until this Agreement shall
have been terminated pursuant to Section 9.1 hereof, neither the Seller nor the
Company shall (and each shall use its best efforts to ensure that none of its
shareholders, officers, directors, agents, representatives or affiliates) take
or cause or permit any Subsidiary to take, directly or indirectly, any of the
following actions with any party other than the Buyer or its designees: (i)
solicit, encourage, initiate or participate in any negotiations, inquiries or
discussions with respect to any offer or proposal to acquire all or any
significant part of the Company's business, assets or capital shares, including,
without limitation the Common Share held by Seller as of the date hereof, the
Softimage Shares and the Assets, whether by arrangement, amalgamation, merger,
consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "Acquisition
Transaction"); (ii) disclose any information not customarily disclosed to any
person concerning the Company's business or properties or afford to any person
or entity access to the Company's properties, books or records, except as
required by law or pursuant to a governmental request for information; (iii)
enter into or execute any agreement relating to an Acquisition Transaction, plan
of reorganization or other agreement calling for the sale of all or any
significant part of the Company's business and properties; or (iv) make or
authorize any public statement, recommendation or solicitation with respect to
any Acquisition Transaction or any offer or proposal relating to an Acquisition
Transaction, in each case other than with respect to the Reorganization.
4.1.6 No Acquisitions. Other than pursuant to the Reorganization, the Company
shall not acquire or agree to acquire by amalgamation, arrangement, merger or
consolidation with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to
the Business Condition of the Company.
4.1.7 No Dispositions. The Company shall not sell, lease, license, transfer,
mortgage, encumber or otherwise dispose of any of its assets or cancel, release
or assign any indebtedness or claim, except in the Ordinary Course of Business
consistent with prior practice. Except in the Ordinary Course of Business, the
Seller shall not sell, lease, license, transfer, mortgage, encumber or otherwise
dispose of any of the Seller Assets.
4.1.8 Indebtedness. The Company shall not incur any indebtedness for borrowed
money from any party other than the Seller by way of direct loan, sale of debt
securities, purchase money obligation, conditional sale, guarantee or otherwise,
including without limitation, pursuant to existing bank credit agreements.
4.1.9 Plans. The Company shall not adopt or amend in any material respect any
Plan, or pay any pension or retirement allowance not required by any existing
Plan, except for such amendments as may be required for the qualification or
continued qualification of such Plan under any applicable statute or regulation.
The Company shall not enter into any employment contracts, pay any special
bonuses or special remuneration to officers, directors, or employees, or
increase the salaries, wage rates or fringe benefits of its officers,
consultants or employees other than pursuant to scheduled reviews under the
Company's normal compensation review cycle (which review cycle will take place
in July 1998 and result in a regular salary adjustment effective in August
1998), in all cases consistent with the Company's existing policies and past
practice.
4.1.10 Agreement. Neither the Company nor the Seller, as the case may be, shall
agree to take or take any of the actions prohibited by this Section 4.1.
4.1.11 Accounts Payable and Accounts Receivable; Intercompany Arrangements. The
Company shall pay all accounts payable and shall collect all accounts receivable
in the Ordinary Course of Business and shall not accelerate the collection of
any of its accounts receivable or delay the payment of any of its accounts
payable.
4.1.12 Breach of Representation and Warranties. Neither the Seller nor the
Company will take any action which would cause or constitute a breach of any of
the representations and warranties set forth in Article II or which would cause
any of such representations and warranties to be inaccurate. In the event of,
and promptly after becoming aware of, the occurrence of or the pending or
threatened occurrence of any event which would cause or constitute such a breach
or inaccuracy, the Company shall give detailed notice thereof to the Buyer and
both the Company and the Seller will use their best efforts to prevent or
promptly remedy such breach or inaccuracy.
4.2. Consents. Each of the Seller and the Company shall promptly apply for or
otherwise seek, and use its best efforts to obtain, all consents and approvals,
and make all filings, required with respect to the Company for the consummation
of the Reorganization, except such consents and approvals as Seller and the
Buyer agree the Company shall not seek to obtain, and Seller will use reasonable
efforts to cooperate with the Company and provide assistance in prosecuting such
requests.
4.3. Best Efforts. Except matters as to which the Seller or the Company agrees
in this Agreement to use reasonable efforts, the Seller and the Company shall
each use its best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to the Closing under this
Agreement.
4.4. Retention of Seller. Neither the Seller nor any of its Subsidiaries shall
take any action or omit to take any action, or permit the occurrence of, or
enter into any agreements regarding, any such action or omission, which would,
or may reasonably be expected to, diminish the Seller's rights in or to the
Seller Assets.
4.5. Retention of Company Assets. The Company shall not take any action or omit
to take any action, or permit the occurrence of, or enter into any agreements
regarding, any such action or omission, which would, or may reasonably be
expected to, materially diminish the Company's rights in or to the Company
Assets.
COVENANTS OF THE BUYER
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, the Buyer agrees
(except as expressly contemplated by this Agreement or with the Seller's prior
written consent which will not be unreasonably withheld or delayed taking into
account the mutual interests of the parties) that:
5.1. Breach of Representations and Warranties The Buyer will not take any action
which would cause or constitute a breach of any of the representations and
warranties set forth in Article III or which would cause any of such
representations and warranties to be inaccurate. In the event of, and promptly
after becoming aware of, the occurrence of or the pending or threatened
occurrence of any event which would cause or constitute such a breach or
inaccuracy, the Buyer will give detailed notice thereof to the Seller and the
Buyer will use its best efforts to prevent or promptly remedy such breach or
inaccuracy.
5.2. Consents. The Buyer will promptly apply for or otherwise seek, and use its
best efforts to obtain, all consents and approvals, and make all filings,
required for the consummation of the transactions contemplated hereby. 5.3. Best
Efforts. Except matters as to which the Buyer agrees in this Agreement to use
reasonable efforts, the Buyer will use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to the Closing under this Agreement.
ADDITIONAL AGREEMENTS
In addition to the foregoing, the parties each agree to take the following
actions after the execution of this Agreement.
6.1. Shareholders'. The Company shall duly call, give notice of, convene and
hold a meeting of its shareholders as promptly as practicable for the purpose of
voting upon the Reorganization. The Company shall, through its Board of
Directors, recommend that its shareholders approve of such matters, coordinate
and cooperate with respect to the timing of such meeting, and use its best
efforts to hold such meeting as soon as practicable after the date hereof and
shall secure the approval of its shareholders for the transactions contemplated
herein.
6.2. Access to Information. The Company and the Seller shall, subject to
applicable law and applicable confidentiality agreements to which the Seller or
the Company is a party listed in Section 6.2 of the Disclosure Schedule, afford
the Buyer and its accountants, counsel and other representatives, reasonable
access during normal business hours during the period prior to the Closing to
(a) all of the Company's properties, books, contracts, commitments and records,
and (b) such other information concerning the business, properties and personnel
of the Company as the Buyer may reasonably request. The Company agrees to
provide the Buyer and its accountants, counsel and representatives copies of
internal financial statements promptly upon request. No information or knowledge
obtained after the date hereof in any investigation pursuant to this Section 6.2
shall affect or be deemed to modify any representation or warranty contained
herein or in the Disclosure Schedule. All information delivered or disclosed to
the Buyer by the Company, the Seller or any of their employees, agents,
accountants, counsel or other representatives related to or in connection with
this Agreement other than, after the Closing, the Company Assets and Seller
Assets shall be deemed Confidential Information (as defined in the
Confidentiality Agreement dated March 4, 1998, as amended, by and among the
Buyer, the Seller and the Company (the "Confidentiality Agreement")) subject to
the terms and conditions of the Confidentiality Agreement. The Buyer shall have
the right following the Closing to have reasonable access to the Retained Assets
for the purpose of complying with laws, regulations and other legal matters;
provided, that such access shall be structured in such a way so as to preserve
any attorney-client or similar privilege of the Seller.
6.3. Governmental Filings. Each of the parties hereto shall promptly file any
Notification and Report Forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, shall use its best efforts to
obtain an early termination of the applicable waiting period, and shall make any
further filings or information submissions pursuant thereto that may be
necessary, proper or advisable. No party shall participate in any meeting with
the Federal Trade Commission or Department of Justice in respect of its filing
under the HSR Act relating to the transactions contemplated hereby or any review
of such filing by either of the foregoing agencies without giving the other
party prior notice of such meetings and offering such other party the
opportunity to attend and participate in such meetings. Both the Seller and the
Company shall take all reasonable actions necessary to cause the expiration of
the notice periods or receipt of required Consents, as applicable under the
Investment Canada Act, Competition Act (Canada), and similar laws relating to
the Company, including notification to any applicable Governmental Entities that
the parties will proceed with the consummation of the transactions contemplated
hereby (assuming the satisfaction of other conditions).
6.4. Employees The Seller will work with the Buyer to assist in the retention,
or hiring, as the case may be, by the Company of as many Employees as possible
(with the exception of those employees (the "Unrestricted Employees") listed in
Section 6.4 of the Disclosure Schedule hereto as to which the Seller may also
attempt to retain, in the discretion of the Seller) after the Closing. The Buyer
will offer employment to such Employees (including the Unrestricted Employees)
and the Seller and the Company will cooperate with the efforts of the Buyer as
reasonably requested to interview, recruit and hire such Employees. The Seller
shall be responsible for any severance or other obligations that arise from the
termination of an Employee's employment (constructive or otherwise) or other
relationship with the Company or the Seller on or prior to the Closing.
