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EXHIBIT 10.3
[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
EXECUTION COPY
STOCK AND WARRANT PURCHASE AGREEMENT
THIS STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made
as of February 4, 2001 between Princeton Video Image, Inc., a New Jersey
corporation (the "Company"), and PVI Holding, LLC, a Delaware limited liability
company (the "Purchaser"). The parties hereby agree as follows:
1. Authorization and Sale of the Common Shares and Warrants.
1.1 Authorization. The Company has authorized the issuance and sale
pursuant to the terms and conditions hereof of 15,471,908 shares of its Common
Stock, including shares of Common Stock issuable upon exercise of the Warrants
described below.
1.2 Sale and Issuance of the Shares and Warrants; Consideration.
Subject to the terms and conditions hereof,
(a) on the business day after the consummation of the conditions
precedent to the issuance thereof in Sections 5.1 and 5.2 have been satisfied or
waived (the "First Closing Date"), the Company will issue and sell to the
Purchaser and the Purchaser will purchase from the Company 2,007,909 shares of
Common Stock (the "First Shares") in consideration for $5,019,772.50; and
(b) on the Second Closing (as defined below), the Company will
issue and sell to the Purchaser and the Purchaser will purchase from the
Company:
(i) 1,992,091 shares of Common Stock (the "Second Shares",
and together with the First Shares, the "Initial
Shares") in consideration for $4,980,227.50; and
(ii) warrants (the "Warrants") which entitle the Purchaser
to purchase 11,471,908 shares of the Company's Common
Stock (subject to adjustment pursuant to the footnote
to the form of Warrant Certificate attached hereto as
Exhibit B) (the "Warrant Shares, and together with the
Initial Shares, the "Shares") at any time after the
Second Closing Date (as defined below) until and
including the third anniversary of the Second Closing
Date (the "Expiration Date") at the following prices:
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(A) $8.00 per share from the Second Closing Date until
and including the first anniversary of the Second
Closing Date;
(B) $9.00 per share from the first anniversary of the
Second Closing Date until and including the second
anniversary of the Second Closing Date; and
(C) $10.00 per share from the second anniversary of
the Second Closing Date until and including the
Expiration Date,
on the terms set forth in the form of the Warrant
Certificate attached hereto as in Exhibit B.
2. Closing Date; Delivery.
2.1 Closing Date. The closing comprising the purchase by the
Purchaser and sale by the Company of the First Shares shall be held at the
offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on
the First Closing Date or at such other time and place as the Company and the
Purchaser may agree in writing (the "First Closing"). The closing comprising the
purchase by the Purchaser and sale by the Company of the Second Shares and the
Warrants shall be held at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 on the business day following the date upon which the
conditions to the issuance thereof in Sections 5.3 and 5.4 have been satisfied
or waived or at such other time and place as the Company and the Purchaser may
agree in writing (the "Second Closing").
2.2 Delivery. Subject to the terms of this Agreement:
(a) at the First Closing, the Company will deliver to the
Purchaser a certificate representing the First Shares, in consideration for
$5,019,772.50 by wire transfer of same day funds to such account or accounts as
may be specified by the Company; and
(b) at the Second Closing, the Company will deliver to the
Purchaser:
(i) a certificate representing the Second Shares, in
consideration for $4,980,227.50 by wire transfer of
same day funds to such account or accounts as may be
specified by the Company; and
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(ii) a certificate evidencing the Warrants.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that (except as set forth on a Schedule
of Exceptions attached hereto as Exhibit C, which exceptions shall be deemed to
be representations and warranties as if made hereunder):
3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority to carry on its
businesses as now conducted and as proposed to be conducted. At the time of and
continuing after the merger of the Company with and into Princeton Video Image,
Inc., a Delaware corporation with the certificate of incorporation substantially
in the form attached as Exhibit A-1 hereto and bylaws substantially in the form
attached as Exhibit A-2 hereto (the "Delaware Company"), the Delaware Company
will be a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and will have all requisite corporate
power and authority to carry on its businesses as now conducted and as proposed
to be conducted. The Company is qualified or licensed to do business as a
foreign corporation in all jurisdictions where such qualification or licensing
is required, except where the failure to so qualify could not have a material
adverse effect on the financial condition, properties, business, prospects or
results of operations of the Company. For the purpose of this Agreement, where
the context requires, the terms "Company" and "Delaware Company" may be used
interchangeably to refer to Insert, Inc. after the reincorporation.
3.2 Corporate Power. The Company has all requisite corporate power
and authority necessary for the authorization, execution and delivery of this
Agreement, the Registration Rights Agreement in the form attached hereto as
Exhibit D (the "Registration Rights Agreement"), the Shareholders Agreement in
the form attached hereto as Exhibit E (the "Shareholders Agreement"), the L-VIS
License Agreement in the form attached hereto as Exhibit F-1 (the "License
Agreement") and the Joint Collaboration and License Agreement, which definitive
agreement will be based on the terms set forth in Exhibit F-2 attached hereto
(the "Joint Collaboration and License Agreement"). This Agreement, the
Registration Rights Agreement, the Shareholders Agreement, the License Agreement
and the Joint Collaboration and License Agreement (together, the "Transaction
Documents") are valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except as the same may be limited by
bankruptcy, insolvency, moratorium, and other laws of general application
affecting the enforcement of creditors' rights.
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3.3 Subsidiaries; Other Entities.
(a) The Company owns or controls, directly or indirectly, the
majority of voting power of the entities listed on Exhibit G-1 attached hereto
(each, a "Subsidiary"). Each Subsidiary has all requisite corporate power and
authority to own and lease its properties, to carry on its business as presently
conducted and to carry out the transactions contemplated hereby. Each Subsidiary
is qualified to do business as a foreign corporation in those jurisdictions in
which such qualification is necessary in order to undertake its respective
business and is not qualified to do business as a foreign corporation only in
such other jurisdictions in which the failure to be so qualified will not have a
material adverse effect on such Subsidiary's financial condition, properties,
business, prospects or results of operations. Exhibit G-1 attached hereto sets
forth the details of ownership of the securities of each Subsidiary and the
details of any existing equity interests and Rights in relation to each
Subsidiary. The Company owns all such securities of each Subsidiary free and
clear of any lien, encumbrance or similar right. Except for the Subsidiaries,
the Company does not control, directly or indirectly, any other corporation,
partnership, joint venture, limited liability company, association or business
entity or other similar entity.
(b) Exhibit G-2 attached hereto sets forth the entities in which
the Company has an economic interest ("Investments"), the details of ownership
of the securities of each such entity and the details of any existing equity
interests and Rights in relation to each such entity. The Company owns all
securities of each Investment free and clear of any lien, encumbrance or similar
right.
3.4 Capitalization.
(a) The authorized capital stock of the Company is (i)
40,000,000 shares of Common Stock, no par value, (ii) 1,000,000 shares of
Preferred Stock, (iii) a series of 167,000 shares of such class of Preferred
Stock designated as the Series A Redeemable Preferred Stock, $4.50 par value
("Series A Redeemable Preferred Stock") and (iv) a series of 93,300 shares of
such class of Preferred Stock designated as the Series B Redeemable Preferred
Stock, $5.00 par value ("Series B Redeemable Preferred Stock"). There are issued
and outstanding 10,089,995 shares of the Common Stock, 11,363 shares of Series A
Redeemable Preferred Stock, 12,834 shares of Series B Redeemable Preferred Stock
and no other Preferred Stock. All such issued and outstanding shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. The holders of any and all options, warrants,
securities, rights or other interests convertible into or exchangeable for, or
otherwise giving the holder thereof the right to purchase or acquire, directly
or indirectly, from the Company or, to the best knowledge of the Company, from
any other Person any shares of Common Stock or any other such option, warrant of
security, right or instrument,
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including, without limitation, unvested warrants, out-of-the-money options,
securities issued in any acquisition transaction, and any instrument of the
value of which is measured by reference to the value of the Common Stock
(individually or collectively, "Rights"), along with the number of shares of
capital stock issuable upon exercise of such Rights and the agreements upon
which the Rights are based, are set forth in Exhibit H hereto. The information
regarding the nature and amount of shares of Common Stock and Rights set forth
in Exhibit K attached hereto is accurate.
(b) The Company has reserved 2,160,000 shares of Common Stock
(and upon obtaining shareholder approval, will have reserved 5,160,000 shares of
Common Stock) for issuance to employees, consultants, officers or directors upon
exercise of options granted or to be granted under stock or other option plans
or arrangements approved by the Board of Directors of the Company (the
"Company's Board").
(c) Except as set forth in this Agreement and the Registration
Rights Agreement, there are no outstanding Rights or agreements for the purchase
or acquisition from the Company of any shares of its capital stock, including
without limitation, agreements providing for the payment to be made in the form
of shares of Common Stock or Rights.
(d) Except for the Shareholders Agreement executed concurrently
herewith, the Company is not a party or subject to any agreement or
understanding between any persons or entities, which affects or relates to the
voting or giving of written consents with respect to any securities.
3.5 Authorization.
(a) Corporate Action. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the sale and
issuance of the Shares and the Warrants and the authorization, execution and
performance of the Company's obligations hereunder and under the other
Transaction Documents in the case of the First Shares, have been taken and, in
the case of the Second Shares and the Warrants, other than the approval of the
Company's shareholders have been taken.
(b) Shareholder Approval. The approval by the Company's
shareholders of this Agreement and the other Transaction Documents (i) is not
required for the issuance and sale of the First Shares, (ii) with respect to the
issuance and sale of the Second Shares, the Warrants and the Warrant Shares, and
(iii) with respect to the re- incorporation of the Company in Delaware as the
Delaware Company, requires an affirmative vote of a majority of the votes cast
at a meeting of shareholders of the Company at which a quorum is present and is
the only vote of holders of any class or
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series of the Company's securities necessary to approve the Company's actions
taken or to be taken in connection with this Agreement and the other Transaction
Documents.
(c) Valid Issuance. The Shares when issued in compliance with
the provisions of this Agreement will be duly and validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances. The rights and
restrictions of the Shares are as set forth in the Certificate of Incorporation.
Each of the Warrants when issued in compliance with the provisions of this
Agreement will be duly and validly issued and free of any liens or encumbrances.
The Second Shares and the Warrant Shares have been duly and validly reserved for
issuance. The Shares when issued and delivered in accordance with the terms of
this Agreement and the Warrants (with respect to the Warrant Shares) will not be
subject to any preemptive rights or rights of first refusal, and the Shares will
be entitled to full and unencumbered voting rights consistent with the
provisions of the Company's Certificate of Incorporation.
3.6 No Preemptive Rights. No person has any right of first refusal
or any preemptive rights in connection with (i) the issuance of the Shares or
(ii) any future issuances of securities by the Company.
3.7 Intellectual Property Rights.
(a) "Intellectual Property Rights" means all domestic and
foreign patents, trademarks, copyrights, service marks, and applications and
registrations therefor, and all software, technical data and designs, trade
names, customer lists, trade secrets, proprietary processes and formulae,
inventions, know-how, other confidential and proprietary information, and other
industrial and intellectual property rights. The Company and its Subsidiaries
owns or is licensed to use all of the Intellectual Property Rights used by the
Company to carry on its business as presently conducted and as presently
proposed to be conducted. Exhibit I-1 attached hereto sets forth a true and
complete list of all domestic and foreign patents, domestic and foreign
trademarks, domestic and foreign service marks, domestic and foreign copyrights,
and applications and registrations therefor, owned or controlled by the Company
or its Subsidiaries. All registered or issued patents, copyrights, trademarks,
and service marks, and applications therefor owned or controlled by the Company
or its Subsidiaries are in full force and effect. All prior art known to the
Company or its Subsidiaries which may be or may have been pertinent to the
examination of any United States patent or patent application listed on Exhibit
I-1 attached hereto has been cited to the United States Patent and Trademark
Office.
(b) Except with respect to the Licensed Rights (as defined
herein), the Company has good, valid and subsisting title to all of the
Intellectual Property Rights used by the Company or its Subsidiaries to carry on
its business as presently conducted, free and clear of all liens, mortgages,
security interests, pledges, charges and
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encumbrances, and, to the Company's best knowledge, third party claims of any
ownership rights, title or interest. The Company or its Subsidiaries has the
right to bring infringement actions with respect to the Intellectual Property
Rights owned or controlled by the Company and its Subsidiaries. Intellectual
Property Rights conceived by employees or consultants of the Company or its
Subsidiaries and related to the business of the Company or its Subsidiaries were
"works for hire", and all right, title, and interest therein were transferred
and assigned to the Company or its Subsidiaries.
(c) To the Company's best knowledge, the Company does not use,
market or sell, nor proposes to use, market or sell, any product or service that
violates or would violate any Intellectual Property Right of a third party.
Other than as identified in Exhibit I-2, there is no pending or threatened claim
or litigation against the Company (i) contesting the Company's or its
Subsidiaries' right to use Intellectual Property Rights to carry on its business
as presently conducted, (ii) asserting the invalidity, unenforce ability or
misuse of any Intellectual Property Rights owned or controlled by the Company or
its Subsidiaries, or (iii) asserting the infringement or other violation of, or
conflict with, any Intellectual Property Rights of a third party. Other than as
identified in Exhibit I-3, the Company is not aware of any third party that
uses, markets or sells or proposes to use, market or sell, any product or
service that violate, or would violate or is in conflict with the Intellectual
Property Rights owned or controlled by the Company or its Subsidiaries.
(d) None of the Intellectual Property Rights owned or
controlled by the Company or its Subsidiaries are subject to any outstanding
judgment or contract restricting the use thereof by the Company or its
Subsidiaries. Other than in the ordinary course of business consistent with past
practices, neither the Company nor its Subsidi aries has entered into any
agreement to indemnify any other Person against any charge of infringement of
any Intellectual Property Rights. Any agreement, contract or other
representations or commitment by the Company or its Subsidiaries to indemnify a
third party with respect to Intellectual Property Rights owned or controlled by
the Company or its Subsidiaries is identified in Exhibit I-4 attached hereto.
(e) Exhibit I-5 attached hereto sets forth all agreements,
memorandums or other undertakings that grant licenses, sublicenses or other
rights of use of any Intellectual Property Rights owned by a third party and
licensed to the Company or its Subsidiaries (the "Licensed Rights"). Such
Licensed Rights are valid and authorized by the terms under which the Company or
its Subsidiaries licenses or otherwise uses such Licensed Rights. The Company
and its Subsidiaries are not in default in the payment of any royalties, license
fees or other consideration to any owner or licensor of any Licensed Rights used
in or necessary for the conduct of its business as now conducted and as proposed
to be conducted or to any agent or representative of any such owner or licensor
by reason of the use thereof by the Company or its Subsidiaries nor otherwise is
in default in any material respect in the performance of any of its obligations
to any such owner or
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licensor, and no such owner or licensor, nor any such agent or representative,
has notified the Company or its Subsidiaries of any claim of any such default.
(f) Exhibit I-6 attached hereto sets forth all agreements,
memoran dums or other undertakings that grant licenses, sublicenses, or other
rights of use of the Intellectual Property Rights or the Licensed Rights granted
by the Company or its Subsidiaries.
3.8 Compliance with Other Instruments. Each of the Company and its
Subsidiaries is not in violation of any term of its Certificate of Incorporation
or Bylaws, nor is the Company nor its Subsidiaries in violation of or in default
in any material respect under the terms of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, the violation of which could have a
material adverse effect on the financial condition, properties, business,
prospects or results of operations of the Company and its Subsidiaries,
individually or in the aggregate, and, to the best knowledge of the Company, is
not in violation of any order, statute, rule or regulation applicable to the
Company or its Subsidiaries, the violation of which could have a material
adverse effect on the financial condition, properties, business, prospects or
results of operations of the Company and its Subsidiaries, individually or in
the aggregate. The execution, delivery and performance of and compliance with
this Agreement or the other Transaction Documents, and the issuance and sale of
Shares and the Warrants will not (a) result in any such violation, or (b) be in
conflict with or constitute a default under any such term, or (c) result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company and its Subsidiaries, individually or in the
aggregate, pursuant to any such term. To the best knowledge of the Company,
there is no such term or any such order, statute, rule or regulation which
adversely affects, or in the future could materially adversely affect, the
financial condition, properties, business, prospects or results of operations of
the Company and its Subsidiaries, individually or in the aggregate, or any of
their properties or assets.
3.9 Litigation, etc. There is no action, proceeding or investigation
pending or threatened against the Company or its Subsidiaries, or their
respective officers, directors or shareholders, or to the best knowledge of the
Company, against employees of the Company or its Subsidiaries (or, to the best
knowledge of the Company, any basis therefor or threat thereof): (a) which could
result, either individually or in the aggregate, in (i) any material adverse
change in the financial condition, properties, business, prospects or results of
operations of the Company and its Subsidiaries, individually or in the
aggregate, or in any of their properties or assets, or (ii) any material
impairment of the right or ability of the Company or its Subsidiaries to carry
on its business as now conducted or as proposed to be conducted, or (iii) any
material liability on the part of the Company or its Subsidiaries; or (b) which
questions the validity of this Agreement or the other Transaction Documents, or
any action taken or to be taken in connection herewith.
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Neither the Company nor any of its Subsidiaries is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company or its Subsidiaries currently pending or which the
Company or its Subsidiaries currently intends to initiate.
3.10 Consents. No consent, approval or authorization of or
designation, declaration or filing with any governmental or regulatory
authority, agency, commission, body or other governmental entity or by any court
("Governmental Authority") or other third party is required in connection with:
(a) the valid execution and delivery of this Agreement or the other Transaction
Documents; (b) the obtaining of the consents, permits and waivers specified in
subsection 5.1(b) hereof with respect to the First Closing; or (c) the obtaining
of the consents, permits and waivers specified in subsection 5.3(b) hereof with
respect to (x) the Second Closing, other than the re-incorporation in Delaware
or (y) the re-incorporation in Delaware.
3.11 Offering. In reliance on the representations and warranties of
the Purchaser in Section 4 hereof, the offer, sale and issuance of Shares and
the Warrants in conformity with the terms of this Agreement will not result in a
violation of the requirements of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"), or the qualification or registration
requirements of applicable blue sky laws.
3.12 Taxes. Each of the Company and its Subsidiaries has filed all
tax returns that are required to have been filed with appropriate federal,
state, county and local governmental agencies or instrumentalities, except where
the failure to do so could not have a material adverse effect on the financial
condition, properties, business, prospects or results of operations of the
Company and its Subsidiaries, individually and in the aggregate. Neither the
Company nor its Subsidiaries have elected pursuant to the Internal Revenue Code
of 1986, as amended (the "Code"), to be treated as a Subchapter S corporation or
a collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which could have a material effect on the financial condition,
properties, business, prospects or results of operations of the Company, as
presently conducted or proposed to be conducted or any of its properties or
material assets. Each of the Company and its Subsidiaries has paid or
established reserves for all income, franchise and other taxes, assessments,
governmental charges, penalties, interest and fines due and payable by it.
3.13 Title. Each of the Company and its Subsidiaries owns or leases
all property and assets used in the conduct of its business free and clear of
all liens, mortgages, loans or encumbrances except liens for current taxes and
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's or its Subsidiary's ownership (as
applicable) or use of such property or assets.
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With respect to the property and assets leased by each of the Company and its
Subsidiaries, each of the Company and it Subsidiaries is in compliance with such
leases and, to the best of the Company's knowledge, holds valid leasehold
interests free and clear of any liens, claims or encumbrances.
3.14 Material Contracts and Commitments. (a) All of the Company's
material agreements are set forth on the list attached hereto as Exhibit J (the
"Contracts") which includes, without limitation:
(i) all of the contracts, mortgages, indentures, agreements,
instruments and transactions to which the Company is a
party or by which it is bound (including purchase orders
to the Company or placed by the Company) which involve
obligations of, or payments to, the Company in excess of
$100,000;
(ii) all agreements between the Company and its officers,
directors, consultants and employees,
(iii) all agreements or understandings between the Company and
current or potential sales affiliates, agents or
distributors;
(iv) all agreements of the Company that contain restrictions
on its ability to compete;
(v) all agreements creating an obligation to participate in
a joint venture, limited liability company, partnership
or similar arrangement;
(vi) all agreements that contain provisions that require or
gives either party to the agreement the option that
payments by the Company be made as a percent of its
revenue or in stock;
(viii) all agreements with a term exceeding three years;
(ix) all guarantees of the obligations of others;
(x) all agreements granting rights of exclusivity to third
parties ;
(xi) all agreements relating to the acquisition or
disposition of any business or any interest therein;
(xii) all leases of real property or material personal
property or any capital leases.
(b) All of the Contracts are valid, binding and in full force
and effect and enforceable by and against the Company in accordance with their
respective terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and rules or laws concerning
equitable remedies. Neither the Company nor, to the best of its knowledge, any
of its counterparties is in material breach or default under any of such
Contracts.
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(c) A true, correct and complete copy of each of the Contracts
which are referred to in clause (a), together with all amendments, waivers or
other changes thereto, has been supplied or made available via XXXXX or
otherwise by the Company to the Purchaser.
3.15 Financial Statements. The Company's financial statements,
xxxxxxx dated balance sheets, consolidated statements of operations and
consolidated statements of cash flows for the fiscal years ended June 30, 2000
and 1999 (the "Audited Financial Statements"), reported on by
PricewaterhouseCoopers LLP, have been delivered to the Purchaser. The Company's
financial statements, consolidated balance sheets, xxxxxxx dated statements of
operations and consolidated statements of cash flows for the interim periods
subsequent to June 30, 1999 and 2000 (the "Interim Financial Statements" and,
together with the Audited Financial Statements, the "Financial Statements") are
in accordance with the books and records of the Company, are complete and
correct, and fairly and accurately present the financial condition and operating
results of the Company for the periods indicated therein, all in conformity with
generally accepted accounting principles ("GAAP"), except that the Interim
Financial Statements do not contain footnotes or reflect the interperiod
adjustments required by GAAP. As of the date of the most recent balance sheet
included in the Interim Financial Statements, the Company did not have any
liabilities, absolute, contingent, or otherwise, which in accordance with GAAP
are required to be disclosed or reserved for other than as set forth in the
Financial Statements. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
GAAP.
3.16 No Material Adverse Change. Since June 30, 2000, there has been
no material adverse change in the financial condition, operating results,
assets, operations, prospects, employee relations or customer or supplier
relations of the Company and its Subsidiaries, taken as a whole.
3.17 Absence of Changes. Since June 30, 2000:
(a) neither the Company nor any of its Subsidiaries has entered
into any transaction which was not in the ordinary course of business:
(b) there has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) materially adversely
affecting the financial condition, properties, business, prospects or results of
operations of the Company and its Subsidiaries, individually or in the
aggregate;
(c) neither the Company nor its Subsidiaries has declared or
paid any dividend or made any distribution on its stock, or issued, offered,
redeemed, purchased or otherwise acquired any of its capital stock;
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(d) neither the Company nor its Subsidiaries has materially
changed any compensation arrangement or agreement with any of its key employees
or executive officers, or materially changed the rate of pay of its employees as
a group;
(e) each of the Company and its Subsidiaries has not changed or
amended any Contract, except as contemplated by this Agreement;
(f) there has been no resignation or termination of employment
of any key officer or employee of the Company or its Subsidiaries, and each of
the Company and its Subsidiaries does not know of any impending resignation or
termination of employment of any such officer or employee that, if consummated,
would have a material adverse effect on the financial condition, properties,
business, prospects or results of operations of the Company and its
Subsidiaries, individually or in the aggregate,
(g) there has been no change, except in the ordinary course of
business, in the material contingent obligations of the Company or its
Subsidiaries (or in any contingent obligation of the Company or its Subsidiaries
regarding any director, shareholder or key employee or officer of the Company or
its Subsidiaries) by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(h) there have been no loans made by the Company or its Subsidi
aries to any of its employees, officers or directors other than travel advances
and other advances made in the ordinary course of business;
(i) there has been no waiver by the Company or the Subsidiaries
of a valuable right or of a material debt owing to it; and
(j) there has not been any satisfaction or discharge of any
lien, claims or encumbrance or any payment of any obligation by the Company or
its Subsidiaries, except in the ordinary course of business and which is not
material to the assets, properties, financial condition, operating results or
business of the Company and its Subsidiaries, individually or in the aggregate.
3.18 Registration Rights. Other than as granted pursuant to the
Registra tion Rights Agreement, the Company has not granted or agreed to grant
any rights to register (as that term is defined in the Registration Rights
Agreement) securities, including piggyback registration rights, to any person or
entity which grants or agreements are effective as of the date hereof.
3.19 Certain Transactions. Each of the Company and its Subsidiaries
is not indebted, directly or indirectly, to any of its employees, officers,
directors or shareholders or to their spouses or children, in any amount
whatsoever; and none of said employees, officers, directors, shareholders, or
any member of their immediate families,
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are indebted to the Company or its Subsidiaries or have any direct or indirect
ownership interest in any firm or corporation with which the Company or its
Subsidiaries is affiliated or with which the Company or its Subsidiaries has a
business relationship. No such employee, officer, director, shareholder, or any
member of their immediate families, is, directly or indirectly, interested in
any material contract with the Company or its Subsidiaries. Each of the Company
and its Subsidiaries is not guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
3.20 Proprietary Information of Third Parties. No employee or
consultant of the Company nor its Subsidiaries is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee or consultant with the Company or its
Subsidiaries or , to the Company's best knowledge, any other party because of
the nature of the business conducted or proposed to be conducted by the Company
or its Subsidiaries or the use by the employee or consultant of his best efforts
with respect to such business. To the Company's best knowledge, no third party
has claimed or has reason to claim that any person employed or engaged by the
Company or its Subsidiaries has (a) violated or may be violating any of the
terms or conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company or its
Subsidiaries which suggests that such a claim might be contemplated. To the
Company's best knowledge, no person employed by or engaged by the Company or its
Subsidiaries has used or proposes to use any trade secret or any information or
documentation proprietary to any former employer, and no person employed by or
engaged by the Company or its Subsidiaries has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company or its
Subsidiaries, and the Company has no reason to believe there will be any such
use or violation.
3.21 Employee Benefit Plans.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of the Company and its
Subsidiaries (the "Employees") and current or former directors of the Company,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the "Benefit
Plans"), are listed on Schedule III attached hereto. True and complete copies of
all Benefit Plans listed on Schedule III, including, but not
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limited to, any trust instruments and insurance contracts forming a part of any
Benefit Plans, and all amendments thereto have been provided or made available
to the Purchaser.
(b) All Benefit Plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering Employees which are subject to
ERISA (the "ERISA Plans") are in substantial compliance with ERISA. Each ERISA
Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code, may properly rely upon a favorable determination
letter issued by the Internal Revenue Service, and the Company is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter or the loss of the qualification of such Plan under Section
401(a) of the Code. Each ERISA Plan which is intended to be part of a voluntary
employees' beneficiary association within the meaning of Section 501(c)(9) of
the Code has (i) received an opinion letter from the Internal Revenue Service
recognizing its exempt status under Section 501(c)(9) of the Code and (ii) filed
a timely notice with the Internal Revenue Service pursuant to Section 505(c) of
the Code, and the Company is not aware of circumstances likely to result in the
loss of the exempt status of such ERISA Plan under Section 501(c)(9) of the
Code. Neither the Company nor any of its subsidiaries has engaged in a
transaction with respect to any ERISA Plan that, assuming the taxable period of
such transaction expired as of the date hereof, could subject the Company or any
Subsidiary to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any of its subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). The Company and the subsidiaries have not incurred and
do not expect to incur any withdrawal liability with respect to a multiemployer
plan under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived or extended, other than pursuant to PBGC Reg. Section
4043.66, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(d) All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the Audited
Financial Statements or the Interim Financial Statements. Neither any Pension
Plan nor any single- employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA
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and no ERISA Affiliate has an outstanding funding waiver. Neither the Company
nor any of its subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Plan,
and there has been no material change in the financial condition of such Plan
since the last day of the most recent plan year. The withdrawal liability of the
Company and its subsidiaries under each Benefit Plan which is a multiemployer
plan to which the Company, any of its subsidiaries or an ERISA Affiliate has
contributed during the preceding 12 months, determined as if a "complete
withdrawal", within the meaning of Section 4203 of ERISA, had occurred as of the
date hereof, does not exceed $100,000.
(f) There is no material pending or, to the best knowledge of
the Company threatened, litigation relating to the Benefit Plans. Neither the
Company nor any of its subsidiaries has any obligations for retiree health and
life benefits under any ERISA Plan. The Company or the Subsidiaries may amend or
terminate any such Plan at any time without incurring any liability thereunder.
(g) There has been no amendment to, announcement by the Company
or any of its Subsidiaries relating to, or change in employee participation or
coverage under, any Benefit Plan which would increase materially the expense of
maintaining such Plan above the level of the expense incurred therefor for the
most recent fiscal year. Neither the execution of this Agreement, shareholder
approval of this Agreement nor the consummation of the transactions contemplated
hereby will (i) entitle any employees of the Company or any of the Subsidiaries
to severance pay or any increase in severance pay upon any termination of
employment after the date hereof, (ii) accelerate the time of payment or vesting
or trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans, (iii) cause the
Company or any of its Subsidiaries to record additional compensation expense on
its income statement with respect to any outstanding stock option or other
equity-based award or (iv) result in payments under any of the Benefit Plans
which would not be deductible under Section 162(m) or Section 280G of the Code.
(h) All Benefit Plans maintained outside of the United States
comply in all material respects with applicable local law. The Company and its
Subsidiaries have no material unfunded liabilities with respect to any such
Benefit Plan.
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3.22 Environmental and Safety Laws. Neither the Company nor its
Subsidiaries is in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety which violation or
violations, in the aggregate, would have a material adverse effect on the
financial condition, properties, business, prospects or results of operations of
the Company and its Subsidiaries, individually or in the aggregate, and no
material expenditures are or will be required in order to comply with any such
existing statute, law, or regulation.
3.23 Insurance. Each of the Company and its Subsidiaries has in full
force and effect fire and casualty insurance policies, and insurance against
other hazards, risks and liabilities to persons and property to the extent and
in the manner customary for companies in similar businesses similarly situated.
3.24 Company Reports; Disclosure.
(a) Company Reports. The Company has delivered or made
available via XXXXX or otherwise to the Purchaser each registration statement,
report, proxy statement or information statement filed by it with the Securities
and Exchange Commission (the "SEC") in the form (including exhibits, annexes and
any amendments thereto) filed with the SEC (collectively, the "Company
Reports"). As of their respective dates, the Company Reports complied in all
material respects with the requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and 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 made therein, not
misleading.
(b) Disclosure. No representation or warranty by the Company in
this Agreement, or in any statement, document or certificate furnished or to be
furnished to the Purchaser pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements made herein and therein, not misleading.
3.25 New Jersey Anti-Takeover Statute. Based on the Purchaser's
representation in Section 4.1(e) herein, the Company has taken all action
(including approval of the issuance and sale of the Shares and the Warrants and
the consummation by the Company of the other transactions contemplated hereby)
necessary to cause the restrictions contained in N.J.S.A. 14A:10A-1 et. seq.
(the "New Jersey Statute") to be inapplicable to (a) the issuance and sale of
the First Shares, (b) the issuance and sale of the Second Shares, (c) the
issuance and sale of the Warrants, (d) the issuance and sale of the Warrant
Shares upon exercise of the Warrants (after giving effect to the application of
any anti-dilution adjustments), (e) the grant and exercise of the preemptive
rights under Section 6.2 hereof, including the exercise of rights, options and
warrants acquired in
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accordance with such preemptive rights and the conversion and exchange of
securities acquired in connection with such preemptive rights, (f) the execution
of the License Agreement and the Joint Collaboration and License Agreement and
(g) the other transactions contemplated hereby. Further, the Company's Board has
adopted resolutions in the form attached as Schedule I hereto intended to
exclude, to the maximum extent permitted by law, any subsequent "business
combination" (as defined in the New Jersey Statute) between the Company or any
of its Subsidiaries and the Purchaser or any of the Purchaser's affiliates from
the restrictions of the New Jersey Statute.
4. Representations and Warranties of Purchaser and Restrictions on
Transfer Imposed by the Securities Act.
4.1 Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) Investment Intent; Due Authorization. This Agreement is
made with the Purchaser in reliance upon the Purchaser's representation to the
Company, evidenced by Purchaser's execution of this Agreement, that the
Purchaser is acquiring the Shares and the Warrants for investment for the
Purchaser's own account, and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act. The Purchaser has the full right, power and authority to enter
into and perform the Transaction Documents, and the Transaction Documents
constitute valid and binding obligations upon it.
