Exhibit 4.3
ACQUISITION AGREEMENT
Among
AMPEX CORPORATION
and
AMPEX HOLDING CORPORATION
and
THE SEVERAL SHAREHOLDERS NAMED HEREIN
dated as of
June 24, 1998
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TABLE OF CONTENTS
Page
1. Purchase and Sale of the Shares and Related Transactions...............................................-1-
2. Related Agreements.....................................................................................-4-
3. Representations and Warranties of Sellers..............................................................-5-
4. Representations and Warranties of Buyer and Parent....................................................-29-
5. Covenants of the Sellers..............................................................................-33-
6. Covenants of Buyer....................................................................................-39-
7. Buyer's Closing Conditions............................................................................-40-
8. Sellers' Closing Conditions...........................................................................-50-
9. Closing and Closing Date..............................................................................-54-
10. Survival of Representations and Warranties............................................................-54-
11. Indemnification of Buyer..............................................................................-55-
12. Closing Date Balance Sheet............................................................................-58-
13. Brokerage; Expenses...................................................................................-61-
14. Assigns...............................................................................................-61-
15. Governing Law.........................................................................................-62-
16. Further Assurances....................................................................................-62-
17. Termination...........................................................................................-62-
18. Consent to Service....................................................................................-64-
19. Entire Agreement; Amendments..........................................................................-64-
20. Notices...............................................................................................-65-
21. Designated Subsidiary.................................................................................-66-
22. Miscellaneous.........................................................................................-66-
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Exhibit A List of Sellers
Exhibit B Certificate of Designations
Exhibit C Escrow Agreement
Exhibit D Registration Rights Agreement
Exhibit E Disclosure Schedule
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ACQUISITION AGREEMENT
THIS AGREEMENT dated this 24th day of June, 1998 by and among
AMPEX CORPORATION, a Delaware corporation ("Parent"), AMPEX HOLDINGS
CORPORATION, a Delaware corporation ("Buyer"), and the several shareholders
named below (each, a "Seller" and collectively, "Sellers").
W I T N E S S E T H
WHEREAS, Sellers own all the issued and outstanding shares of
common stock (the "Shares") of MicroNet Technology, Inc., a Delaware corporation
(the "Company"); and
WHEREAS, Buyer desires to acquire, and Sellers desire to sell,
the Shares, in exchange for shares of Class A Common Stock of Parent and the
other consideration specified herein below;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereby agree
as follows:
1. Purchase and Sale of the Shares and Related Transactions.
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(a) On the Closing Date (as defined in Section 9) and upon the
terms and subject to the conditions hereof, Sellers will sell to Buyer and Buyer
will purchase and acquire from Sellers, the Shares in exchange for (i) the
number of shares of Class A Common Stock, par value $0.01 per share (the "Class
A Stock") of
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Parent determined by dividing $1,800,000 by the "Closing Stock Price" (as
hereinafter defined) (the "Purchase Plan"); and (ii) the other covenants,
agreements and undertakings of Buyer set forth herein. The aggregate number of
shares of Class A Stock deliverable to Sellers pursuant to this Section 1(a)
shall be allocated among Sellers (or their permitted designees)in accordance
with written instructions signed by all Sellers, and delivered to Buyer not less
than two business days prior to the Closing Date. In no event shall Parent have
any obligation to issue more than 720,000 shares of Class A Stock pursuant to
this Section 1(a). The "Closing Stock Price" shall be determined by taking the
average of the closing prices of the Class A Stock as reported on the American
Stock Exchange for the five trading day period ending on the second business day
before Closing. A Seller shall have the right, upon not less than two business
days' written notice prior to the Closing Date to designate an entity controlled
by such Seller to acquire title to the shares of Class A Stock issuable to such
Seller hereunder, provided that such entity shall be an "accredited investor" as
defined in Section 3(v) hereof.