Employees who are employed by the Company, the Buyer or any of their affiliates
after the Closing will receive, until December 31, 1998, or such earlier time as
they cease to be employed by the Company or the Buyer, compensation and benefits
which, in the aggregate and without considering stock options and stock purchase
plan benefits, are substantially similar to the benefits received by persons
constituting Company Employees of similar position immediately prior to the
Closing. For purposes of eligibility and vesting in the benefit plans of the
Company, the Buyer or any of their affiliates, Employees who are employed by the
Company, the Buyer or any of their affiliates after the Closing will receive
credit for their periods of service with the Company, the Seller and the
Seller's affiliates prior to Closing. At the request of any Employee who is
eligible to participate in the 401(k) plan of the Buyer or an affiliate thereof
after the Closing, such plan shall accept rollovers of participant loans from
Seller's 401(k) plan.
6.5. Expenses. If the Closing occurs, all costs and expenses, including but not
limited to, attorney fees, accounting fees, investment banking fees and all
other professional services fees, incurred by the Company through the Closing in
connection with this Agreement and the transactions contemplated hereby,
including but not limited to the Reorganization, shall be paid by the Seller. If
the Closing does not occur, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense. In any event, all costs and expenses incurred by
the Buyer in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Buyer, and all costs and expenses incurred by the
Seller in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Seller.
6.6. No Public Announcements. No party hereto will make any public announcement
of or other disclosure with respect to this Agreement or any of the transactions
contemplated hereby without the written consent of the other parties unless
advised by counsel that such disclosure is required by law, in which case the
disclosing party will promptly and, in any event, prior to such disclosure,
notify the other party and provided the other party the reasonable opportunity
to comment on such disclosure.
6.7. Company. The Seller hereby agrees that effective upon the Closing, the
Company, its Subsidiaries, successors and assigns are hereby released and
forever discharged from any and all claims, indemnities, interest, losses,
costs, expenses or any other obligation or liability arising under or related to
the Combination Agreement dated as of February 14, 1994 by and between the
Seller and the Company (the "Combination Agreement"), and any and all agreements
or arrangements contemplated thereby, including, but not limited to, any claims
and obligations relating to any representation, warranty, covenant or other
provision included in the Combination Agreement or any agreement contemplated
thereby.
6.8. Standstill Agreement. Without the prior written consent of the Buyer,
Seller shall not during the period ending five years from the date hereof (i)
acquire, offer to acquire or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or direct or indirect rights or
options to acquire any voting securities of the Buyer, (ii) make or in any way
participate, directly or indirectly, in any "solicitation" or any "proxy" to
vote (as such terms are used in the proxy rules under the Exchange Act) or seek
to advise or influence any person or entity with respect to the voting of any
voting securities of the Buyer, (iii) form, join or in any way participate,
directly or indirectly, in a "group" within the meaning of Section 13(d)(3) of
the Exchange Act with respect to any voting securities of the Buyer, or (iv)
otherwise act, alone or in concert with others, directly or indirectly, to seek
control of the management, Board of Directors or policies of the Buyer.
6.9. Seller No Hire Agreement. During the period beginning on the date hereof
and ending one year after the Closing, the Seller will not directly or
indirectly hire any Employees (as defined in Section 2.10).
6.10. Buyer No Hire Agreement. If this Agreement is terminated prior to the
Closing, the Buyer agrees that, for a period ending one year after the date
hereof, it will not solicit any Company Employee for the purpose of hiring such
Company Employee. Notwithstanding the foregoing, the Buyer may hire any Company
Employee who contacts the Buyer as a result of the Buyer's general solicitation
efforts.
6.11. Company Financial Statements. For a period of up to six months after the
Closing, the Seller shall provide the Buyer and the Company with such
information and assistance as may reasonably be requested by either of them to
prepare audited financial reports of the Company required under the Exchange
Act.
6.12. Section 338 Election. The Buyer shall notify the Seller within 10 days
after the filing, if any, of an election under Section 338 of the Code with
respect to the Company.
6.13. Sales Tax. The Buyer shall indemnify and hold harmless the Seller with
respect to any Washington State sales taxes for which the Buyer is legally
obligated by Washington law, if any, as a result of the transactions
contemplated by this Agreement.
6.14. License Grants to Buyer.
(a) Seller Licensed Patents. As of the Closing Date, Seller hereby grants
to Buyer and Company and their Subsidiaries a worldwide, nonexclusive,
perpetual, irrevocable, royalty-free, fully-paid up license under Seller
Licensed Patents to make, have made, use, sell and import (i) Company Products
and subsequent versions of those products, but only to the extent that such
subsequent versions include functionality incorporated in Company Products as of
the Closing Date and (ii) in the Buyer Field, products developed by or for the
Company, the Buyer, any of their respective Subsidiaries or any Permitted
Sublicensee (as defined below) and implementing functions included in Company
Product's as of the Closing Date, which functions are covered by one or more
claims of Seller Licensed Patents. The licenses granted in this Section 6.14(a)
include the right to grant sublicenses in connection with (i) the distribution
of such products developed by or for the Company, the Buyer or any of their
respective Subsidiaries, or (ii) the sale or transfer to any entity of a line of
the Buyer's, the Company's or a Subsidiary's business (a "Permitted
Sublicensee") that includes the transfer of substantially all rights in one or
more of such products developed by or for the Company, the Buyer or any of their
respective Subsidiaries.
(b) Seller Licensed Technology. Unless otherwise restricted in Section
2.17E of the Disclosure Schedule, as of the Closing Date, Seller hereby grants
to Buyer and Company and their Subsidiaries a license under Seller Licensed
Technology, which license shall be worldwide, nonexclusive, perpetual,
irrevocable, royalty-free, and fully-paid up, with the right to grant
sublicenses, to use, reproduce, execute, display, publicly perform or display,
import, broadcast, prepare derivative works of, transmit and distribute the
Seller Licensed Technology, all such rights to be exercised solely in connection
with products developed by or for the Company, the Buyer, any of their
respective Subsidiaries or a Permitted Sublicensee and whose functionality is
primarily within the Buyer Field. The licenses granted in this Section 6.14(b)
include the right to grant sublicenses in connection with (i) the distribution
of such products developed by or for the Company, the Buyer or any of their
respective Subsidiaries, or (ii) the sale or transfer of a line of the Buyer's,
the Company's, or a Subsidiary's business related to such products developed by
or for the Company, the Buyer or any of their respective Subsidiaries.
CONDITIONS PRECEDENT AND POST-CLOSING COVENANTS
7.1. Conditions to Each Party's. The respective obligations of the parties under
this Agreement are subject to the satisfaction prior to the Closing of the
following conditions:
7.1.1 Governmental Approvals. Consents legally required for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred, or been obtained, other than such Consents, the failure of
which to obtain would have no material adverse effect on the consummation of the
transactions contemplated hereby.
7.1.2 No Restraints. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any Governmental Entity of competent jurisdiction which enjoins or prohibits
the consummation of the transactions contemplated by this Agreement shall be in
effect.
7.1.3 Corporate and Stockholder Approvals. The transactions
contemplated hereby, including the Reorganization described below, shall have
been approved and adopted by the required vote of the Seller and the holders of
the Exchangeable Shares.
7.1.4 Reorganization. Within seven days prior to the Closing, the
Company shall have effected a reorganization of the Company under applicable
United States and Canadian laws (the "Reorganization"), which shall result in
(i) all of the current holders of Exchangeable Shares holding thereafter shares
of a newly formed affiliate of the Seller, with such shares having substantially
the same rights, privileges and conditions as the Exchangeable Shares (the "New
Exchangeable Shares"), and (ii) the Seller, or the Shareholder Affiliate, owning
all of the outstanding shares of stock (the "Softimage Shares") of the Company
or a successor thereto (the "Amalgamated Subsidiary") that retains all assets,
liabilities, rights and obligations of the Company (other than any obligation
with respect to the Exchangeable Shares) as constituted on the date hereof. To
the extent applicable, all references in this Agreement to: (i) the Seller shall
be deemed to include the Shareholder Affiliate and (ii) the Company shall be
deemed to include the Amalgamated Subsidiary.
7.2. Conditions to Obligations of the. The obligations of the Buyer under this
Agreement are subject to the satisfaction prior to the Closing of the following
conditions precedent, each of which may be waived in writing in the sole
discretion of the Buyer:
7.2.1 Representations and Warranties of the Company and the Seller.
The representations and warranties of each of the Company and the Seller set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except as otherwise contemplated by this Agreement, and the
Buyer shall have received a certificate signed by the chief executive officer
and the chief financial officer of each of the Company and the Seller to such
effect on the Closing Date.
7.2.2 Performance of Obligations of the Company. The Company and the
Seller each shall have performed in all material respects all agreements and
covenants required to be performed by it under this Agreement prior to the
Closing Date, and Buyer shall have received a certificate signed by the chief
executive officer and the chief financial officer of the Company and the chief
executive officer and the chief financial officer of the Seller to such effect
on the Closing Date.