(b) Shares and Warrants Not Registered. The Purchaser
understands and acknowledges that the offering of the Shares and the Warrants
pursuant to this Agreement will not be registered under the Securities Act or
qualified under applicable blue sky laws on the grounds that the offering and
sale of securities contemplated by this Agreement are exempt from registration
under the Securities Act and exempt from qualifications available under
applicable blue sky laws, and that the Company's reliance upon such exemptions
is predicated upon the Purchaser's representations set forth in this Agreement.
(c) Knowledge and Experience. The Purchaser (i) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of the Purchaser's prospective investment in the
Shares and the Warrants; (ii) has the ability to bear the economic risks of the
Purchaser's prospective investment; (iii) has been furnished with and has had
access to such information as the Purchaser has considered necessary to make a
determination as to the purchase of the Shares and the Warrants together with
such additional information as is necessary to verify the accuracy of the
information supplied; (iv) has had all questions which have been asked by such
Purchaser satisfactorily answered by the Company; and (v) has not been offered
the Shares and the Warrants by any form of advertisement, article, notice or
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other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any such media. Nothing in this Section 4.1(c) shall limit
the Purchaser's right to rely on the Company's representations and warranties
and indemnification obligations in making its investment decision to purchase
the Shares and Warrants.
(d) Accredited Investor. The Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) under the Securities Act.
(e) Interested Stockholder. Immediately prior to the execution
and delivery of this Agreement, the Purchaser is not an "interested stockholder"
as defined in N.J.S.A. 14A:10A-3.
4.2 Legends. Each certificate representing the Shares and the
Warrants (together, the "Securities") may be endorsed with the following
legends:
(a) Federal Legend. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144
OR ANOTHER EXEMPTION FROM THE ACT.
(b) Other Legends. Any other legends required by applicable
state blue sky laws.
The Company need not register a transfer of legended
Securities, and may also instruct its transfer agent not to register the
transfer of the Securities, unless the conditions specified in each of the
foregoing legends are satisfied.
4.3 Removal of Legend and Transfer Restrictions. Any legend endorsed
on a certificate pursuant to subsection 4.2(a) and the stop transfer
instructions with respect to such legended Securities shall be removed and the
Company shall issue a certificate without such legend to the holder of such
Securities if such Securities are registered under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available or if such holder satisfies the requirements of Rule 144(k).
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5. Conditions to the Closing.
5.1 Conditions to the Purchaser's Obligations - First Closing. The
obligation of the Purchaser to purchase the First Shares at the First Closing is
subject to the fulfillment to the Purchaser's satisfaction, on or prior to the
First Closing Date, of the following conditions, any of which may be waived by
the Purchaser:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
First Closing Date with the same force and effect as if they had been made on
and as of said date (except to the extent any such representation or warranty
expressly speaks of an earlier date) and, to the extent not already qualified by
materiality, except for changes which, in the aggregate, would not have a
material adverse effect on the financial condition, properties, business,
prospects or results of operations of the Company and its Subsidiaries,
individually or in the aggregate). The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the First Closing Date.
(b) Consents and Waivers. The Company shall have obtained in a
timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the purchase and sale of the First Shares.
(c) Approvals and Waivers with Respect to the Mexican
Affiliate. The Company shall have obtained the irrevocable approvals and waivers
from the parties to the Reorganization Agreement, dated as of December 28, 2000
(as to be amended immediately prior to the First Closing, the "Reorganization
Agreement"), on the terms set forth in Schedule II hereto, to permit the
consummation of the purchase and sale of the First Shares by the Company and the
Purchaser.
(d) Registration Rights Agreement. The Company and the
Purchaser shall have executed the Registration Rights Agreement.
(e) Shareholders Agreement. The Company, the Purchaser and each
of the shareholders listed thereunder shall have executed the Shareholders
Agreement.
(f) License Agreement. The Company and the Purchaser shall have
executed the License Agreement.
(g) Nasdaq Listing. The First Shares to be issued hereunder
shall have been approved for quotation on the Nasdaq National Market.
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(h) Absence of Proceedings. No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Governmental
Authority, shall have been issued, and no action or proceeding should have been
instituted by any Governmental Authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.
(i) Purchaser's Appointment of Directors. If the Purchaser
nominates a person to be appointed a director to the Company's Board in
accordance with Section 6.1 hereof, the Purchaser Director (as defined below)
shall have been appointed to the Company's Board.
(j) Officer's Certificate. The Company shall have delivered a
Certificate, executed on behalf of the Company by its Chief Executive Officer,
dated as of the First Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (b) and (c) of this Section 5.1.
(k) Secretary's Certificate. The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
First Closing Date, certifying the Company's Board resolutions approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the First Shares in the form attached hereto as Schedule I
and certifying the current versions of the Certificate of Incorporation and
Bylaws of the Company.
(l) Opinion of Counsel. The Purchaser shall have received in
form and substance satisfactory to the Purchaser an opinion from Smith,
Stratton, Wise, Xxxxx & Xxxxxxx, the Company's counsel, dated as of the First
Closing Date, regarding the due organization of the Company, the due
authorization, execution and delivery of this Agreement by the Company, the due
authorization, validity and fully paid and nonassessable status of the First
Shares, such other customary matters, the enforceability of the Company's Board
resolutions attached hereto as Schedule I in relation to Section 3.25(a)-(g) and
the accuracy of Section 3.25 hereof.
5.2 Conditions to Obligations of the Company- First Closing. The
Company's obligation to sell and issue the First Shares at the First Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
First Closing Date of the following conditions, any of which may be waived by
the Company:
(a) Representations and Warranties Correct. The representations
and warranties made by the Purchaser in Section 4 hereof shall be true and
correct when made, and shall be true and correct on the First Closing Date with
the same force and effect as if they had been made on and as of said date
(except to the extent any such representation or warranty expressly speaks of an
earlier date).
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(b) Conditions Fulfilled. The conditions set forth in
subsections (b) and (c) of Section 5.1 shall have been fulfilled.
(c) License Agreement. The Company and the Purchaser shall have
executed the License Agreement.
(d) Officer's Certificate. The Purchaser shall have delivered a
Certificate, executed on behalf of the Purchaser by its Chief Executive Officer,
dated as of the First Closing Date, certifying to the fulfillment of the
conditions specified in subsection (a) of this Section 5.2.
(e) Absence of Proceedings. No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Governmental
Authority, shall have been issued, and no action or proceeding should have been
instituted by any Governmental Authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.
5.3 Conditions to the Purchaser's Obligations - Second Closing. The
obligation of the Purchaser to purchase the Second Shares and the Warrants at
the Second Closing is subject to the fulfillment to the Purchaser's
satisfaction, on or prior to the Second Closing Date, of the following
conditions, any of which may be waived by the Purchaser:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
Second Closing Date with the same force and effect as if they had been made on
and as of said date (except to the extent any such representation or warranty
expressly speaks of an earlier date and, to the extent not already qualified by
materiality, except for changes which, in the aggregate, would not have a
material adverse effect on the financial condition, properties, business,
prospects or results of operations of the Company and its Subsidiaries,
individually or in the aggregate). The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Second Closing Date.
(b) Consents and Waivers. The Company shall have obtained in a
timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the purchase and sale of the Second Shares and
the Warrants.
(c) Satisfactory First Closing. The First Closing shall have
been satisfactorily completed in accordance with the terms of this Agreement.
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(d) Reincorporation of the Company. The Company shall have been
reincorporated in the State of Delaware as the Delaware Company.
(e) Joint Collaboration and License Agreement. The Company and
the Purchaser shall have entered into and executed a definitive Joint
Collaboration and License Agreement, in form and substance satisfactory to each
party, reflecting the terms set forth in Exhibit F-2 attached hereto.
(f) Approvals and waivers with respect to the Mexican
Affiliate. The Company shall have obtained the irrevocable approvals and waivers
from the parties to the Reorganization Agreement, on the terms set forth in
Schedule II hereto, to permit the Company and the Purchaser to complete the
transactions contemplated by this Agreement and the other Transaction
Agreements.
(g) Board and Shareholders' Approval. The Company's Board and
shareholders shall have approved the Proposals (as defined in Section 6.5(b)),
the latter with an affirmative vote of a majority of the votes cast at a meeting
of shareholders of the Company at which a quorum is present and the issuance of
the Second Shares and the Warrants shall have been approved by the Company's
shareholders in the manner required by applicable laws and the applicable NASD
Rules.
(h) Nasdaq Listing. The Second Shares and the Warrant Shares to
be issued hereunder shall have been approved for quotation on the Nasdaq
National Market.
(i) Absence of Proceedings. No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Governmental
Authority, shall have been issued, and no action or proceeding should have been
instituted by any Governmental Authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.
(j) Officer's Certificate. The Company shall have delivered a
certificate, executed on behalf of the Company by its Chief Executive Officer,
dated as of the Second Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (b) and (f) of this Section 5.3.
(k) Secretary's Certificate. The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
Second Closing Date, certifying the Company's Board and shareholders resolutions
approving the Proposals and certifying the current versions of the Certificate
of Incorporation and Bylaws of the Company.
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(l) Opinion of Counsel. The Purchaser shall have received in
form and substance satisfactory to the Purchaser an opinion from Smith,
Stratton, Wise, Xxxxx & Xxxxxxx, the Company's counsel, dated as of the Second
Closing Date, regarding the due organization of the Company, the due
authorization, execution and delivery of the Transaction Documents by the
Company, the due authorization, validity and fully paid and nonassessable status
of the Second Shares and the shares underlying the Warrants, such other
customary matters, the enforceability of the Company's Board resolutions
attached hereto as Schedule I in relation to Section 3.25(a) - (g) and the
accuracy of Section 3.25 hereof.
5.4 Conditions to Obligations of the Company - Second Closing. The
Company's obligation to sell and issue the Second Shares and the Warrants at the
Second Closing is subject to the fulfillment to the satisfaction of the Company
on or prior to the Second Closing Date of the following conditions, any of which
may be waived by the Company:
(a) Representations and Warranties Correct. The representations
and warranties made by the Purchaser in Section 4 hereof shall be true and
correct when made, and shall be true and correct on the Second Closing Date with
the same force and effect as if they had been made on and as of said date
(except to the extent any such representation or warranty expressly speaks of an
earlier date).
(b) Conditions Fulfilled. The conditions set forth in
subsections (b), (f) and (to the extent it applies to the approval by the
Company's shareholders) (g) of Section 5.3 shall have been fulfilled.
(c) Joint Collaboration and License Agreement. The Company and
the Purchaser shall have entered into and executed a definitive Joint
Collaboration and License Agreement, in form and substance satisfactory to each
party, reflecting the terms set forth in Exhibit F-2 attached hereto.
(d) Officer's Certificate. The Purchaser shall have delivered a
Certificate, executed on behalf of the Purchaser by its Chief Executive Officer,
dated as of the First Closing Date, certifying to the fulfillment of the
conditions specified in subsection (a) of this Section 5.4.
(e) Absence of Proceedings. No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Governmental
Authority, shall have been issued, and no action or proceeding should have been
instituted by any Governmental Authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.
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6. Affirmative Covenants of the Company. The Company hereby covenants
and agrees as follows:
6.1 Nomination of a Director. (a) For so long as the Cablevision
Systems Corporation, a Delaware corporation and the indirect beneficial owner of
the Purchaser (the "Parent"), or its affiliates beneficially own shares of
Common Stock that in the aggregate comprise at least 75% of the Original
Investment (as defined below), the Parent shall be entitled to nominate one
director to the Company's Board and each Committee thereof (the "Purchaser
Director"). In the event that the Parent or its affiliates shall at any time
cease to beneficially own shares of Common Stock that in the aggregate comprise
at least 75% of the Original Investment, the Parent shall thenceforth not be
entitled to nominate any Purchaser Director under this Section 6.1 and the
Company may request that any Purchaser Director then on the Company's Board
resign as director of Company, and upon such request, the Parent shall use its
reasonable efforts to, cause such Purchaser Director to, resign immediately. For
the purposes of this Agreement, the "Original Investment" is, until and
including the Second Closing Date, if any, the number of shares of Common Stock
issued in the First Closing and, following the Second Closing Date, if any, the
number of Initial Shares, as adjusted to give effect to stock splits, dividends,
distribution, reclassifications and similar matters.
(b) The Parent shall have the right to designate one person to
be appointed to the Company's Board and each Committee thereof on the First
Closing Date and the Company's Board shall elect such person to the Company's
Board as soon as practicable after such designation. Thereafter, the Parent
shall have the right to designate one person to be nominated for election to the
Company's Board at each shareholders meeting at which directors are to be
elected. The Company shall notify the Parent of the date of any meeting of
stockholders at which directors are to be elected at least 90 days prior to the
date of such meeting. The Parent shall give the Company notice of the person so
designated not later than 75 days prior to the date of any such meeting. If the
Parent fails to give such notice, the designee of the Parent then serving as a
director shall be its designee for re- election. The Purchaser shall vote, or
cause to be voted, all shares of Common Stock of which it or any of its
affiliates is the direct or indirect beneficial owner in favor of the Parent's
designee. If the shareholders of the Company do not elect the Purchaser Director
as a director of the Company, the Company shall take all action required to
increase the size of its Board of Directors and shall appoint the Purchaser
Director to fill such newly-created directorship, provided that such action is
then permitted by applicable law and the rules and regulations of any stock
exchange or automated quotation system on which the Company's Common Stock is
then listed or quoted.
6.2 Preemptive Rights. The Company hereby agrees that the Purchaser
shall be entitled to the respective rights and subject to the respective
obligations set forth in this Section:
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(a) Notice; Exercise; Closing. If the Company proposes to
issue, issues, grant or sell or grants or sells shares of Common Stock, the
Company shall give to the Purchaser a written notice setting forth in reasonable
detail the per share consideration and other terms on which such shares of
Common Stock are proposed to be issued, granted or sold and the amount thereof
proposed to be issued, granted or sold. For the purpose of this Section 6.2(a),
with respect to any convertible or derivative security or any other Rights,
"proposes to issue" means the receipt by the Company of a notice of exercise,
conversion, exchange or similar notice of settlement of such Right. The
Purchaser shall thereafter have the preemptive right, exercisable by notice to
the Company no later than 15 days after the Company's notice is received, to
purchase up to such number of shares of Common Stock so that, after giving
effect to such issuance, grant or sale and the preemptive subscription by the
Purchaser, the Purchaser, together with its affiliates, will beneficially own in
the aggregate the same proportion of the outstanding shares of Common Stock
beneficially owned as of the date of the Company's notice, for the consideration
in cash and on the other terms set forth in the Company's notice. Any written
notice by the Purchaser exercising the right to purchase shares of Common Stock
pursuant to this Section shall constitute an irrevocable commitment to purchase
from the Company the shares of Common Stock specified in such notice upon the
issuance of such shares of Common Stock, subject to the maximum set forth in the
preceding sentence. The closing of the purchase of such shares of Common Stock
by the Purchaser shall, to the extent legally practicable, take place at the
same time and place as the closing of such issuance, grant or sale to the
persons giving rise to the preemptive rights set forth in this Section and if
not at the same time shall take place as soon thereafter as is practicable;
provided, that such closing shall, to the extent applicable, be conditioned upon
the expiration or termination of any waiting period under the HSR Act (as
defined below) and the making of any necessary filings with and obtaining of any
approvals from any Governmental Authorities except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a material adverse effect on the financial condition, properties, business,
prospects or results of operations of the Company and its Subsidiaries,
individually or in the aggregate. At such closing, (i) the Company shall deliver
to the Purchaser certificates representing the shares of Common Stock being
subscribed, and such shares of Common Stock will be validly issued, fully paid
and nonassessable, (ii) the Purchaser shall deliver to the Company the
consideration to be paid for such shares of Common Stock and agreements of the
nature provided herein if similar agreements are executed by the other
purchasers in such issuance which may include, without limitation,
representations and warranties by the Company and the Purchaser and agreements
which restrict the Purchaser's rights with respect to the Common Stock, and in
any event, at the request of the Company, a duly executed certificate reasonably
satisfactory to the Purchaser containing such representations and warranties of
the Purchaser with respect to federal and state securities laws as are included
herein and (iii) the Purchaser and the Company shall execute such other
documents and take such other action as shall be reasonably necessary to
consummate the subscription of such or shares of Common Stock.
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(b) Non-Exercise. From the date of the Company's notice first
referred to in the foregoing paragraph (a) and for a period of 90 days
thereafter, the Company may offer, issue, grant and sell to any person up to the
amount of shares of Common Stock set forth in the Company's notice relating to
such shares of Common Stock for a price and other terms no less favorable to the
Company, and including no less cash, than those set forth in such notice
(without deduction for reasonable underwriting, sales agency and similar fees
payable in connection therewith); provided, however, that the Company may not
issue, grant or sell shares of Common Stock in an amount greater than the amount
set forth in such notice without granting the Purchaser the preemptive rights in
this Section with respect to such greater amount of shares of Common Stock.
(c) Exemptions. The provisions of this Section shall not apply
to:
(i) shares of Common Stock and Rights as set forth in
Exhibit K attached hereto; and
(ii) the securities to be issued pursuant to the
transactions contemplated by this Agreement.
(d) Non-Cash Valuation. In the event that any offer, issue,
grant or sale includes or is proposed to include any non-cash consideration, the
Company and the Purchaser shall in good faith seek to agree upon the value of
such non-cash consideration. If the Company and the Purchaser fail to agree on
such value during the 15-day period contemplated by paragraph (a) of this
Section, then the value shall be as reasonably determined by the Company's Board
of Directors in good faith. The value of any securities shall be the fair market
value of such securities and the value of any property other than securities
shall be the fair market value of such property.
(e) HSR Condition. If in the reasonable judgment of the
Purchaser, the Purchaser's acquisition of shares of Common Stock upon exercise
of its rights under this Section 6.2 would require a filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Company and the Purchaser each will take such actions as may be
required promptly to comply with the requirements of the HSR Act relating to the
filing and furnishing of information (an "HSR Report") to the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department of Justice
("DOJ"), such actions to include (i) preparing and cooperating with each other
in preparing the HSR Report to be filed by or on behalf of each of them so as to
avoid errors or inconsistencies between their HSR Reports in the description of
the reported transaction and to permit the filing of their HSR Reports in a
timely fashion, (ii) complying with any request for additional documents or
information made by the FTC, the DOJ or any other Governmental Authorities and
assisting the other in so complying and (iii) causing all persons which are part
of the same "person" (as defined for purposes of the HSR Act) as such party to
cooperate and assist in such compliance. The Company and Purchaser each
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will pay any costs that it incurs in complying with the obligations set forth in
this paragraph. It will be a condition precedent to the acquisition of shares of
Common Stock by the Purchaser that either (i) no filing under the HSR Act by the
Purchaser is required in connection with such acquisition or (ii) any applicable
waiting period under the HSR Act has expired or been terminated. If the
applicable waiting period under the HSR Act has not expired or been terminated
within 180 days after filing of the HSR Report or if the Purchaser and the
Company agree to withdraw the HSR Report, then the Company will use its
reasonable best efforts to afford to the Purchaser the benefits intended to be
provided by this Section 6.2 by granting to the Purchaser the right to acquire,
on the same terms as the securities originally to be acquired, other securities
of the Company having substantially the same rights, privileges and preferences
as the securities originally to be acquired, except that such other securities
will not possess voting rights and will be convertible into the shares of Common
Stock that the Purchaser was to acquire pursuant to this Section.
6.3 Reincorporation in Delaware. As soon as practicable after the
shareholders have approved the reincorporation of the Company in the
Shareholders Meeting (as defined in Section 6.5), the Company agrees to file the
certificate of merger with the Secretary of State of Delaware to effect the
merger of the Company with and into the Delaware Company having the Certificate
of Incorporation substantially in the form set forth in Exhibit A-1 attached
hereto and the bylaws substantially in the form set forth in Exhibit A-2
attached hereto.
6.4 Acquisition Proposals. The Company agrees that after the date
hereof and prior to the earlier of the termination of this Agreement in
accordance with the terms herein and the Second Closing Date, neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate or solicit, encourage or
otherwise knowingly facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of all or 15% or more of the
assets or any outstanding equity securities of, it or any of its Subsidiaries
(any such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"). The Company further agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person other than the Purchaser relating to an Acquisition Proposal or any
person that the Company believes may be considering an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from (a) complying with Rule 14e-2
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promulgated under the Exchange Act with regard to an Acquisition Proposal; (b)
providing information in response to a request therefor by a person who has made
an unsolicited bona fide written Acquisition Proposal if the Company's Board
receives from the person so requesting such information an executed a customary
form of confidentiality agreement; (c) engaging in any negotiations or
discussions with any person who has made an unsolicited bona fide written
Acquisition Proposal; or (d) withdrawing, modifying or changing, in a manner
adverse to the Purchaser, its recommendation to the shareholders of the Company
with respect to this Agreement and the transactions contemplated herein and in
the other Transaction Documents, if and only to the extent that, (i) in each
such case referred to in clause (b), (c) or (d) above, the Company's Board
determines in good faith by a majority vote after consultation with outside
legal counsel that failing to take such action would result in a breach of its
fiduciary duties under applicable law and (ii) in each case referred to in
clause (c) or (d) above, the Company's Board determines in good faith (after
consultation with its outside legal counsel and a financial advisor of national
reputation) that such Acquisition Proposal, if accepted, is reasonably likely to
be consummated, taking into account all legal, financial and regulatory aspects
of the proposal and the person making the proposal and would, if consummated,
result in a transaction more favorable to the Company's shareholders from a
financial point of view than the transaction contemplated by this Agreement. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties other than the
Purchaser conducted heretofore with respect to any Acquisitions Proposal. The
Company agrees that it will take the necessary steps to promptly inform any
individuals or entities referred to in the preceding sentence hereof of the
obligations undertaken in this Section 6.4. The Company agrees that it will
notify the Purchaser immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any proposals or offers and
thereafter shall keep the Purchaser informed, on a current basis, on the status
and terms of any such proposals or offers and the status of any such discussions
or negotiations. The Company also agrees that it will promptly request any
person that has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such person by or on behalf of
it or any of its Subsidiaries.
6.5 Proxy Statement; Shareholders Meeting. The Company will comply
with Article 14(a) of the Exchange Act and the rules promulgated thereunder in
relation to any proxy statement (as amended or supplemented, the "Proxy
Statement") to be sent to the shareholders of the Company in connection with a
meeting of the shareholders of the Company in connection with the transactions
contemplated by this Agreement (the "Shareholders Meeting"), and the Company
shall not, on the date of the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein
not false or
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misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies or the Shareholders Meeting which has become false or misleading. The
Company will promptly prepare and file as promptly as practicable with the SEC
the Proxy Statement and promptly thereafter mail the Proxy Statement to the
shareholders of the Company. If the Company should discover at any time prior to
the Second Closing, any event relating to the Company or any of its Subsidiaries
or any of their respective affiliates, officers or directors that is required to
be set forth in a supplement or amendment to the Proxy Statement, in addition to
the Company's obligations under the Exchange Act, the Company will promptly
inform the Purchaser thereof.
(b) Subject to their fiduciary obligations under applicable law, the
Company's Board shall recommend to the Company's shareholders (and not revoke or
amend such recommendation) (i) the proposed sale and issuance of the Second
Shares and the Warrants, together with the Warrant Shares upon exercise of the
Warrants and (ii) the proposed reincorporation of the Company in the State of
Delaware (together, the "Proposals") to the shareholders at the Shareholders
Meeting called to consider and vote upon the Proposals and shall take all lawful
action to solicit the adoption of the Proposals, including the adoption of the
Certificate of Incorporation of Delaware Company as attached hereto as Exhibit
A-1. Whether or not the Company's Board determines at any time after the date
hereof that, due to its fiduciary duties, it must revoke or amend its
recommendation to its shareholders, the Company is required to, and will take,
in accordance with applicable law and its Certificate of Incorporation and
Bylaws, all action necessary to convene the Shareholders Meeting as promptly as
practicable to consider and vote upon the adoption of the Proposals.
6.6 Nasdaq Listing. The Company shall use its best efforts to cause
(i) the First Shares issuable pursuant to the terms of this Agreement to be
approved for quotation on the Nasdaq National Market prior to the First Closing
and (ii) the Second Shares and the Warrant Shares issuable pursuant to the terms
of this Agreement to be approved for quotation on the Nasdaq National Market
prior to the Second Closing.
6.7 Conduct of Business. Until the earlier of the Second Closing and
the termination of this Agreement in accordance with Section 10.2 hereof, the
Company shall:
(a) not take any of the actions that the Company would not be
able to take without the consent of the Purchaser under Section 7 hereof other
than as set forth in Exhibit L attached hereto;
(b) conduct its business in the ordinary course and refrain
from taking any action that would cause any representation or warranty made
herein to be untrue or materially misleading or cause any condition to either of
the First Closing or the Second Closing set forth in Section 5 hereof to fail to
be satisfied;
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(c) comply in all material respects with its contractual
obligations and legal requirements applicable to it;
(d) permit the Purchaser and any of its employees, agents and
representatives to have reasonable access to its books and record of account;
(e) make available to the Purchaser copies of all documents
referenced on the Schedules hereto and not attached hereto (including, without
limitation, contracts , deeds, lease agreements, intellectual property license
agreements and intellectual property registrations); and
(f) provide the Purchaser with such other instruments,
agreements and documents as the Purchaser may reasonably request.
6.8 Warrant Exercise and HSR. If the Purchaser gives notice to the
Company of its intention to exercise any or all of the Warrants in accordance
with their respective terms and if the exercise is only subject to a filing
required under the HSR Act, (i) the exercise price of the Warrants shall be as
of the date of the notice of exercise and (ii) the Company and the Purchaser
each will take such actions as may be required promptly to comply with the
requirements of the HSR Act relating to the filing and furnishing of a HSR
Report to the FTC and DOJ, such actions to include (i) preparing and cooperating
with each other in preparing the HSR Report to be filed by or on behalf of each
of them so as to avoid errors or inconsistencies between their HSR Reports in
the description of the reported transaction and to permit the filing of their
HSR Reports in a timely fashion, (ii) complying with any request for additional
documents or information made by the FTC, the DOJ or any other Governmental
Authorities and assisting the other in so complying and (iii) causing all
Persons which are part of the same "person" (as defined for purposes of the HSR
Act) as such party to cooperate and assist in such compliance. The Company and
Purchaser each will pay any costs that it incurs in complying with the
obligations set forth in this paragraph. It will be a condition precedent to the
acquisition of shares of Common Stock by the Purchaser that either (i) no filing
under the HSR Act by the Purchaser is required in connection with such
acquisition or (ii) any applicable waiting period under the HSR Act has expired
or been terminated.
7. Negative Covenants of the Company. For so long as the Purchaser,
together with its affiliates, continues to hold at least 75% of the Original
Investment, the Company hereby covenants and agrees not to take any of the
following actions without the prior written consent of the Purchaser:
(a) the consolidation with or merger with or into, or conveyance,
transfer or lease of all or substantially all of the Company's or any of its
Subsidiaries' assets to, any person;
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(b) the offering, sale or issuance of any debt in excess of
$2,500,000 (other than in connection with (i) accounts payable incurred in the
ordinary course of business or (ii) incurrences in the ordinary course of
business for a term of less than one year in an aggregate not to exceed
$5,000,000) in a single transaction or any series of related transactions, by
the Company or any of its Subsidiaries (with respect to which, the Purchaser
shall not be permitted to unreasonably withhold its consent);
(c) the offering, sale or issuance of any equity securities or
Rights of the Company or any of its Subsidiaries, other than:
(i) the Rights and the shares of Common Stock as set forth
in Exhibit K attached hereto (including the shares of Common
Stock issued pursuant to exercise of the Rights set forth in
Exhibit K attached hereto);
(ii) up to 250,000 shares of Common Stock (or Rights
therefore), in the aggregate, that are issued in connection with
any strategic purpose approved by the Company's Board;
(iii) up to 800,000 shares of Common Stock, in the
aggregate, to the extent that such shares are required to be
issued to Endeavor pursuant to the letter agreement dated as of
December 15, 2000, as revised on January 3 and 11, 2001 (but not
as revised, amended or extended after the date hereof);
(iv) shares of Common Stock that are issued by the Company
pursuant to its 401(k) plan as in effect on the date hereof;
(v) up to 2,112,193 authorized but unissued options, and
shares of Common Stock that are issued upon the exercise of
options, that are granted under the Company's stock option plans
for employees, directors and consultants (the options and shares
of Common Stock (or Rights therefore) that may be issued under
subsections (ii), (iii), (iv) and (v), the "Permitted Transfer
Basket");
(vi) the securities to be issued pursuant to the
transactions contemplated by this Agreement.
(d) any acquisition or transfer of assets (including investments in
third parties) (other than in the ordinary course of business) involving
consideration in excess of 10% of the Company's market capitalization
(calculated on the basis of the outstanding shares of the Company only) at the
time of such acquisition or transfer as recorded on the balance sheet of the
Company or any of its Subsidiaries (with respect to which, the Purchaser
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shall not be permitted to unreasonably withhold its consent); provided that any
acquisition or transfer of assets involving a third party in excess of such 10%
threshold shall not be considered in the ordinary course of business;
(e) any transactions with officers or directors (other than pursuant
to existing employment or stock option agreements otherwise approved by the
Company's Board in the ordinary course of business consistent with the Company's
past practice), any entity, shareholder or affiliate which beneficially owns 5%
or more of the Company's outstanding shares other than on an arm's-length basis
for fair market value as determined by the Company's Board in good faith;
(f) [CONFIDENTIAL TREATMENT REQUESTED];
(g) at any time prior to the Expiration Date, any material change by
the Company or any of its Subsidiaries in any existing or future employment
relationship with the Company's current or future chairman of the Company's
Board, principal executive officer, chief technology officer or principal
financial officer; provided that this covenant shall not prevent the Company's
Board from terminating in good faith any of such persons for "cause" and
provided further that the Purchaser shall not unreasonably withhold its consent
with respect to the selection of a successor to any such person;
(h) any voluntary change in the quotation on the Nasdaq National
Market System;
(i) any voluntary bankruptcy, liquidation or dissolution of the
Company or any of its Subsidiaries; and
(j) from the date hereof and until the earlier of the Second Closing
and the termination of this Agreement, the taking of any action that would have
caused any adjustment under Section 6 of the Warrants (as set forth in the form
of Warrant Certificate attached as Exhibit B) if such Warrants had actually been
issued to Purchaser as of the date
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hereof, other than the issuance of up to 50,000 shares of Common Stock (or
Rights therefore) for any valid purpose, other than with the prior written
consent of the Purchaser (such consent not to be unreasonably withheld if the
Company agrees to adjust the initial face amount of the Warrants appropriately).
8. Affirmative Covenants of the Purchaser. The Purchaser hereby
covenants and agrees as follows:
8.1 Purchaser Agreements.
(a) The Purchaser hereby agrees, as of the date hereof until the
earlier of the Expiration Date or the date that the Warrants have been fully
exercised (but in all cases, until the first anniversary of the Second Closing),
that neither it, Parent nor any subsidiary of Parent will acquire any additional
shares of Common Stock without the prior approval of the Company's Board (other
than shares of Common Stock acquired upon the exercise of any of the Warrants or
pursuant to the exercise of the Purchaser's preemptive rights under Section 6.2
hereof).
(b) The Purchaser agrees, as of the Second Closing Date, that so
long as the Purchaser, Parent and Parent's subsidiaries hold, in the aggregate,
more than 20% of the outstanding Common Stock of the Company, the Purchaser,
Parent and Parent's subsidiaries will not transfer, in the aggregate, more than
5% of the outstanding Common Stock of the Company in any three-month period
without the approval of the Company's Board (other than pursuant to the exercise
of the Purchaser's registration rights under the Registration Rights Agreement).
(c) The Purchaser shall, subject to any rule or regulation of
Nasdaq, vote, or cause to be voted, all shares of Common Stock of which it or
any of its affiliates is the direct or indirect beneficial owner in favor of the
Proposals at the Shareholders Meeting.
9. Indemnification.
(a) Indemnity. The Company agrees to indemnify, defend and hold
harmless the Purchaser, its affiliates and their respective shareholders,
directors, officers, partners, employees, agents, successors and assigns (each
an "Indemnified Party"), from and against all losses, damages, liabilities,
deficiencies or obligations, including, without limitation, all claims, actions,
suits, proceedings, demands, judgments, assessments, fines, interest, penalties,
costs and expenses (including settlement costs and reasonable legal fees)
(collectively, "Losses") to which any of them may become subject as a result of
any and all misrepresentations or breaches of a representation or warranty of
the Company herein or the nonperformance or breach of any covenants or
agreements of the Company contained
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herein (for the purposes of this Section 9 deleting any material adverse effect
qualifier contained in any such representation or warranty).