(b) At the Closing and concurrently with consummation of the
transactions referred to in Section 1(a), Sellers will sell and assign to Buyer,
and Buyer will purchase from Sellers, Sellers' interests in the bank
certificates of deposit pledged by Sellers as collateral security under certain
Third Party Pledge
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Agreements (the "CIT Pledge Agreements") between the several Sellers and The CIT
Group/Credit Finance, Inc. ("CIT"), more fully described on Exhibit A hereto,
relating to a Loan and Security Agreement, dated as of December 20, 1996,
between the Company and CIT (the "CIT Loan Agreement"), for cash in an amount
equal to the respective amounts of such certificates of deposit, or Buyer will
otherwise obtain the full release of Sellers' obligations under the CIT Pledge
Agreements.
(c) On or prior to the Closing, Sellers will exchange all
outstanding shares of Series A Redeemable Preferred Stock ("Series A Preferred
Stock") of the Company and all outstanding shares of Series B Redeemable
Exchangeable Preferred Stock ("Series B Preferred Stock" and together with the
Series A Preferred Stock, the "Old Preferred Stock") of the Company for the
number of shares of 8% Noncumulative Redeemable Junior Preferred Stock (the
"Junior Preferred Stock") of the Company set forth on Exhibit A hereto opposite
each Seller's name; which shares shall have the terms specified in the form of a
Certificate of Designations attached as Exhibit B hereto (the "Certificate of
Designations").
(d) The acquisition of the Company by Buyer contemplated by
this Agreement shall not include any of the Company's Subsidiaries (as defined
in Section 3(c) hereof). On or prior to the Closing Date, Sellers shall cause
the Company to transfer all of the shares of capital stock of the Subsidiaries
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held by the Company to Sellers or their designee and to change their Corporate
names to names that do not include the word "Micronet." There shall be no
adjustment to the Purchase Price as a result of the transactions contemplated by
this Section 1(d).
(e) The sale of Shares and related transactions referred to in
this Section 1, including the manner of making all payments, shall be effected
in accordance with the terms and provisions of Section 9.
2. Related Agreements.
------------------
(a) Escrow Agreement. At the Closing, Buyer, Parent and
Sellers will enter into an escrow agreement in the form of Exhibit C attached
hereto (the "Escrow Agreement") with IBJ Xxxxxxxx Bank & Trust Company, as
Escrow Agent and 720,000 shares of Class A Stock and all the shares of Junior
Preferred Stock deliverable to the Sellers pursuant to Section 1 shall be
deposited with the Escrow Agent at the Closing and held in escrow for the
periods specified in the Escrow Agreement as security for Sellers'
indemnification obligations set forth in Section 11 hereof.
(b) Registration Rights Agreement. At the Closing, Buyer,
Parent and Sellers will enter into a Registration Rights Agreement in the form
of Exhibit D attached hereto, providing for the registration of the shares of
Class A Stock deliverable to
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Sellers pursuant to Section 1 under the Securities Act of 1933, as amended (the
"Securities Act").
3. Representations and Warranties of Sellers. Sellers jointly and severally
represent and warrant to Buyer as follows:
(a) Corporate Status of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware with full corporate power and authority to carry on its
business as now conducted and to own or lease and operate its properties as and
in the places where such business is now conducted and such properties are now
owned, leased or operated. The Company is duly qualified or authorized to do
business and is , or on the Closing Date will be, in good standing in each
jurisdiction listed in Schedule 3(a)of the disclosure schedule attached hereto
as Exhibit E and forming a part hereof (the "Disclosure Schedule"), which are
the only jurisdictions where it owns or leases real property or where the
failure to be so qualified would result in a material adverse effect on the
business, assets, financial condition or results of operations of the Company (a
"Material Adverse Effect"). Sellers have delivered to Buyer a complete and
correct copy of the Com pany's certificate of incorporation (certified by the
appropriate official of the State of Delaware and the Company's By-Laws
(certified by the Secretary of the Company), as amended and in effect on the
date hereof.