7.2.3 Opinion of Counsel to the Seller. The Buyer shall have
received opinions dated the Closing Date of Xxxxxxx Xxxxx & Xxxxx LLP, United
States counsel to the Seller, and XxXxxxxx Xxxxxxxx, Canadian counsel to the
Seller, in substantially the forms attached hereto as Exhibits 7.2.3A and
7.2.3B, respectively.
7.2.4 Sale of Assets. The Seller shall have (i) executed and
delivered to the Buyer (or its designee) a Xxxx of Sale, Assignments of
Trademarks, Patents and Copyrights and such other documents and instruments as
are required to vest in the Buyer (or its designee) the rights in the Seller
Assets provided for herein, and (ii) delivered to the Buyer (or its designee)
certificates evidencing the Softimage Shares duly endorsed in blank or with duly
executed stock powers.
7.2.5 Software License. The Seller and the Buyer shall have executed
and delivered a license with respect to certain software containing
substantially the terms set forth in Section 7.2.5 of the Buyer Disclosure
Schedule.
7.2.6 Letter Agreement. The Seller and the Buyer shall have executed
and delivered a letter agreement containing substantially the terms set forth in
Section 7.2.6 of the Buyer Disclosure Schedule.
7.2.7 Assigned Contracts. The Seller shall have secured for the
benefit of the Company and the Buyer any consents or assignments of agreements
that relate to the business of the Company as being currently conducted or as
planned to be conducted that are required for the Company to enjoy the benefits
and privileges of such agreements after the Closing, including without
limitation, those agreements identified in Section 7.2.7 of Buyer's Disclosure
Schedule.
7.2.8 Intercompany Agreement. The Intercompany Agreement shall
have been terminated.
7.2.9 Approvals for Employee Options. The Buyer shall have obtained
regulatory approval from the Quebec Securities Commission regarding the granting
of the Employee Options, and the issuance of the underlying securities.
7.2.10 Transitional Service Agreement. The Buyer and the Seller
shall have entered into a transitional service agreement containing
substantially the terms set forth in Section 7.2.10 of the Buyer Disclosure
Schedule, pursuant to which the Seller shall provide transitional services to
the Buyer and/or the Company.
7.2.11 Competition Act. The Buyer shall have received from the
Director of Investigation and Research (the "Director") appointed under the
Competition Act, a no-action letter following pre-notification pursuant to
Section 114 of the Competition Act or an advanced ruling certificate pursuant to
Section 102 of the Competition Act in form and substance satisfactory to the
Buyer in its sole discretion whereby the Director certifies that he is satisfied
that he would not have sufficient grounds on which to apply to the Competition
Tribunal under Section 92 of the Competition Act in respect of the transactions
contemplated by this Agreement.
7.2.12 Investment Canada Act. The Buyer shall have received from the
Minister designated by the Governor-in-Council as the Minister for the purposes
of Investment Canada Act (the "Minister") a notice under Section 21, 22 or 23 of
the Investment Canada Act that the Minister is satisfied or is deemed to be
satisfied, as the case may be, that the transactions contemplated by this
Agreement represent an investment likely to be of net benefit to Canada.
7.2.14 Post-Closing Collaboration Agreement. The Buyer and the
Seller shall have entered into a Post-Closing Collaboration Agreement containing
substantially the terms set forth in Section 7.2.13 of the Buyer's Disclosure
Schedule.
7.2.15 Legal Action. There shall not be overtly threatened or
pending any action, proceeding or other application before any Governmental
Entity: (i) challenging or seeking to restrain or prohibit the consummation of
the transactions contemplated by this Agreement, or seeking to obtain any
material damages as a result thereof; or (ii) seeking to prohibit or impose any
material limitations on any Asset or the Company's ownership or operation of all
or any material portion of its business or to compel the Seller or the Company
to dispose of or hold separate all or any material portion of Seller's or the
Company's business or assets as a result of the transactions contemplated by the
Agreement.
7.3. Conditions to Obligation of the Seller and the Company The obligations of
the Seller and the Company under this Agreement are subject to the satisfaction
prior to the Closing of the following conditions precedent, each of which may be
waived in writing in the discretion of the Seller and the Company:
7.3.1 Representations and Warranties of the Buyer. The
representations and warranties of the Buyer set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing as though made on and as of the Closing, except as otherwise
contemplated by this Agreement, and the Seller and the Company shall have
received a certificate signed by the chief executive officer and the chief
financial officer of the Buyer to such effect.
7.3.2 Performance of Obligations of the Buyer. The Buyer shall have
performed in all material respects all agreements and covenants required to be
performed by it under this Agreement prior to the Closing, and the Seller and
the Company shall have received a certificate signed by the chief executive
officer and the chief financial officer of the Buyer to such effect.
7.3.3 Opinion of Counsel to the Buyer. The Seller shall have
received an opinion dated the Closing Date of Xxxx and Xxxx LLP, United States
counsel to the Buyer, in substantially the form attached hereto as Exhibit
7.3.3.
7.3.4 Registration Rights Agreement. The Seller and the Buyer shall
have entered into a Registration Rights Agreement substantially in the form set
forth as Exhibit 7.3.4 hereto.
7.3.5 License Agreement. The Seller and the Buyer shall have entered
into an agreement in substantially the form attached hereto as Exhibit 7.3.5 to
be performed after the Closing.
7.4. Post-Closing Covenants.
7.4.1 Cancelled Employee Option Shares. After the Closing, the
principal amount of the Note (as adjusted at Closing, if and to the extent
required under Section 1.6) shall be increased by $39.71 for each share of Buyer
Common Stock that will not be issued under Employee Options as a result of the
termination after the Closing Date of employment with the Company or the Buyer,
as the case may be, of the holder of any such Employee Option to the extent that
such Employee Option was not exercisable at the time of such termination (the
"Cancelled Employee Option Shares"). An accounting shall be made by the Buyer at
the end of each calendar quarter to determine the number of Cancelled Employee
Option Shares as a result of employment terminations during such period and such
accounting shall be delivered to the Seller within thirty days after the end of
such quarter together with a calculation of the amount by which the principal
amount of the Note is to be increased hereby and the Seller and Buyer shall
amend the Note accordingly.
7.4.2 Restrictions on Sales of Shares of Buyer Common Stock. The
Seller agrees not to sell or transfer any Buyer Common Stock (including Buyer
Common Stock issued under the Warrant) for a period of three years after the
Closing; provided that the foregoing shall not restrict the Seller from entering
into bona fide transactions which constitute a hedge against changes in the
market price of Buyer Common Stock. Certificates representing such Buyer Common
Stock shall bear the following legend:
These shares have not been registered under the Securities Act of
1933, as amended. They may not be offered or transferred by sale,
assignment, pledge or otherwise unless (i) a registration statement
for the shares under the Securities Act of 1933 is in effect or (ii)
the Corporation has received an opinion of counsel, which opinion is
satisfactory to the Corporation, to the effect that such
registration is not required under the Securities Act of 1933.
Until June 15, 2001, the sale, transfer or other disposition of any
of the shares represented by this certificate are subject to the
restrictions contained in a Stock and Asset Purchase Agreement dated
as of June 15, 1998 by and among the registered holder and the
issuer of such shares, and, until such date, no shares represented
by this certificate may be sold, transferred or otherwise disposed
of without the written consent of the issuer.
7.4.3 Bonus Payments. The Seller shall pay to all Employees all
bonus amounts earned and or accrued through June 30, 1998.
7.4.4 Tax Cooperation.
(a) The Seller shall, at its cost, arrange for the preparation of
financial statements of the Company and the preparation and filing of all
returns of the Company for taxes relating to any period ending on or including
the Closing Date, and pay all taxes required to be paid or remitted by the
Company for the taxation year ending as a consequence of the Closing and for any
period, or portion thereof, up to the Closing Date.
Such tax returns shall be prepared in a manner reasonably consistent
with prior tax returns filed by the Company. The Buyer shall have the right to
cause the Company to make any designation, election or claim on such return
which the Buyer deems to be in the best interest of the Company, in which case
the Seller shall not be responsible for and the Buyer shall pay any additional
taxes resulting from such designation, election or claim taxes in respect of
such return. Income tax returns shall be submitted to the Buyer at least twenty
days prior to the final date upon which they are legally required to be filed
and all other returns shall be so submitted at least five days prior to the
final date upon which they are legally required to be filed. The Buyer shall
have the right to review and comment on such filings.
(c) The Seller and the Buyer shall (i) each provide the other, and the Buyer and
the Seller shall cause the Company to provide each of them, with such assistance
as may reasonably be requested by either of them in connection with the
preparation of any return, audit or other examination by any taxing authority or
judicial or administrative proceedings relating to the Company's liability for
taxes for periods ending on or before the Closing Date, (ii) each retain and
provide the other, and the Buyer and the Seller shall cause the Company to
retain and provide the Seller and the Buyer with, any records or other
information which may be relevant to such return, audit or examination,
proceeding or determination.