(b) Payment. Any obligations of the Company under the provisions
of this Section shall be paid promptly to the Indemnified Party by the Company.
Notwithstanding anything contained herein to the contrary, other than
indemnification for Losses that result from any misrepresentation or breaches of
a representation or warranty of the Company or the nonperformance or breach of
any representation, covenant or agreement of the Company contained in Sections
3.12 and 3.13, the indemnification provided above, with respect to Losses
resulting from any misrepresentation or breach of any misrepresentation or
warranty, shall only apply to the extent that, and not until, the aggregate of
all amounts subject to indemnification under this Section 9 exceeds $200,000.
10. Miscellaneous.
10.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS
BY THE LAWS OF THE STATE OF NEW YORK.
10.2 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(i) at any time, by the mutual written agreement of the
Purchaser and the Company;
(ii) by the Purchaser if the First Closing does not occur
within 3 weeks from the date hereof; or
(iii) by either party upon written notice to the other party if
the Second Closing has not occurred within 6 months from the date hereof, in
which case all parties shall be released from all obligations hereunder other
than obligations arising from a breach or default hereunder, including Section
9.
10.3 Survival. Notwithstanding any investigation made by the
Purchaser, all representations and warranties made herein shall survive, with
respect to each of the First Closing and the Second Closing, the relevant
closing of the transactions contemplated hereby for a period of 3 years, except
with respect to the representations and warranties contained in (a) Sections 3.1
(Organization and Standing), 3.2 (Corporate Power), 3.3 (Subsidiaries), 3.4
(Capitalization), 3.5 (Authorization), 3.6 (No Preemptive Rights), 3.7
(Intellectual Property Rights), 3.13 (Title) and 3.25 (New Jersey Anti-Takeover
Statute), each of which shall remain in full force and effect indefinitely; (b)
Section 3.12 (Taxes), which shall remain in full force and in effect until 60
days following the expiration of the applicable statute of limitation period
(including extensions); and (c) Section 3.22 (Environmental and Safety
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Laws), which shall survive the closing of the transactions for a period of 5
years. This Section 10 shall survive the termination of this Agreement. For the
purpose of this Section 10.3, all statements as to factual matters contained in
any certificate or other instrument delivered by or on behalf of the Company
pursuant hereto or in connection with the transactions contemplated hereby shall
be deemed to be representations and warranties by the Company hereunder as of
the date of such certificate or instrument. Any matter as to which a claim has
been asserted by notice to the other party that is pending or unresolved at the
end of any applicable limitation period shall continue to be covered by this
Section 10.3 notwithstanding any applicable statute of limitations (which the
parties hereby waive) until such matter is finally terminated or otherwise
resolved by the parties under this Agreement or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and paid.
10.4 Successors and Assigns; Third Party Beneficiary. Except as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. Nothing set forth in this Agreement shall
be construed to confer any benefit to any third party who is not a party to this
Agreement, other than the Parent.
10.5 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
they supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
10.6 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
delivered by courier or overnight delivery, addressed (a) if to the Purchaser,
c/o Cablevision Systems Corporation, 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: General Counsel or such other address as such Purchaser shall
have furnished to the Company in writing, with a copy (which shall not
constitute notice) to Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxx, or (b) if to the Company, at 00 Xxxxxxxx
Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President, or at such other
address as the Company shall have furnished to the Purchaser in writing, with a
copy (which shall not constitute notice) to Smith, Stratton, Wise, Xxxxx &
Xxxxxxx, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxx
X. Xxxxx. Notices that are mailed shall be deemed received five days after
deposit in the United States mail.
10.7 Severability. In case any provision of this Agreement shall be
found by a court of law to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
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10.8 Finder's Fees and Other Fees.
(a) The Company (i) represents and warrants that it has
retained no finder or broker other than First Union Securities, Inc. in
connection with the transactions contemplated by this Agreement and, (ii) hereby
agrees to indemnify and to hold the Purchaser harmless from and against any
liability for commission or compensation in the nature of a finder's fee to any
broker or other person or firm (and the costs and expenses of defending against
such liability or asserted liability) for which the Company, or any of its
employees or representatives, are responsible.
(b) The Purchaser (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Company
harmless from and against any liability for any commission or compensation in
the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which the Purchaser, or any of its employees or representatives, are
responsible.
10.9 Expenses. (a) The Company and the Purchaser shall each bear
their own expenses and legal fees in connection with the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents.
(b) Notwithstanding Section 10.9(a), the Company agrees to
reimburse the Purchaser's reasonable fees and expenses of outside counsel
incurred in connection with the transactions contemplated by this Agreement, up
to a maximum of $200,000 upon the Second Closing based on copies of the relevant
invoices delivered to the Company; provided, however, that in the event that
this Agreement is terminated in accordance with Section 10.2(iii), the Company
agrees to reimburse the Purchaser for all the Purchaser's reasonable fees and
expenses of outside counsel incurred in connection with the transactions
contemplated by this Agreement, up to a maximum of $350,000 within 5 business
days of receipt of a copy of the relevant invoices.
10.10 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to the Company or to any holder of any
securities issued or to be issued hereunder shall impair any such right, power
or remedy of the Company or such
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holder, nor shall it be construed to be a waiver of any breach or default under
this Agreement, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any delay or omission to exercise any
right, power or remedy or any waiver of any single breach or default be deemed a
waiver of any other right, power or remedy or breach or default theretofore or
thereafter occurring. All remedies, either under this Agreement, or by law
otherwise afforded to the Company or any holder, shall be cumulative and not
alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
PVI HOLDING, LLC
By: /s/ Xxxxxxx X. Xxxx
________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
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39
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A-1: FORM OF DELAWARE CERTIFICATE OF INCORPORATION
EXHIBIT A-2: FORM OF BYLAWS
EXHIBIT B: FORM OF WARRANT CERTIFICATE
EXHIBIT C: SCHEDULE OF EXCEPTIONS
EXHIBIT D: FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT E: FORM OF SHAREHOLDERS AGREEMENT
EXHIBIT F-1: FORM OF LICENSE AGREEMENT
EXHIBIT F-2: LETTER OF INTENT IN RELATION TO THE JOINT COLLABORATION AND
LICENSE AGREEMENT
EXHIBIT G-1: SUBSIDIARIES
EXHIBIT G-2: OTHER ENTITIES
EXHIBIT H: HOLDERS OF RIGHTS
EXHIBIT I: INTELLECTUAL PROPERTY RIGHTS
EXHIBIT J: MATERIAL CONTRACTS
EXHIBIT K: COMMON SHARES AND RIGHTS IN THE DENOMINATOR
EXHIBIT L: PERMITTED BUSINESS
SCHEDULE I: FORM OF BOARD APPROVAL
SCHEDULE II: APPROVALS AND WAIVERS WITH RESPECT TO THE
MEXICAN AFFILIATE
SCHEDULE III: BENEFIT PLANS
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TABLE OF CONTENTS
1. Authorization and Sale of the Common Shares and Warrants........................................1
1.1 Authorization..........................................................................1
1.2 Sale and Issuance of the Shares and Warrants; Consideration............................1
2. Closing Date; Delivery..........................................................................2
2.1 Closing Date...........................................................................2
2.2 Delivery...............................................................................2
3. Representations and Warranties of the Company...................................................3
3.1 Organization and Standing..............................................................3
3.2 Corporate Power........................................................................3
3.3 Subsidiaries; Other Entities...........................................................4
3.4 Capitalization.........................................................................4
3.5 Authorization..........................................................................5
3.6 No Preemptive Rights...................................................................6
3.7 Intellectual Property Rights...........................................................6
3.8 Compliance with Other Instruments......................................................8
3.9 Litigation, etc........................................................................8
3.10 Consents...............................................................................9
3.11 Offering...............................................................................9
3.12 Taxes..................................................................................9
3.13 Title.................................................................................10
3.14 Material Contracts and Commitments....................................................10
3.15 Financial Statements..................................................................11
3.16 No Material Adverse Change............................................................11
3.17 Absence of Changes....................................................................12
3.18 Registration Rights...................................................................13
3.19 Certain Transactions..................................................................13
3.20 Proprietary Information of Third Parties..............................................13
3.21 Employee Benefit Plans................................................................14
3.22 Environmental and Safety Laws.........................................................16
3.23 Insurance.............................................................................16
3.24 Company Reports; Disclosure...........................................................16
3.25 New Jersey Anti-Takeover Statute......................................................17
4. Representations and Warranties of Purchaser and Restrictions on Transfer Imposed
by the Securities Act..........................................................................17
4.1 Representations and Warranties by the Purchaser.......................................17
4.2 Legends...............................................................................18
4.3 Removal of Legend and Transfer Restrictions...........................................19
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5. Conditions to the Closing......................................................................19
5.1 Conditions to the Purchaser's Obligations - First Closing.............................19
5.2 Conditions to Obligations of the Company- First Closing...............................21
5.3 Conditions to the Purchaser's Obligations - Second Closing............................22
5.4 Conditions to Obligations of the Company - Second Closing.............................23
6. Affirmative Covenants of the Company...........................................................24
6.1 Nomination of a Director..............................................................24
6.2 Preemptive Rights.....................................................................25
6.3 Reincorporation in Delaware...........................................................28
6.4 Acquisition Proposals.................................................................28
6.5 Proxy Statement; Shareholders Meeting.................................................29
6.6 Nasdaq Listing........................................................................30
6.7 Conduct of Business...................................................................30
6.8 Warrant Exercise and HSR..............................................................31
7. Negative Covenants of the Company..............................................................31
8. Affirmative Covenants of the Purchaser.........................................................34
8.1 Purchaser Agreements..................................................................34
9. Indemnification................................................................................34
10. Miscellaneous..................................................................................35
10.1 GOVERNING LAW.........................................................................35
10.2 Termination...........................................................................35
10.3 Survival..............................................................................35
10.4 Successors and Assigns; Third Party Beneficiary.......................................36
10.5 Entire Agreement......................................................................36
10.6 Notices, etc..........................................................................36
10.7 Severability..........................................................................36
10.8 Finder's Fees and Other Fees..........................................................37
10.9 Expenses..............................................................................37
10.10 Titles and Subtitles..................................................................37
10.11 Counterparts..........................................................................37
10.12 Delays or Omissions...................................................................37
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[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
Exhibits and Schedules
The following information is provided as required by the Stock and
Warrant Purchase Agreement dated February 4, 2001 between PRINCETON VIDEO IMAGE,
INC. (the "Company") and PVI HOLDING, LLC. (the "Purchaser").
As used herein, "Reorganization Agreement" refers to the Reorganization
Agreement dated as of December 28, 2000, by and among Presencia en Medios, S.A.,
Xxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxxxxxx, Presence in Media LLC, Virtual
Advertisement LLC, PVI LA, LLC, the Company and Princeton Video Image Latin
America, LLC (the "Reorganization Agreement") with certain holders of shares of
its Common Stock and warrants to acquire its Common Stock.
43
Exhibit A-1
Attach Form of Delaware Certificate of Incorporation
44
CERTIFICATE OF INCORPORATION
OF PRINCETON VIDEO IMAGE, INC.
FIRST. The name of this corporation is Princeton Video Image, Inc. (the
"Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, in the City of
Wilmington, County of New Castle. The registered agent of the Corporation at
such address is Corporation Service Company.
THIRD. The purpose of the Corporation is to engage in any lawful
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH.
A. The total authorized capital stock of the Corporation shall consist
of one class of 60,000,000 shares of Common Stock, par value $.001, one class of
975,803 shares of Preferred Stock, par value $.001, one class of 11,363 shares
of Series A Redeemable Preferred Stock, par value $4.50 and one class of 12,834
shares of Series B Redeemable Preferred Stock, par value $5.00, such classes of
Preferred Stock to have such relative rights, preferences and limitations as
herein set forth.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
pursuant to the Delaware General Corporation Law, to fix or alter from time to
time the designations, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions of any wholly
unissued series of Preferred Stock, and to establish from time to time the
number of shares constituting any such series or any of them; and to increase or
decrease the number of shares of any series subsequent to the issuance of shares
of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be decreased in
accordance with the foregoing sentence, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
C. The Series A Redeemable Preferred Stock shall have a par value of
$4.50 per share. The Series A Redeemable Preferred Stock shall have a six
percent (6%) per annum dividend rate and dividends shall be paid annually and
shall be cumulative. The failure of the Corporation to pay dividends on a
current basis shall not create any special rights except that no dividends shall
be paid in respect of Common Stock until all accumulated dividends in respect of
the Series A Redeemable Preferred Stock have been paid. Dividends shall be paid
either in cash or at the election of the Corporation in a number of shares of
Common Stock determined by the then current value per share of
45
Common Stock of the Corporation. The Series A Redeemable Preferred Stock will
not have voting rights in connection with the election of directors of the
Corporation, or on any other matter, other than as required by applicable law.
The Corporation shall have the right to redeem the Series A Redeemable Preferred
Stock in whole at any time or in part from time to time in cash at par plus all
accrued but unpaid dividends. The Corporation shall be required to redeem the
Series A Redeemable Preferred Stock in cash at par plus all accrued but unpaid
dividends out of thirty percent (30%) of the amount, if any, by which the
Corporation's annual net income after taxes in any year as shown on its audited
financial statements exceeds $5,000,000.
D. The Series B Redeemable Preferred Stock shall have a par value of
$5.00 per share. The Series B Redeemable Preferred Stock shall have a six
percent (6%) per annum dividend rate and dividends shall be paid annually and
shall be cumulative, provided that no dividends shall be paid at any time while
there are accrued but unpaid dividends with respect to the Series A Redeemable
Preferred Stock. The failure of the Corporation to pay dividends on a current
basis shall not create any special rights except that no dividends shall be paid
in respect of Common Stock until all accumulated dividends in respect of the
Series B Redeemable Preferred Stock have been paid. Dividends shall be paid
either in cash or at the election of the Corporation in a number of shares of
Common Stock determined by the then current value per share of Common Stock of
the Corporation. The Series B Redeemable Preferred Stock will not have voting
rights in connection with the election of directors of the Corporation, or on
any other matter, other than as required by applicable law. Provided that no
Series A Redeemable Preferred Stock is then outstanding, the Corporation shall
have the right to redeem the Series B Redeemable Preferred Stock in whole at any
time or in part from time to time in cash at par plus all accrued but unpaid
dividends. Provided that no Series A Redeemable Preferred Stock is then
outstanding, the Corporation shall be required to redeem the Series B Redeemable
Preferred Stock in cash at par plus all accrued but unpaid dividends out of
twenty percent (20%) of the amount, if any, by which the Corporation's annual
net income after taxes in any year as shown on its audited financial statements
exceeds $5,000,000.
FIFTH. The name and address of the incorporator is as follows:
_________________________
_________________________
_________________________
SIXTH. The Corporation hereby elects not to be governed by Section 203
of the Delaware General Corporation Law, as amended.
SEVENTH. The Board of Directors of the Corporation is hereby expressly
authorized and empowered to adopt, amend or repeal the Bylaws of the
Corporation, except as such power may be restricted or limited by the Delaware
General Corporation Law, as amended.
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EIGHTH. The election of directors need not be by written ballot unless
the Bylaws of the Corporation so provide.
NINTH. No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of directors of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Neither the amendment nor repeal of this Article
NINTH, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article NINTH, shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
amendment, repeal or adoption of an inconsistent provision.
TENTH.
A. The Corporation shall indemnify its directors and officers to the
fullest extent permitted by applicable law as in effect from time to time.
B. Expenses (including attorneys' fees) incurred by a director or
officer of the Corporation in defending an action, suit, or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit, or proceeding, to the fullest extent permitted by Delaware law, upon
receipt of an undertaking by the director or officer to repay the amount of
expenses so advanced if it shall be determined that the director or officer is
not entitled to be indemnified. The indemnification provided by this Article
TENTH shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under this Certificate of Incorporation, any bylaw,
agreement, vote of stockholders or disinterested directors, statute, or
otherwise, and shall inure to the benefit of the heirs, executors, and
administrators of an indemnified party. The provisions of this Article TENTH
shall not be deemed to preclude the Corporation from indemnifying other persons
from similar or other expenses and liabilities as the Board of Directors or the
stockholders may determine. Neither the amendment nor repeal of this Article
TENTH, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article TENTH, shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
amendment, repeal or adoption of an inconsistent provision.
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IN WITNESS WHEREOF, the undersigned, being the incorporator herein
before named, has executed, signed and acknowledged this certificate of
incorporation this ______________ day of ______________, 2001.
_____________________________
Incorporator
Name:
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Exhibit A-2
Attach Form of Delaware By-Laws
49
BY-LAWS
OF
PRINCETON VIDEO IMAGE, INC.
ARTICLE I - OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be at such place in the State of Delaware as shall be designated by the
Board of Directors (hereinafter called the "Board").
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other place(s) within or without the State of Delaware as the Board may from
time to time determine or the business of the Corporation may require.
ARTICLE II - STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of stockholders shall be held at
the principal office of the Corporation or at such place within or without the
State of Delaware as the Board shall authorize, or in the case of special
meetings, at the place specified in the notice of the meeting.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and for such other business as may properly come before
the meeting shall be held at such date and time as may be designated by the
Board.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may
be called by the Board or by the president and shall be called by the president
or the secretary at the request in writing of a majority of the Board or at the
request in writing by any stockholder owning shares of the Corporation's capital
stock. Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice.
SECTION 4. NOTICE OF MEETINGS OF STOCKHOLDERS. Written notice of the
time, place and purpose or purposes of every meeting of stockholders shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, to each stockholder of record
entitled to vote at the meeting.
When a meeting is adjourned to another time or place, it shall not be
necessary, unless the Bylaws otherwise provide, to give notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken and at the adjourned meeting only
such business is transacted as might have been transacted at the original
meeting. However, if adjournment is for more than thirty (30) days, or if after
the adjournment the Board fixes a new record date for the adjourned meeting, a
notice of the
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adjourned meeting shall be given to each stockholder of record on the new record
date entitled to notice.
SECTION 5. WAIVER OF NOTICE. Notice of meeting need not be given to any
stockholder who signs a waiver of notice, in person or by proxy, whether before
or after the meeting. The attendance of any stockholder at a meeting, in person
or by proxy, without protesting prior to the conclusion of the meeting the lack
of notice of such meeting, shall constitute a waiver of notice by him.
SECTION 6. ACTION BY STOCKHOLDERS WITHOUT A MEETING. To the fullest
extent permitted by law, whenever a vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provision of the laws of the State of Delaware or of the Certificate of
Incorporation or these Bylaws, the meeting, prior notice thereof and the vote of
stockholders may be dispensed with if the holders of shares of stock of the
Corporation having not less than the minimum number of votes that would have
been necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted shall consent in writing to the
taking of such action. Where corporate action is taken in such manner by less
than unanimous written consent, prompt written notice of the taking of such
action shall be given to all stockholders who have not consented in writing
thereto.
SECTION 7. QUORUM. Except as otherwise provided by statute or the
Certificate of Incorporation of the Corporation, the presence, in person or by
proxy, of stockholders holding a majority of the shares of the stock of the
Corporation generally entitled to vote shall constitute a quorum at all meetings
of the stockholders for the transaction of business. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal of
any stockholders. In the absence of a quorum at any meeting or any adjournment
thereof, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without any notice other than announcement at the meeting of the
time and place of the adjourned meeting, until the requisite amount of shares
entitled to vote thereat shall be present.
ARTICLE III - DIRECTORS
SECTION 1. BOARD OF DIRECTORS. Subject to any provision in the
Certificate of Incorporation, the business of the Corporation shall be managed
by its Board, each of whom shall be at least 18 years of age.
SECTION 2. NUMBER OF DIRECTORS. The authorized number of the directors
of the Corporation shall be established from time to time by the Board.
SECTION 3. TERM OF DIRECTORS. At each annual meeting the stockholders
shall elect directors to hold office until the next succeeding annual meeting,
except as otherwise
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required by the Certificate of Incorporation or the Bylaws in the case of
classification of directors. Each director shall hold office for the term for
which he is elected and until his successor shall have been elected and
qualified. A director may resign by written notice to the Corporation. The
resignation shall be effective upon receipt thereof by the Corporation or at
such subsequent time as shall be specified in the notice of resignation.
SECTION 4. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any directorship
not filled at the annual meeting, any vacancy, however caused, occurring in the
Board, and newly created directorships resulting from an increase in the
authorized number of directors, may be filled by the affirmative vote of a
majority of the remaining directors even though less than a quorum of the Board,
or by a sole remaining director. A director so elected by the Board shall hold
office until his successor shall have been elected and qualified. If, for any
reason, the Corporation shall at any time have no directors then in office, any
stockholder may call a special meeting of stockholders for the election of
directors and, over his/her signature, shall give notice of such meeting in
accordance with these Bylaws.
SECTION 5. REMOVAL OF DIRECTORS. One or more or all of the directors of
the Corporation may be removed for cause by the stockholders by the affirmative
vote of the majority of the votes cast by the holders of shares entitled to vote
for the election of directors.
SECTION 6. QUORUM OF BOARD OF DIRECTORS AND COMMITTEES. A majority of
the entire Board, or of any committee thereof, shall constitute a quorum for the
transaction of business, unless the Certificate of Incorporation shall provide
that a greater or lesser number shall constitute a quorum, which in no case
shall be less than the greater of two persons or one-third of the entire Board
or committee, except that when a Board of one director is authorized, one
director shall constitute a quorum.
SECTION 7. ACTION OF DIRECTORS WITHOUT A MEETING. Any action required
or permitted to be taken pursuant to authorization voted at a meeting of the
Board or any committee thereof, may be taken without a meeting if, prior or
subsequent to such action, all members of the Board or of such committee, as the
case may be, consent thereto in writing and such written consents are filed with
the minutes of the proceedings of the Board or committee. Such consent shall
have the same effect as a unanimous vote of the Board or committee for all
purposes.
SECTION 8. PLACE OF BOARD MEETINGS. Meetings of the Board may be held
either within or without the State of Delaware.
SECTION 9. ANNUAL MEETING. An annual meeting of the Board shall be held
immediately following the annual meeting of stockholders at the place of such
annual meeting of stockholders.
SECTION 10. NOTICE OF MEETINGS OF THE BOARD; ADJOURNMENT. Regular
meetings of the Board may be held with or without notice. Special meetings of
the Board shall be held upon notice to the directors and may be called by the
president upon three (3)
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days' notice to each director either personally or by mail or by wire. Special
meetings shall be called by the president or by the secretary in a like manner
on written request of two directors. Notice of any meeting need not be given to
any director who signs a waiver of notice, whether before or after the meeting.
The attendance of any director at a meeting without protesting prior to the
conclusion of the meeting the lack of notice of such meeting shall constitute a
waiver of notice by him. Neither the business to be transacted at, nor the
purpose of, any meeting of the Board need be specified in the notice or waiver
of notice of such meeting. Notice of an adjourned meeting need not be given if
the time and place are fixed at the meeting adjourning and if the period of
adjournment does not exceed ten days in any one adjournment.
A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given to all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
SECTION 11. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution
adopted by a majority of the entire Board, may designate from among its members
an executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
SECTION 1. OFFICES, ELECTION, TERM, SALARIES, SECURITY. The officers of
the Corporation shall be a chairman of the Board, a chief executive officer, a
chief financial officer, a chief operating officer, a president, a secretary and
a treasurer. In addition, the Board may elect additional officers such as one or
more vice presidents and such assistant secretaries and assistant treasurers as
the Board may deem proper. The officers shall be elected or appointed by the
Board.
Any two or more offices may be held by the same person.
Any officer elected or appointed as herein provided shall hold office
until the next regular meeting of the Board following the annual meeting of
stockholders or until a successor is elected or appointed and has qualified
subject to earlier termination by removal or resignation.
All officers of the Corporation, as between themselves and the
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided in the Bylaws, or as may be determined by
resolution of the Board not inconsistent with the Bylaws.
The salaries of all officers shall be fixed by the Board.
In case the Board shall so require, any officer or agent of the
Corporation shall execute to the Corporation a bond in such sum and with such
surety or sureties as the Board may direct, conditioned upon the faithful
performance of his duties to the Corporation and including
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responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
SECTION 2. DELEGATION OF DUTIES. In case of the absence of any officer
of the Corporation, or for any other reason that may seem sufficient to the
Board, the directors may, by a majority vote of the Board, delegate the powers
and duties of such officer, for the time being, to any other officer, or to any
director.
SECTION 3. REMOVAL AND RESIGNATION OF OFFICERS; FILLING OF VACANCIES.
Any officer elected or appointed by the Board may be removed by the Board with
or without cause.
An officer may resign by written notice to the Corporation. The
resignation shall be effective upon receipt thereof by the Corporation or at
such subsequent time as shall be specified in the notice of resignation.
Any vacancy occurring among the officers, however caused, may be filled
by election or appointment by the Board for the unexpired term.
SECTION 4. CHAIRMAN OF THE BOARD. The chairman of the Board shall
preside at all meetings of the stockholders and of the Board. He shall have
general and active management of the business of the Corporation, shall oversee
the fulfillment of the Corporation's mission, and shall see that all orders and
resolutions of the Board are carried into effect, subject, however, to the right
of the directors to delegate any specific powers, except such as may be by
statute exclusively conferred on the chairman of the Board, to any other officer
or officers of the Corporation. He shall have the authority to execute bonds,
mortgages and other contracts under the seal of the Corporation except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. He shall have the
general powers and duties of supervision and management usually vested in an
executive officer and the chairman of the board of a corporation. He shall
present a report of the condition of the business of the Corporation at each
annual meeting of the stockholders and the Board. He shall perform such other
duties as may from time to time be requested by the Board.
SECTION 5. CHIEF EXECUTIVE OFFICER. The chief executive officer shall,
in the absence of the chairman of the Board, preside at all meetings of the
stockholders and of the Board. Acting under the direction of the Board and the
chairman of the Board, he shall have general and active management of the
business of the Corporation, shall oversee the marketing, business and strategic
development efforts of the Corporation and shall see that all orders and
resolutions of the Board are carried into effect, subject, however, to the right
of the directors to delegate any specific powers to any other officer or
officers of the Corporation. He shall have the authority to execute bonds,
mortgages and other contracts under the seal of the Corporation, except where
the signing and execution thereof shall be expressly designated by the Board to
some other officer or agent of the Corporation. He shall have the general powers
and duties of supervision and management usually vested in the chief executive
officer of a corporation. He
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shall perform such other duties as may from time to time be requested by the
Board or by the chairman of the Board.
SECTION 6. CHIEF FINANCIAL OFFICER. A chief financial officer, if one
has been appointed, shall be vested with all of the powers, and shall be
required to perform all of the duties, as may be properly assigned by the Board,
the chairman of the Board, the chief executive officer or the president.
SECTION 7. PRESIDENT. The president shall be vested with all of the
powers, and shall be required to perform all of the duties, as may be properly
assigned by the Board or the chairman of the Board.
SECTION 8. CHIEF OPERATING OFFICER. A chief operating officer, if one
has been appointed, shall be vested with all of the powers, and shall be
required to perform all of the duties, as may be properly assigned by the Board,
the chairman of the Board, the chief executive officer or the president.
SECTION 9. VICE-PRESIDENTS. During the absence or disability of the
president, the vice-president, or if there are more than one, the executive
vice-president shall have all the powers and functions of the president. Each
vice-president shall perform such other duties as the Board shall prescribe.
SECTION 10. SECRETARY. The secretary shall attend all meetings of the
Board and of the stockholders; record all votes and minutes of all proceedings
in a book to be kept for that purpose; give or cause to be given notice of all
meetings of stockholders and of special meetings of the Board; keep in safe
custody the seal of the Corporation and affix it to any instrument when
authorized by the Board; when required, prepare a list of stockholders or cause
to be prepared and available at each meeting of stockholders entitled to vote
thereat, indicating the number of shares of each respective class held by each;
keep all the documents and records of the Corporation as required by law or
otherwise in a proper and same manner; and perform such other duties as may be
prescribed by the Board.
SECTION 11. ASSISTANT-SECRETARIES. During the absence or disability of
the secretary, the assistant-secretary, or if there are more than one, the one
so designated by the secretary or by the Board, shall have all the powers and
functions of the secretary.
SECTION 12. TREASURER. The treasurer shall have the custody of the
corporate funds and securities; keep full and accurate accounts of receipts and
disbursements in the corporate books; deposit all money and other valuables in
the name and to the credit of the Corporation in such depositories as may be
designated by the Board; disburse the funds of the Corporation as may be ordered
or authorized by the Board and preserve proper vouchers for such disbursements;
render to the president and Board at the regular meetings of the Board, or
whenever they require it, an account of all his transactions as treasurer and of
the financial condition of the Corporation; render a full financial report at
the annual meeting of the stockholders if so requested; be furnished by all
corporate officers and agents at his request, with
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such reports and statements as he may require as to all financial transactions
of the Corporation; and perform such other duties as are given to him by the
Bylaws or as from time to time are assigned to him by the Board, the chairman of
the Board, the chief executive officer or the president.
SECTION 13. ASSISTANT-TREASURER. During the absence or disability of
the treasurer, the assistant-treasurer, or if there are more than one, the one
so designated by the secretary or by the Board, shall have all the powers and
functions of the treasurer.
ARTICLE V - STOCK CERTIFICATES
SECTION 1. CERTIFICATES REPRESENTING SHARES. The shares of the
Corporation shall be represented by certificates signed by, or in the name of
the Corporation by, the chairman or vice-chairman of the Board, or the president
or a vice-president, and by the treasurer or an assistant-treasurer, or the
secretary or an assistant-secretary of the Corporation and shall be sealed with
the seal of the Corporation or a facsimile thereof.
SECTION 2. LOST OR DESTROYED CERTIFICATES. The Board may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation, alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the Corporation a bond in such
sum and with such surety or sureties as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost or destroyed.
SECTION 3. TRANSFER OF SHARES. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, and cancel the old certificate. Every such transfer
shall be entered on the transfer book of the Corporation which shall be kept at
its principal office. No transfer shall be made within ten days next preceding
the annual meeting of stockholders.
SECTION 4. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to treat the holder of record of any share as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice thereof, except as expressly provided by Delaware
statutes.
SECTION 5. CLOSING TRANSFER BOOKS. The Board shall have the power to
close the share transfer books of the Corporation for a period of not more than
ten (10) days during the
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thirty-day period immediately preceding (a) any stockholders' meeting, or (b)
any date upon which stockholders shall be called upon to or have a right to take
action without a meeting, or (c) any date fixed for the payment of a dividend or
any other form of distribution, and only those stockholders of record at the
time the transfer books are closed, shall be recognized as such for the purpose
of (a) receiving notice of or voting at such meeting, or (b) allowing them to
take appropriate action, or (c) entitling them to receive any dividend or other
form of distribution.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation and to applicable law, the Corporation may, from time to time, by
action of its Board, declare and pay dividends or make other distribution on its
outstanding shares in cash or in its own shares or in its bonds or other
property, including the shares or bonds of other corporations, except when the
Corporation is insolvent or would thereby be made insolvent.
Dividends may be declared or paid and other distributions may be made
out of surplus only, except as otherwise provided by statute.
ARTICLE VI - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear the name
of the Corporation, the year of its organization and the words "Princeton Video
Image, Inc., Corporate Seal 2001 Delaware." The seal may be used by causing it
to be impressed directly on the instrument or writing to be sealed, or upon
adhesive substance affixed thereto. The seal on the certificates for shares or
any corporate obligation for payment of money may be a facsimile, engraved or
printed.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of July
of each year.
ARTICLE VIII - BY-LAW CHANGES
AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
Except as otherwise provided in the Certificate of Incorporation, the
Bylaws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. Bylaws may also
be amended, repealed or adopted by the Board but any Bylaw adopted by the Board
may be amended by the stockholders entitled to vote thereon.
If any Bylaw regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of the
next meeting of stockholders
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for the election of directors the Bylaw so adopted, amended or repealed,
together with a concise statement of the changes made.
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Exhibit B
Attach Form of Warrant Certificate
59
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND ARE "RESTRICTED
SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER
THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED
FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE ACT OR (ii) IN
COMPLIANCE WITH RULE 144 OR ANOTHER EXEMPTION FROM
THE ACT.