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(b) The Company's Capitalization. The Company's authorized
capital stock consists of 85,000 shares of capital stock, $0.001 par value per
share, consisting of (i) 55,000 shares of Common Stock, of which 19,125 Class A
shares and 30,150 Class B shares are issued and outstanding, and no shares are
held in treasury; and (ii) 30,000 shares of Preferred Stock, of which 3,500
shares of the Series A Preferred Stock and 4,500 shares of the Series B
Preferred Stock are issued and outstanding, and no shares are held in treasury;
and (iii) no other shares of any other class or series of capital stock are
issued or outstanding or held in treasury. Except as set forth in the first
sentence of this Section 3(b) and for employee stock options and contingent
warrants listed on Schedule 3(b) of the Disclosure Schedule (all of which shall
have been cancelled on or prior to the Closing Date), no options, warrants,
conversion, exchange or other rights, agreements or commitments of any kind
obligating the Company, contingently or otherwise, to issue or sell any shares
of its capital stock of any class or any securities convertible into or
exchangeable for any such shares are outstanding, and no authorization therefore
has been given. Each of the Shares is a validly issued, fully-paid and
non-assessable share of capital stock of the Company, and no personal liability
will attach to the ownership thereof. Each Seller is and on the Closing Date
will be the sole record and beneficial owner of the Shares set forth opposite
such Seller's name on Exhibit A hereto,
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free and clear of any liens, charges, encumbrances, security interests, options
or rights of others with respect thereto, and upon the transfer of the Shares by
Sellers to Buyer and full payment therefor as contemplated in this Agreement,
Buyer will acquire legal, valid and marketable title thereto.
(c) The Company's Subsidiaries. Schedule 3(c) of the
Disclosure Schedule sets forth the name of all direct and indirect subsidiaries
of the Company ("Subsidiaries") at the date of this Agreement. Neither the
Company nor any of the Subsidiaries owns any shares of capital stock or other
interests in any corporation, partnership, association or other entity, other
than the shares of the Subsidiaries indicated on Schedule 3(c). At the Closing,
the Company will have no Subsidiaries. Neither the Interim Balance Sheet (as
defined in Section 3(e) hereof) nor the related unaudited statement of
operations reflects any assets, liabilities, revenues or income of the
Subsidiaries. The Company has not assumed, incurred, guaranteed or otherwise
become liable for any liabilities or obligations of the Subsidiaries, and except
as indicated in Schedule 3(c), on and after the Closing Date the Company will
have no liabilities or obligations (actual, contingent, asserted, unasserted or
otherwise) with respect to any Subsidiaries now or heretofore owned or operated
by the Company, directly or indirectly, whether arising before, on or after the
Closing Date, including, without limitation, any liabilities or obligations with
respect to
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severance costs relating to former employees or any other costs or expenses in
connection with the liquidation or winding up of former Subsidiaries.
(d) Authority for Agreements, etc. Each Seller has full power
and authority to execute and deliver this Agreement and to carry out its
obligations hereunder and the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by Seller and, assuming its due
authorization, execution and delivery by Parent and Buyer, constitutes the valid
and legally binding obligation of each Seller in accordance with its terms
except as the same may be limited by (a) bankruptcy, insolvency, reorganization,
fraudulent conveyance or laws or equitable principles relating to or affecting
the enforcement of creditors' rights generally, or (b) general principles of
equity, whether considered in a proceeding in equity or at law. The instruments
referred to in Section 2 will be duly authorized, executed and delivered by each
Seller at Closing and, assuming their due authorization, execution and delivery
by the other parties thereto, will constitute valid and legally binding
obligations of each Seller in accordance with their respective terms (except as
aforesaid). The execution, delivery and performance of this Agreement by Seller
will not conflict with or result in any violation of, or constitute a default
under, or give rise to a right of termination or acceleration of (a) the
Certificate of
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Incorporation or By-Laws of Sellers or the Company, or (b) any mortgage,
indenture, lease, agreement or other instrument to which any Seller or the
Company is a party, or by which their respective properties are bound, or (c)
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Sellers, the Company, or any of
their respective properties, except in the case of clauses (b) and (c) as would
not result in a Material Adverse Effect on the Company or materially and
adversely affect the ability of Sellers to consummate the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with any governmental authority or any
other person is required to be made or obtained by the Company or any Seller in
connection with Sellers' execution, delivery, and performance of this Agreement,
except as disclosed on Schedule 3(d) to the Disclosure Schedule, all of which
shall have been obtained or made by the Company or Sellers on or prior to the
Closing Date.