Subject to the following sentence, the Seller shall exercise
at its expense complete control over the handling, disposition and settlement of
any government inquiry, examination or proceeding that could result in a
determination with respect to taxes due or payable by the Buyer or the Company
for which the Seller may be liable, or against which the Seller may be required
to indemnify the Buyer or the Company pursuant hereto. The Seller shall,
however, promptly notify the Company if, in connection with any such inquiry,
examination or proceeding, any government authority proposes in writing to make
any assessment or adjustment with respect to tax items of the Company, which
assessments or adjustments could affect the Company following the Closing Date,
and shall not agree to any such proposed assessment or adjustment without the
prior written consent of the Company. The Buyer shall notify the Seller in
writing promptly upon learning of any such inquiry, examination or proceeding.
The Buyer shall cooperate with the Seller, as the Seller may reasonably request,
in any such inquiry, examination or proceeding.
INDEMNIFICATION
8.1. Indemnity. If the Closing occurs, the Seller hereby indemnifies and holds
harmless the Buyer and the Company, from and against all claims, damages,
losses, liabilities, costs and expenses (including, without limitation,
settlement costs and any legal, accounting or other expenses for investigating
or defending any actions or threatened actions) (with respect to a party hereto,
collectively, "Losses") in connection with each and all of the following (a
"Breach of Warranty"):
8.1.1 any misrepresentation or breach of any representation or
warranty made by the Seller or the Company in this Agreement;
8.1.2 any breach of any covenant, agreement or obligation of the
Seller or the Company contained in this Agreement;
8.1.3 any claim by a holder of Exchangeable Shares or New
Exchangeable Shares;
8.1.4 any claim or legal proceeding asserted or related to any fact
existing, prior to the Closing;
8.1.5 any claims against, or liabilities or obligations under,
Plans of the Seller;
8.1.6 any tax assessed against the Company as a result of the
Company's activities (including, without limitation, transfer pricing between
the Company and the Seller, and exposures noted in the preliminary Canadian tax
audit report dated March 31, 1998) or transactions involving the Company through
the date of the Closing; and
8.1.7 any of the matters described in Sections 2.1, 2.6, 2.9, 2.15
and 2.17L (provided, however, that the Seller's obligations with respect to the
matters described in such Section 2.17L shall be limited to its obligations to
defend and pay the amount of any adverse settlement or judgement) of the
Disclosure Schedule.
8.2. Indemnity by Buyer. The Buyer hereby indemnifies and holds harmless the
Seller from and against all Losses in connection with each and all of the
following:
8.2.1 any misrepresentation or breach of any representation or
warranty made by the Buyer in this Agreement; and
8.2.2 any breach of any covenant, agreement or
obligation of the Buyer contained in this Agreement.
8.3. Claims for Indemnification. Whenever any claim shall arise for
indemnification under this Article VIII, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party with the obligation to
indemnify the Indemnified Party (the "Indemnifying Party") of the claim and,
when known, the facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings by a third party, the notice shall specify, if
known, the amount or an estimate of the amount of the liability arising
therefrom. The Indemnified Party shall not settle or compromise any claim by a
third party for which it is entitled to indemnification hereunder without the
prior written consent, which shall not be unreasonably withheld or delayed, of
the Indemnifying Party, provided, however, that if suit shall have been
instituted against the Indemnified Party and the Indemnifying Party shall not
have taken control of such suit after notification thereof as provided in
Subsection 8.4 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim upon giving notice to the Indemnifying Party as
provided in Subsection 8.4.
8.4. Defense by the Indemnifying Party. In connection with any claim which may
give rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person other than the Indemnified Party, the Indemnifying
Party, at the sole cost and expense of the Indemnifying Party, may, upon written
notice to the Indemnified Party, assume the defense of any such claim or legal
proceeding if the Indemnifying Party acknowledges to the Indemnified Party in
writing the obligation of the Indemnifying Party to indemnify the Indemnified
Party with respect to all elements of such claim. If the Indemnifying Party
assumes the defense of any such claim or legal proceeding, the Indemnifying
Party shall select counsel reasonably acceptable to the Indemnified Party to
conduct the defense of such claims or legal proceedings and at the sole cost and
expense of the Indemnifying Party shall take all steps necessary in the defense
or settlement thereof. The Indemnifying Party shall not consent to a settlement
of, or the entry of any judgment arising from, any such claim or legal
proceeding, without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed), provided, that, if the
Indemnified Party withholds consent to any settlement of a claim for monetary
damages only, the Indemnifying Party's liability to indemnify the Indemnified
Party for such claims under this Section shall not exceed the amount set forth
in the proposed settlement. The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. If the Indemnifying Party does not assume the
defense of any such claim or litigation resulting therefrom within 30 days after
the date written notice of such claim is provided to the Indemnifying Party: (a)
the Indemnified Party may defend against such claim or litigation in such manner
as it may deem appropriate, including, but not limited to, settling such claim
or litigation (without relieving the Indemnifying Party of its indemnification
obligations), after giving written notice of the same to the Indemnifying Party,
on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third party claim or the amount or nature of any
such settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend or
settle such third party claim in a reasonably prudent manner.
8.5. Survival of Representations; Claims for Indemnification Except as provided
for below, all representations and warranties contained in this Agreement shall
survive for a period of two years after the date of Closing and shall thereafter
terminate and be of no further force or effect; provided, that the
representations contained in Sections 2.11, 2.15 and 2.22 shall survive through
the expiration of any applicable statute of limitations period, and provided,
further, that representations contained in Sections 2.18 shall survive
indefinitely. The Seller shall have no right of contribution against the Company
with respect to any breach of any representation, warranty, covenant or
agreement of the Seller or the Company contained herein or contemplated hereby.
8.6. Limitations. Other than with respect to Section 6.4, 6.5, 6.13 and 7.4, no
Indemnifying Party shall have any liability for indemnification under this
Article VIII unless the aggregate amount of all Losses of such Indemnifying
Party exceeds $500,000 (the "Threshold Amount"). If such aggregate amount does
not exceed the Threshold Amount, the liability of such Indemnifying Party for
indemnification under this Article VIII shall include the full amount of such
Losses including the Threshold Amount. Notwithstanding anything to the contrary
in this Article VIII (i) the maximum aggregate liability of any Indemnifying
Party under this Agreement shall be $250,000,000; and (ii) in no event shall any
party be liable for punitive damages hereunder. The Buyer shall not make any
claim for indemnification resulting from termination of Company employees after
the Closing Date. This Article VIII shall set forth the sole exclusive remedy
and recourse of the Indemnified Parties (and corresponding liability for any
Indemnifying Party) for monetary damages arising from any claim, cause of action
or right of any nature by the Indemnified Party against the Indemnifying Party,
any officer, director, employee or agent of such Indemnifying Party under this
Agreement, except for fraud
8.7. Exclusion. This Article shall not apply to Section 6.14.
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated at any time prior to the
Closing, whether before or after approval of matters presented in connection
with the Reorganization by the shareholders of the Company:
9.1.1 by mutual consent of the parties hereto; 9.1.2 by the Buyer if
there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of the Company or the Seller, and such breach has not been cured, or
best efforts are not being employed to cure such breach, within 10 days after
notice thereof is given to the party committing such breach;
9.1.3 by the Seller if there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of the Company or the Buyer, and such breach has not been cured, or
best efforts are not being employed to cure such breach, within 10 days after
notice thereof is given to the party committing such breach;
9.1.4 by the Buyer if the Closing shall not have taken place before
December 31, 1998; or
9.1.5 by any party hereto if (i) the conditions to such party's
obligation to close shall have become impossible to satisfy or (ii) any
permanent injunction or other order of a court or other competent authority
preventing the Reorganization or the Closing shall have become final and
non-appealable.
9.2. Effect of Termination. In the event of termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become void and have no
effect, and there shall be no liability or obligation on the part of the Seller,
the Company or the Buyer or their respective officers or directors, except that
(i) the provisions of the last sentence of Section 6.2 and all of Sections 6.5,
6.6, 9.2, 10.2, 10.6 and 10.7 shall survive such termination and (ii) no party
shall be released or relieved from any liability arising from the breach by such
party of any of its representations, warranties, covenants or agreements as set
forth in this Agreement.
9.3. Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4. Extension, Waiver. At any time prior to the Closing, any party hereto may,
to the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made by any party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements, covenants or conditions for the benefit of any party
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of all parties hereto.
GENERAL PROVISIONS
10.1. Notices. All notices and other communications hereunder shall be (i) in
writing, (ii) delivered personally, by facsimile (receipt confirmed) or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice), and (iii) effective upon receipt by the party so notified:
(a) if to the Seller to:
Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Seller's counsel
Microsoft Corporation
Law and Corporate Affairs
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
and: Seller's counsel
Xxxxxxx Xxxxx & Xxxxx XXX
0000 Xxxxxxxx Center
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company to:
Softimage, Inc.
0000, Xxxx. Xx-Xxxxxxx, Xxxxxx 400
Montreal (Quebec), Canada H2X 2V2
Attention: President
Facsimile No.: (000) 000-0000
(c) if to the Buyer to:
Avid Technology, Inc.
Metropolitan Technology Park
Xxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Buyer's Counsel
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
10.2. Interpretation. When a reference is made in this Agreement to Sections or
Exhibits, such reference shall be to a Section or Exhibit to this Agreement
unless otherwise indicated. The words "include," "includes," and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents, index of defined terms and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
10.3. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to each of the other parties, it being understood that all parties
need not sign the same counterpart.