11,471,908* Warrants
------------
*The 11,471,908 number was calculated by using the fully diluted number
of shares reflected in Exhibit K to the Stock and Warrant Purchase Agreement
(the "Purchase Agreement"), plus 50,000 shares, as the denominator for
calculating the number of shares Purchaser would need to acquire (in addition to
the 4 million shares it is purchasing under the Purchase Agreement) to own 45%
of the Company on a fully diluted basis (pro forma for the full exercise of
these Warrants). The initial face number of the Warrants shall instead be
8,350,398 if, as of the Second Closing, the Reorganization Agreement dated as of
December 28, 2000, by and among Presencia en Medios, the Company and the other
parties thereto, has been terminated without any obligation of the Company (i)
to issue to the Sellers thereunder any shares or warrants referred to therein or
(ii) to issue the warrant for 100,000 shares to Xxxxx & Company, Incorporated
relating to the closing of the transaction contemplated therein. The above
calculations are both premised on the assumption that the Company will comply
with Section 7(j) of the Purchase Agreement.
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PRINCETON VIDEO IMAGE, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies
that for good and valuable consideration, the sufficiency of which is hereby
acknowledged, PVI Holding, LLC or its assigns (the "Holder") is the owner of the
number of warrants ("Warrants") specified above, each of which entitles the
Holder thereof to purchase, at any time on or before the Expiration Date (as
hereinafter defined), one fully paid and non-assessable share of Common Stock,
no par value ("Common Stock"), of Princeton Video Image, Inc., a Delaware
corporation (the "Company"), at the purchase prices per share of Common Stock
set forth in Section 1 below in lawful money of the United States of America in
cash (including by wire transfer of funds to an account designated by the
Company) or by certified or cashier's check or a combination of cash and
certified or cashier's check (subject to adjustment as hereinafter provided).
1. Warrant; Purchase Price. Each Warrant shall entitle the
Holder initially to purchase one share of Common Stock of the Company and the
purchase price payable upon exercise of the Warrants (the "Purchase Price")
shall initially be as follows:
(i) $8.00 per share from the date hereof until and
including the first anniversary of the date hereof;
(ii) $9.00 per share from the first anniversary of
the date hereof until and including the second anniversary of the date
hereof; and
(iii) $10.00 per share from the second anniversary of
the date hereof until and including the Expiration Date (as defined
below).
The Purchase Price and number of shares of Common Stock issuable upon exercise
of each Warrant are subject to adjustment as provided in Article 6. The shares
of Common Stock issuable upon exercise of the Warrants (and/or other shares of
common stock so issuable by reason of any adjustments pursuant to Article 6) are
sometimes referred to herein as the "Warrant Shares."
2. Exercise; Expiration Date. The Warrants are exercisable, at
the option of the Holder, in whole or in part at any time and from time to time
on or after the date hereof and on or before 5:00 p.m. New York time on the
third anniversary of the date hereof (the "Expiration Date"), upon surrender of
this Warrant Certificate to the Company together with a
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duly completed Notice of Exercise, in the form attached hereto as Exhibit A, and
payment of an amount equal to the Purchase Price times the number of Warrants to
be exercised. In the case of the exercise of less than all the Warrants
represented by this Warrant Certificate, the Company shall cancel the Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate for the balance of such Warrants.
3. Registration and Transfer on Company Books. The Company
shall maintain books for the registration and transfer of the Warrants and the
registration and transfer of the Warrant Shares. Prior to due presentment for
registration of transfer of this Warrant Certificate, or the Warrant Shares, the
Company may deem and treat the registered Holder as the absolute owner thereof.
No sale, transfer, assignment, hypothecation or other disposition of the Warrant
Shares shall be made unless any such transfer, assignment or other disposition
will comply with the rules and statutes administered by the Securities and
Exchange Commission (the "Commission") and (i) a registration statement under
the Securities Act of 1933, as amended (the "Act"), including such shares is
currently in effect, or (ii) an exemption therefrom is applicable to such
transfer.
4. Reservation of Shares. The Company covenants that it will
at all times reserve and keep available out of its authorized capital stock,
solely for the purpose of issue upon exercise of the Warrants, such number of
shares of capital stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of capital stock
which shall be issuable upon exercise of the Warrants shall be duly and validly
issued and fully paid and non-assessable and free from all taxes, liens, claims
and charges with respect to the issue thereof, and that, upon issuance, such
shares shall be listed on each national securities exchange or automated
over-the-counter trading system, if any, on which the other shares of such
outstanding capital stock of the Company are then listed.
5. Loss or Mutilation. Upon receipt by the Company of
reasonable evidence of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and, in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to the Company, or, in the
case of mutilation, upon surrender and cancellation of the mutilated Warrant
Certificate, the Company shall execute and deliver in lieu thereof a new Warrant
Certificate representing an equal number of Warrants.
6. Adjustment of Purchase Price and Number of Shares
Deliverable
6.1 The number of Warrant Shares purchasable upon the exercise
of each Warrant and the Purchase Price with respect to the Warrant Shares shall
be subject to adjustment as follows:
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(a) In case the Company shall (i) declare or make a dividend
or distribution on its Common Stock payable in shares of its Common Stock, (ii)
subdivide or redivide its outstanding shares of Common Stock through stock split
or otherwise, or (iii) reduce, combine or consolidate its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the number of
Warrant Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
number of Warrant Shares that such Holder would have owned or have been entitled
to receive after the happening of any of the events described above had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Such adjustment shall be made successively
whenever any event referred to in this paragraph (a) shall occur. Any adjustment
made pursuant to this paragraph (a) shall become effective retroactively as of
the record date of such event.
(b) In case the Company shall issue by reclassification of its
Common Stock (including any reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation) other securities
of the Company (such event, a "Reclassification"), the number and/or nature of
Warrant Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of securities of the Company issued as a result of such
Reclassification that such Holder would have owned or have been entitled to
receive after the happening of such Reclassification had such Warrant been
exercised immediately prior to the happening of such Reclassification or any
record date with respect thereto. Such adjustment shall be made successively
whenever any event referred to in this paragraph (b) shall occur. Any adjustment
made pursuant to this paragraph (b) shall become effective retroactively as of
the record date of such Reclassification.
(c) In the event of any capital reorganization or any
reclassification of the capital stock of the Company or in case of the
consolidation or merger of the Company with another corporation, or in the case
of any sale, transfer or other disposition to another corporation of all or
substantially all the properties and assets of the Company (any such event in
this paragraph (c), a "Triggering Event"), the Holder of each Warrant shall
thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition that appropriate provisions shall be
made so that such Holder shall thereafter be entitled to purchase) the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have been entitled to receive had such Warrants been
exercised immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition;
and in any such case appropriate adjustments shall be made in the application of
the provisions of this Article 6 with respect to the rights and interest
thereafter of the Holder of the Warrants to the end that the provisions of this
Article 6 shall thereafter be applicable, as near as reasonably may be, in
relation to any shares or other property thereafter purchasable upon the
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exercise of the Warrants. The provisions of this paragraph (c) shall similarly
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers or other dispositions.
(d) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted as provided in paragraphs (a), (b) or (c)
of this Section 6.1, the Purchase Price with respect to the Warrant Shares shall
be adjusted by multiplying such Purchase Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Warrant
Shares purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
so purchasable immediately thereafter.
(e) In the event that the Company grants, issues or sells any
shares of Common Stock (whether upon the exercise of rights, options, warrants,
convertible or exchangeable securities or otherwise) or other securities for
which a Warrant is exercisable, the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be increased so that
the Holder shall be entitled to receive a number of Warrant Shares in the
aggregate the same proportion of the total outstanding shares of Common Stock or
other securities represented by each Warrant immediately prior to such grant,
issue or sale. The provisions of this paragraph (e) shall similarly apply to
successive grants, issues or sales of shares of Common Stock or other
securities. In addition, to the extent that PVI Holding, LLC (or its permitted
assigns, the "Purchaser") elects not to exercise its preemptive rights under
Section 6.2 of the Stock and Warrant Purchase Agreement, dated as of February 4,
2001, between the Company and the Purchaser (the "Purchase Agreement"), with
respect to (i) any shares of Common Stock issued under the "Permitted Transfer
Basket" (as defined in the Purchase Agreement), (ii) any shares of Common Stock
issued to Xxxxx Aernout pursuant to his Contract of Employment with Princeton
Video Image Europe dated June 23, 2000, or (iii) any shares of Common Stock
issued to First Union Securities, Inc., or its affiliates, pursuant to its
agreement with the Company dated August 27, 2000, the number of Warrant Shares
purchasable upon exercise of each Warrant immediately prior thereto (including
for this purpose the adjustment outlined above) shall also be increased so that
the Holder shall be entitled to receive a further number of Warrant Shares in
the aggregate equal to the number of additional shares that the Holder would
have received with respect to its preemptive rights had the Purchaser exercised
its preemptive rights in full. The adjustment provided in this Section 6.1(e)
shall not apply to any grant, issue or sale by the Company of any of the shares
of Common Stock issued as set forth in Exhibit K to the Purchase Agreement.
(f) In addition to the adjustment provided in paragraph (e) of
this Section 6.1, in the event that the Company grants, issues or sells any
shares of Common Stock (whether upon the exercise of rights, options, warrants,
convertible or exchangeable securities or otherwise) or other securities for
which a Warrant is exercisable at a price (or in consideration for assets having
a fair market value) per share less than the Market Price Per Share (as
determined pursuant to
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Section 9.2 below), the Purchase Price of each Warrant shall be reduced
immediately after such grant, issuance or sale so that it shall equal the price
determined by multiplying the Purchase Price in effect on the date of such
grant, issuance or sale by a fraction, the numerator of which shall be the total
number of shares of Common Stock or other securities outstanding on the date of
such grant, issuance or sale plus a number of shares of Common Stock or other
securities equal to the number arrived at by dividing the aggregate price of the
total number of additional shares of Common Stock or other securities granted,
issued or sold by such Market Price per Share, and the denominator of which
shall be the total number of shares of Common Stock or other securities
outstanding on the date of such grant, issuance or sale plus the total number of
additional shares of Common Stock or other securities granted, issued or sold.
Any shares of Common Stock or other securities owned by or held for the account
of the Company shall be deemed not to be outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever there is such a
grant, issuance or sale of shares of Common Stock or other securities. The
adjustment provided in this Section 6.1(f) shall not apply to any grant, issue
or sale by the Company of any of the shares of Common Stock issued as set forth
in Exhibit K to the Purchase Agreement.
(g) In the case the Company shall make a distribution on its
Common Stock or other securities for which a Warrant is exercisable that is
payable in assets (including, without limitation, cash) or securities ("Assets
or Securities"), the Purchase Price of each Warrant shall be reduced immediately
after such distribution by an amount equal to (i) the fair market value of the
Assets or Securities distributed divided by (ii) the total number of shares of
Common Stock or other applicable securities outstanding on the date of such
distribution. Any shares of Common Stock or other applicable securities owned by
or held for the account of the Company shall be deemed not to be outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever there is such a distribution of Assets or Securities.
(h) In the event of any dispute arising with respect to the
computation of adjustments provided in Section 6.1, such question shall be
conclusively determined by a nationally recognized investment banking firm
appointed by the Company and acceptable to the Holder; such investment banking
firm having access to all necessary records of the Company and such
determination shall be binding on the Holder.
6.2 No adjustment in the number of Warrant Shares purchasable
under the Warrants, or in the Purchase Price with respect to the Warrant Shares,
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the number of Warrant Shares issuable upon the exercise of
such Warrant or in the Purchase Price thereof, provided, however, that any
adjustments which by reason of this Section 6.2 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All final results of adjustments to the number of Warrant Shares and the
Purchase Price thereof shall be rounded to the nearest one thousandth of a share
or the nearest cent, as the case may be.
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6.3 Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant or the Purchase Price of such Warrant Shares is
adjusted, as herein provided, the Company shall mail to the Holder, at the
address of the Holder shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chairman of the Board,
Chief Financial Officer or Secretary of the Company, which sets forth the number
of Warrant Shares purchasable upon the exercise of each Warrant and the Purchase
Price of such Warrant Shares after such adjustment, a brief statement of the
facts requiring such adjustment and the computation by which such adjustment was
made.
6.4 The Company shall give notice to the Holder by registered
mail, if at any time prior to the expiration or exercise in full of the
Warrants, any of the following events shall occur:
(a) The Company shall authorize the payment of any dividend or
authorize the making of any distribution to the holders of shares of Common
Stock (including, without limitation, any distribution payable in Assets or
Securities);
(b) The happening of any Reclassification or Triggering Event;
(c) Any grant, issuance or sale of shares of Common Stock;
(d) A dissolution, liquidation or winding up of the Company; or
(e) A capital reorganization or reclassification of the Common
Stock (other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation or any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially an entirety.
Such giving of notice shall be initiated at least 10 business days prior to the
date fixed as a record date or effective date or the date of closing of the
Company's stock transfer books for the determination of the shareholders
entitled to such dividend or distribution, for the grant, issuance or sale of
such shares of Common Stock, or for the determination of the shareholders
entitled to vote on such proposed merger, consolidation, sale, conveyance,
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of the closing of the stock transfer books, as the case may be.
Failure to provide such notice shall not affect the validity of any action taken
in connection with such dividend, distribution, Reclassification, grant, sale,
issuance, or proposed merger, consolidation, sale, conveyance, dissolution,
liquidation or winding up.
7. Conversion Rights.
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7.1 In lieu of the exercise of any portion of the Warrants as
provided in Section 2.1 hereof, the Warrants represented by this Warrant
Certificate (or any portion thereof) may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to: (1)
the product of (a) the number of shares of Common Stock then issuable upon the
exercise of the Warrants to be so converted and (b) the excess, if any, of (i)
the Market Price Per Share (as determined pursuant to Section 9.2) with respect
to the date of conversion over (ii) the Purchase Price in effect on the business
day next preceding the date of conversion, divided by (2) the Market Price Per
Share with respect to the date of conversion. For example, if the Market Price
Per Share on the date of conversion is $4.00 and the Purchase Price is $2.00,
then the Holder would be entitled to receive 15,000 shares of Common Stock upon
conversion of 30,000 Warrants without any cash payment being required.
7.2 The conversion rights provided under this Section 7 may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding. In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrants (or so much thereof as shall have been surrendered
for conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) certificate or certificates representing the number of
shares of Common Stock to which the Holder shall be entitled as a result of the
conversion, and (ii) if the Warrant Certificate is being converted in part only,
a new certificate of like tenor and date for the balance of the unconverted
portion of the Warrant Certificate.
8. Voluntary Adjustment by the Company. The Company may, at
its option, at any time during the term of the Warrants, reduce the then current
Purchase Price to any amount deemed appropriate by the Board and/or extend the
date of the expiration of the Warrants.
9. Fractional Shares and Warrants; Determination of Market
Price Per Share
9.1 Anything contained herein to the contrary notwithstanding,
the Company shall not be required to issue any fraction of a share of Common
Stock in connection with the exercise of Warrants. Warrants may not be exercised
in such number as would result (except for the provisions of this paragraph) in
the issuance of a fraction of a share of Common Stock unless the Holder is
exercising all Warrants then owned by the Holder. In such event, the Company
shall, upon the exercise of all of such Warrants, issue to the Holder the
largest aggregate whole number of shares of Common Stock called for thereby upon
receipt of the Purchase Price for all of such Warrants and pay a sum in cash
equal to the remaining fraction of a share of Common
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Stock, multiplied by its Market Price Per Share (as determined pursuant to
Section 9.2 below) as of the last business day preceding the date on which the
Warrants are presented for exercise.
9.2 As used herein, the "Market Price Per Share" with respect
to any class or series of Common Stock or others securities on any date shall
mean the average closing price per share of the Common Stock or other securities
for the 20 trading days immediately preceding such date. The closing price for
each such day shall be the last sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices regular
way, in either case on the principal securities exchange on which the shares of
such Common Stock or other securities are listed or admitted to trading or, if
applicable, the last sale price, or in case no sale takes place on such day, the
average of the closing bid and asked prices of such Common Stock or other
securities on NASDAQ or any comparable system, or if such Common Stock or other
securities is not reported on NASDAQ, or a comparable system, the average of the
closing bid and asked prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If such bid and asked prices are not available, or
with respect to rights for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then "Market Price Per Share" shall
be equal to the fair market value of such Common Stock or other securities as
determined in good faith by the Board.
10. Governing Law. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed by its officers thereunto duly authorized and
its corporate seal to be affixed hereon, as of this ____ day of _________, 2001.
PRINCETON VIDEO IMAGE, INC.
By:___________________________________
Name:
Title:
[SEAL]
Attest:
By:______________________________
Name:
Title:
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EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise,
pursuant to Section 2 of the Warrant Certificate accompanying this Notice of
Exercise, __________ Warrants of the total number of Warrants owned by the
undersigned pursuant to the accompanying Warrant Certificate, and herewith makes
payment of the Purchase Price of such shares in full.
Name of Holder: ________________________
Signature: ________________________
Address: ________________________
________________________
________________________
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70
EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant
to Section 7 of the Warrant Certificate accompanying this Notice of Conversion,
__________ Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate into shares of the Common Stock
of the Company (the "Shares").
The number of Shares to be received by the undersigned shall
be calculated in accordance with the provisions of Section 7.1 of the
accompanying Warrant Certificate.
Name of Holder: ________________________
Signature: ________________________
Address: ________________________
________________________
________________________
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Exhibit C
Section 3 Representations and Warranties of the Company.
Schedule of Exceptions.
Section 3.4(c) Rights to Acquire Stock.
Warrants to Purchase Common Stock.
WARRANT EXPIRATION NO. OF EXERCISE PRICE /
NUMBER DATE SHARES SHARE
------ ---------- ------ ----------------
37 11/03/03 13,600 $8.00
50 09/15/03 20,000 $8.00
52 11/04/04 13,600 $8.00
112 04/15/04 450,000 $8.00
120 3 years from Commencement Date 70,000 $20.00
(term defined in Warrant)
127 9/3/05 6,000 $8.00
129 04/15/04 10,932 $8.00
131 02/09/06 28,226 $8.00
132 03/28/06 24,000 $8.00
133-141, 12/21/00- 21,572 $8.00
144 11/06/01
145 09/03/05 20,000 $4.50
174 02/28/04 2,000 $8.00
175 02/28/04 2,000 $8.00
176 02/28/04 2,000 $8.00
177 02/28/04 1,000 $8.00
72
178 04/29/04 22,200 $8.00
12/16/02 380,000 $8.40
Unnumbered
10/22/06 200,000 $6.05
Warrants
12/16/02 20,000 $8.40
TOTAL: 1,307,130
Options to Purchase Common Stock.
The Company has reserved 2,160,000 shares of Common Stock (and upon
obtaining shareholder approval, will have reserved 5,160,000 shares of Common
Stock) for issuance to employees, consultants, officers or directors upon
exercise of options granted or to be granted under the Amended 1993 Stock Option
Plan (the "Plan"). The Company has currently outstanding options to purchase
3,047,807 shares under the Plan; the excess over the 2,160,000 shares currently
authorized under the Plan is subject to shareholder approval.
On February 2, 2001, the Board of Directors authorized the grant to
senior employees of the Company of additional options to purchase a total of
775,000 shares of Common Stock under the Plan, subject to shareholder approval.
On February 2, 2001, the Board of Directors, in connection with the
proposed hiring of a Vice President of Business Affairs of the Company and
contingent upon the Second Closing, authorized the grant of additional stock
options under the Plan to purchase 160,000 shares of the Common Stock of the
Company.
Other Commitments to Issue Capital Stock or Warrants.
2,678,353 shares of Common Stock and warrants to purchase 1,036,825
shares of Common Stock are to be issued pursuant to the Reorganization
Agreement.
The Company has a consulting agreement with Endeavor, dated January 11,
2001, pursuant to which commissions, if and when earned, will be payable in
Common Stock.
Warrants to be issued to the General Manager of Princeton Video Image
Europe, N.V. ("PVI Europe") for the purchase of [CONFIDENTIAL TREATMENT
REQUESTED] of the common stock of PVI Europe, pursuant to his employment
arrangement, will provide that if PVI Europe has not commenced an initial public
offering of its stock by [CONFIDENTIAL TREATMENT REQUESTED], the Company will
grant to the General Manager warrants to purchase [CONFIDENTIAL TREATMENT
REQUESTED] of the Company's Common Stock, and the warrants to purchase shares of
PVI Europe will be cancelled.
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Upon the closing of the transactions contemplated by the Reorganization
Agreement, the Company will issue to Xxxxx & Company warrants for the purchase
of 100,000 shares of its Common Stock for acting as a financial advisor; such
warrants will be exercisable at a price per share equal to 110% of the average
price per share of the Common Stock for the ten (10) days immediately preceding
the closing of the transaction contemplated by the Reorganization Agreement and
will have a 5 year term. The parties are currently negotiating whether the
warrants will contain any registration rights.
Xxxxx & Company has delivered a fairness opinion, dated as of December
20, 2000, with regard to the Reorganization Agreement, and is entitled to
receive warrants for the purchase of 100,000 shares of the Company's Common
Stock; the exercise price per share for the Common Stock underlying the warrants
shall be $2.3065. The warrant will have a five year term. The Company has not
yet issued the warrant certificate; the parties are currently negotiating
whether the warrants will contain any registration rights.
An additional 100,000 shares are reserved for issuance under the
employer match provisions of the Company's 401(k) plan.
The Company has an agreement with ScholarShop, Inc. d/b/a Food for
Thought, signed November 17, 2000, pursuant to which the Company may be required
to pay Food for Thought in the form of PVI Common Stock rather than cash, at the
option of ScholarShop on reasonable notice and subject to approvals as required
by law.
The Company has an agreement with a law firm, dated November 1, 1999
pursuant to which the Company has the option to pay the bonus amount payable
thereunder with shares of PVI Common Stock.
The Reorganization Agreement, Section 11, provides that the Company
may, at its sole option, elect to pay any reimbursements to the Sellers in
shares of Common Stock of the Company.
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Section 3.4(d) Voting. The Reorganization Agreement, Section 7.1,
grants the Seller Group, as defined therein, the right to nominate a specified
number of directors of PVI dependent on the amount of shares of the Company
which are held by such group. All members of the Seller Group shall vote all
shares over which they exercise voting control in favor of the designees of the
Seller.
The Shareholders Agreement of PVI Europe, N.V., dated July 18, 2000,
Section 8, grants the Company the right to nominate two candidates for election
as one of the directors of PVI Europe as long as the Company holds at least
eight percent of the outstanding capital stock of PVI Europe. (Based on a
translation in English of the original agreement which is written in Dutch).
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Section 3.6(ii) Preemptive Rights. Reorganization Agreement, Sections
7.2 and 7.3. Each member of the Seller Group (as defined in the Reorganization
Agreement) shall have a right to purchase a pro rata portion of certain
securities which the Company may, from time to time, propose to sell and issue,
subject to the terms and conditions set forth in the Reorganization Agreement.
Such member's pro rata portion shall equal a fraction, the numerator of which is
the number of shares of PVI Common Stock held by it on the date of exercise of
this right plus the number of shares of PVI Common Stock issuable upon
conversion or exchange of then outstanding convertible or exchangeable
securities or on exercise of then outstanding options, rights or warrants held
by it, and the denominator of which is the total number of shares of PVI Common
Stock then outstanding plus the number of shares of PVI Common Stock issuable
upon conversion or exchange of then outstanding convertible or exchangeable
securities or on exercise of then outstanding options, rights or warrants.
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Section 3.9 Litigation.
Princeton Video Image, Inc. v. Scidel USA Ltd. (Pending trial,
anticipated to begin in late February 2001).
Sportvision, Inc. and Fox Sports Productions, Inc. v.
Princeton Video Image, Inc. (Discovery stayed to March 3,
2001).
European Patent Office, Opposition to Grant by Xxxxx, on EPO
Application No. 9191562.8 (Hearing scheduled for March 28,
2001).
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Section 3.10 Consents.
3.10(c)(x) Filing of preliminary and definitive proxy statements
pursuant to the Securities Exchange Act of 1934.
Shareholder consent required for issuance of shares, warrants
and reincorporation under this Agreement.
3.10(c)(y) The lease for NJ office space, dated July 16, 1997, amended
June 1, 1999, between the Company and Princeton South at Lawrenceville One,
requires written consent of landlord, which shall not be unreasonably withheld,
on merger or reincorporation.
The Agreement with RealNetworks, Inc., dated April 28, 2000,
requires the written consent of Real Networks, Inc. on merger or
reincorporation.
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Section 3.17 Absence of Changes Since June 30, 2000.
(a) The Company has entered into the Reorganization Agreement.
The Company has entered into the Shareholders Agreement, dated
July 18, 2000, by and among Princeton Video Image, Inc., Interactive Media,
S.A., and Princeton Video Image Europe, N.V.
The Company has entered into an Operating Agreement for
Revolution Company, L.L.C., a Delaware Limited Liability Company, with CBS
Technology Corporation and Core Digital Technologies, Inc., dated January 27,
2001. The Company has executed the Operating Agreement, and the Company
understands that the other members have approved the form of and are expected to
execute the Operating Agreement in the immediate future.
(c) The Company made a Preferred Stock Exchange Offer, dated June 13,
2000, which closed in August 2000, and the share exchange was completed in
September 2000.
Pursuant to the Stock Option Plan, each director of the Company
received an automatic grant of options on the first day of the Company's fiscal
year, with such options to vest on a schedule of 1/12 on the first day of each
month.
(d) Changes in employment arrangements, agreements, compensation of
officers:
As set forth above, on February 2, 2001, the Board of
Directors granted to the ten senior employees of the Company additional options
to purchase a total of 775,000 shares of Common Stock under the Plan, subject to
shareholder approval.
On February 2, 2001, the Board of Directors authorized the Company to
enter contracts of employment with its 10 senior employees. For those employees
currently employed under written agreements, the terms of the new agreements
will be substantially similar to the agreement now in effect. Those 4 employees
without written agreements will receive written agreements with terms and
conditions substantially similar to those agreements of other employees of
comparable seniority and responsibility. The new agreements will supersede any
agreement or arrangement now in effect. Of the 10 employees, the Chairman and
CEO will have agreements which run to February 1, 2004, unless extended. All
other of the above-referenced senior employees will receive agreements which run
to February 1, 2003, unless extended. The agreements will contain the Company's
customary severance provisions (requiring the Company to pay severance equal to
the employee's salary for 6 months or the balance of the term, whichever is
greater), should the employee be terminated without cause as defined in the
agreement, except that the agreement with each the Chairman and the CEO of the
Company will provide for severance in an amount equal to the salary payable for
the remaining term of employment or 2 years, whichever is greater.
On February 2, 2001, the Board of Directors authorized the increase of
the annual salary of the Chairman and the CEO of the Company, with the increase
in salary to commence as of February 2, 2001. The annual salary of the Chairman
is [CONFIDENTIAL TREATMENT REQUESTED], and the annual salary of the CEO is
[CONFIDENTIAL TREATMENT REQUESTED].
79
On February 2, 2001, the Board of Directors authorized the Company to
hire a Vice President of Business Affairs, with the hiring contingent upon the
consummation of the Second Closing. The prospective employee is to receive
[CONFIDENTIAL TREATMENT REQUESTED].
On February 2, 2001, the Board of Directors authorized the repricing to
$4.375 per share of all options held by officers, directors and employees with
an exercise price of $5.00 or more. Options as to which employees elect
repricing will become unvested and vesting, as provided in the Plan, will
commence on the date of repricing. The options held by directors will be subject
to the reduced exercise price without further action and without change to any
conditions or terms regarding the vesting thereof. No directors who are also
officers or employees hold options with an exercise price of $5.00 or more.
On December 20, 2000, the Board of Directors Compensation Committee
authorized the grant to Company employees of options to purchase 589,000 shares
of the Company's Common Stock under the Stock Option Plan.
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Section 3.18 Registration Rights.
The Company has granted registration rights in warrants to purchase
shares of its Common Stock held by Xxxxx & Company (580,000 shares) and
Barington Capital (20,000 shares).
The Company is negotiating as to whether the warrants to purchase
200,000 shares of the Company's Common Stock to be granted to Xxxxx & Company in
connection with the Reorganization Agreement will provide for registration
rights.
The Company will enter into a registration rights agreement upon the
closing of the transactions contemplated by the Reorganization Agreement; the
form of registration rights will be as attached to the Reorganization Agreement.
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Section 3.19 Certain Transactions. Officers and directors of the
Company or any of its subsidiaries with any direct or indirect interest in any
entity that does business with the Company or subsidiaries are as follows:
Xxxxxxx Senior, a Managing Director and Executive Vice President of Xxxxx &
Company and a Director of the Company; Xxxxxxx Xxxx, the President and a
principal shareholder of Presencia en Medios, S.A. de C.V. and a Director of the
Company; and Xxxx Xxxxxxxxx, President of PVR Securities, Inc. and a Director of
the Company.
Other transactions are as follows:
Nonrecourse Promissory Note dated July 31, 1997 of Xxxxx F Xxxxxxxx in
favor of the Company.
Pledge Agreement dated July 31, 1997 between the Company and Xxxxx F
Xxxxxxxx.
Nonrecourse Promissory Note dated July 31, 1997 of Xxxxxx X. XxXxxxxx
in favor of the Company.
Pledge Agreement dated July 31, 1997 between the Company and Xxxxxx X.
XxXxxxxx.
Nonrecourse Promissory Note in the amount of $122,920, dated December
22, 1997, of Xxxxx F Xxxxxxxx in favor of the Company.
Pledge Agreement dated December 22, 1997 between the Company and Xxxxx
F Xxxxxxxx.
Nonrecourse Promissory Note in the amount of $46,580, dated December
22, 1997, of Xxxxxx X. XxXxxxxx in favor of the Company.
Pledge Agreement dated December 22, 1997 between the Company and Xxxxxx
X. XxXxxxxx.
NOTHING DISCLOSED IN THIS EXHIBIT C SHALL ALTER, AMEND OR MODIFY THE
RESTRICTIONS UPON THE COMPANY AS SET FORTH IN SECTION 7 OF THE STOCK
AND WARRANT PURCHASE AGREEMENT.
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Exhibit D
Attach Form of Registration Rights Agreement
83
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of
February 4, 2001, by and among Princeton Video Image, Inc., a New Jersey
corporation (the "Company"), and PVI Holding, LLC , Delaware limited liability
company and a subsidiary of Cablevision Systems Corporation (together with its
successors and assigns, the "Investor").
PRELIMINARY STATEMENTS
A. The Company and the Investor have entered into the Stock and Warrant Purchase
Agreement, dated as of February 4, 2001 (the "Purchase Agreement"), pursuant to
which the Investor has acquired shares of Common Stock and Warrants.
B. In connection with its purchase of Common Stock and Warrants pursuant to the
Purchase Agreement, the Investor has requested that the Company grant the
registration rights set forth herein on the terms and conditions set forth in
Section 2 of this Agreement.
C. The Company has determined that it is advisable and in the Company's best
interest to grant the Investor the registration rights set forth herein on the
terms and conditions set forth in Section 2 of this Agreement and has agreed to
do so.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the terms
defined in this Section 1 shall have the meanings herein specified for all
purposes of this agreement, applicable to both the singular and plural forms of
any of the terms herein defined. Terms defined in the Preliminary Statements
shall have the meanings assigned to such terms therein.
"Agreement" means this Registration Rights Agreement.
"Board" means the Board of Directors of the Company.
"Common Stock" means the common stock, no par value, of the Company.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means any record or beneficial owner of the Company's
securities.
84
"Person" includes any natural person, corporation, trust, association,
company, limited liability company, partnership, joint venture and other entity
and any government, governmental agency, instrumentality or political
subdivision.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (1) all Common Stock or other equity
securities of the Company acquired on the date hereof or hereafter acquired by
the Investor; (2) all Common Stock issued or issuable upon exercise of the
Warrants by the Investor, and (3) any securities issued or issuable with respect
to the Common Stock or Warrants referred to in clauses (1) and (2) above by way
of a stock dividend or stock split or in connection with a combination of
shares, reclassification, recapitalization, merger or consolidation or
reorganization; provided, however, that such shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they (i) have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction; (ii) have not been sold
in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such Common Stock
are removed upon the consummation of such sale and the seller and purchaser of
such Common Stock receive an opinion of counsel for the Company, which shall be
in form and content reasonably satisfactory to the seller and buyer and their
respective counsel, to the effect that such Common Stock in the hands of the
purchaser is freely transferable without restriction or registration under the
Securities Act in any public or private transaction; or (iii) can not be sold in
any three month period (or any other relevant period under any amendment to Rule
144 made subsequent to the date hereof) pursuant to Rule 144 without regard to
any manner of sale or volume limitations.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act or any similar successor rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrants" means any and all warrants or options issued by the Company
to the Investor which are exercisable for the purchase of Common Stock.