(e) Financial Statements. Sellers have delivered to Buyer (i)
the combined balance sheets, statements of operations, statements of net capital
deficiency and statements of cash flows of the Company and its Subsidiaries as
at December 19, 1996 and December 31, 1995 and for the periods then ended,
audited by Ernst & Young LLP; and (ii) the unaudited combined balance sheet of
the Company and its Subsidiaries as of March 31, 1998 (the
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"Interim Balance Sheet") and the unaudited combined statement of operations of
the Company and its Subsidiaries for the three months then ended, certified by
the chief financial officer of the Company. The financial statements referred to
in the preceding sentence, together with the related notes thereto are
hereinafter referred to collectively as the "Company Financial Statements." The
Company Financial Statements, which are attached hereto as Schedule 3(e) to the
Disclosure Schedule, have been prepared from the books and records of the
Company and its Subsidiaries in accordance with generally accepted accounting
principles ("GAAP")applied on a consistent basis except as noted in Schedule
3(e). The combined balance sheets included in the Company Financial Statements
present fairly the consolidated financial position of the Company as of the
respective dates thereof and the combined statements of operations included in
the Company Financial Statements present fairly the consolidated income of the
Company for the periods covered thereby, subject, in the case of the Interim
Balance Sheet and the related interim unaudited statement of operations, to
normal year-end adjustments which will not be material in the aggregate. Except
as disclosed in the Company Financial Statements or Schedule 3(e) of the
Disclosure Schedule, the Company has no liabilities or obligations, whether
accrued, absolute, contingent or otherwise,of a kind that should properly be
reflected or reserved against in a balance sheet prepared in conformity with
GAAP applied on a
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713283.7
consistent basis, other than liabilities and obligations that are (i) reflected,
accrued or reserved for in the Interim Balance Sheet, (ii) incurred in the
ordinary course of business consistent with past practice since the date of the
Interim Balance Sheet or (iii) incurred in connection with the transactions
contemplated by and in accordance with the terms of this Agreement. The Closing
Date Balance Sheet (as defined in Section 12 hereof) will be prepared from the
books and records of the Company in accordance with GAAP consistently applied
and will present fairly the financial position of the Company as at the date
thereof.
(f) No Adverse Change. Since the date of the Interim Balance
Sheet (i) except as disclosed in Schedule 3(f) of the Disclosure Schedule, there
has been no material adverse change in the business, properties, revenues,
operations or condition (financial or otherwise)of the Company, (ii) the Company
has not suffered any damage, destruction or loss of property (whether or not
covered by insurance) materially and adversely affecting its condition
(financial or otherwise) or operations; and (iii) none of the Sellers or the
Company has taken or permitted any of the actions referred to in Section 5(c)
hereof.
(g) Taxes. (i) The Company has filed or will file or cause to
be filed, within the time and in the manner prescribed by law, all material
returns, declarations, reports, estimates, information returns and statements,
including information returns
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and reports ("Returns"), required to be filed by it that are due on or prior to
the Closing Date, taking into account all applicable extensions of due dates.
All Returns so filed are or will be complete and accurate, and otherwise
complied (or will comply) in all material respects with the laws, rules and
regulations applicable to such Returns. For purposes of this Section 3(g),
references to the Company shall, wherever appropriate, include the Subsidiaries,
and references to Code Sections shall be to sections of the Internal Revenue
Code of 1986, as amended.