10.4. Miscellaneous. This Agreement, each of the agreements attached as an
exhibit hereto and any other documents referred to herein or contemplated
hereby, other than the agreements contemplated by Sections 7.2.5, 7.2.6, 7.2.10
and 7.2.13, (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) are not intended to confer upon any other person
any rights or remedies hereunder (except as otherwise expressly provided
herein).
10.5. Assignment. This Agreement may not be assigned without the prior written
consent of the parties hereto, and any attempted assignment other than in
compliance with this Section shall be null and void. The Reorganization shall
not be deemed to constitute an assignment for purposes of this Section.
10.6. Governing Law. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the Commonwealth of
Massachusetts, USA applicable to agreements executed and performed entirely
within Massachusetts.
10.7. Language of Contract. Each of the parties acknowledges having requested
and being satisfied that this document and the documents attached be drawn in
English. Chacune des parties reconnait avoir demande que ce document et les
documents y afferents soient rediges en anglais et s'en declare satisfaite.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
In Witness Whereof, the Seller, the Company and the Buyer have caused this
Agreement to be signed by their respective officers thereto duly authorized, all
as of the date first written above.
MICROSOFT CORPORATION
By: /s/Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------
Title: Chief Financial Officer
--------------------------
SOFTIMAGE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------
Title: Chief Executive Officer
--------------------------
AVID TECHNOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
Exhibit 1.4A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON TRANS-
FER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. 1 Number of Shares: 1,155,235
(subject to adjustment)
Date of Issuance: August __, 1998
AVID TECHNOLOGY, Inc.
Common Stock Purchase Warrant
(Void after August ___, 2008)
Avid Technology, Inc., a Delaware corporation (the "Company"), for value
received, hereby certifies that Microsoft Corporation or, subject to Section 9,
its registered assigns (the "Registered Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company, at any time or from time to
time on or after August ___, 2000 and on or before August __, 2008 at not later
than 5:00 p.m. (Boston, Massachusetts time), 1,155,235 shares of common stock,
$.01 par value per share (the "Common Stock"), of the Company, at a purchase
price of $47.65 per share. The shares of Common Stock purchasable upon exercise
of this Warrant, and the purchase price per share, each as adjusted from time to
time pursuant to the provisions of this Warrant, are hereinafter referred to as
the "Warrant Shares" and the "Purchase Price," respectively.
1. Exercise
(a) This Warrant may be exercised by the Registered Holder, in whole or in part,
by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by such Registered Holder or by such Registered
Holder's duly authorized attorney, at the principal office of the Company,
or at such other office or agency as the Company may designate, accompanied
by payment in full, in lawful money of the United States, of the Purchase
Price payable in respect of the number of Warrant Shares purchased upon such
exercise. The Purchase Price shall be paid in the form of (i) cash, (ii) a
check of the Registered Holder to the Company, (iii) an electronic wire
transfer of immediately available funds in accordance with written
instructions of the Company or, (iv) if approved by the Company, any
combination of the foregoing forms of payment.
(b) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a)
above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(c) below shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon compliance with Section 9 and
payment by such Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant Shares to which
such Registered Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which such Registered Holder would otherwise be entitled,
cash in an amount determined pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or warrants (dated the
date hereof) of like tenor, calling in the aggregate on the face or faces
thereof for the number of Warrant Shares equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of this
Warrant minus the number of such shares purchased by the Registered Holder upon
such exercise.
2. Adjustments
(a) If outstanding shares of the Company's Common Stock shall be subdivided into
a greater number of shares or a dividend in Common Stock shall be paid in
respect of Common Stock, the Purchase Price in effect immediately prior to
such subdivision or at the record date of such dividend shall simultaneously
with the effectiveness of such subdivision or immediately after the record
date of such dividend be proportionately reduced. If outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Purchase
Price in effect immediately prior to such combination shall, simultaneously
with the effectiveness of such combination, be proportionately increased.
When any adjustment is required to be made in the Purchase Price, the number
of Warrant Shares purchasable upon the exercise of this Warrant shall be
changed to the quotient of (i) (A) the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment multiplied by
(B) the Purchase Price in effect immediately prior to such adjustment,
divided by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) If there shall occur any capital reorganization or reclassification of the
Company's Common Stock (other than a change in par value or a subdivision or
combination as provided for in subsection 2(a) above), or any consolidation
or merger of the Company with or into another corporation, or a transfer of
all or substantially all of the assets of the Company, then, as part of any
such reorganization, reclassification, consolidation, merger or sale, as the
case may be, lawful provision shall be made so that the Registered Holder of
this Warrant shall have the right thereafter to receive upon the exercise
hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive
if, immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, such Registered Holder
had held the number of shares of Common Stock which were then purchasable
upon the exercise of this Warrant. In any such case, appropriate adjustment
(as reasonably determined in good faith by the Board of Directors of the
Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder
of this Warrant, such that the provisions set forth in this Section 2
(including provisions with respect to adjustment of the Purchase Price)
shall thereafter be applicable, as nearly as is reasonably practicable, in
relation to any shares of stock or other securities or property thereafter
deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase Price, the
Company shall promptly mail to the Registered Holder a certificate setting
forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall
also set forth the kind and amount of stock or other securities or property
into which this Warrant shall be exercisable following the occurrence of any
of the events specified in subsection 2(a) or (b) above.
3. Fractional Shares. The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock. For this purpose, The Fair Market Value per share of Common Stock shall
be determined as follows:
(i) If the Common Stock is listed on a national securities exchange, the Nasdaq
National Market or another nationally recognized exchange or trading system as
of the Exercise Date, the Fair Market Value per share of Common Stock shall be
deemed to be the last reported sale price per share of Common Stock thereon on
the Exercise Date; or, if no such price is reported on such date, such price on
the next preceding business day (provided that if no such price is reported on
the next preceding business day, the Fair Market Value per share of Common Stock
shall be determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national securities exchange, the
Nasdaq National Market or another nationally recognized exchange or trading
system as of the Exercise Date, the Fair Market Value per share of Common Stock
shall be deemed to be the amount most recently determined by the Board of
Directors to represent the fair market value per share of the Common Stock
(including without limitation a determination for purposes of granting Common
Stock options or issuing Common Stock under an employee benefit plan of the
Company); and, upon request of the Registered Holder, the Board of Directors (or
a representative thereof) shall promptly notify the Registered Holder of the
Fair Market Value per share of Common Stock. Notwithstanding the foregoing, if
the Board of Directors has not made such a determination within the three-month
period prior to the effective date of exercise, as determined in pursuant to
Section 1(b) above (the "Exercise Date"), then (A) the Fair Market Value per
share of Common Stock shall be the amount next determined by the Board of
Directors to represent the fair market value per share of the Common Stock
(including without limitation a determination for purposes of granting Common
Stock options or issuing Common Stock under an employee benefit plan of the
Company), (B) the Board of Directors shall make such a determination within 15
days of a request by the Registered Holder that it do so, and (C) the exercise
of this Warrant pursuant to this subsection 1(b) shall be delayed until such
determination is made.
4. Securities Law Trading Restrictions
(a) This Warrant and the Warrant Shares shall not be sold or transferred unless
(i) the Company provides consent in accordance with Section 9, and (ii)
either (A) the Warrant or the Warrant Shares first shall have been
registered under the Securities Act of 1933, as amended (the "Act"), or (B)
the Company first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect that such
sale or transfer is exempt from the registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED UNDER SUCH ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act, or any
successor provision thereto.
5. No Impairment. The Company will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
6. Notices of Record Date, etc.
In case:
(a) the Company shall take a record of the holders of its Common Stock (or other
stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in
which the Company is the surviving entity), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up 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 other stock or securities at the
time deliverable 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, transfer, dissolution, liquidation or
winding- up. Such notice shall be mailed at least ten (10) days prior to the
record date or effective date for the event specified in such notice.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
8. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. Transfer Restrictions
(a) Neither this Warrant nor any rights hereunder are transferable, in whole or
in part, without the written consent of the Company which the Company may
withhold in its sole discretion. To effect any such permitted transfer, the
Registered Holder must surrender this Warrant with a properly executed
assignment (in the form attached hereto as Exhibit II) at the principal office
of the Company. Such assignment shall not be effective unless and until
countersigned by the Company.
(b) Upon the surrender by the Registered Holder of this Warrant and an
assignment executed by the Registered Holder and countersigned by the Company to
the Company at the principal office of the Company, the Company will, subject to
the provisions of Section 4 hereof, issue and deliver to or upon the order of
such Holder a new Warrant of like tenor, in such name as the Registered Holder
(upon payment by such Registered Holder of any applicable transfer taxes) shall
direct, calling on the face thereof for the number of shares of Common Stock
called for on the face of the Warrant so surrendered.
(c) Until any permitted transfer of this Warrant is effected as provided above,
the Company may treat the Registered Holder of this Warrant as the absolute
owner hereof for all purposes.
10. Mailing of Notices, etc. All notices and other communications from the
Company to the Registered Holder of this Warrant shall be mailed by first-class
certified or registered mail, postage prepaid, to the address furnished to the
Company in writing by the last Registered Holder of this Warrant who shall have
furnished an address to the Company in writing. All notices and other
communications from the Registered Holder of this Warrant or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the Registered Holder of this Warrant and thereafter all references in this
Warrant to the location of its principal office at the particular time shall be
as so specified in such notice.