2. Demand Registration Rights.
2.1 Grant of Demand Registration Rights. Subject to the terms
of this Agreement, at any time and from time to time, the Investor shall be
entitled to request registration under the Securities Act of at least 200,000
Registrable Securities then held by the Investor. Each such request for
registration must specify the number of Registrable Securities requested to be
registered and whether such registration is to be in
2
85
the form of an Underwritten Offering. The Investor shall not be entitled to
request that a Demand Registration be a shelf registration pursuant to Rule 415
under the Securities Act for a period of one year commencing from the date of
the Second Closing (as defined in the Purchase Agreement).
2.2 Selection of Underwriter(s). If the Investor elects to
have the offering of Registrable Securities pursuant to a Demand Registration be
in the form of an underwritten offering (an "Underwritten Offering"), the
Investor shall select and obtain the investment banker or investment bankers and
manager or managers for the offering , subject to the approval of the Company
not to be unreasonably withheld or delayed.
2.3 Priority on Underwritten Demand Registration. If a Demand
Registration is an Underwritten Offering and the managing underwriters advise
the Investor and the Company in writing that in their opinion the number of
Registrable Securities requested to be included in such offering exceeds the
number of Registrable Securities that can be sold therein without adversely
affecting the marketability of the offering, the Company will include in such
registration the number of Registrable Securities requested to be included that,
in the opinion of such underwriters, can be sold without adversely affecting the
marketability of the offering. Any reduction in the number of Registrable
Securities included in such Underwritten Offering shall be applied in a manner
that the percentage of reduction of such Registrable Securities shall be no
greater than the percentage of securities of Persons other than the Investor, as
such percentage reductions are determined in the good faith and judgment of the
Company. The Company shall not include, and shall not permit other holders of
its securities to include, any securities in such Demand Registration other than
securities of the same class or series as the Registrable Securities to which
the demand request pursuant to Section 2.1 related. If the aggregate number of
shares actually offered by the Investor with respect to such registration is
less than 75% of the aggregate number of shares such Investor initially
requested to be offered as a result of a reduction pursuant to this Section,
then such registration shall not count as a Demand Registration hereunder and
such Investor shall retain its rights hereunder with respect to the number of
Demand Registrations without a reduction as a result of such registration. The
Investor may abandon a Demand Registration at any time. An abandoned Demand
Registration shall not count as a Demand Registration and such Investor shall
retain its rights hereunder with respect to the number of Demand Registrations
without a reduction as a result thereof if such Investor, at its option, pays
all fees and expenses in connection with such abandoned registration other than
fees and expenses relating to any Registrable Securities that any Person other
than the Investor may have requested to be included in such abandoned
registration.
2.4 Limitations on Demand Registration. Notwithstanding any
other provision in this Agreement, (i) the Investor shall not be permitted to
make more than 6 requests for a Demand Registration pursuant to Section 2.1, and
(ii) the Company shall
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86
not be required to effect more than two Demand Registrations during any 12-month
period.
2.5 Postponement of Demand Registration by the Company. The
Company may postpone for up to 90 days the filing of a registration statement
for a Demand Registration if the Company has delivered a certificate to the
Investor stating that the Board, acting in good faith, has determined that
pursuance of such Demand Registration would be seriously detrimental to the
Company and its shareholders; provided, however, that in the event of any such
postponement, the Investor shall be entitled to withdraw the request for such
Demand Registration and, if such request is withdrawn, such request shall not
count as a Demand Registration hereunder; and provided, further, that the
Company may not exercise its rights under this Section 2.5 more than once in any
twelve-month period.
2.6 Special Audits. Notwithstanding any other provision of
this Agreement, the Company shall not be required to undergo or pay for any
special audit to effect any registration statement pursuant to Section 2, and if
such a special audit would be required in order to file or effect a registration
statement hereunder, the Company shall be entitled to delay the filing or
effectiveness of such registration statement until a reasonable period of time
following completion of such audit in the ordinary course of the Company's
business; provided, however, that the Company shall not be entitled to delay the
filing or effectiveness of such registration statement if the Investor shall
agree to pay for the cost of such audit.
3. Piggyback Registrations Rights.
3.1 Grant of Piggyback Registration Rights. Subject to the
terms of this Agreement, at any time at which the Company shall determine to
file a registration statement under the Securities Act (other than on Forms X-0,
X-0 or a registration statement on Form S-l covering solely an employee benefit
plan) in connection with the proposed offer and sale for money of any of its
securities, the Company agrees promptly to give written notice of its
determination to the Investor. Upon the written request of the Investor given
within 15 days after the receipt of such written notice from the Company, the
Company agrees to use its best efforts to cause any or all such Registrable
Securities, of which the Investor has so requested registration thereof, to be
included in such registration statement and registered under the Securities Act,
all to the extent requisite to permit the sale or other disposition of the
Registrable Securities to be so registered. All registrations of Registrable
Securities referred to in this Section 3 may be referred to as "Piggyback
Registrations."
3.2 Underwritten Piggyback Registration. If the registration
of which the Company gives written notice pursuant to Section 3.1 is for a
public offering involving an underwriting, the Company agrees to so advise the
Investor as a part of its written notice.
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87
3.3 Priority on Piggyback Registration. Notwithstanding any
other provision of this Section 3, if the managing underwriter of a Piggyback
Registration that is an underwritten distribution advises the Company and the
Investor in writing that, in its good faith judgment, the number of shares of
Registrable Securities and the other securities requested to be registered
exceeds the number of shares of Registrable Securities and other securities
which can be sold in such offering without adversely affecting the marketability
of the offering, then (i) the number of shares of Registrable Securities and
other securities so requested to be included in the offering shall be reduced to
that number of shares which in the good faith judgment of the managing
underwriter can be sold in such offering, and (ii) such reduced number of shares
shall be allocated among all participating Holders, in proportion, as nearly as
practicable, to the respective number of shares of Registrable Securities held
by such Holders at the time of filing the registration statement; provided,
however, that, in all events, the shares to be issued by the Company shall have
priority over the shares of Registrable Securities requested to be registered.
4. Registration Procedures. If and as often as the Company is
required by the provisions of Section 2 or Section 3 hereof to include shares of
Registrable Securities held by the Investor in a registration statement filed
under the Securities Act, the Company, at its expense and as expeditiously as
possible, agrees to:
4.1 Registration Statement; Period of Effectiveness. In
accordance with the Securities Act and all applicable rules and regulations,
prepare and file with the Commission a registration statement with respect to
such securities within 15 days of the date of any request for a Demand
Registration pursuant to Section 2.1 and use its best efforts to cause such
registration statement to become and remain effective for a period of 90 days
(or, if such registration statement has been filed on Form S-3 and the Investor
has indicated in its request for a Demand Registration that it is requesting a
shelf registration pursuant to Rule 415 under the Securities Act, for a period
of two years) and prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus contained therein
as may be necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete during such period
of time;
4.2 Underwriting Agreement. With respect to an Underwritten
Offering, the Company shall enter into one or more underwriting agreements,
engagement letters, agency agreements, or other agreements, as appropriate, and
take all other appropriate and reasonable actions as the managing underwriters
or the Investor shall reasonably request in order to expedite or facilitate such
Underwritten Offering and in such connection:
5
88
4.2.1. make such representations and warranties to
the Holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in comparable
underwritten offerings;
4.2.2. obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
managing underwriters) covering the matters customarily
covered in opinions requested in comparable underwritten
offerings and such other matters as may be reasonably
requested by such underwriters;
4.2.3. obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the underwriters, such letters to be
in customary form and covering matters of the type customarily
covered in "cold comfort" letters by independent accountants
in connection with comparable underwritten offerings;
4.2.4. if requested, provide the indemnification in
accordance with the provisions and procedures hereof to all
parties to be indemnified pursuant to said paragraph and, if
requested by the underwriters provide indemnification in form,
substance and scope as is customarily provided by issuers to
underwriters in comparable underwritten offerings; and
4.2.5. deliver such documents and certificates as may
be reasonably requested by the managing underwriters, if any,
to evidence the satisfaction of any customary conditions
contained in the underwriting agreement or other agreement
entered into by the Company;
4.3 Copies of Registration Statement, Prospectus, Other
Documents. Furnish to the Investor and to the underwriters of the securities
being registered such number of copies of the registration statement and each
amendment and supplement thereto, preliminary prospectus, final prospectus and
such other documents as such underwriters and Investor may reasonably request in
order to facilitate the public offering of such securities;
4.4 Blue Sky Qualification. Use its best efforts to register
or qualify the securities covered by such registration statement under such
state securities or blue sky laws of such jurisdictions as the Investor and
underwriters may reasonably request within 20 days prior to the original filing
of such registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction where it is
not so qualified, or to subject itself to taxation in any such jurisdiction;
6
89
4.5 Notification of Effectiveness and Filing. Notify the
Investor promptly after it shall receive notice thereof, of the date and time
when such registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
4.6 Preparation of Amendments and Supplements at Investor's
Request. Prepare and file with the Commission, promptly upon the request of the
Investor, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Investor, is required under
the Securities Act or the rules and regulations thereunder in connection with
the distribution of the Registrable Securities by the Investor;
4.7 Correction of Statements or Omissions. Prepare and file
promptly with the Commission, and promptly notify the Investor of the filing of,
such amendments or supplements to such registration statement or prospectus as
may be necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under the
Securities Act, any event has occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
4.8 Amendment of or Supplement to Non-Complying Registration
Statement or Prospectus. In case the Investor is required to deliver a
prospectus at a time when the prospectus then in circulation is not in
compliance with the Securities Act or the rules and regulations of the
Commission, prepare promptly upon request such amendments or supplements to such
registration statement and such prospectus as may be necessary in order for such
prospectus to comply with the requirements of the Securities Act and such rules
and regulations;
4.9 Stop Orders, Proceedings. Advise the Investor, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued; and
4.10 Inspection; Roadshows. Make available for inspection upon
request by the Investor, by any managing underwriter of any distribution to be
effected pursuant to such registration statement and by any attorney, accountant
or other agent retained by the Investor or any such underwriter, all financial
and other records, pertinent corporate documents and properties of the Company,
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by the Investor, underwriter, attorney,
accountant or agent in connection with such registration statement,
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and cause executive officers of the Company to participate in roadshow
presentations reasonably requested by the underwriters in connection with any
public offering.
5. Expenses. Except as set forth in Section 2.3, with respect to each
inclusion of shares of Registrable Securities in a registration statement
pursuant to Section 2 or Section 3 hereof, the Company agrees to bear all fees,
costs and expenses of and incidental to such registration and the public
offering in connection therewith; provided, however, that the Investor agree to
bear its pro rata share of any applicable underwriting discount and commissions.
The fees, costs and expenses of registration to be borne as provided in the
preceding sentence shall include, without limitation, all registration, filing,
listing, and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, fees and disbursement of counsel for the
underwriter or underwriters, if any, of the securities to be offered (if the
Company and/or the Investor are otherwise required to bear such fees and
disbursements), all legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdiction in which such
securities are to be registered or qualified, reasonable fees and disbursement
of one firm of counsel for the Investor to be selected by the Investor, and the
premiums and other costs of policies of insurance against liability arising out
of such public offering.
6. Underwriting Agreements. In the event any Demand Registration or
Piggyback Registration under this Agreement is an Underwritten Offering, the
right of the Investor to participate therein, and the inclusion of the
Investor's Registrable Securities therein, shall be subject to the Investor's
agreeing to enter into, together with the Company, an underwriting agreement
with the underwriter or underwriters selected by the Company for such
underwriting.
7. Indemnification.
7.1 Indemnification by Company. The Company hereby agrees to
indemnify and hold harmless pursuant to the provisions of this Agreement from
and against, and agrees to reimburse the Investor and any underwriter or broker
dealer acting for the Investor with respect to, any and all claims, actions
(actual or threatened), demands, losses, damages, liabilities, costs or expenses
to which the Investor may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a registration statement that
includes the Registrable Securities of the Investor, any prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
claim, action, demand, loss, damage, liability, cost or expense is caused by an
untrue statement or
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alleged untrue statement or omission or alleged omission so made in strict
conformity with written information furnished by the Investor specifically for
use in the preparation thereof.
7.2 Indemnification by the Investor. The Investor hereby
agrees to indemnify and hold harmless the Company, its officers, directors and
each Person who controls the Company within the meaning of the Securities Act,
from and against, and agrees to reimburse the Company, its officers, directors
and controlling Persons with respect to, any and all claims, actions, demands,
losses, damages, liabilities, costs or expenses to which the Company, its
officers, directors or such controlling Persons may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in a registration
statement that includes the Registrable Securities of the Investor, any
prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by the Investor
specifically for use in the preparation thereof. Notwithstanding the foregoing,
the Investor shall be obligated hereunder to pay no more than the net proceeds
realized by it upon its sale of Registrable Securities included in such
registration statement.
7.3 Indemnification Procedure. Promptly after receipt by a
party indemnified pursuant to the provisions of Section 7.1 or Section 7.2 of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim therefor
is to be made against the indemnifying party pursuant to Section 7.1 or Section
7.2, notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to an indemnified party otherwise than under this Section 7 and
shall not relieve the indemnifying party from liability under this Section 7
unless such indemnifying party is prejudiced by such omission. In case any
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to those available to the indemnifying party, the indemnified
party shall have the right to select separate counsel (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party). Upon the permitted assumption by the
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indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under Section 7.1 or Section 7.2 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs of investigation) unless: (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence; (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time; (iii) the indemnifying party and its counsel do not actively
and vigorously pursue the defense of such action; or (iv) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party shall be liable to an
indemnified party for any settlement of any action or claim without the consent
of the indemnifying party, and no indemnifying party may unreasonably withhold
its consent to any such settlement. No indemnifying party will 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 with respect to such claim or
litigation.
7.4 Contribution.
7.4.1 If the indemnification provided for in Section 7.1 or
Section 7.2 is held by a court of competent jurisdiction to be unavailable to a
party to be indemnified with respect to any claims, actions, demands, losses,
damages, liabilities, costs or expenses referred to therein, then each
indemnifying party under any such Section, in lieu of indemnifying such
indemnified party thereunder, hereby agrees to contribute to the amount paid or
payable by such indemnified party as a result of such claims, actions, demands,
losses, damages, liabilities, costs or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such claims, actions, demands, losses, damages,
liabilities, costs or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
the Investor shall be obligated to contribute pursuant to this Section 7.4 shall
be limited to an amount equal to the per share public offering price (less any
underwriting discount and commissions) multiplied by the number of shares of
Registrable Securities sold by the Investor pursuant to the registration
statement which gives rise to such obligation to contribute (less the aggregate
amount of any damages which the Investor has otherwise been required to pay in
respect
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of such claim, action, demand, loss, damage, liability, cost or expense or any
substantially similar claim, action, demand, loss, damage, liability, cost or
expense arising from the sale of such Registrable Securities).
7.4.2 No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution pursuant to this Section 7.4 from any person who was not guilty of
such fraudulent misrepresentation.
8. Reporting Requirements Under the Exchange Act. The Company
represents and warrants to the Investor that it meets the registrant eligibility
and transaction requirements for the use of Form S-3 for registration of the
sale of Registrable Securities by the Investor, and the Company shall file all
reports required to be filed by the Company with the Commission in a timely
manner so as to maintain such eligibility for the use of Form S-3. The Company
further agrees to furnish to the Investor such reports and documents filed by
the Company with the Commission as the Investor may reasonably request in
availing itself of an exemption for the sale of Registrable Securities without
registration under the Securities Act.
The Company acknowledges and agrees that the purposes of the
requirements contained in this Section 8 are to enable the Investor to comply
with the current public information requirement contained in paragraph (c) of
Rule 144 should the Investor ever wish to dispose of any of the securities of
the Company acquired by it without registration under the Securities Act in
reliance upon Rule 144 (or any other similar exemptive provision). In addition,
the Company agrees to take such other measures and file such other information,
documents and reports, as shall be required of it hereafter by the Commission as
a condition to the availability of Rule 144 (or any similar exemptive provision
hereafter in effect) and the use of Form S-3.
9. Shareholder Information. The Company may request the Investor to
furnish the Company with such information with respect to the Investor and the
distribution of such Registrable Securities of the Investor that is sought to be
effected pursuant to this Agreement and itself as the Company may from time to
time reasonably request in writing and as shall be required by law or by the
Commission in connection therewith, and the Investor agrees to furnish the
Company with such information.
10. Additional Registration Rights. The Company, at its discretion, may
grant registration rights, pari passu with the rights granted in Section 2 and
Section 3 of this Agreement, to persons who become holders of other securities
of the Company subsequent to the date of this Agreement, and shall not be
obligated to seek or obtain the consent of the Investor in order to do so;
provided, that the Company shall not permit other holders of its securities to
include any securities in a Demand Registration other than securities of the
same class or series as the Registrable Securities to which the demand request
pursuant to Section 2.1 related; and provided, further, that the granting of
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any such rights shall not conflict with or otherwise alter any rights granted to
Investor hereunder. If the Company intends to grant registration rights to any
other Person at any time, the Company shall first send a copy of the proposed
agreement with respect to such registration rights to the Investor as soon as
practicable prior to such grant, and the Company agrees that the Investor may,
at its option, agree to adopt the registration rights contained in the proposed
agreement in lieu of the registration rights contained herein for the
Registrable Securities.
11. Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
12. Standstill. The Investor and the Company each agrees, if requested
by the managing underwriter of an Underwritten Offering or any other
underwritten offering of securities by the Company for its own account, not to
offer, pledge, sell, contract to sell, grant any option for the sale of or
otherwise dispose of, directly or indirectly, any of the Registrable Securities
held by the Investor, or any other securities of the Company or any security or
instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock or other securities of the Company for a
period commencing 7 days prior to and ending 90 days following the effective
date of any registration statement pertaining to such Underwritten Offering or
such other underwritten offering, except (i) with respect to any Registrable
Securities or other equity securities of the Company included in such
registration or any equity securities required to be issued by the Company
pursuant to its existing contracts, stock options plans and warrants (including,
for the sake of clarity, the equity securities set forth in Exhibit K to the
Purchase Agreement) or (ii) with respect to any Registrable Securities or other
equity securities of the Company offered or sold by the Company under a private
placement in compliance with the Securities Act, provided that, in the case of
(ii), such offeree or purchaser agrees to be bound by the restrictions contained
herein to the extent that the Company is bound. The Company shall obtain similar
agreements from each of its officers and directors and the restrictions
contained herein shall be applied to the Investor only to the extent applied to
each such director and officer. The Company shall obtain similar agreements from
each future holder of registration rights and the restrictions contained herein
shall be applied to the Investor only to the extent applied to each such holder
of registration rights.
13. Miscellaneous; Termination of Rights.
13.1 Termination. Unless sooner terminated pursuant to the terms of
this Agreement, the obligations of the Company pursuant to Sections 2 and 3
hereof as to any Registrable Securities, and the Investor's restrictions under
this Agreement, shall terminate upon the sale or other disposition of all such
Registrable Securities by the Investor. In addition to the foregoing, the
obligations of the Company pursuant to this
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Agreement, other than the obligations set forth in Sections 5, 7 and 13, shall
terminate if the Investor notifies the Company in writing that it does not wish
to have its shares of Common Stock registered under this Agreement.
13.2 Waivers and Amendments.
13.2.1 With the written consent of the Investor, the
obligations of the Company to the Investor and the rights of the Investor under
this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time
or indefinitely), and with the same consent the Company may enter into a
supplementary agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of any
supplemental agreement or modifying in any manner the rights and obligations
hereunder or thereunder of the Investor and the Company; provided, however,
that, without the consent of the Investor, the Company may, from time to time,
amend this Agreement in any manner that, viewed in its entirety, is ameliorative
of, or provides the Investor with rights that are superior to or of greater
benefit to the Investor than, the rights that the Investor holds prior to the
date of any such amendment. Upon the effectuation of each such waiver, consent
or agreement of amendment or modification, the Company agrees to give prompt
written notice thereof to the Investor who has not previously consented thereto
in writing. Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally or by course of dealing, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this Section 13.2. Specifically, but without limiting the generality
of the foregoing, the failure of the Investor at any time or times to require
performance of any provision hereof by the Company shall in no manner affect the
right of the Investor at a later time to enforce the same. No waiver by any
party of the breach of any term or provision contained in this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
13.2.2. Notwithstanding the foregoing and without the consent of the
Investor, the rights and obligations of the Investor under this Agreement may be
transferred to any transferee to whom Registrable Securities are transferred;
provided, however, that: (i) such transfers are in compliance with all other
documents and agreements between the Company and the Investor; (ii) the Investor
provides the Company with written notice of the transfer of such Registrable
Securities at or prior to such transfer, advising the Company of the name and
address of the proposed transferee and identifying the securities to be
transferred; and (iii) such proposed transferee agrees in writing to be bound by
all of the provisions of this Agreement. In such event, such transferee shall be
added as a party to this Agreement, and the term "Investor" under this Agreement
shall also refer to such transferee.
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13.3 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes any and all prior or contemporaneous agreements or understandings of
the parties relating to the subject matter hereof. All such agreements shall
terminate and be of no further force or effect.
13.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns. If
any transferee of the Investor shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof
as if it were the Investor. The Investor (or a transferee designated in writing
to the Company by the Investor) shall act on behalf of the initial Investor and
all transferees thereof as the Investor for all purposes hereof.
13.5 Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first class postage prepaid, registered or certified mail,
13.5.1 If to the Investor, at c/o Cablevision Systems
Corporation, 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: General
Counsel, or at such other address as the Investor shall have furnished to the
Company in writing, with a copy (which shall not constitute notice) to Xxxxxxxx
& Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxx; or
13.5.2 If to the Company, at 00 Xxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President, or at such other address
as the Company shall have furnished to the Investor in writing, with a copy
(which shall not constitute notice) to Smith, Stratton, Wise, Xxxxx & Xxxxxxx,
000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxx X. Xxxxx.
Each such notice, request, consent and other communication shall, for
all purposes of the Agreement, be treated as being effective or having been
given when delivered, if delivered personally, or, if sent by mail, at the
earlier of its actual receipt or three (3) days after the same has been
deposited in a regularly maintained receptacle for the deposit of U.S. mail,
addressed and postage prepaid as aforesaid.
13.6 Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement
shall be given effect separately from the
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provision or provisions determined to be illegal or unenforceable and shall not
be affected thereby.
13.7 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not. Subject to the immediately preceding sentence, this Agreement
shall not run to the benefit of or be enforceable by any Person other than a
party to this Agreement and its successors and assigns.
13.8 Headings. The headings of the sections, subsections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.
13.9 Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
13.10 Consent to Jurisdiction. The parties hereto hereby irrevocably
submit to the exclusive jurisdiction of any New York State or Federal court
sitting in the State of New York, for any action or proceeding arising out of or
related to this Agreement, and the parties hereto hereby irrevocably agree that
all claims in respect of any such action or proceeding may be heard and
determined in New York State court or, to the extent permitted by law, in such
Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed personally or by a duly authorized representative
thereof as of the day and year first above written.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
PVI HOLDING, LLC
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
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Exhibit E
Attach Form of Shareholders Agreement
100
SHAREHOLDERS AGREEMENT
DATED AS OF FEBRUARY 4, 2001
By and Among
PRINCETON VIDEO IMAGE, INC.
PVI HOLDING, LLC
and
CERTAIN SHAREHOLDERS
NAMED HEREIN
101
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT ("Agreement") is made and entered
into as of February 4, 2001, by and among Princeton Video Image, Inc., a New
Jersey corporation (the "Company"); PVI Holding, LLC, a Delaware limited
liability company (the "Purchaser"); Xxxxx X. Xxxxxxxx, Chairman of the Board of
Directors of the Company ("Xxxxxxxx"), and Presencia en Medios, SA de CV, a
Mexican corporation ("Presencia", together with its affiliates and Xxxxxxxx, the
"Shareholders").
W I T N E S S E T H:
WHEREAS, the Company has entered into the Stock and Warrant
Purchase Agreement (the "Stock Purchase Agreement"), dated as of February 4,
2001, between the Company and the Purchaser pursuant to which the Company is
issuing and will issue to the Purchaser common stock, no par value, of the
Company (the "Common Stock") and certain warrants to purchase Common Stock of
the Company (the "Warrants");
WHEREAS, the Stock Purchase Agreement also contemplates that a
designee of Purchaser shall be named to the Company's Board of Directors and
that the Company re-incorporate in the State of Delaware;
WHEREAS, the Company and the Shareholders believe it to be in
their best interests that the transactions contemplated by the Stock Purchase
Agreement, including the issuance of the Common Stock and Warrants to the
Purchaser, the designation of the Purchaser's designee on the Company's Board of
Directors and the re-incorporation of the Company in Delaware, be approved;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Certain Definitions
As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
102
"Board" shall mean the Board of Directors of the Company in
office at the applicable time.
"Expiration Date" shall mean the later of (i) the third
anniversary date of the issuance of the Warrant or (ii) December 31, 2004.
"Lien" shall mean any lien, pledge, security interest, claim,
third party right or other encumbrance.
"Person" shall mean an individual, corporation, limited
liability company, partnership, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity that may be
treated as a person under applicable law.
"Proposal Notice" shall have the meaning specified in Section
2.2.
"Shareholders Meeting" shall have the meaning specified in
Section 4.1(a).
"Subject Shares" shall have the meaning specified in Section
4.1(a).
"Shares" shall mean any shares of Common Stock issued and
outstanding from time to time.
"Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place in trust
(voting or otherwise), transfer by operation of law (other than by way of a
merger or consolidation of the Company) or in any other way encumber or dispose
of, directly or indirectly and whether or not voluntarily, any Shares.
"Transferee" shall have the meaning specified in Section 2.1.
ARTICLE II
Certain Restrictions on Transfers
2.1 Xxxxxxxx Restrictions. (a) Until the Expiration Date,
Xxxxxxxx shall not, directly or indirectly, Transfer Shares to any Person (any
Person in whose favor a Transfer of Shares is made, and all subsequent
transferees of any such Person, regardless of the method of Transfer, being
referred to collectively as "Transferees" and individually as a "Transferee")
without the prior written consent of the Purchaser, except for:
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(i) Transfers of Shares, in one or a series of transactions
that, in the aggregate, do not exceed the greater of:
(A) the number of Shares that are 5% of the number of
Shares beneficially owned by Xxxxxxxx on the date hereof; and
(B) the number of Shares, the net proceeds of which
(after brokerage commissions) are used entirely for the
repayment of the $475,000 and $122,920 nonrecourse promissory
notes, dated July 31, 1997 and December 22, 1997, respectively
plus interest, owed by Xxxxxxxx to the Company, plus the
number of shares the net proceeds of which (after brokerage
commissions) is equal to $1,000,000;
(ii) any Transfer by will, trust, intestacy laws or the laws
of descent or survivorship; or
(iii) any Transfer by the laws of community property or
otherwise pursuant to a court order upon the divorce of such
Shareholder.
2.2 Presencia Restrictions. The Purchaser and Presencia hereby
agree with each other that, for so long as the Purchaser, together with its
affiliates, continues to hold at least 75% of the Original Investment (as
defined in the Stock Purchase Agreement), Presencia desires to Transfer in a
transaction or series of transactions any Shares to any other Person, Presencia
shall first notify the Purchaser in writing (a "Proposal Notice") at least 30
but not more than 60 days prior to the proposed date of Transfer of the
possibility of such a transaction and the number of Shares proposed to be
Transferred; provided, however, that Presencia need not provide a Proposal
Notice to the Purchaser in relation to any such Transfers to its affiliates (as
defined under Rule 405 of the Securities Act of 1933, as amended) or, if such
affiliate is an individual, any such affiliate's immediate family (meaning such
affiliate's spouse, parents, children, adopted children, stepchildren and
grandchildren), trusts solely or primarily for the benefit of such individual or
such individual's immediate family members, and corporations, partnerships,
limited liability companies or other entities in which such individual or such
individual's family members and/or trusts are the majority equity holders as the
case may be, if and only if such transferee shall have, prior to such Transfer,
executed and delivered an agreement, in form and substance reasonably
satisfactory to the Purchaser, agreeing to be bound by the terms of this
Agreement to the extent that Presencia is bound. Following the Purchaser's
receipt of a Proposal Notice, Presencia shall discuss with the Purchaser the
possibility of effecting such a transaction with the Purchaser. If the Purchaser
wishes to pursue such a transaction and is capable of completing such a
transaction, then, for a period of 30 days after the Purchaser's receipt of the
Proposal Notice (or such shorter period if the Purchaser responds in writing
that it is not interested in pursuing such a transaction), Precenia shall
negotiate in good faith and exclusively with the Purchaser to
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determine whether it is possible to agree to such a transaction with the
Purchaser but shall not be obligated to enter into any agreement with the
Purchaser to do so. Presencia shall be free to negotiate and to initiate and
hold discussions with other potential purchasers at any time before the Proposal
Notice or after the expiration of such 30-day or shorter period and may agree to
enter into such a transaction at any time after the expiration of such 30-day or
shorter period even if such transaction has a lower value to the Shareholder
than any transaction proposed by the Purchaser. The Purchaser agrees to keep
confidential the fact that Presencia is considering effecting such a
transaction, the possible terms thereof and any confidential information
obtained by the Purchaser in pursuing negotiations contemplated by this Section.
Notwithstanding anything in this Section 2.2 to the contrary, Presencia shall
not be required to provide a Proposal Notice with respect to the proposed
Transfers, in a single transaction or a series of related transactions, that in
the aggregate represent less than 5% of the outstanding Common Stock on the date
hereof.
ARTICLE III
Legend
All Shareholders agree that any certificates evidencing Shares
subject to this Agreement shall be stamped or endorsed with a legend in
substantially the following form; provided, that the Company shall upon
termination of this Agreement promptly upon request deliver a replacement
certificate not containing the legend below in exchange for the legended
certificate:
THE TRANSFER OF THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS
SET FORTH IN A SHAREHOLDERS AGREEMENT DATED AS OF FEBRUARY 4, 2001
AMONG THE COMPANY AND CERTAIN SHAREHOLDERS NAMED THEREIN, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND
MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY.
ARTICLE IV
Voting Agreements
4.1 Agreement to Vote Subject Shares in Favor of Transactions
Contemplated by Stock Purchase Agreement.
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(a) Voting. For so long as this Agreement is in effect, at any
meeting of shareholders of the Company, however called, including any adjourned
or postponed meeting (a "Shareholders Meeting"), and in any action by consent of
the shareholders of the Company or in any other circumstances upon which a vote,
consent or other approval is sought, each Shareholder shall vote (or cause to be
voted), or, if applicable, give consent or approval with respect to, all of the
Shares that such Shareholder has the right to vote (the "Subject Shares") in
favor of approval of the transactions contemplated by the Stock Purchase
Agreement, including the issuance of Common Stock and the Warrants to the
Purchaser and the re-incorporation of the Company to the State of Delaware. Any
such vote shall be cast or consent shall be given for purposes of this Section
4.1 in accordance with such procedures relating thereto as shall ensure that it
is duly counted for purposes of determining that a quorum is present and for
purposes of recording in accordance herewith the results of such vote or
consent.
(b) Covenants. From and after the date of this Agreement until
the completion of the Shareholders Meeting called for the purpose of voting in
favor of the transactions contemplated by the Stock Purchase Agreement, each
Shareholder agrees not to:
(i) sell, transfer, exchange, pledge, assign,
hypothecate, encumber, tender or otherwise dispose of, or enter into
any contract, option or other arrangement with respect to the sale,
transfer, exchange, pledge, assignment, hypothecation, encumbrance,
tender or other disposition of the Subject Shares; provided that
Presencia may Transfer its Subject Shares to its affiliates (as defined
under Rule 405 of the Securities Act of 1933, as amended) or, if such
affiliate is an individual, any such affiliate's immediate family
(meaning such affiliate's spouse, parents, children, adopted children,
stepchildren and grandchildren), trusts solely or primarily for the
benefit of such individual or such individual's immediate family
members, and corporations, partnerships, limited liability companies or
other entities in which such individual or such individual's family
members and/or trusts are the majority equity holders as the case may
be, if and only if such transferee shall have, prior to such Transfer,
executed and delivered an agreement, in form and substance reasonably
satisfactory to the Purchaser, agreeing to be bound by the terms of
this Agreement to the extent that Presencia is bound;
(ii) grant any proxies with respect to any Subject
Shares,
(iii) deposit any such Subject Shares into a voting
trust or enter into a voting or option agreement with respect to any of
such Subject Shares;
(iv) directly or indirectly, solicit or encourage
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide
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any confidential information to, or have any discussions with, any
person relating to, an Acquisition Proposal (as defined in the Stock
Purchase Agreement); or
(v) take any action which would make any
representation or warranty of Shareholder herein untrue or incorrect or
prevent, burden or materially delay the consummation of the
transactions contemplated by the Stock Purchase Agreement and this
Agreement.