(ii) The Company has paid, within the time and in the
manner prescribed by law (and until the Closing will pay, within the time and in
the manner prescribed by law), all material Taxes (as defined below) that are
due and payable on or prior to the Closing Date, except where the payment
thereof is being contested in good faith by appropriate proceedings and has been
disclosed on Schedule 3 (g) of the Disclosure Schedule.
(iii) As of the Closing Date, the Company will in all
material respects, for all periods prior to the Closing, have satisfied or have
provided adequate reserves for all of its applicable federal, state, local and
foreign withholding tax requirements (including without limitation income,
social security and employment tax withholding for all types of compensation).
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(iv) The Company has established (and until the
Closing will establish) on the Company Financial Statements reserves adequate
for the payment of all Taxes not yet due and payable, and except as so provided
for, no liability (actual or contingent, asserted or unasserted) exists or will
arise with respect to Taxes, resulting from operations or transactions of the
Company occurring prior to the Closing Date.
(v) There is (and until the Closing will be) no
material difference between the amounts of the book basis and the tax basis of
assets (net of liabilities) that is not accounted for by an accrual on the books
for federal income tax purposes or, if not required to be so accrued under GAAP,
is not described in the Disclosure Schedule.
(vi) There are no liens for Taxes upon the assets of
the Company except liens for Taxes not yet due.
(vii) The Company has not filed (and will not file
prior to the Closing Date) any consent agreement under Code Section 341(f) or
agreed to have Code Section 341(f)(2) apply to any disposition of the subsection
(f) asset (as such term is defined in Code Section 341(f)(4)) owned by the
Company.
(viii) No deficiency or adjustment for any Taxes has
been proposed or asserted or assessed against the Company; to the best of the
Seller's knowledge, no foreign, federal, state or local audits, examination or
other administrative proceedings or court proceedings are pending with regard to
any Taxes.
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(ix) The federal income tax returns of the Company
have never been examined by the Internal Revenue Service (the "IRS"). Except as
is set forth in the Disclosure Schedule, none of Sellers or the Company has
received any notice of deficiency or assessment from any Federal, state, local
or foreign taxing authority with respect to liabilities for Taxes of the Company
which have not been paid or finally settled. The Company not has executed or
filed with the IRS or any other governmental authority any agreement or
instrument extending, or having the effect of extending, the period for
collection or assessment of any Taxes, nor are any requests for such waivers or
consents pending. The Company has not entered into any closing agreement with
any taxing authority that will affect any period ending after the Closing Date.
(x) The Company is not a party to any tax-sharing or
allocation agreement, nor does the Company owe any amount under any tax-sharing
or allocation agreement.
(xi) The acquisition of the Company by the Buyer will
not result in the payment of any "excess parachute payment" within the meaning
of Code Section 280G. There is no agreement, plan or arrangement covering any
employee or independent contractor of the Company that would give rise to any
payment that would not be deductible pursuant to Code Section 280G or Code
Section 162(m).
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(xii) The Company has not made any election
under Code Section 338(g) with respect to any acquisition and no outstanding
debt obligation of the Company is "corporate acquisition indebtedness" within
the meaning of Code Section 279(b).
(xiii) The Company is not a United States Real
Property Holding Corporation as defined in Code Section 897(c)(2).
(xiv) To the knowledge of Sellers and the
Company, no material income economically attributable to transactions occurring
before the Closing Date will be required to be recognized for Tax purposes by
the Company on or after the Closing Date, excluding any such income for which
reserves for deferred Taxes have been established.
(xv) None of Sellers is a "foreign person" (as
that term is defined in Code Section 1445) and each Seller shall furnish to
Buyer on or prior to the Closing Date a certificate of such Seller's non-foreign
status, as set forth in Treasury Regulation Section 1.1445-2(b).