11. No Rights as Stockholder. Until the exercise of this Warrant, the Registered
Holder of this Warrant shall not have or exercise any rights by virtue hereof as
a stockholder of the Company.
12. Change or Waiver. No term of this Warrant may be changed or waived other
than by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
13. Headings. The headings in this Warrant are for purposes of reference only
and shall not limit or otherwise affect the meaning of any provision of this
Warrant.
14. Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts entered into and
performed entirely within Delaware.
AVID TECHNOLOGY, INC.
By:---------------------------
[Corporate Seal] Title:------------------------
ATTEST:---------------------------
Exhibit I
PURCHASE FORM
To:_________________
Dated:______________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of the
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$____________, representing the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment is in the form of (indicate
the applicable amount for each form of payment):
$___________ Cash
$___________ Check of the Registered Holder to the Company
$___________ Wire transfer of immediately available funds to the
Company
$___________ TOTAL PURCHASE PRICE
Signature:___________________________
Address:_____________________________
EXHIBIT II
ASSIGNMENT FORM
For Value Received, ________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (No. ____) with respect to the number of shares of Common
Stock covered thereby set forth below, unto:
Name of Assignee Address No. of Shares
REGISTERED HOLDER
Signature: Dated:
Witness: Dated:
On behalf and in the name of the Company, the undersigned consents to the
assignment of the attached Warrant by the Registered Holder to the assignee set
forth above.
COMPANY
By:
Name:
Title:
Exhibit 1.4B
AVID TECHNOLOGY, INC.
9.5% Subordinated Note Due 2003
$5,000,000 (Subject to Adjustment) Boston, Massachusetts
August 3, 1998
---------------------
Avid Technology, Inc., a Delaware corporation (the "Company"), for value
received, hereby promises to pay to Microsoft Corporation (the "Holder"), the
principal sum of Five Million Dollars ($5,000,000), plus such principal amount
(the "Additional Amount") as may be added from time to time to the principal
amount of this Note pursuant to Section 7.4.1 of the Stock and Asset Purchase
Agreement dated as of June 15, 1998 by and among the Company, the Holder and
Softimage, Inc. (the "Agreement"). Any Additional Amount shall be indicated on
the last page of this Note after receipt by Holder of a written notice from the
Company designating such Additional Amount pursuant to Section 7.4.1 of the
Agreement.
The principal amount hereof, including the Additional Amount and accrued
but unpaid interest thereon, shall be due and payable in full on June 15, 2003.
Interest on this Note shall be computed on the basis of a 365-day year from the
date hereof on the unpaid balance of the principal amount from time to time
outstanding at the rate of nine and one-half percent (9.5%) per annum, such
interest to be due and payable in arrears on the last day of each of the months
of October, January, April and July in each calendar year, until the principal
outstanding shall be paid in full. Interest on the Additional Amount shall
accrue from the date of issuance of this Note and shall be payable in arrears on
the scheduled interest payment dates. The interest rate of this Note shall
increase to twelve and one-half (12.5%) during the period of any default in
payment of principal or interest due hereunder.
Subordination.
(a) Subordination to Senior Indebtedness. The indebtedness evidenced by this
Note, and the payment of the principal hereof, and any interest hereon, is
wholly subordinated, and junior and subject in right of payment, to the extent
and in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred. "Senior
Indebtedness" means the principal of, and premium, if any, and interest on (i)
all indebtedness of the Company for monies borrowed from banks, trust companies,
insurance companies and other financial institutions, including commercial
paper, (ii) principal of, and premium, if any, and interest on any indebtedness
or obligations of others of the kinds described in (i) above assumed or
guaranteed in any manner by the Company, (iii) deferrals, renewals, extensions
and refundings of any such indebtedness or obligations described in (i) and (ii)
above, and (iv) any other indebtedness of the Company which the Company and the
Holder may hereafter from time to time expressly and specifically agree in
writing shall constitute Senior Indebtedness.
(b) No Payment if Default in Senior Indebtedness. No payment on account of
principal of or interest on this Note shall be made directly or indirectly by
the Company (or any of its subsidiaries), if at the time of such payment or
purchase or immediately after giving effect thereto, (i) there shall exist a
default in any payment with respect to any Senior Indebtedness or (ii) there
shall have occurred an event of default (other than a default in the payment of
amounts due thereon) with respect to any Senior Indebtedness, as defined in the
instrument under which the same is outstanding, permitting the holders thereof
to accelerate the maturity thereof (a "Non- Payment Default"), and such event of
default shall not have been cured or waived or shall not have ceased to exist;
provided, however, if after a period of 180-days after the occurrence of a
Non-Payment Default (a "Payment Blockage Period"), the holder of such Senior
Indebtedness has not accelerated the maturity thereof, then the Company shall
resume payments due under this Note, and provided further, that there shall not
be more than one Payment Blockage Period in any period of 365 consecutive days.
The holder of Senior Indebtedness may invoke a Payment Blockage Period by
written notice to the Company.
(c) Payment upon Dissolution, Etc.
(i) In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for benefit of creditors or other similar
proceeding initiated by or against the Company or any dissolution or winding up
or total or partial liquidation or reorganization of the Company (being
hereinafter referred to as a "Proceeding"), all holders of the Senior
Indebtedness shall have the exclusive right to exercise all rights of the Holder
arising from its claims in the Proceeding, including but not limited to the
right to vote for a trustee and to accept or reject a proposed plan of
reorganization or composition.
(ii) Upon payment or distribution to creditors in a Proceeding of assets of
the Company of any kind or character, whether in cash, property or securities,
all principal and interest due upon any Senior Indebtedness shall first be paid
in full, or payment thereof in full duly provided for, before the Holder shall
be entitled to receive or, if received, to retain any payment or distribution on
account of this Note; and upon any such Proceeding, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holder would be entitled except for the provisions of
this Section 1 shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Holder if the Holder shall have received such payment or
distribution, directly to the holders of the Senior Indebtedness (pro rata to
each such holder on the basis of the respective amounts of such Senior
Indebtedness held by such holder) or their representatives to the extent
necessary to pay all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holder. In the
event of any Proceeding, the Holder shall be entitled to be paid one hundred
percent (100%) of the principal amount thereof and accrued interest thereon
before any distribution of assets shall be made among the holders of any class
of shares of the capital stock of the Company in their capacities as holders of
such shares.
2. 1.
(iii) For purposes of this Section 1(c), the words
"assets" and "cash, property or securities" shall not be deemed to include
shares of Common Stock of the Company as reorganized or readjusted, or
securities of the Company or any other person provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this Section 1 with respect to this Note to the payment
of all Senior Indebtedness which may at the time be outstanding, if (x) the
Senior Indebtedness is assumed by the new person, if any, resulting from any
such reorganization or readjustment, and (y) the rights of the holders of Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment not, without the consent of such holders, altered
by such reorganization or readjustment.
3.
(d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
Holder shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of the assets of the Company made on such
Senior Indebtedness until all principal and interest on this Note shall be paid
in full; and for purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness of any cash, property or securities to which
the Holder would be entitled except for the subordination provisions of this
Section 1 shall, as between the Holder and the Company and/or its creditors
other than the holders of the Senior Indebtedness, be deemed to be a payment on
account of the Senior Indebtedness.
(e) Rights of Holder Unimpaired. The provisions of this Section 1 are and are
intended solely for the purposes of defining the relative rights of the Holder
and the holders of Senior Indebtedness and nothing in this Section 1 shall
impair, as between the Company and the Holder, the obligation of the Company,
which is unconditional and absolute, to pay to the Holder the principal thereof
and interest thereon, in accordance with the terms of this Note, nor shall
anything herein prevent the Holder from exercising all remedies otherwise
permitted by applicable law or hereunder upon default, subject to the rights set
forth above of holders of Senior Indebtedness to receive cash, property or
securities otherwise payable or deliverable to the Holder.
(f) Holders of Senior Indebtedness. These provisions regarding subordination
will constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness; such
provisions are made for the benefit of the holders of Senior Indebtedness, and
such holders are hereby made obligees under such provisions to the same extent
as if they were named therein, and they or any of them may proceed to enforce
such subordination. The Holder shall execute and deliver to any holder of Senior
Indebtedness (i) any such instrument as such holder of Senior Indebtedness may
reasonably request in order to confirm the subordination of this Note to such
Senior Indebtedness upon the terms set forth in this Note, and (ii) any such
instrument as may be reasonably requested by the holders of Senior Indebtedness
or their representatives to enforce all claims upon or in respect of this Note.
Prepayment.
(a) The principal indebtedness represented by this Note may be prepaid in whole
or in part, from time to time, without penalty and without the prior written
consent of the Holder.
Default.