(c) Representations and Warranties of each Shareholder. Each
Shareholder represents and warrants to the Purchaser that:
(i) Capacity; No Violations. The Shareholder has the
necessary power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Shareholder, and constitutes a
valid and binding agreement of the Shareholder enforceable against the
Shareholder in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and such execution and delivery and performance by
the Shareholder of this Agreement will not (A) constitute a breach or
violation of, or a default under, or cause or allow the acceleration or
creation of a Lien (with or without the giving of notice, passage of
time or both) pursuant to, any law, rule or regulation or any judgment,
decree, order, governmental or non-governmental permit or license, or
any material contract of the Shareholder or to which the Shareholder or
the Shareholder's properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the certificate of
incorporation, bylaws or other organizational documents of the
Shareholder, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental or
non-governmental permit or license or the consent or approval of any
other party to any material contract of the Shareholder or to which the
Shareholder or the Shareholder's properties is subject or bound.
(ii) Subject Shares. The Shareholder is the record
holder of, has sole voting and dispositive power over, and has good and
valid title to, the Subject Shares free and clear of all Liens (other
than any Lien created by this Agreement and, in the case of Xxxxxxxx,
the pledges of Subject Shares to the Company to secure the promissory
notes referred to in Section 2.1(i)(B)) and, except as provided by this
Agreement, there are no options or rights to acquire or proxies, voting
trusts or voting agreements relating to the Subject Shares to which
Shareholder is a party.
(d) Adjustments; Additional Shares. In the event (i) of any
stock dividend, stock split, recapitalization, reclassification, subdivision,
combination or
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exchange of Shares on, of or affecting the Subject Shares, or (ii) any
Shareholder shall become the beneficial owner of any additional Shares or other
securities of the Company, then such Shares held by Shareholder immediately
following the effectiveness of the events described in clause (i) or Shareholder
becoming the beneficial owner of the Shares or other securities, as described in
clause (ii), shall become Subject Shares hereunder.
4.2 Agreement to Vote Subject Shares in Favor of the
Purchaser's Designee. For so long as the Purchaser, together with its
affiliates, continues to hold at least 75% of the Original Investment (as
defined in the Stock Purchase Agreement), at any Shareholders Meeting at which
directors are to be elected, including any adjourned or postponed meeting, and
in any action by consent of the shareholders of the Company or in any other
circumstances upon which a vote, consent or other approval is sought, each
Shareholder shall vote (or cause to be voted), or, if applicable, give consent
or approval with respect to, all Subject Shares in favor of approval of the
Purchaser's designee for election to the Board. Any such vote shall be cast or
consent shall be given for purposes of this Section 4.2 in accordance with such
procedures relating thereto as shall ensure that it is duly counted for purposes
of determining that a quorum is present and for purposes of recording in
accordance herewith the results of such vote or consent.
ARTICLE V
Miscellaneous
5.1 Amendment; Waiver. This Agreement may be amended only by a
written instrument duly executed by each party hereto. No failure by any party
to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon
breach thereof shall constitute a waiver of any such breach or of any other
covenant, duty, agreement or condition, any such waiver being effective only if
contained in a writing executed by the waiving party.
5.2. Counterparts. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
5.3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.4. Consent to Jurisdiction. In connection with any suit,
claim, action or proceeding arising out of this Agreement: each party hereby
consents to the in
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personam jurisdiction of the United States federal courts and New York state
courts located in New York, New York; each party agrees that service in the
manner set forth in Section 5.5 hereof shall be valid and sufficient for all
purposes; and each party agrees to, and irrevocably waives any objection based
on forum non conveniens or venue not to, appear in any United States federal
court or New York state court located in New York, New York.
5.5. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered in person, by cable, facsimile, telegram or telex or by registered
or certified mail (postage prepaid, return receipt requested) if:
if to the Company:
00 Xxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Purchaser:
c/o Cablevision Systems Corporation
0000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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if to Xxxxxxxx:
c/o the Company
00 Xxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to Presencia:
Palmas #000-000
Xxxxxx XX 00000
Xxxxxx
Attention: Xxxxxxx Xxxx
with a copy to:
Fried Xxxxx Xxxxxx Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
5.6 Integration. This Agreement, the Stock Purchase Agreement
(including the Exhibits thereto) and the documents, certificates and instruments
referred to herein constitute the entire agreement and supersede all prior
agreements and understandings between the parties with respect to its subject
matter. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to its subject matter other
than those expressly set forth or referred to herein.
5.7 Severability. If any term or provision of this Agreement
or any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in part, whether generally or in any particular
jurisdiction, such provision shall be deemed
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amended to the extent, but only to the extent, necessary to cure such
invalidity, illegality or unenforceability, and the validity, legality and
enforceability of the remaining provisions, both generally and in every other
jurisdiction, shall not in any way be affected or impaired thereby.
5.8. Assignment. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, executors and other
legal representatives and permitted assigns of the parties hereto. This
Agreement and the rights hereunder shall not be assignable or transferable by
the Company or the Shareholders without the prior written consent of the other
parties hereto.
5.9 Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
5.10. Further Assurances. From time to time, as and when
requested by any party hereto and without further consideration, the other
parties shall execute and deliver, or cause to be executed and delivered, all
such documents and instruments and shall take, or cause to be taken, all such
further or other actions, as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
5.11. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person, other than the parties and their respective permitted successors and
assigns, any right, benefit or remedy of any nature or kind whatsoever under or
by reason of this Agreement.
5.12 Injunctive Relief. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies that it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth above.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
PVI HOLDING, LLC
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
SHAREHOLDERS:
/s/ Xxxxx X. Xxxxxxxx
---------------------------------
XXXXX X. XXXXXXXX
PRECENSIA EN MEDIOS, SA de CV
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
Title: Director General
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Exhibit F-1
Attach Form of License Agreement
113
[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
PRINCETON VIDEO IMAGE, INC.
L-VIS(TM) SYSTEM LICENSE AGREEMENT
This Agreement is made this 4th day of February, 2001 by and between Princeton
Video Image, Inc. ("PVI") and Cablevision Systems Corporation ("Cablevision").
1. DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:
1.1 "Additional Units" has the meaning assigned to such term in Section
2.8(b).
1.2 "Advertiser" means any Third Party for which an insertion of an
Electronic Image is made by Licensees for consideration in any form; provided,
however, such shall not be deemed to include cable television subscribers solely
by virtue of their payment of cable subscription fees.
1.3 "Affiliate," with respect to any person or Company, shall mean any
person or Company controlled by such first person or Company. For these
purposes, "control" shall refer to (a) the possession, directly or indirectly,
of the power to direct the management, policies or television operations of a
person or Company, whether through the ownership of voting securities, by
contract or otherwise, or (b) the ownership, directly or indirectly, of at least
50% of the voting securities or other ownership interest of a Company. For
purposes of this Agreement, National Sports Partners (or its affiliate which
operates the national "Fox Sports Net") shall be considered to be an Affiliate
of Cablevision.
1.4 "Company" means any form of organization, entity or business,
whether or not conducted for profit.
1.5 "Documentation" means all operator and user manuals, training
materials, guides, specifications and other materials created or owned by PVI
and provided to licensees generally to use and operate the L-VIS(TM) System.
1.6 "Editing Agent" means any individual or Company that is responsible
for actual, physical manipulation of the L-VIS(TM) System in order to make
insertions of Electronic Images.
1.7 "Electronic Image" means an image that is electronically inserted
into Telecasts through use of the L-VIS(TM) System.
1.8 "Enhancements" has the meaning assigned to such term under Section
3.4 (a).
114
1.9 "Equipment" means the computer hardware and other equipment
included in the L-VIS(TM) System, as identified on all Schedules B as may be
executed by the parties from time to time pursuant to Section 2.8 of this
Agreement.
1.10 "Equipment Fee" means PVI's direct cost for the Equipment (as
reasonably determined by PVI) from time to time.
1.11 "General Improvements" means all material revisions, updates,
upgrades and other modifications to the Software included in the L-VIS(TM)
System from time to time, and the Equipment embodying and Documentation with
respect to same, that PVI generally makes available to licensees without charge
(other than reimbursement of PVI's reasonable expenses and/or charges for the
Equipment).
1.12 "Initial Unit" means the one L-VIS(TM) System that PVI is
licensing to Licensees effective upon the date on which the Term commences,
pursuant to this Agreement.
1.13 "Licensed Affiliates" means any present and future Affiliate of
Cablevision so long as it remains an Affiliate of Cablevision and agrees in
writing to be bound by the terms and conditions of this Agreement.
1.14 "Licensees" means Cablevision and its Licensed Affiliates.
1.15 "Licensed Network" means a then current television network
Affiliate of Cablevision. Current examples include Bravo Network, American Movie
Classics, and MSG Network.
1.16 "Licensed Telecast" means the Telecast of any event or content
other than (i) Telecasts, intended for exclusive or primary distribution within
a specified territory outside the Territory as to which PVI has entered or
enters into an exclusive license, of events that originate within such specified
territory without the consent of the holder of such exclusive license or (ii)
Telecasts of content with respect to which Cablevision or a Licensed Affiliate
is not the primary rights holder, which is both (a) to be disseminated on a
Network not owned or controlled by Cablevision or a Licensed Affiliate and (b)
distributed by a System Operator other than Cablevision or a Licensed Affiliate.
1.17 "L-VIS(TM) System" means the Equipment, the Software, the
Documentation and the General Improvements, modifications or improvements
therein or derivatives thereof which, collectively allow real-time or
post-production electronic insertion of Electronic Images into Telecasts in
which video is inserted and executed "upstream", prior to distribution of the
program to individual, or groups of, viewers. For the avoidance of doubt,
Schedule A describes certain technology and functionality which is included as
part of the L-VIS System and certain other technology and functionality which is
specifically excluded from the meaning of the L-VIS System.
1.18 "Network" shall mean a broadcast channel for the dissemination of
video programming content through a television system, cable system, satellite
system or other such similar broadcasting system.
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1.19 "Revenues" means all of the consideration that Licensees receive,
from Advertisers attributable to the use of the Units licensed to Licensees
hereunder, including without limitation advertising fees, premiums, user
charges, fees, and up-front payments (to the extent non-refundable). If the
exploitation of the Units licensed to Licensees hereunder is sold in combination
with other goods or services, Licensees shall, in good faith, reasonably
allocate the appropriate portion of such consideration as Revenue.
1.20 "Revenue Sharing Rate" means
[CONFIDENTIAL TREATMENT REQUESTED]
1.21 "Software" means the computer software, in object code form,
included in the L-VIS(TM) System as of the date of the shipment of a Unit, and
all General Improvements made subsequent to the date of this Agreement, if any.
1.22 "System Operator" shall mean an entity providing a system for
distributing Networks to end users, such as the Cablevision cable distribution
system.
1.23 "Telecast" means the dissemination of audio-visual content via
television transmission (whether broadcast, narrow-cast, cable, satellite,
closed circuit or otherwise) and, only for purposes of this Agreement, the term
shall specifically include distribution of audio-visual content primarily
through movie theaters. All other means of transmitting content (including,
without limitation, primarily through the Internet or any similar or successor
means) shall be expressly excluded from the definition of Telecast and the scope
of Licensee's license hereunder.
1.24 "Term" means the term of this Agreement, which shall commence on
the date first written above.
1.25 "Territory" means the United States of America, its territories
and possessions, and Canada.
1.26 "Third Party" means any person or Company who or which is neither
a party nor an Affiliate of a party.
1.27 "Trademarks" means all trademarks or trade names that PVI uses,
from time to time, with respect to the L-VIS(TM) System.
1.28 "Unit" means one complete L-VIS(TM) System. "Units" means the
Initial Unit and the Additional Units (as defined herein), if any,
collectively.
2. LICENSE AND LEASE GRANTS.
2.1 Grant of L-VIS(TM) System License. Subject to the terms and
conditions set forth in this Agreement (including, without limitation, Section
2.2), PVI hereby grants to Cablevision
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and its Licensed Affiliates a non-exclusive, non-transferable license to use the
L-VIS System, including, without limitation, the Software, Equipment,
Documentation and General Improvements and any technology or know-how that is
owned or controlled by PVI and is necessary or useful for the exploitation
thereof, solely for combined use as an L-VIS(TM) System and in connection with
the Telecast of Licensed Telecasts during the Term. Licensees shall use the
L-VIS(TM) System for their own use or for the use of other Licensees. Licensees
shall not use the L-VIS(TM) System to provide services to non-Licensees.
2.2 Reservation of Rights.
(a) All rights and licenses not expressly granted in Sections
2.1 and 2.14 are hereby expressly reserved by PVI.
(b) Further, notwithstanding the non-exclusive license granted
to Licensees in Section 2.1, Licensees acknowledge and agree that: (i) PVI has
specifically reserved the right to use the Software, Equipment and the
Trademarks in conjunction with its and/or Third Parties' use of the L-VIS(TM)
System in connection with the Telecast within the Territory of content or
events, whether or not Licensed Telecasts, without any obligation to compensate
Licensees in connection with such use; and (ii) Licensees shall have no right to
use the L-VIS(TM) System in connection with the Telecast of content or events
that are not Licensed Telecasts unless PVI or a Third Party licensee of PVI
expressly grants Licensees such right.
2.3 Restrictions on Use. In addition to other restrictions and
limitations which may be imposed by this Agreement:
(a) Unless otherwise provided herein, Licensees shall not: (i)
make or distribute to others copies of the Software or the Documentation aside
from back-up copies of the Software; (ii) modify, adapt, merge, translate,
decode, reverse engineer, decompile, disassemble or create derivative works
based upon the Software, the Documentation, the Equipment, any General
Improvement or any other part of the L-VIS(TM) System; (iii) use the L-VIS(TM)
System or any part thereof in the construction, development, maintenance,
running or execution of any application other than the Software; or (iv) market
the Software, the Equipment, any General Improvement or the L-VIS(TM) System, or
any part thereof, other than in connection with the insertion of Electronic
Images into Licensed Telecasts, in accordance with the terms and conditions of
this Agreement.
(b) Unless agreed to by PVI in advance, in writing, or
otherwise permitted in accordance with the other terms of this Agreement,
Licensees shall not: (i) sublicense, lease, sell, assign, rent or otherwise
transfer to others, or otherwise dispose of, the Software, the Documentation,
the Equipment, any General Improvement or any other part of the L-VIS(TM)
System; (ii) use the L-VIS(TM) System for any purpose other than in connection
with the Licensed Telecasts within the Territory; or (iii) transfer, assign,
relicense or otherwise dispose of its rights under this Agreement.
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2.4 Compliance with Standards.
(a) Licensees shall use, and shall cause any Editing Agent to
use, the L-VIS(TM) System only in accordance with PVI's reasonable and customary
continuity standards, as may be in effect from time to time during the Term.
(b) Licensees acknowledge that any use of the L-VIS(TM) System
in violation of applicable laws or regulations and commonly recognized
governmental, community or industry standards would cause severe and irreparable
injury to PVI's reputation and legitimate business interests. Notwithstanding
anything contained in this Agreement to the contrary, and in addition to
Licensee's obligations under 2.4(a), Licensees shall not knowingly use, and it
shall not allow any Editing Agent to knowingly use, the L-VIS(TM) System in any
manner inconsistent with any applicable laws or regulations and any commonly
recognized governmental, community or industry standards, or in a manner that
has not been approved by the rightsholders, sponsors, advertisers and
broadcasters of the Licensed Telecast in question.
(c) During the Term, Licensees shall maintain, at their sole
cost and expense, advertising injury insurance (or its equivalent in the
Territory) with such coverage and such limits as are customarily maintained by
television advertisers in the Territory.
2.5 Obligations of Licensees.
(a) Licensees and/or their respective designee(s) shall be
solely responsible for selling the available Electronic Image capacity for
Licensed Telecasts. Licensees and PVI will cooperate and coordinate, from time
to time, as the parties deem reasonably appropriate to develop and implement
Licensee's commercialization plan.
(b) Licensees and/or their respective designee(s) shall be
responsible for obtaining and maintaining any governmental authorizations
(including, without limitation, any equipment export or import licenses), and
for negotiating any arrangements with Telecast rightsholders, necessary to
enable Licensees to use the L-VIS(TM) System as contemplated in this Agreement,
including, without limitation, obtaining any and all required rights and
permissions (all such authorizations, arrangements, rights and permissions,
collectively, "Required Permissions").
(c) It is understood that Licensees may have arrangements with
one or more Editing Agents for Licensed Telecasts. The license rights granted by
PVI to Licensees to use the L-VIS(TM) System shall be extended to such Editing
Agents solely for their use in connection with Licensed Telecasts and the
provisions of Sections 2.3, 2.4, 2.6, 2.12, 2.14(b), 3.7, 3.8, 4.2, 4.4 and 5
shall apply to such Editing Agent. Each Licensee shall be responsible for
compliance by its Editing Agents with such terms.
(d) Subject to the other terms of this Agreement, Licensees
shall maintain complete editorial control over the use of the L-VIS(TM) System
in connection with Licensed Telecasts, including the right to determine the
location, content and appearance of the Electronic Images.
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2.6 Inspection Right. PVI shall have the right to inspect, at its own
expense and at reasonable times and following reasonable notice, all sites where
the L-VIS(TM) System is being used pursuant to this Agreement, in order to
verify that such use complies in all respects with the requirements under this
Agreement.
2.7 Good Faith Incidental Telecasts. The parties acknowledge that
Telecasts and related distribution of content cannot be made to conform exactly
to geographic boundaries or distribution methods. As a result, a Licensee's good
faith use of the L-VIS(TM) System pursuant to the license granted in Section 2.1
may result in the Telecast of Electronic Images in geographic areas not
permitted under the definition of Licensed Telecasts. No such good faith,
incidental Telecast by a Licensee shall constitute a breach of any obligation of
the Licensee or Licensees under this Agreement, and the Licensees shall not be
required to make any payment to or otherwise separately compensate PVI or any
Third Party on account thereof.
2.8 Lease of Equipment; Additional Units.
(a) Subject to the terms and conditions set forth in this
Agreement, PVI hereby leases to such Licensee as Cablevision shall designate the
Equipment which embodies the Initial Unit solely for use in conjunction with
Licensees' use of the L-VIS(TM) System and solely in connection with Licensed
Telecasts. The Equipment comprising the Initial Unit will be described and
identified by serial number on a Schedule B that the parties will execute in
conjunction with delivery of the Initial Unit.
(b) During the Term and so long as Licensees are not in
material default under any of the terms or conditions of this Agreement, any
Licensee may request, from time to time, that PVI lease to such Licensee
additional Units. PVI shall exercise reasonable commercial efforts to provide
Licensees with the number of additional Units (such additional Units, the
"Additional Units") that Licensees request. Delivery of Additional Units shall
be made in accordance with Section 2.9. Additional Schedules B shall be executed
by the parties, from time to time, for all Additional Units delivered to
Licensees pursuant to this Section 2.8(b).
2.9 Delivery of Unit(s); Risk of Loss; Casualty Insurance.
(a) PVI shall use commercially reasonable efforts to deliver
the Initial Unit as soon as practicable after the date of this Agreement. In
connection with the delivery of any Additional Units, PVI shall provide
Licensees with written notice of a firm delivery date at least 30 days prior to
such delivery. PVI shall ship the Initial Unit and any Additional Unit(s),
F.O.B. PVI's facility, Lawrenceville, New Jersey, USA, to the appropriate
Licensee at the delivery location designated therefor on the applicable Schedule
B. The Licensee shall be responsible for all freight expenses and any and all
import duty or tax assessed by the delivery location country relating to such
shipment. PVI shall be responsible for delivery, set-up and testing the
Equipment on-site.
(b) Upon delivery of the Initial Unit or the Additional
Unit(s), as the case may be, to a Licensee, the Licensee shall assume all risks
of loss, theft, destruction of and damage to the Unit(s) so delivered unless the
loss or damage arises from the actions of PVI employees or contractors.
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2.10 Training.
(a) PVI shall provide training in the use and operation of the
L-VIS(TM) System to members of Licensee's technical staff or Editing Agents, as
Licensees may reasonably request from time to time, to enable such individuals
to use and operate the L-VIS(TM) System properly. The dates and locations for
such training shall be as mutually agreed upon by the parties. Licensees shall
pay PVI for PVI's direct costs (as reasonably determined by PVI) to provide such
training, including labor costs, travel, meal and lodging expenses of any PVI
personnel in connection with providing such training.
(b) In addition, for a period not to exceed 30 days after each
delivery of a Unit as reasonably requested by a Licensee, PVI shall make one of
its representatives available to such Licensee at a single location to provide
technical assistance in connection with the installation and operation of such
Unit, should such Licensee so request. PVI shall provide such assistance at no
additional cost to such Licensee, except that such Licensee shall be responsible
for all expenses incurred by the PVI representative for travel, meals and
lodging in connection with providing such assistance.
2.11 Maintenance Support.
(a) Each Licensee shall maintain the Unit(s) it receives in
good operating condition, at its sole expense. PVI shall make its technical
personnel available during PVI's normal business hours for telephone
consultations with Licensees' technical staff at no charge. In the event that
on-site technical support is required by a Licensee during the Term, PVI shall
provide such support at PVI's direct costs (as reasonably determined by PVI) for
such services, including expenses of PVI's personnel for travel, meals and
lodging incurred in connection with providing such services.
(b) At a Licensee's request, PVI shall use reasonable
commercial efforts to make its technical personnel available to such Licensee,
at no charge to such Licensee, during non-business hours for emergency telephone
consultations during the Telecast of a specific event.
(c) At a Licensee's request, PVI will provide its technical
personnel to render services necessary to move or operate Unit(s) for a
Licensee's benefit. Such services shall be provided at PVI's direct costs for
such services (as reasonably determined by PVI); provided, however, that if PVI
provides Enhancements it shall be compensated for such services as provided
under Section 3.4.
(d) Notwithstanding any provision contained in this Agreement
to the contrary, after the initial Term, PVI shall only be obligated to provide
maintenance, training and support services under this Agreement if it then
provides support for L-VIS Systems for customers and licensees generally.
2.12 Ownership.
(a) Licensees acknowledge and agree that PVI owns the
L-VIS(TM) System, including all of the Software, Equipment, Documentation and
any General Improvements, and
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all copies thereof, all updates and modifications thereto made by or on behalf
of PVI and all right, title and interest in and to all patents, patent rights,
copyrights, Trademarks, service marks, trade secrets and confidential or
proprietary information relating thereto. Except as specifically set forth in
Section 2.1 of this Agreement, Licensees acknowledge that, by virtue of this
Agreement, Licensees do not have, and will not obtain, any right, title or other
proprietary interest in or to any of the foregoing, except as may be provided
under the Joint Collaboration and License Agreement to be entered by the
parties.
(b) If PVI supplies Licensees with reasonable labels, plates
or other markings stating that the Equipment is owned by PVI, Licensees shall
affix and keep affixed the same in a prominent place on the Equipment. PVI shall
have the right, at all reasonable times and following reasonable notice, to
inspect the Units and observe Licensee's use of the L-VIS(TM) System. Licensees
grant PVI the right to execute and file such statements or instruments, and take
such other actions, to provide public notice of, and protect PVI's interest in,
the Equipment, including without limitation against the rights of landlords.
(c) The Equipment is, and shall at all times be and remain,
personal property notwithstanding that the Equipment or any part thereof may now
be, or hereafter become, in any manner affixed or attached to real property or
any improvements thereon.
2.13 Improvements.
(a) From time to time as reasonably requested by Licensees,
PVI shall deliver to Licensees, and provide Licensees' technical staff with any
necessary training concerning, any General Improvements that exist during the
Term. Licensees acknowledge and agree that PVI shall not be obligated to create
any General Improvements. PVI shall provide General Improvements to Licensees
without charge, except that Licensees shall reimburse PVI for its direct costs
in connection with providing such General Improvements, and with the purchase,
shipment, insurance, etc. of any Equipment embodying such General Improvements,
promptly after PVI's presentation of an invoice for such expenses provided, that
Licensees shall have, pursuant to this Agreement, a license to any improvements
to the extent such improvements relate to the functionality of the L-VIS System
(as described in Schedule A).
(b) The parties shall execute additional Schedules B, if
necessary, to reflect any Equipment delivered to Licensees pursuant to this
Section 2.13.
(c) In the event PVI develops any non-exclusive special
improvements for the L-VIS(TM) System that are not General Improvements, PVI
will offer Licensees the opportunity to obtain a separate license for such
special improvements on terms no less favorable than those offered to any third
party (provided that Licensees are considered under this Agreement hereby to be
licensed to such improvements to the extent they improve on the existing
functionality of the L-VIS System).
2.14 Grant of Trademark License.
(a) Subject to the terms and conditions set forth in this
Agreement (including, without limitation, Section 2.2), PVI hereby grants to
Licensees a non-exclusive, non-
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transferable license to use the Trademarks in connection with Licensees'
exploitation of the L-VIS(TM) System under the license granted in Section 2.1.
(b) Licensees shall use the Trademarks only in such form and
manner as shall be approved from time to time by PVI, including without
limitation the identification of PVI as the owner of such Trademarks, and in
accordance with all applicable laws and regulations in the Territory. Licensees
shall not use the Trademarks in any manner that may jeopardize the significance,
distinctiveness or validity thereof. All of Licensees' uses of the Trademark
shall inure to the benefit of PVI. Licensees shall not use the Trademarks in
combination with any other trademark, trade name or logo of its own or of any
Third Party to create a composite trademark or logo, without the prior written
consent of PVI. If any Licensee becomes aware of any infringement of the rights
of PVI in the Trademarks in the Territory, such Licensee will promptly notify
PVI in writing and will join and assist PVI at PVI's sole cost and expense, if
such assistance is required, in taking steps as PVI may reasonably request for
the protection of PVI's rights.
(c) PVI makes no warranty with regard to the validity of the
Trademarks or the registration thereof.
3. INITIATION FEE; EQUIPMENT FEE; ROYALTIES; ENHANCEMENT FEES; PAYMENT.
3.1 Initiation Fee. In partial consideration of the licenses and rights
granted by PVI to Licensees under this Agreement, Cablevision shall pay PVI an
initiation fee of US $7,500,000 ("Initiation Fee") as follows: $2,500,000 shall
be paid upon the First Closing as defined under that certain Stock and Warrant
Purchase Agreement between PVI Holding, LLC, a wholly-owned indirect subsidiary
of Cablevision, and PVI dated this date (the "Stock Purchase Agreement"), and
$5,000,000 shall be paid upon the Second Closing as defined under the Stock
Purchase Agreement (provided, that if there is no Second Closing for any reason
other than solely attributable to default by Cablevision, the second $5,000,000
payment shall be considered irrevocably waived). Payment of the Initiation Fee
shall be creditable against the payment of any future royalty, revenue sharing
obligation, enhancement fee, equipment fee or other monetary obligation of any
Licensees to PVI under this Agreement or any other agreement between the parties
as they may so provide therein. The Initiation Fee payable hereunder shall also
be creditable against the payment of future royalty, revenue sharing obligation,
enhancement fee, equipment fee or other monetary obligation of Licensees under
the Joint Collaboration and License Agreement to be entered into by the parties.
3.2 Equipment Fee. Licensees shall pay PVI a one-time non-refundable
Equipment Fee with respect to each Unit licensed to Licensees upon delivery.
3.3 Revenue Sharing; Minimum Revenue Sharing.
(a) In partial consideration of the licenses and rights
granted by PVI to Licensees pursuant to this Agreement, each Licensee shall pay
to PVI a royalty consisting of a portion of all such Licensee's Revenues in an
amount equal to the greater of (i) Revenues multiplied by the Revenue Sharing
Rate, or (ii) all payments made by Advertisers in connection
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with the insertion of Electronic Images through use of a Unit licensed to such
Licensee hereunder (regardless of how such payments are characterized)
multiplied by the Revenue Sharing Rate.
(b) Without the prior written consent of PVI, Licensees shall
not accept or solicit any non-monetary consideration directly in connection with
the use of the L-VIS(TM) System other than as would be reflected in Revenues,
except for commercially reasonable use for demonstrations to potential
Advertisers or as otherwise permitted by Section 3.4.
3.4 Non-Revenue Use; Enhancement Fees.
(a) In addition to Revenue Sharing Payments, Licensees shall
pay PVI a fee in connection with any insertion of Electronic Images in Licensed
Telecasts for which Licensees do not receive Revenue (e.g. non-sponsored virtual
first down lines, speed of pitch displays, etc. viewer enhancements)
("Enhancements"). If PVI provides services to provide insertion of any such
Enhancement, Licensees shall pay PVI a fee equal to [CONFIDENTIAL TREATMENT
REQUESTED] of PVI's direct costs (as reasonably determined by PVI) to provide
such Enhancement to Licensees (provided that such rate shall be reduced to
[CONFIDENTIAL TREATMENT REQUESTED] for the first 6 months after first use of any
Enhancement by any Licensee). If Licensees insert an Enhancement without use of
PVI's services, Licensees shall pay PVI a fee equal to [CONFIDENTIAL TREATMENT
REQUESTED] of PVI's reasonable estimated cost to have provided services to
insert such Enhancement (provided that such fee shall be waived for the first 6
months after first use of any Enhancement by any Licensee). For purposes of this
provision, PVI's costs may include allocable amortization costs of equipment not
already leased to Licensees hereunder which is used by PVI directly in
connection with providing the Enhancement to Licensees and all direct out of
pocket costs associated with such insertion, including labor, as reasonably
determined by PVI, from time to time. If Enhancements are provided by PVI,
Licensees shall make payment of Enhancement Fees within 30 days of invoice by
PVI. If Enhancements are provided by Licensees, Licensees shall make payment of
applicable fees as provided in Section 3.5.
(b) Notwithstanding the provisions of Sections 3.3 (b) and 3.4
(a), Licensees may use the L-VIS(TM) System to promote or advertise the
businesses or programming of Cablevision or the Licensed Affiliates, without
charge, provided that after the first 6 months of the initial Term, Licensees
may use a maximum of 25% of the Electronic Image insertions (rounded up to the
nearest whole avail) in any Licensed Event (measured by avails set by the
Licensee which are actually used) for such purpose.
3.5 Payments. Except as provided in Section 3.3(b), all revenue sharing
payments and Enhancement fees due under this Agreement shall be paid quarterly,
within 30 days after the end of each calendar quarter. Each such payment shall
be accompanied by a statement showing, for the subject calendar quarter, the
sales of Electronic Images, the amount of Revenues generated by such sales, use
of Enhancements, permitted no-charge promotional use, and the amount of revenue
sharing payments due on Revenues and fees due on Enhancements.
3.6 Mode of Payment. Licensees shall make all payments required under
this Agreement as directed by PVI from time to time in United States Dollars.
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3.7 Records Retention. During each year of the Term, and for a period
of 24 months after each such year, Licensees shall keep complete and accurate
records pertaining to Revenues and to permit PVI to confirm compliance with the
terms of this Agreement and the accuracy of payment calculations hereunder.
3.8 Audit Request. During each year of the Term and for a period of 24
months after each such year, at the reasonable request of PVI, Licensees shall
permit PVI or a reputable, independent, certified public accountant or firm
appointed by PVI, to examine such records as may be necessary to confirm the
correctness of any payment due or made to PVI by Licensees hereunder or
Licensees' compliance with the Terms of this Agreement.
3.9 Cost of Audit. PVI shall bear any and all expenses associated with
the conduct of the performance of any audit contemplated by Section 3.8;
provided, however, that should any such audit disclose a ten percent or greater
aggregate underpayment by Licensees to PVI for the audit period in question, or
material non-compliance by Licensees with the terms of this Agreement, Licensees
shall reimburse PVI for all such audit expenses.
3.10 [CONFIDENTIAL TREATMENT REQUESTED]
4. LIMITED WARRANTY; INTELLECTUAL PROPERTY; DISCLAIMERS; EXCLUSIONS.
4.1 Limited Warranty.
(a) PVI represents and warrants that it owns all of the patent
rights, copyrights and trade secrets, or has the right to grant licenses
therefor, which comprise the L-VIS(TM) System, and which are necessary to grant
the licenses for the L-VIS(TM) System as provided in this Agreement.