(xvi) For purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, or other assessments of whatever kind or
nature, including, without limitation, all net income, gross income, gross
receipts, sales, use, value-added, ad valorem, transfer, franchise, profits,
license,
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withholding, payroll, employment, excise, estimated, severance, stamp, net
worth, environmental, occupancy or property taxes, customs duties, fees,
assessments or charges of any kind whatsoever (together with any interest and
any penalties, additions to tax or additional amounts) imposed by any taxing
authority (domestic or foreign) upon or payable by the Company or the
Subsidiaries.
(h) Patents, Trademarks and Trade Names, etc. Schedule 3(h) of
the Disclosure Schedule hereto contains a complete and correct list of each
patent, trademark, trade name, copyright, servicemark or maskwork owned or used
by any of the Company as well as all registrations thereof and pending
applications therefor, and each license or other agreement relating thereto
(collectively, the "Intellectual Property"). Except as disclosed in Schedule
3(h), the Company pays no royalty or similar fees to anyone relating to the
Intellectual Property. Except as set forth in Schedule 3(h) there is no action,
suit or proceeding pending or, to the best knowledge of Sellers threatened
against, by or affecting any of the Company alleging that any of the
Intellectual Property rights of others with respect to any product manufactured,
used or sold by the Company are being infringed, or challenging the validity or
effectiveness of the Intellectual Property.
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(i) Permits; Compliance with Laws. The Company has all
necessary permits, licenses and governmental authorizations required for the
ownership or occupancy of its properties and assets and the carrying on of its
business, except where the failure to have any such permit, license or
governmental authorization would not have a Material Adverse Effect on the
Company. The Company has complied in all material respects with all laws,
regulations, orders and permits, the violation of which would have a Material
Adverse Effect on the Company.
(j) Insurance. Schedule 3(j) to the Disclosure Schedule
contains a complete and correct list of all policies of insurance covering the
Company, indicating the type and amount of coverage, the premium and the
expiration date of each policy. Such policies are in full force and effect.
Complete and correct copies of each insurance policy have been furnished or made
available to Buyer.
(k) Material Contracts. Except as listed in Schedule 3(k) of
the Disclosure Schedule (the "Material Contracts") or any other exhibit hereto,
the Company is not a party to any (i) contract not made in the ordinary course
of business; (ii) contract for the employment of any officer or employee; (iii)
licenses of patents, trademarks or trade names, copyrights, servicemarks or
other intellectual properties, including trade secrets or proprietary know-how;
(iv) written
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xxxxxxxxx, xxxxxxxxxxxxxxx, sales agency, consignment or similar agreement; (v)
written contract for the future purchase of materials, supplies, services,
merchandise or equipment not capable of being fully performed or not terminable
within a period of one year from the date hereof or in excess of normal
operating requirements; (vi) agreement or arrangement for the sale or lease of
any assets or services other than in the ordinary course of business; (vii)
contract or commitment for capital expenditures in excess of $50,000 for any one
project; (viii) mortgage, pledge, security agreement, or other similar agreement
with respect to liens or encumbrance of any real or personal property; (ix)
lease of machinery or equipment, where any one lease requires payments in excess
of $50,000 per annum; (x) collective bargaining agreement or other agreement
with any labor union or association representing any employee; (xi) loan
agreement, guarantee, subordination or similar type of agreement relating to
borrowed money; (xii) retirement, severance, pension, bonus, profit-sharing,
stock option, stock purchase, group insurance, medical or other fringe benefit
plan or program providing employee benefits; (xiii) consulting agreement; (xiv)
contract with, or material permit issued by, any government or agency or
instrumentality thereof; or (xv) other material agreement, whether or not
entered into in the ordinary course of business, under which the Company's
liability exceeds $50,000,
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other than any agreement entered into in the ordinary course of business for the
purchase or sale of goods or services. Complete and correct copies of each such
agreement have been furnished or made available to Buyer. The Company has
performed all the obligations required to be performed by it to date and is not
in default under any of the material agreements, leases, contracts or other
documents to which it is a party except for any failures to perform or defaults
that would not, singly or in the aggregate, have a Material Adverse Effect on
the Company.