(a) Subject to the subordination provisions of Section 1, the entire unpaid
principal of this Note and the interest then accrued on this Note shall become
and be immediately due and payable upon written demand of the Holder, without
any other notice or demand of any kind or any presentment or protest, if any one
of the following events shall occur and be continuing at the time of such
demand, whether voluntarily or involuntarily, or, without limitation, occurring
or brought about by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
governmental body:
(b) If default shall be made in the payment of any installment of principal of,
or of any installment of interest on, this Note or any Senior Indebtedness and
if any such default shall remain unremedied for twenty (20) days after notice
thereof; or
(c) If the Company (i) makes a composition or an assignment for the benefit of
creditors or trust mortgage, (ii) applies for, consents to, acquiesces in, files
a petition seeking or admits (by answer, default or otherwise) the material
allegations of a petition filed against it seeking the appointment of a trustee,
receiver or liquidator, in bankruptcy or otherwise, of itself or of all or a
substantial portion of its assets, or a reorganization, arrangement with
creditors or other remedy, relief or adjudication available to or against a
bankrupt, insolvent or debtor under any bankruptcy or insolvency law or any law
affecting the rights of creditors generally, or (iii) admits in writing its
inability to pay its debts generally as they become due; or
(d) If an order for relief shall have been entered by a bankruptcy court or if a
decree, order or judgment shall have been entered adjudging the Company
insolvent, or appointing a receiver, liquidator, custodian or trustee, in
bankruptcy or otherwise, for it or for all or a substantial portion of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief, decree, order
or judgment shall remain undischarged or unstayed for a period of sixty (60)
days; or if any substantial part of the property of the Company is sequestered
or attached and shall not be returned to the possession of the Company or such
subsidiary or released from such attachment within sixty (60) days.
General.
(a) This Note may not be assigned by the Holder without the written consent of
the Company. The obligations of the Company hereunder shall be binding upon
successors and assigns of the Company.
(b) Recourse under this Note shall be to the general unsecured assets of the
Company only and in no event to the officers, directors or stockholders of the
Company.
(c) All payments shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender therein for the payment
of public and private debts.
(d) All notices, requests, consents and demands shall be made in writing and
shall be mailed postage prepaid, or delivered by hand, to the Company or to the
Holder at their respective addresses set forth below or to such other address as
may be furnished in writing to the other party hereto:
If to the Holder: Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
If to the Company:Avid Technology, Inc.
Metropolitan Technology Park
Xxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
(e) If any date that may at any time be specified in this Note as a date for the
making of any payment of principal or interest under this Note shall fall on
Saturday, Sunday or on a day which in Boston, Massachusetts shall be a legal
holiday, then the date for the making of that payment shall be the next
subsequent day which is not a Saturday, Sunday or legal holiday.
(f) This Note shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered as a sealed
instrument on the date first above written by the duly authorized representative
of the Company.
AVID TECHNOLOGY, INC.
By:_____________________________________
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
[Corporate Seal]
ATTEST: ________________________
Xxxxx X. Xxxxxxx
Secretary
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Additional Amount Date
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Exhibit 7.3.4
REGISTRATION RIGHTS AGREEMENT
This Agreement, dated as of August __, 1998 is entered into by and between
Avid Technology, Inc., a Delaware corporation (the "Company"), and Microsoft
Corporation, a Washington corporation (the "Purchaser").
RECITALS
Whereas, the Company and the Purchaser have entered into a Stock and Asset
Purchase Agreement dated as of June 15, 1998 (the "Purchase Agreement");
Whereas, the Purchaser has agreed that no shares of capital stock of the
Company received in connection with the Purchase Agreement (and the warrant
issued thereunder) shall be transferred by the Purchaser until after the third
anniversary of the Closing Date (as defined in the Purchase Agreement); and
Whereas, the Company and the Purchaser desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;
Now, Therefore, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.01 par value per share,
of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Other Holders" shall have the meaning set forth in Section 2(c).
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation or any registration statement
covering only securities offered by another stockholder or stockholders of the
Company).
"Registration Expenses" means the expenses described in Section 5.
"Registrable Shares" means the Shares and any other shares of Common
Stock issued in respect of the Shares (because of stock splits, stock dividends,
reclassifications, recapitalizations or other similar events); provided,
however, that shares of Common Stock which are Registrable Shares shall cease to
be Registrable Shares upon (i) becoming eligible for sale under Rule 144(k)
under the Securities Act, (ii) any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act or (iii) any sale in any manner to a person or
entity which, by virtue of Section 12 of this Agreement, is not entitled to the
rights provided by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, as they may be from time to time in
effect.
"Shares" means the shares of Common Stock acquired by the Purchaser
under the Purchase Agreement, including shares of Common Stock issued upon
exercise of the Warrant (as defined in the Purchase Agreement).
"Stockholder" means the Purchaser and any person or entity to whom
the rights granted under this Agreement are transferred by the Purchaser
pursuant to Section 12 hereof.
2. Required Registrations
(a) At any time after August __, 2001, the Stockholder may request, in writing,
that the Company effect the registration under the Securities Act of Registrable
Shares owned by the Stockholder.
(b) Upon receipt of any request for registration pursuant to this Section 2
received after August ___, 2001, the Company shall use its reasonable best
efforts to effect the registration, on Form S-3 under the Securities Act (or, if
such form is not available, such other form as shall be appropriate for such
sale), of all Registrable Shares which the Company has been requested to so
register. (c) If the Stockholder intends to distribute the Registrable Shares
covered by its request by means of an underwriting, it shall so advise the
Company as a part of its request made pursuant to Section 2(a). If other holders
of securities of the Company who are entitled by contract with the Company to
have securities included in such a registration (the "Other Holders") request
that their securities be included in such registration and underwriting, the
Company may include the securities of such Other Holders in such registration
and underwriting on the terms set forth herein. The Company shall (together with
the Stockholder and all Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form (including, without limitation, customary indemnification and contribution
provisions) with the managing underwriter. Notwithstanding any other provision
of this Section 2(c), if the managing underwriter advises the Company that the
inclusion of all shares requested to be registered would adversely affect the
offering, the securities of the Company held by Other Holders shall first be
excluded from such registration and underwriting to the extent deemed advisable
by the managing underwriter and, if all such shares have been excluded and
further limitation of the number of shares is required, Registrable Shares shall
then be excluded from such underwriting and registration to the extent deemed
advisable by the managing underwriter. If the Stockholder or any Other Holder
who has requested inclusion in such registration as provided above disapproves
of the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, and the securities so withdrawn shall also be
withdrawn from registration. If the managing underwriter has not limited the
number of Registrable Shares or other securities to be underwritten, the Company
may include securities for its own account in such registration if the managing
underwriter so agrees and if the number of Registrable Shares and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited. (d) The Stockholder shall have the
right to select the managing underwriter(s) for any underwritten offering
requested pursuant to Section 2(a), subject to the approval of the Company,
which approval will not be unreasonably withheld. (e) The Company shall not be
required to effect more than four registrations pursuant to Section 2. In
addition, the Company shall not be required to effect any registration within
six months after the effective date of any other Registration Statement. For
purposes of this Section 2(e), a Registration Statement shall not be counted
until such time as such Registration Statement has been declared effective by
the Commission (unless the Stockholder withdraws its request for such
registration and elects not to pay the Registration Expenses therefor pursuant
to Section 5). (f) If at the time of any request to register Registrable Shares
by the Stockholder pursuant to this Section 2, the Company is engaged or has
plans to engage in a registered public offering or is engaged or plans to engage
in any other activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested registration,
then the Company may at its option direct that such request be delayed for a
period not in excess of 90 days from the date of such request, such right to
delay a request to be exercised by the Company not more than once, or for an
aggregate delay of more than 90 days, in any 12-month period.
3. Incidental Registration
(a) Whenever the Company proposes to file a Registration Statement (other than a
Registration Statement filed pursuant to Section 2) at any time and from time to
time, it will, prior to such filing, give written notice to the Stockholder of
its intention to do so. Upon the written request of the Stockholder given within
20 days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall
use reasonable efforts to cause all Registrable Shares which the Company has
been requested by the Stockholder to register to be registered under the
Securities Act to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the request
of the Stockholder; provided that the Company shall have the right to postpone
or withdraw any registration effected pursuant to this Section 3 without
obligation to the Stockholder.