(b) PVI warrants that the Units will, during the Term, be free
from defects and operate substantially in accordance with the Documentation,
when operated as a unit with the intended software on the intended hardware and
operating system environment. PVI does not warrant, however, that operation of
the Units shall be uninterrupted or error free. This warranty shall not apply if
errors or problems result from Licensees' negligence or improper use of the
Units. Licensees shall notify PVI in writing of its claim for any such failure
to conform. If any Unit, or any part thereof, fails to perform in accordance
with this warranty, Licensees' exclusive remedy, and PVI's sole obligation under
this warranty, shall be limited to the correction or replacement, as soon as
practicable, of such Unit or part thereof which is cause of the error. If PVI is
unable, after expenditure of reasonable commercial efforts, to replace the
defective part or correct program errors in the L-VIS(TM) System, Licensees may,
elect to continue use of the Unit with such defects and errors, as is, or
terminate this Agreement. PVI's warranty obligation with
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respect to a specific Unit shall be void if such Unit, or any portion thereof,
is modified by Licensees without PVI's written consent.
4.2 Limitation of Warranty. THE LIMITED WARRANTY PROVIDED IN SECTION
4.1 IS THE ONLY WARRANTY WITH RESPECT TO THE L-VIS(TM) SYSTEM AND THE UNITS. PVI
DOES NOT MAKE, AND LICENSEES DO NOT RECEIVE, ANY OTHER WARRANTY, EXPRESS OR
IMPLIED, AND ALL OTHER WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE L-VIS(TM) SYSTEM OR ANY PORTION THEREOF,
THE UNITS, THE DOCUMENTATION OR ANY SERVICES FURNISHED UNDER THIS AGREEMENT ARE
EXPRESSLY EXCLUDED.
4.3 Intellectual Property Enforcement, Infringement; Indemnification.
(a) With respect to any claims of infringement in the
Territory with respect to a patent, copyright, or trade secret which covers the
L-VIS(TM) System or any portion thereof, PVI shall have the first right, but not
the duty, to institute infringement actions against Third Parties. If PVI does
not institute an infringement proceeding against an offending Third Party,
Licensees shall have the right, but not the duty, to institute such an action,
provided that PVI shall also appear as a party as licensor and shall have the
right to assume control of any infringement proceeding instituted by Licensees
by reimbursing Licensees for all of the costs and expenses incurred by Licensees
in connection therewith.
(b) PVI shall defend, at its expense, any action brought
against Licensees to the extent that such action is based on a claim that the
use of the L-VIS(TM) System, within the scope of this Agreement, infringes any
patent, trade secret or copyright, other than claims to the extent arising from
Licensee's failure to obtain Required Permissions.
(c) PVI shall indemnify Licensees from and against any costs,
damages or fees incurred, including amounts paid in settlement (provided, so
long as PVI is defending such action at PVI's expense and has confirmed that
such action is fully subject to PVI's indemnification obligation hereunder, that
any such settlement made at PVI's expense is approved by PVI, such approval not
to be unreasonably withheld), by Licensees in any action under this Section 4.3
which are attributable to claims that the use of the L-VIS(TM) System (including
any General Improvements), within the scope of this Agreement, infringes any
patent, trade secret or copyright, other than claims to the extent arising from
Licensee's failure to obtain Required Permissions. Licensees shall notify PVI
promptly in writing of any such claim, (provided that such notice shall not
constitute a condition precedent to indemnification hereunder) and shall provide
at PVI's expense, all available information, and reasonable assistance and
authority to enable PVI to defend it. Licensees shall also permit PVI to defend,
compromise or settle such claims as long as such compromise or settlement is at
no cost to Licensees, includes a complete release of Licensees and does not
purport to materially restrict any Licensee's future activity.
(d) The costs and expenses of any action under this Section
4.3 (including reasonable fees of attorneys and other professionals) shall be
borne by the party instituting and maintaining, or defending, such action, as
the case may be. If, however, the parties together
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institute and maintain or defend such action, such costs and expenses shall be
borne by the parties in such proportions as they may reasonably agree in
writing. Each party shall execute all necessary and proper documents and take
such actions as shall be appropriate to allow the other party to institute and
maintain, or defend, such action, provided such other party has the right to do
so under this Section 4.3. Any award paid by Third Parties as a result of any
such action (whether by way of settlement or otherwise) shall be paid to the
party who instituted and maintained, or defended, such action, as the case may
be. If, however, both parties did so, then such award shall be allocated between
the parties in proportion to their respective injuries and contributions to the
costs and expenses incurred in such action, or as they may have otherwise
agreed.
(e) In the event that the L-VIS(TM) System, or any part
thereof, becomes or in PVI's opinion is likely to become the subject of a claim
of infringement, PVI may: (i) procure for Licensees, at no cost to Licensees,
the right to continue to use the L-VIS(TM) System, (ii) replace or modify the
L-VIS(TM) System, at no cost to Licensees, to make the L-VIS(TM) System
non-infringing, provided that the same functions at comparable levels are
performed by the replaced or modified system, or (iii) if the right to continue
to use cannot be reasonably procured or the L-VIS(TM) System cannot be
reasonably replaced or modified, terminate this Agreement.
(f) THIS SECTION 4.3 STATES THE ENTIRE LIABILITY OF PVI WITH
RESPECT TO INFRINGEMENT OF PATENTS, TRADE SECRETS OR COPYRIGHTS BY THE L-VIS(TM)
SYSTEM OR ANY PORTION THEREOF, AND PVI SHALL HAVE NO ADDITIONAL LIABILITY WITH
RESPECT TO ANY ALLEGED OR PROVEN INFRINGEMENT.
4.4 Exclusion and Disclaimer of Damages.
(a) PVI SHALL NOT HAVE ANY LIABILITY FOR INDIRECT, INCIDENTAL,
SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS
OF ANTICIPATED REVENUE OR OTHER DAMAGES ARISING FROM THE LOSS OF USE OF THE
L-VIS(TM) SYSTEM, EVEN IF PVI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
(b) PVI'S TOTAL LIABILITY FOR DAMAGES UNDER THIS AGREEMENT
SHALL NOT IN ANY EVENT EXCEED THE TOTAL AMOUNT OF PAYMENTS RECEIVED BY PVI FROM
LICENSEES UNDER THIS AGREEMENT.
(c) THE FOREGOING LIMITS CONTAINED IN CLAUSES (a) AND (b)
ABOVE SHALL NOT APPLY TO THE EXTENT DAMAGES RESULT FROM PVI'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.
4.5 Allocation of Risk. The parties acknowledge and agree that the
pricing and other terms of this Agreement have been established to reflect the
allocation of risk set forth in this Section 4 and elsewhere in this Agreement.
5. CONFIDENTIAL AND PROPRIETARY INFORMATION.
5.1 Confidential and Proprietary Information.
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(a) Licensees acknowledge and agree that the L-VIS(TM) System
constitutes a valuable asset of PVI and that the information contained in the
L-VIS(TM) System, and any other information that PVI has disclosed or discloses
to Licensees prior to the date hereof or during the Term, as the case may be,
which PVI indicated or indicates at the time of disclosure is confidential, is
confidential and proprietary information of PVI (all such information
collectively, the "Information"). Each Licensee agrees that during the Term and
for a period of five years after any termination of this Agreement, it will not,
without PVI's prior written consent, directly or indirectly, (i) reveal, report,
publish, disclose or transfer any Information to any Third Party other than
Licensee's agent or representative, or (ii) use any Information for any purpose
or for the benefit of any Third Party, except as expressly authorized in this
Agreement. Each Licensee shall make reasonable efforts to notify and inform its
agents, representatives and employees who have access to the L-VIS(TM) System or
any Information of such Licensee's limitations, duties and obligations regarding
non-disclosure and use of the Information. Licensees shall not, and shall not
permit any of their respective agents, representatives or employees, to remove
any proprietary or other legends or restrictive notices contained in or included
in any Information. In no event shall Licensees use less care to maintain the
confidentiality of the Information than they use to maintain the confidentiality
of their own confidential and proprietary information.
(b) "Confidential and Proprietary Information" shall not
include any information which (a) was rightfully in the Licensee's possession
prior to receipt from PVI other than through prior disclosure by PVI; (b) now is
or hereafter becomes available to the public (including, without limitation, any
information filed with any governmental agency and available to the public)
other than as the result of a disclosure by the Licensee in breach hereof, (c)
becomes available to the Licensee on a nonconfidential basis from a source other
than PVI which the Licensee does not believe is prohibited from disclosing such
information to the Licensee prior to, any disclosures made by PVI to the
Licensee of such information. Additionally, PVI agrees that the Licensee shall
have no obligation with respect to any disclosure of Confidential and
Proprietary Information to the extent it is required to be disclosed by the
Licensee by order of a court of competent jurisdiction, administrative agency or
governmental body, or by any law, rule or regulation, or by subpoena, or any
other administrative or legal process, or by applicable regulatory or
professional standards, or in connection with any judicial or other proceeding;
provided that if Licensee is required to make any such disclosure of information
Licensee will give reasonably prompt notice of such requirement to PVI to permit
PVI to make application to contest or limit such disclosure.
5.2 Verification. PVI shall have the right to have its representatives
visit the sites where the Units are located at all reasonable times and upon
reasonable notice to verify the appropriate use and protection of the
Information.
5.3 Specific Performance. Licensees acknowledge that monetary damages
alone would not adequately compensate PVI in the event of a breach by Licensees
of this Section 5 or Section 2.3(a), and that, in addition to all other remedies
available to PVI at law or in equity, PVI shall be entitled to seek injunctive
relief for the enforcement of its rights, without the posting of bond or other
security, and to seek an accounting of profits made during the period of such
breach.
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6. TERMINATION.
6.1 Expiration. The Term of this Agreement shall continue to the fifth
anniversary of the date on which the Term commences and shall automatically
continue for successive additional 5 year periods indefinitely unless
Cablevision gives written notice of its election not to so continue at least 90
days prior to the expiration of the initial 5 year period or any additional 5
year period for which the Term has been so extended.
6.2 Breach. Either party shall have the right to terminate this
Agreement if the other party is in default of any material obligation hereunder
and such default has not been cured by the other party within 30 days after
receipt of notice of such default (or, if such default cannot reasonably be
cured within such 30-day period, if the party in default does not commence and
diligently continue actions to cure such default during such 30-day period). PVI
shall notify Cablevision, in addition to the relevant Licensee, of any alleged
default. Either party may regard the other party as being in default under this
Agreement if the other party becomes insolvent, makes a general assignment for
the benefit of creditors, suffers or permits the appointment of a receiver for
its business or assets, or becomes subject to any proceeding under any
bankruptcy or insolvency law, whether domestic or foreign, or has wound up or
otherwise liquidated, voluntarily or otherwise.
6.3 Effect of Termination. Upon the expiration or termination of this
Agreement for any reason, Licensees shall immediately discontinue use of the
L-VIS(TM) System and shall return all of the Units and all Documentation to PVI
at a location designated by PVI, F.O.B. destination, freight prepaid, within 30
days after such expiration or termination. Licensees shall assume all risks of
loss or damage until delivery at such location. Thereafter, Licensees shall
retain no rights in or to the L-VIS(TM) System or the Documentation. In the
event of termination of this Agreement by PVI for breach by Licensees, such
termination shall be in addition to and not in lieu of any other remedies, at
law or in equity, available to PVI. In the event of any termination of this
Agreement, for any reason, by PVI, (a) PVI shall immediately refund to
Cablevision the unused portion of the Initiation Fee and (b) shall immediately
refund the remaining undepreciated value of the Equipment.
6.4 Surviving Rights and Obligations. The parties' respective rights
and obligations regarding insurance (specifically, Section 2.4(c)), ownership
(2.12), Trademarks (2.14(b)), revenue sharing payments and records (3.4 - 3.10),
limitation of remedies (4.2 and 4.4), intellectual property enforcement and
infringement (4.3), confidentiality (5), termination (6.3 and 6.4) and other
miscellaneous rights and obligations (7.1, 7.4, 7.6, 7.10, 7.11, 7.12 and 7.17
shall survive expiration or termination of this Agreement. Termination,
relinquishment or expiration of this Agreement for any reason shall be without
prejudice to any rights which shall have accrued to the benefit of either party
prior to such termination, relinquishment or expiration. Such termination,
relinquishment or expiration shall not relieve either party from obligations
which are expressly indicated to survive termination or expiration of this
Agreement.
7. MISCELLANEOUS.
7.1 Relationship. This Agreement shall not be construed as creating a
partnership, joint venture or employment relationship between the parties, and
nothing contained herein shall
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be construed as causing either party to be the employee, agent or representative
of the other. Neither party shall make any warranties or representations, or
incur any obligations whatsoever, on behalf of or in the name of the other
party.
7.2 Representations and Warranties. Each party hereby represents and
warrants to the other as follows:
(a) Such party has the power to execute, deliver and perform
this Agreement in accordance with its terms;
(b) Such party's execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by all requisite corporate action on the part of such
party, have received all required governmental approvals and do not and will not
violate any provision of law or other agreement to which such party is subject;
(c) Such party has obtained all governmental approvals
required in connection with the execution of this Agreement and the performance
of all of such party's obligations hereunder; and
(d) This Agreement, when executed by such party, shall
constitute the valid and legally binding obligation of such party, enforceable
in accordance with its terms.
7.3 Assignment. Licensees may not grant, assign, sublicense or
otherwise convey this Agreement or its rights and obligations hereunder, in
whole or in part, to any Third Party, except as specifically provided otherwise
in this Agreement. Any such purported assignment by Licensees shall be void.
This Agreement shall be binding upon the successors and permitted assigns of the
parties, and the name of a party appearing herein shall be deemed to include the
names of such party's successors and permitted assigns to the extent necessary
to carry out the intent of this Agreement.
7.4 Indemnification by Licensees; No Limitation of Liability.
(a) In addition to the specific remedies stated in this
Agreement, Licensees shall indemnify and hold PVI harmless from and against any
demands, claims or liability resulting from or arising out of the Licensee's
breach of its obligations under Sections 2.4(c) and 2.9(b).
(b) In no event shall the maximum coverage provided by any
policy(ies) of insurance that Licensees are required to maintain hereunder
constitute a limitation on Licensees' liability under this Agreement.
7.5 Force Majeure. Neither party shall be liable to the other for loss
or damages or shall have any right to terminate this Agreement for any default
or delay attributable to any act of God, flood, fire, explosion, strike,
lockout, labor dispute, shortage of raw materials, casualty or accident, war,
revolution, civil commotion, act of public enemies, blockage or embargo,
injunction, law, order, proclamation, regulation, ordinance, demand or
requirement of any government or subdivision, authority or representative of any
such government, or any other
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cause beyond the reasonable control of such party, if the party affected shall
give prompt notice of any such cause to the other party. The party giving such
notice shall thereupon be excused from such of its obligations hereunder as it
is thereby disabled from performing for so long as it is so disabled and for 30
days thereafter; provided, however, that if any event of force majeure prevents
Licensees from materially performing their obligations under this Agreement for
a period in excess of 18 months, PVI shall have the right to terminate this
Agreement upon 30 days' notice to Licensees. Notwithstanding the foregoing,
nothing in this Section 7.5 shall excuse or suspend the obligation to make any
payment due hereunder in the manner and at the time provided.
7.6 Notices. All notices and communications required or permitted under
this Agreement shall be in writing and delivered by any method providing for
proof of delivery. Any notice shall be deemed to have been given on the date of
receipt. Notices shall be delivered to a party at the address for such party as
set forth in the Stock Purchase Agreement (or at such other address for a party
as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof).
7.7 Waiver. No provision of this Agreement shall be waived by any act,
omission or knowledge of a party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by the waiving
party. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach thereof.
7.8 Severability. The provisions of this Agreement are severable, and
if any one or more of these provisions is held to be invalid or unenforceable,
in whole or in part, the remaining provisions and any partially enforceable
provision shall be and remain binding and enforceable.
7.9 Further Actions. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
7.10 Governing Law. The rights and obligations of the parties hereto
shall be governed by and construed in accordance with the laws of the State of
New York without regard to conflicts of law principles.
7.11 Compliance with Law. Nothing in this Agreement shall be deemed to
permit a party to export, re-export or otherwise transfer any Unit without
compliance with all applicable laws.
7.12 Taxes. In addition to the other amounts payable under this
Agreement, Licensees shall pay, or reimburse PVI for, all sales, use, value
added, excise, personal property or similar taxes (other than taxes on or based
upon PVI's net income) which may be levied or imposed by any taxing authority
with respect to the transactions and payments contemplated by this Agreement.
7.13 Amendment. No amendment, modification or supplementation of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly
17
130
authorized officer of PVI and Cablevision. Each additional Schedule B executed
by the parties pursuant to the terms of this Agreement shall constitute an
amendment of this Agreement.
7.14 Descriptive Headings. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
7.15 Counterparts. This Agreement and all of the Schedules hereto may
be executed simultaneously in two counterparts, either one of which need not
contain the signature of more than one party, but both such counterparts taken
together shall constitute one and the same instrument.
7.16 Entire Agreement. This Agreement, including all of the Schedules
hereto, as may be added to or amended from time to time, constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, understandings and
agreements, whether oral or written, between the parties respecting the subject
matter hereof.
7.17 No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to, or shall, confer upon any Third Party (other than
the Licensed Affiliates) any legal or equitable right, benefit or remedy of any
nature whatsoever.
* * *
ACCEPTED AND AGREED TO ACCEPTED AND AGREED TO
PVI: LICENSEE:
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxx
------------------------------- --------------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxx
Title: VP, Finance/CFO Title: Vice Chairman
Date: February 4, 2001 Date: February 4, 2001
18
131
PRINCETON VIDEO IMAGE, INC.
SYSTEM LICENSE AGREEMENT
SCHEDULE A
DESCRIPTION OF LICENSED SYSTEM
The current L-VIS(TM) products, which are the subject of this Agreement, are all
current television broadcast applications based on PVI's hardware and software
technology in which the inserts are placed in the video upstream, prior to the
distribution of the program. The inserts either are distributed to the entire
audience or the inserts may be targeted or narrow-casted. In the case of
targeted or narrow-casted inserts, it is only in the sense that multiple video
feeds are generated upstream, each feed including the insert, going to a target
audience. Inserts changed for subsequent reruns of the original programs are
included in these products as long as the inserts are put in upstream. In all
cases of the current products, the insert is done at the same location that the
position of the insert is determined. These current products are distinguished
from future PVI products not included within the license granted under this
Agreement. Such future products include, inter alia, those where the position of
the insertion is determined upstream and the insertion is executed downstream.
These downstream insertion products may insert features into video at numerous
locations, including a satellite down link, a cable head end, a neighborhood
distribution site, at individual homes, or even individual receivers within a
home. PVI has already developed technology and intellectual property relating to
this general class of downstream insertion products. PVI anticipates that the
implementation and expansion of these downstream insertion products will be one
of the subjects of a separate agreement with Licensees. The L-VIS Equipment,
Software and Documentation licensed under this Agreement shall be deemed to
include any future systems created by PVI, only to the extent that such future
systems materially implement the above-described functionality of upstream
insertion.
19
132
PRINCETON VIDEO IMAGE, INC.
SYSTEM LICENSE AGREEMENT
SCHEDULE B
EQUIPMENT CERTIFICATE
FOR
INITIAL UNIT
Delivery Location: __________
Description:
One L-VIS(TM) System comprised of the following:
Component Serial No.
ACCEPTED AND AGREED TO ACCEPTED AND AGREED TO
PVI: LICENSEES:
By: _______________________________ By: ________________________________
Name:______________________________ Name: ______________________________
Title: ____________________________ Title: _____________________________
Date: _____________________________ Date: ______________________________
20
133
Exhibit F-2
Attach Term Sheet regarding the Joint Collaboration and License Agreement
134
[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
Term Sheet
Joint Collaboration and License Agreement
This will confirm the business understanding and intent of Princeton
Video Image, Inc. ("PVI") and Cablevision Systems Corporation (or an affiliate
to be designated by Cablevision Systems Corporation) ("Cablevision") (PVI and
Cablevision, collectively, "we" or "us"). Subject to the signing of a mutually
satisfactory definitive agreement, the parties intend to collaborate to develop
technology, including the computer hardware, software and documentation,
television set-top box interfaces, equipment and related technology, to create
virtual, in-content, interactive and targeted advertising and enhancement
products for downstream real-time insertion of images into video at multiple
distribution locations including, without limitation, via a cable head-end, a
satellite uplink facility, a neighborhood distribution site, at individual
homes, or individual receivers within a home (the "Project"). The Project's
primary goal will be to create such virtual, in-content, interactive and
targeted advertising and enhancement products specifically for use with
television distribution (the "Primary Goal").
We further agree to collaborate to develop additional products and
applications relating to or flowing from the Project including, without
limitation, (i) instant replay and virtual camera angle applications similar to
the application and function of EyeVision, (ii) enhancements to provide viewer
control of actual or virtual camera angles, (iii) improvements to delivery of
multiple camera angles to set top boxes, and (iv) other products and
applications as may be mutually agreed upon ("Additional Projects"). With regard
to PVI's existing relationship with Revolution Co., LLC, PVI shall use its
reasonable efforts to obtain all necessary rights and permissions from
Revolution Co., LLC [CONFIDENTIAL TREATMENT REQUESTED] in support of and for use
in connection with the Additional Projects.
We agree to negotiate in good faith and with reasonable diligence to
establish a definitive collaboration and cross license agreement to implement
the terms set forth herein. Our negotiations will be based upon the following
principles and terms:
135
Page -2-
Definitions Capitalized terms herein not otherwise defined
shall have the meanings described under the
L-VIS(TM) System License Agreement dated
this date between the parties (the "L-VIS
Agreement").
"Content Provider" shall mean an entity
owning or controlling video programming
content.
"Network" shall mean a broadcast channel for
the dissemination of video programming content
through a television system, cable system,
satellite system or other such similar
broadcasting system.
"Net Revenues" means Revenues received, net of
any payments Cablevision or its Licensed
Affiliate makes to non-Affiliate Networks or
Content Providers to obtain rights to insert
Electronic Images in order to obtain Revenue,
provided that only Revenues obtained for
actual insertion of Electronic Images shall be
included, and that any other ancillary
revenues, including, without limitation,
revenues related to "e-Commerce" or
"T-Commerce" transactions, shall be excluded.
"System Operator" shall mean an entity
providing a system for distributing Networks
to end users, such as the Cablevision cable
distribution system.
Collaboration We will agree upon a development collaboration
plan with stated goals, activities, time
lines, testing and benchmarks where we will
each commit to devote resources and personnel
reasonably available to us in a manner to be
determined. We will negotiate and agree upon
our respective commitment of assets and
resources to the collaboration.
Cross-Licenses Each of us will grant to the other
non-exclusive licenses of intellectual
property we own or control necessary and
appropriate to the advancement of the Project
and Additional Projects.
License to PVI Cablevision will grant to PVI the exclusive
perpetual worldwide [CONFIDENTIAL TREATMENT
REQUESTED] right to use, sublicense or
otherwise commercialize, for all purposes,
136
Page -3-
any technology and intellectual property
rights jointly developed under or as part of
the Project and Additional Projects, which
Cablevision jointly owns and controls with
PVI, subject to retained rights.
Cablevision shall further grant to PVI a
non-exclusive perpetual worldwide
[CONFIDENTIAL TREATMENT REQUESTED] right to
use, sublicense or otherwise commercialize any
technology and intellectual property which
Cablevision solely owns or controls, to the
extent necessary to allow PVI to exploit the
development of the Projects and Additional
Projects.
License to Cablevision PVI will grant to Cablevision and each of its
Licensed Affiliates the non-exclusive
perpetual worldwide right to use any
technology, intellectual property and products
developed under or as part of the Project and
Additional Projects, which PVI owns or
controls solely or jointly with Cablevision,
or which PVI is otherwise entitled to license
or sublicense, upon terms described below.
Unless otherwise specifically agreed, licenses
to technology and intellectual property
developed under or as part of, and products
emanating from, the Project or Additional
Projects, and not directly relating to the
Primary Goal, [CONFIDENTIAL TREATMENT
REQUESTED].
Technology and intellectual property developed
under or as part of, and products emanating
from, the Project or Additional Projects,
relating to the Primary Goal, shall be
licensed upon the following terms:
With respect to Cablevision's and its Licensed
Affiliates' rights as a System Operator where
Cablevision or its Licensed Affiliate performs
downstream insertion of Electronic Images into
programming content owned or controlled by any
rightsholders (whether or not Affiliates of
Cablevision) the following terms shall apply:
(1) Cablevision and its Licensed
Affiliates shall pay PVI the royalty
or revenue sharing rate set forth
below multiplied by the amount of Net
Revenues.
(2) Cablevision and its Licensed
Affiliates will have an initial
6-month grace period to use licensed
technology for promotion of
Cablevision and/or its
137
Page -4-
Licensed Affiliates, before royalty
obligations commence. The initial
6-month grace period shall
commence, with respect to each
product, from the time such product
is first used by Cablevision or a
Licensed Affiliate.
(3) Subsequently, Cablevision shall have
a perpetual [CONFIDENTIAL TREATMENT
REQUESTED] right to use up to 25% of
Electronic Image avails (rounded up
to the nearest whole avail) for the
benefit of Cablevision and/or its
Licensed Affiliates.
(4) PVI may not charge (and agrees to
waive, if it charges generally)
[CONFIDENTIAL TREATMENT REQUESTED],
to any Network or Content Provider
for the delivery of enabled
programming content to
Cablevision or its Licensed
Affiliates for downstream
insertion of Electronic Images.
(5) At the request of Cablevision or any
of its Licensed Affiliates, PVI shall
convey a [CONFIDENTIAL TREATMENT
REQUESTED] perpetual non-exclusive
license to any Network or Content
Provider solely for the delivery of
enabled programming content
to Cablevision or its Licensed
Affiliates for downstream insertion
of Electronic Images.
(6) [CONFIDENTIAL TREATMENT REQUESTED].
With respect to Cablevision's and its Licensed
Affiliates' rights as a Content Provider or
Network, where Cablevision or its Licensed
Affiliate enables programming content for
downstream insertion of Electronic Images by a
System Operator (whether or not an Affiliate
of Cablevision):
(1) PVI will provide all necessary
equipment requested by Cablevision or
any of the Licensed Affiliates at
[CONFIDENTIAL TREATMENT REQUESTED].
138
Page -5-
(2) PVI will provide any requested
services to enable programming
content [CONFIDENTIAL TREATMENT
REQUESTED].
(3) PVI shall not charge any System
Operator a higher royalty or other
fee for Electronic Image insertion
based on the fact that Cablevision or
its Licensed Affiliate is the Content
Provider or Network being distributed
over such System Operator's system
than it charges for such insertion
with respect to any other Content
Provider or Network distributed over
such system. [CONFIDENTIAL TREATMENT
REQUESTED].
Royalty rate The royalty or revenue sharing rate shall be
[CONFIDENTIAL TREATMENT REQUESTED]
Revenue from insertion of Electronic Images by
Cablevision or its Licensed Affiliates under
the L-VIS Agreement and under the joint
collaboration and licensing agreement
contemplated hereby shall count towards the
amount of cumulative Revenues above, as well
as under the L-VIS Agreement.
Any license fees prepaid under related
agreements shall be creditable against
equipment costs, services costs, royalties,
and other monetary obligations incurred as set
forth herein.
Limitation of Licensed For the purposes hereof, the definition of
System Operator Affiliates Licensed Affiliate shall not include any
entity, in its role as System Operator, that
Cablevision acquires, if, after giving effect
to such acquisition and together with all
prior acquisitions of such entities after the
date of the definitive agreement, such
acquisition adds a net total of more than 10
million acquired subscribers (after
discounting for any subscribers sold).
Inventions Each party (including the Licensed Affiliates)
will own intellectual property developed by
its own employees. Intellectual property
developed jointly will be owned jointly.
Cablevision and PVI will coordinate patent
prosecution and
139
Page -6-
maintenance of joint inventions with the
related technology owned independently. All
inventions and joint inventions shall be
cross-licensed as provided above.
The collaboration, licenses and all other terms and conditions governing our
relationship and the Project will be embodied in a mutually acceptable
definitive agreement with other reasonable and customary terms and conditions.
The definitive agreement must be approved and signed by each of us before taking
effect.
140
Exhibit G-1
Section 3.3(a) Subsidiaries.
1. Princeton Video Image Europe, N.V. ("PVI Europe"), with 90% of the
outstanding capital stock owned by the Company; Interactive Media, N.V. owns the
remaining 10% of the outstanding capital stock of Princeton Video Image Europe,
N.V.
Warrants to be issued to the General Manager of PVI Europe for
the purchase of [CONFIDENTIAL TREATMENT REQUESTED] of the common stock of PVI
Europe, pursuant to his employment arrangement, will provide that if PVI Europe
has not commenced an initial public offering of its stock by [CONFIDENTIAL
TREATMENT REQUESTED], the Company will grant to the General Manager warrants to
purchase [CONFIDENTIAL TREATMENT REQUESTED] of the Company's Common Stock, and
the warrants to purchase shares of PVI Europe will be cancelled.
Section 2 of the Shareholders Agreement, dated July 18, 2000,
by and among Princeton Video Image, Inc., Interactive Media, S.A., and Princeton
Video Image Europe, N.V. (the "PVI Europe Shareholders Agreement"), grant each
party a right of first refusal to purchase, on the terms of the proposed sale,
the shares which the other party proposes to sell. Section 3 of the PVI Europe
Shareholders Agreement grants a "bring along right" giving the Company the
option of requiring Interactive to sell its shares to the same party to whom PVI
Europe agrees to sell its shares. Section 4 of the PVI Europe Shareholders
Agreement grants a right of co-investment to the shareholders preventing PVI
Europe from selling any shares, other than in connection with an initial public
offering, unless PVI Europe offers each shareholder the opportunity to purchase
its proportionate share of such shares on terms and conditions, including price,
not less favorable to each shareholder than those on which PVI Europe proposes
to sell such shares to any other purchaser.
2. Princeton Video Image Latin America, L.L.C., the merger subsidiary
under the Reorganization Agreement, a wholly-owned subsidiary. There are no
Rights attendant to any shares of the PVI Latin America L.L.C. interests.
3. Upon the closing of the Reorganization Agreement, the Company will
become the direct and indirect holder of 100% of the equity interest in
Publicidad Virtual, S.A. de C.V. There will be no Rights attendant to the shares
of Publicidad Virtual after closing.
141
Exhibit G-2
Section 3.3(b) Other Entities.
Under the Revolution Company, L.L.C. Operating Agreement, dated January
27, 2001, the Company owns a [CONFIDENTIAL TREATMENT REQUESTED] interest in
Revolution Company, L.L.C., a Delaware Limited Liability Company, with CBS
Technology Corporation owning [CONFIDENTIAL TREATMENT REQUESTED] and Core
Digital Technologies, Inc. owning [CONFIDENTIAL TREATMENT REQUESTED]. The
Company has executed the Operating Agreement, and the Company understands that
the other members have approved the form of and are expected to execute the
Operating Agreement in the immediate future.
The Company owns 1,692,333 shares [CONFIDENTIAL TREATMENT REQUESTED] of
Pineapplehead, Ltd., an Australian Company, as of June 30, 2000.
142
Exhibit H
See Exhibit C, Schedule of Exceptions, pertaining to Section 3.4(c), Rights to
Acquire Stock.
143
Exhibit I-1
Section 3.7(a) List of Intellectual Property Rights.
U.S. Patents.
Patent No. 5,264,933, which relates to basic pattern recognition video
insertion technology, was issued on November 23, 1993, will expire on January
28, 2012 and was assigned to the Company on January 22, 1992.
Patent No. 5,543,856, which relates to the use of remote insertion of
images that might be useful in a narrow casting application, was issued on
August 6, 1996, will expire on October 27, 2013 and was assigned to the Company
on October 22, 1993.
Patent No. 5,627,915, which relates to a pattern recognition system
using templates, was issued on May 6, 1997, will expire on January 31, 2015 and
was assigned to the Company on January 30, 1995.
Patent No. 5,808,695, which relates to a method of tracking scene
motion for live video insertion systems, was issued on September 15, 1998 and
will expire on December 29, 2015 and was assigned to the Company on December 27,
1995.
Patent No. 5,892,554, which relates to inserting live and moving
objects into scenes, was issued to the Company on April 6, 1999, will expire on
November 28, 2015, and was assigned to the Company on March 31, 1998.
Patent No. 5,953,076, which relates to techniques for occlusion
processing, was issued on September 14, 1999 and will expire on June 12, 2016.
Patent No. 6,100,925, which relates to techniques for combining camera
sensors with image processing, was issued on August 8, 2000, and will expire on
November 25, 2017.
U.S. Trademarks.
L-VIS (TM), C-TRAK (TM)
Foreign Patents and Trademarks.