(b) If the registration for which the Company gives notice pursuant to Section
3(a) is a registered public offering involving an underwriting, the Company
shall so advise the Stockholder as a part of the written notice given pursuant
to Section 3(a). In such event, the right of the Stockholder to include its
Registrable Shares in such registration pursuant to Section 3 shall be
conditioned upon such Stockholder's participation in such underwriting on the
terms set forth herein. If the Stockholder proposes to distribute Registrable
Shares through such underwriting, it shall (together with the Company and any
Other Holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for the underwriting by the Company. Notwithstanding any
other provision of this Section 3, if the managing underwriter determines that
the inclusion of all shares requested to be registered would adversely affect
the offering, the Company may limit the number of Registrable Shares to be
included in the registration and underwriting. The Company shall so advise the
Stockholder and the number of shares that are entitled to be included in the
registration and underwriting shall be allocated in the following manner. The
securities of the Company held by stockholders other than Other Holders shall
first be excluded from such registration and underwriting to the extent deemed
advisable by the managing underwriter and, if all such shares have been excluded
and further limitation of the number of shares is required, the number of shares
that may be included in such registration and underwriting shall then be
allocated among the Stockholder and Other Holders requesting registration in
proportion, as nearly as practicable, to the respective number of shares of
Common Stock (on an as-converted basis) which they held at the time the Company
gave the notice specified in Section 3(a). If the Stockholder or any such Other
Holder would thus be entitled to include more securities than such holder
requested to be registered, the excess shall be allocated among the Stockholder
and such Other Holders pro rata in the manner described in the preceding
sentence. If the Stockholder or any Other Holder disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by written notice
to the Company, and any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
4. Registration Procedures
(a) If and whenever the Company is required by the provisions of Section 2 or
Section 3 of this Agreement to use its best efforts to effect the registration
of any Registrable Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration Statement with respect to such
Registrable Shares and use its reasonable best efforts to cause that
Registration Statement to become and remain effective for 180 days from the
effective date or such lesser period until all such Registrable Shares are sold;
(ii) as expeditiously as possible furnish to the Stockholder such reasonable
numbers of copies of the Prospectus, including any preliminary Prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the Stockholder may reasonably request in order to facilitate the public sale
or other disposition of the Registrable Shares; (iii) as expeditiously as
possible use its reasonable best efforts to register or qualify the Registrable
Shares covered by the Registration Statement under the securities or Blue Sky
laws of such states as the Stockholder shall reasonably request, and do any and
all other acts and things that may be necessary or desirable to enable the
Stockholder to consummate the public sale or other disposition in such states of
the Registrable Shares included in the Registration Statement; provided,
however, that the Company shall not be required in connection with this
paragraph (iii) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction; (iv) as expeditiously as possible,
cause all such Registrable Shares to be listed on each securities exchange or
automated quotation system on which similar securities issued by the Company are
then listed; (v) promptly provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement; (vi) promptly make available for inspection by the Stockholder, any
managing underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant or other agent retained
by any such underwriter or selected by the Stockholder, all financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such Registration Statement;
(vii) as expeditiously as possible, notify the Stockholder, promptly after the
Company shall receive notice thereof, of the time when such Registration
Statement has become effective or a supplement to any Prospectus forming a part
of such Registration Statement has been filed; and (viii) as expeditiously as
possible following the effectiveness of such Registration Statement, notify the
Stockholder of any request by the Commission for the amending or supplementing
of such Registration Statement or Prospectus. (b) If the Company has delivered a
Prospectus to the Stockholder and after having done so the Prospectus is amended
to comply with the requirements of the Securities Act, the Company shall
promptly notify the Stockholder and, if requested, the Stockholder shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Stockholder
with revised Prospectuses and, following receipt of the revised Prospectuses,
the Stockholder shall be free to resume making offers of the Registrable Shares.
(c) In the event that, in the judgment of the Company based on advice of
counsel, it is advisable to suspend use of a Prospectus included in a
Registration Statement due to pending material developments or other events that
have not yet been publicly disclosed or due to the need to file with the
Commission financial statements required to comply with the Securities Act, the
Company shall notify the Stockholder to such effect, and, upon receipt of such
notice, the Stockholder shall immediately discontinue any sales of Registrable
Shares pursuant to such Registration Statement until the Stockholder has
received copies of a supplemented or amended Prospectus or until the Stockholder
is advised in writing by the Company that the then current Prospectus may be
used and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus.
Notwithstanding anything to the contrary herein, the Company shall not exercise
its rights under this Section 4(c) to suspend sales of Registrable Shares for a
period in excess of 90 days in any 365-day period.
5. Allocation of Expenses.
The Company will pay all Registration Expenses for all registrations under
this Agreement; provided, however, that if a registration under Section 2 is
withdrawn at the request of the Stockholder (other than as a result of
information concerning the business or financial condition of the Company which
is made known to the Stockholder after the date on which such registration was
requested) and if the Stockholder elects not to have such registration counted
as a registration requested under Section 2, the Stockholder shall pay the
Registration Expenses of such registration. For purposes of this Section, the
term "Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts and selling commissions and any fees and
expenses of counsel to the Stockholder.
6. Indemnification and Contribution
(a) In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Stockholder, each underwriter of Registrable Shares, and each other
person, if any, who controls the Stockholder or such underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities, joint or several, to which the Stockholder or such
underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, state securities or Blue Sky laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and the Company will reimburse the Stockholder and such underwriter or
controlling person for any legal or any other expenses reasonably incurred by
the Stockholder or such underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made (i) in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of the Stockholder or such underwriter or controlling
person specifically for use in the preparation thereof, or (ii) in any
prospectus or preliminary prospectus, or any supplement thereto, other than the
most current version thereof, if the Stockholder has breached its obligations
under Section 4(b).
(b) In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, the Stockholder will indemnify and
hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the Securities Act, Exchange Act, state securities or Blue
Sky laws or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained in
the Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information relating to the Stockholder
furnished in writing to the Company by or on behalf of the Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of the Stockholder hereunder shall be limited to an amount equal to
the net proceeds to the Stockholder from the Registrable Shares sold in
connection with such registration.
(c) Each party entitled to indemnification under this Section (the "Indemnified
Party") shall give notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom; provided, that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section except to the extent that the Indemnifying Party is adversely
affected by such failure. The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
pay such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding; provided further that in no
event shall the Indemnifying Party be required to pay the expenses of more than
one law firm per jurisdiction as counsel for the Indemnified Party. The
Indemnifying Party also shall be responsible for the expenses of such defense if
the Indemnifying Party does not elect to assume such defense. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Section 6 is due in accordance
with its terms but for any reason is held to be unavailable to an Indemnified
Party in respect to any losses, claims, damages and liabilities referred to
herein, then the Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities to which such
party may be subject in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Stockholder on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Stockholder shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact related to information supplied by the Company
or the Stockholder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Stockholder agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 6(d), in no case shall the Stockholder be liable or responsible
for any amount in excess of the net proceeds received by the Stockholder from
the offering of Registrable Shares; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party under this Section, notify the party from whom
contribution may be sought, but the omission so to notify the party from whom
contribution may be sought shall not relieve such party from any other
obligation it or they may have thereunder or otherwise under this Section. No
party shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its prior written consent, which consent
shall not be unreasonably withheld. 7. Other Matters with Respect to
Underwritten Offerings.
In the event that Registrable Shares are sold pursuant to a Registration
Statement in an underwritten offering pursuant to Section 2, the Company agrees
to (a) enter into an underwriting agreement containing customary representations
and warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use reasonable efforts to
cause its independent public accounting firm to issue customary "cold comfort
letters" to the underwriters with respect to the Registration Statement; and (c)
if requested by the Stockholder, consider in good faith making its senior
executives available to assist the underwriters with respect to so-called "road
shows" in connection with marketing efforts for and the distribution and sale of
the Registrable Shares.
8. Information by Holder.
Each holder of Registrable Shares included in any registration shall furnish to
the Company such information regarding such holder and the distribution proposed
by such holder as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
9. Confidentiality of Notices.
Upon receiving any written notice from the Company regarding the Company's plans
to file a Registration Statement, the Stockholder shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
10. Rule 144 Requirements
During the term of this Agreement, the Company shall:
(a) use its best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(b) furnish to the Stockholder upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents of the Company
as such holder may reasonably request to avail itself of any similar rule or
regulation of the Commission allowing it to sell any such securities without
registration.
11. Termination.
All of the Company's obligations to register Registrable Shares under Sections 2
and 3 of this Agreement shall terminate six years after the date hereof.
12. Transfers of Rights.
This Agreement, and the rights and obligations of
the Purchaser hereunder, may not be assigned by the Purchaser without the
express written consent of the Company.
13. General
(a) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts entered into and performed entirely within Massachusetts.
(c) Notices. All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be deemed delivered (i) two business
days after being sent by registered or certified mail, return receipt requested,
postage prepaid or (ii) one business day after being sent via a reputable
nationwide overnight courier service guaranteeing next business day delivery, in
each case to the intended recipient as set forth below:
If to the Company, at Avid Technology, Inc., Metropolitan Technology Park,
Xxx Xxxx Xxxx, Xxxxxxxxx, XX 00000, Attention: President, or at such other
address or addresses as may have been furnished in writing by the Company to the
Purchaser, with a copy to Xxxx X. Xxxxxx, Esq., Xxxx and Xxxx, 00 Xxxxx Xxxxxx,
Xxxxxx, XX 00000; and
If to the Purchaser, at Microsoft Corporation, Xxx Xxxxxxxxx Xxx, Xxxxxxx,
XX 00000-0000, Attention: President, or at such other address or addresses as
may have been furnished in writing by the Purchaser to the Company, with a copy
to Xxxx X. Xxxxxx, Esq., Xxxxxxx Xxxxx & Xxxxx LLP, 5000 Columbia Seafirst
Center, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section. (d) Complete Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
(e) Amendments and Waivers. Any term of this Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least a majority of the Registrable Shares; provided, that this Agreement may be
amended with the consent of the holders of less than all Registrable Shares only
in a manner which affects all such holders in the same fashion. Any such
amendment, termination or waiver effected in accordance with this Section 13(e)
shall be binding on all parties hereto, even if they do not execute such
consent. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision. (f)
Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.
(g) Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together shall constitute one and the same document. This Agreement may
be executed by facsimile signatures. (h) Section Headings. The section headings
are for the convenience of the parties and in no way alter, modify, amend, limit
or restrict the contractual obligations of the parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Counterpart Signature Page to Registration Rights Agreement
Executed as of the date first written above.
AVID TECHNOLOGY, INC.
By:_____________________________
Name:___________________________
Title:__________________________
MICROSOFT CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
Counterpart Signature Page to Registration Rights Agreement