Australia, Patent No. 687,086, issued 6/4/98.
144
Spain, Patent No. 0000000
Xxxxxx, Patent No. 0746942
UK, Patent No. 0000000
Xxxxx, Patent No. 0000000
Japan, Patent No. 0000000
Luxemberg, Patent No. 0746942
Mexico, Patent No. 188,649
Netherlands, Patent No. 0746942
New Zealand, "downstream case" issued 1/97, expires 8/24/2014
Peru, Patent No. 858
Russia, Patent No. 2144279
Australia, Patent No. 698648
EU, Patent No. 0792068
Greece, Patent No. 3032500
Sweden, Patent No. 792,063
Argentina, Xxxxxx Xx. XX 00000XX0
Greece, Patent No. 3031285
Mexico, Patent No. 183,569
Sweden, Patent No. 595,808
Mexico, Patent No. 194066
EU, Patent No. 0000000
Xxxxxx, Patent No. 0000000
Xxxxxx, Patent No. 196502
145
Sweden, Patent No. 796,541
Argentina, Patent No. AR 002498
Applications.
------------
Chile, Applications No. 1996-153
EU, Application No. 96905244.8
Xxxxxxxxx, Xxxxxxxxxxx Xx. XX 000-00
Xxxxxx, Application No. SN P19405641-2
Canada, Application No. 2,175,038
Xxxxx, Xxxxxxxxxxx Xx. 0000-00
Xxxxx, Application No. 94 1 93937.5
Germany, Application No. 69409407.2-08
EU, EP Application No. 94924588.0, priority date of 10/27/93, grant issued
2/19/98; validated in 10 European countries.
Korea, Application No. SN 96-702,186
Singapore, Application No. 9604188-4
Belgium, Validation of 3780.107.1, unknown status
Germany, Application No. 6942155472
Spain, validation application of 3780-107.1EP, Patent No. 000000
Xxxxxx, validation application of 3780-107.1EP, Patent No. 000000
Xxxxx, Application No. 00000XX/0000
Xxxxxxxxxxx, validation application of 3780-107.1EP, Patent No. 000000
Xxxxx, Application No. 1224.93
EU, EPO Application No. 9191562.8 (EP 3780-109)
Germany, validation of EP 3780-109, EPO Application No. 9191562.8
Spain, validation of EP 3780-109, EPO Application No. 9191562.8
France, validation of EP 3780-109, EPO Application No. 9191562.8
UK, validation of EP 3780-109, EPO Application No. 9191562.8
000
Xxxxx, validation of EP 3780-109, EPO Application No. 0000000.8
Japan, Application No. 518234/91
Netherlands, Certification of Domicile on EP 3780-109, EPO Application No.
9191562.8
Singapore, application "Television Displays Having Selected Inserted
Displays", coincides with EP 3780-109, EPO Application No. 9191562.8
Argentina, Application based on U.S. Patent 5,892,554
Brazil, Application Xx. 0000000
Xxxxx, XX 0000-00
EU, EPO Application No. 00000000.9
Japan, Application based on U.S. Patent 5,892,554
Peru, SN 00457.96
Brazil, Application No. 9608944.
Germany, validation of EPO Application No. 96921560.7 (Patent No. 0796541)
Spain, validation of EPO Application No. 96921560.7 (Patent No. 0796541)
France, validation of EPO Application No. 96921560.7 (Patent No. 0796541)
UK, validation of EPO Application No. 96921560.7 (Patent No. 0796541)
Italy, validation of XXX Xxxxxxxxxxx Xx. 00000XX/00
Xxxxx, Application No. 9-503,299
Netherlands, validation of EPO Application No. 96921560.7 (Patent No.
0796541)
Brazil, application based on U.S. Application No. PCT/US97/04083
EU, EPO Application No. 00000000.3
Japan, Application No. 09-538866, laid open as No. 2000-509236
Mexico, Application No. 988,955
U.S., Application No. 09/171,941
Brazil, Application No. 9714971-3
147
EU, EPO Application No. 00000000.0
Japan, Application No. 10-524822
Mexico, Application No. 99-4772
U.S., Application No. 09/308,949, Motion Tracking Using Image-Texture
Templates
EU, Application No. PCT/US97/21608, Motion Tracking Using Image-Texture
Templates
U.S., Application No. 09/331,332, Set Top Device Enhanced for Targeted
Electronic Insertion Into Video
EU, Application No. PCT/US97/23396, Set Top Device Enhanced for Targeted
Electronic Insertion Into Video
Brazil, Application No. 9714970-6
China, Application No. 97180124.X
EU, EPO Application No. 00000000.4
Japan, Application No. 10-524821
Mexico, Application No. 99-4800
U.S., Application Xx. 00/000,000
X.X., Xxxxxxxxxxx Xx. XXX/XX00/00000
Xxxxxx, Application No. SN 9714949-7
EU, EPO Application No. 00000000.3
Japan, Application No. 10-528931
Mexico, Application No. 99-5800.
U.S., Application No. 09/331332
EU, Application No. PCT/US99/01399, Event Linked Insertion of Indicia Into
Video
Xxxxxxxxx, Xxxxxxxxxxx Xx. X00 00 00000
Xxxxxx, Application No. P19907194-0
Chile, Application No.1999-1844
EU, filed
148
Xxxxxx, XX 0000
Xxxxx, filed by Xxxxx Xxxxx
U.S., SN 09/600,768
U.S., Provisional Application No. 60/115,666
U.S., Provisional Application No. 60/129,812, Method and Apparatus to
Overlay Comparative Time Determined Positional Data in a Video Display (inactive
provisional)
U.S., Application No. 09/551,824, Method and Apparatus to Overlay
Comparative Time Determined Positional Data in a Video Display
EU, PCT/US00/10012, Method and Apparatus to Overlay Comparative Time
Determined Positional Data in a Video Display (European counterpart)
U.S., Application No. 09/734,710 (from Provisional 60/170,394) 2-D/3-D
Recognition/Tracking Algorithm for Soccer Application
EU, PCT/US00/3367, 2 -D/3-D Recognition/Tracking Algorithm for Soccer
Application (European counterpart)
U.S., SN 60/170,398, System and Method of Real Time Insertion Into Video
With Occlusion on Arean Containing Multiple Colors (inactive provisional)
U.S., Application No. 09/734,709, System and Method of Real Time Insertion
Into Video With Occlusion on Arean Containing Multiple Colors (from provisional
SN 60/170,398)
U.S., Application No. 09/230,099, Image Insertion In Video Streams Using a
Combination of Physical Sensors and Pattern Recognition
EU, Application No. PCT/US97/21607, Image Insertion In Video Streams Using
a Combination of Physical Sensors and Pattern Recognition
U.S. Application No. 09/171,941, Audio Enhanced Electronic Insertion of
Indicia Into Video
EU, Application No. PCT/US97/04083, Audio Enhanced Electronic Insertion of
Indicia Into Video
EU, Application No. PCT/US96/10166, System and Method of Real Time
Insertions Into Video Using Adaptive Occlusion With a Synthetic Reference Image
EU, Application No. PCT/US96/10163, System and Method for Inserting Static
and Dynamic images Into a Live Video Broadcast
EU, Application No. PCT/US96/10164, Method for Tracking Scene Motion for
Live Video Insertion Systems
EU, Application No. PCT/US96/01125, Live Video Insertion System Including
Template Matching
EU, Application No. PCT/US94/08863, Downstream Control of Electronic
Billboard
EU, Application No. PCT/US91/05174, Television Displays Having Selected
Inserted Indicia
149
Exhibit I-2
Section 3.7(c) Claims against the Company of Infringement of Intellectual
Property Rights.
See Exhibit C, Schedule of Exceptions, pertaining to Section 3.9,
Litigation.
150
Exhibit I-3
Section 3.7(c) Third Party Infringement of Intellectual Property Rights
See Exhibit C, Schedule of Exceptions, pertaining to Section 3.9,
Litigation.
The DVC Group, located in Morristown, New Jersey, may be proposing to
use, market or sell a product or service for streaming internet insertions; such
use, marketing or sale may violate or conflict with Intellectual Property Rights
owned or controlled by the Company. (DVC claiming under Patent No. 6061659).
151
Exhibit I-4
Section 3.7(d) Agreements to Indemnify Third Parties.
None.
152
Exhibit I-5
Section 3.7(e) Licensed Rights to the Company.
Xxxxx Xxxxxxx Research Center, Inc. Xxxxx Xxxxxxx Research Center, Inc.
("Xxxxxxx") has granted the Company a non-exclusive worldwide license to
practice Xxxxxxx'x technology related to the electronic recognition of
landmarks, including an exclusive license covering the specific fields of
television advertising and television sports. The Company has also been granted
a non-exclusive license for use of the Xxxxxxx technology in all other fields
relating to sports or advertising, including video production, local video
insertion, private networks, medical and scientific applications and uses by the
United States Department of Defense or any other United States government
agency. The grant does not include an expiration date.
General Electric Company. General Electric Company ("GE") granted the
Company a five-year non-exclusive, worldwide license relating to all GE patents
on equipment for electronic recognition of selected landmarks; altering images
in television programs for advertising purposes; or any purpose in television
programs the principal focus of which is sports, as of July 1996. The license
expires July 23, 2001.
Theseus Research, Inc. Theseus Research, Inc. ("Theseus") has granted
the Company a non-exclusive, worldwide license to use and sell Theseus' patented
technology for the warping of images in real time. The license expires upon the
expiration of the last of the patents included in the technology.
153
Exhibit I-6
Section 3.7(f) Licensed Rights to Third Parties.
Amended and Restated Territory System License Agreement dated as of
December 27, 2000 by and between the Company and Virtual Media Lab, Inc.
Territory System License Agreement dated as of December 20, 2000 by and
between Princeton Video Image, Inc. and Xx Xxxxx Information & Services.
Amendment Agreement dated January 1, 1999 between the Company and
Publicidad Virtual, S.A. de C.V. amending the License Agreement dated March 1,
1994.
License Agreement dated as of March 1, 1994 between the Company and
Publicidad Virtual, S.A. de C.V.
Territory System License Agreement dated August 31, 1999, between the
Company and Sistemas de Publicidad Virtual, S.L.
License Agreement to PVI Europe, dated July 12, 2000 between the
Company and PVI Europe.
Agreement between the Company and CBS News dated November 1, 1999
(Agreement grants use of an of L-VIS(R) system).
Letter Agreement, dated July 19, 1999, extended by amendment dated
February 22, 2000, between the Company and CanWest Global Communications
Corporation (Agreement grants use of an L-VIS(R) system).
154
Exhibit J
Section 3.14(a) Material Contracts and Commitments.
See Exhibit C, Schedule of Exceptions, Section 3.4(c), regarding
commitments to issue shares of the Company's Common Stock or warrants to
purchase shares of the Company's Common Stock for services provided to the
Company.
See Exhibit C, Schedule of Exceptions, Section 3.17(a) and (d),
regarding material changes since June 30, 2000, with specific regard to
transactions entered by the Company and changes to employment arrangements with
officers of the Company.
See Exhibit C, Schedule of Exceptions, Section 3.19, regarding
transactions with officers and directors of the Company.
See Exhibits I-5 and I-6, regarding agreements pertaining to
Intellectual Property matters.
1) Employment Agreement dated January 24, 1997 between the Company and
Xxxxx F Xxxxxxxx.
2) Employment Agreement dated March 4, 1997 between the Company and Xxxxxx
X. XxXxxxxx.
3) Employment Agreement, dated as of February 5, 1998, between the Company
and Xxxxxxxx Xxxxxxx.
4) Employment Agreement dated November 23, 1998 between the Company and
Xxxxxx X. Xxxxxxxxx.
5) Employment Agreement dated September 30, 1999, between the Company and
Xxxx Xxxxxx.
6) 1993 Employee Stock Option Plan, as amended.
7) Lease Agreement dated July 16, 1997, amended June 1, 1999, between the
Company and Princeton South at Lawrenceville One.
8) Lease Agreement dated July 26, 2000 between the Company and Global
Workplaces, for New York office space.
9) Guaranty of Rent by the Company for lease contract entered into between
Perifund C.V.A. and Princeton Video Image Europe, N.V. dated December 18, 2000.
10) Letter Agreement dated November 5, 1998 between the Company and CBS
Sports, a division of CBS Broadcasting, Inc.
155
11) Binding Letter of Intent between NFL International, a division of NFL
Enterprises L.P., and the Company, executed on January 6, 1999 and restated by
letter agreement dated April 21, 2000.
12) Agreement dated August 9, 1999, between the Company and CBS Sports, a
division of CBS Corporation.
13) Form of Subscription Agreement dated October 20, 1999 between the
Company and various subscribers.
14) SmallCaps Online Group LLC Advising Agreement dated December 1, 2000 by
and between the Company and SmallCaps Online Group LLC.
15) Letter Agreement between the Company and First Union Securities dated
August 23, 2000.
16) Agreement between the Company and Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
dated November 1, 1999.
17) Agreement between the Company and Digital Video Arts, Ltd. dated March
22, 2000.
18) Joint Development and Marketing Agreement between the Company and
Engage Technologies, Inc. dated December 15, 2000 (superseding and replacing the
agreement dated May 23, 2000).
19) Agreement between the Company and ScholarShop, Inc. d/b/a Food for
Thought, signed November 17, 2000.
20) Agreement between the Company and RealNetworks, Inc. dated April 28,
2000.
21) Letter Agreement between the Company and RespondTV dated April 11,
2000.
22) Capitalized Lease Agreement with Associates Commercial Corp. dated
September 30, 1999.
23) Xxxxx Xxxxxx Letter of Credit dated September 25, 1997 for
approximately $60,000; security deposit for leased property.
24) Agreement between the Company and Endeavor, dated January 11, 2001.
156
Exhibit K
Section 7(c) Shares and Rights included in the denominator of the Warrants.*
NATURE OF SHARES AND RIGHTS NUMBER
--------------------------- ------
Current outstanding shares of Common Stock 10,089,995
Current outstanding options (vested, unvested, in-the-$, out-of-the-$) 3,047,807
Current outstanding warrants (vested, unvested, in-the-$, out-of-the-$) 1,307,130
Shares to be issued to Presencia en Medios, SA de CV ("Presencia") pursuant 2,678,353
to the Reorganization Agreement, dated as of December 28, 2000 (the
"Reorganization Agreement"), by and among the Company, Presencia and certain
other parties
Warrants to be issued to Presencia pursuant to the Reorganization Agreement 1,036,825
Warrants to be issued to Xxxxx & Company Incorporated upon the consummation 200,000
of the Reorganization Agreement
Warrants to be issued to Presencia pursuant to the Amendment Agreement, dated 500,000
as of February 4, 2001, by and between the Company, Presencia and certain
other parties
Shares to be received by the Purchaser pursuant to this Agreement 4,000,000
* In addition to the above, the parties agreed to include an additional 50,000
shares of Common Stock in the denominator of the Warrants.
157
Exhibit L
Section 7 Negative Covenants.
Company actions not prohibited by the negative covenants: See Exhibit
C, Schedule of Exceptions, Section 3.17(d), with regard to actions taken by the
Board of Directors on February 2, 2001 pertaining to employment arrangements,
the grant of options, and other matters.
158
Schedule I
Attach Form of Board Approval
159
PRINCETON VIDEO IMAGE, INC.
CABLEVISION RESOLUTIONS
WHEREAS, the Board of Directors (the "Board") of Princeton
Video Image, Inc. (the "Corporation") has reviewed the proposed Stock and
Warrant Purchase Agreement (the "Agreement") pursuant to which PVI Holding, LLC
or any other direct or indirect subsidiary or affiliate of Cablevision Systems
Corporation (the "Purchaser") proposes, among other things, to acquire 4,000,000
shares of the Corporation's common stock, no par value, (the "Common Stock" ) of
which approximately 2,000,000 shares (the "First Shares") will be purchased on
the First Closing Date (as defined in the Agreement) and the balance (the
"Second Shares" and together with the First Shares, the "Shares") on the Second
Closing Date (as defined in the Agreement) and (iii) warrants (the "Warrant") to
purchase up to 11,471,908 shares of Common Stock (the "Warrant Shares") at the
exercise prices set forth in the Warrant, all for an aggregate purchase price of
$10 million (the "Purchase Price"), to be paid on the terms set forth in the
Agreement; and
WHEREAS, as required by the Agreement, the Corporation and the
Purchaser will enter into a Registration Rights Agreement (the "Registration
Rights Agreement") pursuant to which the Purchaser will have the right to
require the Corporation to register the shares of Common Stock acquired by the
Purchaser; and
WHEREAS, as required by the Agreement, the Corporation, the
Purchaser, and certain shareholders of the Corporation will enter into a
Shareholders Agreement (the "Shareholders Agreement"); and
WHEREAS, as required by the Agreement, the Corporation and the
Purchaser will enter into a License Agreement (the "License Agreement") and a
Joint Collaboration and License Agreement (the "Joint Collaboration Agreement");
and
WHEREAS, the Purchaser requires that certain parties to the
Reorganization Agreement dated as of December 28, 2000 among the Corporation,
Presencia en Medios, S.A. ("Presencia") and others waive certain rights provided
to them by the Reorganization Agreement and become parties to the Shareholders
Agreement; and
WHEREAS, the Board has reviewed the proposed Amendment
Agreement (the "Amendment Agreement") pursuant to which, in consideration of the
matters set forth in the previous paragraph hereto, certain sections of the
Reorganization Agreement will be amended and Presencia will receive warrants
(the "Presencia Warrant") to purchase 500,000 shares of the Corporation's common
stock (the "Presencia Warrant Shares"); and
WHEREAS, as required by the Agreement, the Corporation shall
create a wholly-
160
owned subsidiary which shall be incorporated in the State of Delaware (the
"Merger Subsidiary"); and
WHEREAS, as required by the Agreement, the Corporation shall
merge with and into the Merger Subsidiary; and
WHEREAS, the Agreement requires the Corporation to obtain the
approval of its shareholders to certain aspects of the transactions contemplated
by the Agreement and the other Transaction Documents (as defined in the
Agreement) (collectively, the "Transactions"); and
WHEREAS, the Board has reviewed, inter alia, the potential
effects of the Transaction on the financial condition and prospects of the
Corporation, the alternatives to the Transaction available to the Corporation
and the fairness opinion delivered by First Union Securities, Inc.; and
WHEREAS, the directors believe that the Transactions are in
the best interests of the Corporation, its stockholders, creditors and other
constituencies; and
WHEREAS, upon the First Closing (as defined in the Agreement),
the Purchaser will be an "interested stockholder" of the Corporation within the
meaning of the New Jersey Shareholders Protection Act, N.J.S. 14A:10A-1, et.
seq. (the "Act"); and
WHEREAS, the Act prohibits an interested stockholder (as such
term is defined in the Act) from engaging in a "business combination" (as such
term is defined in the Act) with the Corporation for five years following the
interested stockholder's "stock acquisition date" (as such term is defined in
the Act) unless the business combination is approved by the Board prior to that
stock acquisition date and prohibits an interested stockholder from engaging in
a "business combination" with the Corporation at any time unless the business
combination: (a) is approved by the Board prior to that stock acquisition date,
or (b) after such five year period, is approved by the affirmative vote of the
holders of two-thirds of the voting stock of the Corporation not beneficially
owned by the interested stockholder at a meeting called for such purpose or (c)
meets certain requirements set forth in subsection c of Section 5 of the Act;
and
WHEREAS, in the exercise of its good faith business judgment, the
Board reasonably believes that it may be in the best interests of the
Corporation, its shareholders and its other constituencies to engage in a
business combination with the Purchaser or an affiliate or associate of the
Purchaser; and
WHEREAS, in the exercise of its good faith business judgment the
Board reasonably believes that it would be harmful to the Corporation, its
shareholders and its other constituencies if the Board failed to take action to
avoid precluding the Corporation from engaging in a business combination with
the Purchaser or an affiliate or associate of the Purchaser and is adopting
these resolutions to avoid restricting the Corporation from engaging in such
business combinations; and
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161
WHEREAS, the Board, after considering all of the factors set forth
above and after consulting with its legal counsel, has determined in its good
faith business judgment that it is in the best interests of the Corporation, its
shareholders and its other constituencies that certain business combinations
with the Purchaser or an affiliate or associate of the Purchaser be, to the
maximum extent permitted by law, approved as required by the Act;
NOW, THEREFORE, it is hereby
THE TRANSACTION
RESOLVED, that the Corporation issue and sell to the Purchaser,
on the terms and conditions set forth in the Agreement, the First Shares, the
Second Shares, the Warrant and the Warrant Shares and that upon issuance and
payment in compliance with the terms of the Agreement and the Warrant (as to the
Warrant Shares), the First Shares, the Second Shares and the Warrant Shares will
be duly and validly issued, fully paid and nonassessable.
RESOLVED, that the Corporation issue and sell to Presencia, on
the terms and conditions set forth in the Amendment Agreement and the Presencia
Warrant, the Presencia Warrant and the Presencia Warrant Shares and that upon
issuance and payment in compliance with the terms of the Presencia Warrant, the
Presencia Warrant Shares will be duly and validly issued, fully paid and
nonassessable.
RESOLVED, that each of the Chairman of the Board, President, the
Vice Presidents, Secretary, Treasurer, or any other officer of the Corporation
and any other person delegated by the Chairman of the Board or the President of
the Corporation or any one or more of them (each an "Authorized Person") be and
hereby is authorized and directed on behalf of the Corporation and in its name
to execute, deliver and perform the Agreement, the Registration Rights
Agreement, the Shareholders Agreement, the License, the Joint Collaboration
Agreement, the Warrant, the Amendment Agreement and the Presencia Warrant with
such changes and in such form as he or she determines to be necessary or
appropriate and to take all actions and execute all other documents required
thereby, the taking of such actions and the execution of such documents to be
conclusive evidence of such determination.
RESOLVED, that the Corporation hereby reserves for issuance of the
First Shares and the Second Shares 4,000,000 shares of Common Stock.
RESOLVED, that the Corporation hereby reserves for issuance upon
exercise of the Warrant and the Presencia Warrant 11,471,908 shares of Common
Stock and 500,000 shares of Common Stock, respectively, which number of shares
shall be increased or decreased from time to time to reflect adjustments
pursuant to the terms of the Warrant and the Presencia Warrant, respectively, in
the number of shares of Common Stock issuable upon exercise thereof.
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162
THE DELAWARE REINCORPORATION
RESOLVED, that the form of Certificate of Incorporation and
bylaws for the Merger Subsidiary presented to the Board is hereby approved.
RESOLVED, that each Authorized Person is authorized and directed
on behalf of the Corporation and in its name to take all actions and execute all
documents which he or she determines to be necessary or appropriate to cause the
formation of the Merger Subsidiary under the laws of Delaware and to cause the
Corporation to become the sole stockholder of the Merger Subsidiary, the taking
of such actions and the execution of such documents to be conclusive evidence of
such determination.
RESOLVED, that the Corporation become a Delaware corporation by
merging with and into the Merger Subsidiary (the "Merger").
RESOLVED, that each Authorized Person is authorized and directed
on behalf of the Corporation and in its name to take such actions and execute,
deliver and perform such documents (including without limitation an agreement of
merger) as he or she determines to be necessary or appropriate for the purpose
of effecting the Merger, the taking of such actions and the execution of such
documents to be conclusive evidence of such determination.
RESOLVED, that in the event that the requisite number of
shareholders of the Corporation entitled to vote in respect thereof vote in
favor of effecting the Merger, each Authorized Person is authorized and directed
on behalf of the Corporation and in its name to execute and file with such state
agencies such documents (including without limitation a certificate of merger)
as he or she determines to be necessary or appropriate for the purpose of
effecting the Merger, the execution and filing of such documents to be
conclusive evidence of such determination.
THE SHAREHOLDERS MEETING
RESOLVED, that a Special Meeting of Shareholders of the
Corporation be and hereby is called to be held at the offices of the Corporation
in Lawrenceville, New Jersey, on such date as the Board shall subsequently
determine for the purpose of considering and approving the sale and issuance of
the Second Shares, the Warrant and the Warrant Shares and the Merger and to
transact such other business as may properly come before the meeting or any
adjournment or adjournments thereof.
RESOLVED, that the Board recommend to the shareholders that they
approve (i) the sale and issuance of the Second Shares, the Warrant and the
Warrant Shares upon exercise of the Warrant and (ii) the Merger.
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163
RESOLVED, that each Authorized Person be and hereby is authorized
with the advice of counsel to prepare, file with the Securities and Exchange
Commission, and mail to shareholders as of the record date, which shall be such
date as the Board shall subsequently determine, a copy of the notice of Special
Meeting of Shareholders, Proxy Statement and proxy for said meeting.
RESOLVED, that Xxxxx X. Xxxxxxxx, Xxxxxxxx Xxxxxxx and Xxxxxx X.
XxXxxxxx be, and each of them, with full authority to act without the other,
hereby is, designated as a proxy to vote at the Special Meeting of Shareholders
all proxies received by the Board upon the Transaction, the Merger and such
other business as may properly come before the meeting or any adjournment or
adjournments thereof.
RESOLVED, that Xxxxxxx X. Xxxxx or any other representative of
Smith, Stratton, Wise, Xxxxx & Xxxxxxx and representatives of The American Stock
Transfer and Trust Company be and hereby are appointed to serve as inspectors of
the election at the Special Meeting of Shareholders.
THE NEW JERSEY SHAREHOLDERS PROTECTION ACT
RESOLVED, that, in addition to the Transactions, all business
combinations (as such term is defined in the Act) between the Corporation on the
one hand and the Purchaser or an affiliate or an associate of the Purchaser (as
such terms are defined in the Act) on the other hand shall be, and hereby are,
ratified and approved in all respects on and as of the date hereof
notwithstanding that such business combination shall be entered into subsequent
to the Purchaser's stock acquisition date (as such term is defined in the Act);
provided, that any such business combination shall be approved by a vote of a
majority of the directors of the Corporation serving as directors at the time
that such business combination is submitted to the Board for approval (excluding
for purposes of determining such a majority vote any Purchaser Director (as such
term is defined in the Agreement)).
RESOLVED, that the considerations set forth in the preamble to
these resolutions are an integral part hereof and that any court determining the
applicability or validity of these resolutions shall, to the maximum extent
possible, interpret these resolutions so as to give the full effect thereto
intended by the Board of the Corporation as evidenced by such preamble.
RESOLVED, that the foregoing resolutions regarding the Act may not
be amended, modified, supplemented, rescinded, revoked or annulled without the
unanimous consent of the entire Board of the Corporation (including the
Purchaser Directors, if any, then serving on the Corporation's Board).
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164
GENERAL
RESOLVED, that each Authorized Officer be and hereby is authorized
to execute and deliver any and all contracts, deeds, and writings of any nature
and to do any other act or thing in the name and on behalf of the Corporation
that he or she determines to be necessary or appropriate to carry out the
foregoing resolutions, the taking of such actions and the execution of such
documents to be conclusive evidence of such determination.
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165
Schedule II
Attach Approvals and Waivers with Respect to the Mexican Affiliate
166
FORM OF SIDE AGREEMENT REGARDING MEXICAN TRANSACTION
The signatories hereunder (other than PVI Holding, LLC, a Delaware limited
liability company (the "Purchaser")) are parties to the Reorganization
Agreement, dated as of December 28, 2000 (the "Agreement"), as amended in the
Amendment Agreement, dated as of February 4, 2000 (the "Amendment Agreement",
together with the Agreement, the Reorganization Agreement"), by and among
Presencia en Medios, SA de CV, a Mexican corporation ("Presencia"), Xxxxxxx
Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxxxxxx, Presence in Media LLC, a Delaware limited
liability company, Virtual Advertisement LLC, a Delaware limited liability
company, PVI LA, LLC, a Delaware limited liability company, Princeton Video
Image, Inc. (the "Company"), a New Jersey corporation and Princeton Video Image
Latin America, LLC, a New Jersey limited liability company.
Notwithstanding anything to the contrary in the Reorganization Agreement or any
side letters or agreements by or between any of the parties thereof, including
without limitation, the letter from Xxxxxxxx X. Xxxxxxx of the Company, dated
December, 2000, for good consideration:
(a) each of the undersigned hereby consents to the terms of the Stock and
Warrant Purchase Agreement, dated as of February 4, 2001 (the "Purchase
Agreement"), between the Company and the Purchaser;
(b) each of the members of the Seller Group hereby irrevocably waives its right
to equity participation under Sections 7.3 and 7.4 of the Reorganization
Agreement for the benefit of each of the Company and the Purchaser in relation
to:
(i) the issue of the Shares and the issue and exercise of the
Warrants (each as defined in the Purchase Agreement);
(ii) any shares of Common Stock proposed to be issued or issued
pursuant to the Purchaser's preemptive rights under Section
6.2 of the Purchase Agreement; and
(iii) the application of any anti-dilution provision under Section 6
of the Warrant Certificate in the form attached as Exhibit B
to the Purchase Agreement; and
(c) the Company hereby irrevocably waives its rights under Section 8.4 of the
Reorganization Agreement for the benefit of the Purchaser for the limited
purpose of allowing the members of the Seller Group to vote in favor of the
Proposals at the Shareholders Meeting (each as defined in the Purchase
Agreement).
Furthermore, each of the parties to the Reorganization Agreement:
1
167
(i) represents and warrants for the benefit of the Purchaser as of
the date hereof that:
(A) it has not assigned or transferred, directly or
indirectly, any PVI Stock, PVI Warrants or rights
under the Reorganization Agreement since the
execution of the Reorganization Agreement; and
(B) other than the documents set forth in Exhibit A
attached hereto, the Reorganization Agreement is the
only agreement among the parties with respect to the
subject matter therein and has not been amended since
its execution; and
(ii) agrees not to amend or assign or transfer, directly or
indirectly, any of its rights under the Reorganization
Agreement or the PVI Warrants prior to the Second Closing
without the prior written consent of the Purchaser; provided
that Precensia does not require the prior written consent of
the Purchaser in relation to any such transfer or assignment
to its affiliates (as defined under Rule 405 of the Securities
Act of 1933, as amended) or, if such affiliate is an
individual, any such affiliate's immediate family (meaning
such affiliate's spouse, parents, children, adopted children,
stepchildren and grandchildren), trusts solely or primarily
for the benefit of such individual or such individual's
immediate family members, and corporations, partnerships,
limited liability companies or other entities in which such
individual or such individual's family members and/or trusts
are the majority equity holders as the case may be, if and
only if such transferee shall have, prior to such transfer or
assignment, executed and delivered an agreement, in form and
substance satisfactory to the Purchaser, agreeing to be bound
by the terms of this Agreement to the extent that Precensia is
bound.
Unless stated to the contrary, all terms with initial capital letters
are defined in accordance with the Reorganization Agreement.
THIS SIDE AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF
THE STATE OF NEW YORK.
This side agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall
constitute one agreement.
2
168
IN WITNESS WHEREOF, the parties hereto have executed this side agreement as of
February 4, 2001.
PRESENCIA EN MEDIOS, SA DE CV
By:/s/ Xxxxx Xxxx
_______________________________
Name: Xxxxx Xxxx
Title: Director General
/s/ By Power of Attorney Xxxxx Xxxx
__________________________________
XXXXXXX XXXX
/s/ Xxxxx Xxxx
__________________________________
XXXXX XXXX
/s/ Xxxxxxx Xxxxxxxx
__________________________________
XXXXXXX XXXXXXXX
PRESENCE IN MEDIA LLC
By: /s/ Xxxxx Xxxx
________________________________
Name: Xxxxx Xxxx
Title: Director General
VIRTUAL ADVERTISEMENT LLC
/s/ Xxxxx Xxxx
By: _____________________________
Name: Xxxxx Xxxx
Title: Director General
3
000
XXX XX, LLC
By: /s/ Xxxxx Xxxx
_______________________________
Name: Xxxxx Xxxx
Title: Director General
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
PRINCETON VIDEO IMAGE LATIN
AMERICA, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
_______________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
4
170
Agreed:
PVI HOLDING, LLC
By: /s/ Xxxxxxx X. Xxxx
___________________________
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
5
171
Exhibit A
Letters dated December 15, 2000 and December 2000 to Sections 4.26 and 7.3 of
the Reorganization Agreement, respectively.
Letter dated February 4, 2001 regarding incurrence of working capital debt by
Publicidad Virtual, S.A. de C.V.
6
172
Schedule III
Section 3.21(a) Employee Benefit Plans.
Bonus Plan
Amended 1993 Stock Option Plan
Medical & Dental
Long term Disability
Short Term Disability
401K Plan
Group Life Policy
Life AD&D Insurance
Flexible Benefits (Dependent Care and Medical)