(l) Litigation. Except as described in Schedule 3(l) to the
Disclosure Schedule or in the Financial Disclosure Schedule referred to in
Section 3(m)below, there is no action, suit or proceeding pending or, to the
best of the knowledge of Sellers, threatened against, by or affecting the
Company in any court, or by or before any national, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Except as disclosed
in Schedule 3(l), to the best of the knowledge of Sellers, there are no
governmental investigations pending or threatened, and no decrees, injunctions
or orders of any court, governmental department or agency outstanding against
the Company or against Sellers and materially and adversely affecting the
business of the Company.
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(m) Financial Disclosure Schedule. Sellers have delivered to
Buyer a true and complete copy of a financial disclosure schedule, as of March
31, 1998 (the "Financial Disclosure Schedule"), a copy of which is attached as
Schedule (m) to the Disclosure Schedule. The Financial Disclosure Schedule has
been prepared by the Company in good faith and with reasonable diligence and, to
the best of the knowledge of Sellers, does not omit any accounts payable or
other material claims pending or, to the knowledge of Sellers, threatened
against the Company("Claims"), except accounts payable arising in the ordinary
course of business after the date of the Financial Disclosure Schedule as
permitted by this Agreement and except that the Financial Disclosure Schedule
does not necessarily list any individual Claim which is less than $100.00 in
amount. Except as permitted by Section 7(g) hereof, all Claims listed in the
Financial Disclosure Schedule have been, or on or prior to the Closing Date will
be, settled and the Company has, or will have, received a settlement agreement
and mutual release ("Release")from each of the Creditors listed on the Financial
Disclosure Schedule, in substantially the form heretofore submitted by the
Company to Buyer, true copies of which have been or on or prior to the Closing
Date will be delivered to Buyer. Subject to the Company's obligation to make the
cash payments required thereunder, the Releases are and will be valid and
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effective to release the Company from all Claims held by Creditors who have
executed and delivered Releases to the Company in accordance with their
respective terms.
(n) Title to Properties; Absence of Encumbrances.
(i) (A) Schedule 3(n) of the Disclosure
Schedule contains a correct and complete list of the real properties leased or
occupied by the Company as of the date hereof. The Company owns no real
properties.
(B) The Company enjoys peaceful and
undisturbed possession to the real property covered by all of the leases under
which it is operating. All of such leases are valid, subsisting and in full
force and effect, and the Company is not in material breach or default of any
such lease, except as disclosed in Schedule 3(n).
(C) None of the Sellers has received any
notice that any buildings leased or used by the Company violate or conflict with
any restrictive covenant, zoning ordinance, administrative regulation or
provision of national, state or local law in effect which in any material
respect interferes with or prevents the continued use of the properties
described in Schedule 3(n) for the purposes for which they are now being used or
which would materially affect the value thereof.
(ii) All material items of tangible personal
property owned or leased by any of the Company in the ordinary
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course of its business is in good operating condition, ordinary wear and tear
excepted.
(iii) The Company has good and marketable title to
all its properties and assets shown on the Interim Balance Sheet (except for
assets disposed of in the ordinary course of business since the date of the
Interim Balance Sheet or otherwise in accordance with this Agreement) or shown
on any exhibit delivered pursuant hereto, free and clear of any and all liens,
mortgages, pledges, leases, security interests, restrictions, prior assignments,
claims and encumbrances of any kind whatsoever ("Liens"), except as set forth in
Schedule 3(n) or another schedule, excepting therefrom the Lien of current taxes
not yet due and payable and Liens which would not, singly or in the aggregate,
have a Material Adverse Effect on the Company.
(o) Inventory. The inventories of the Company, shown on the
Interim Balance Sheet, or thereafter acquired, consist of a quality and quantity
useful or saleable in the ordinary course of business, other than those items of
inventory not saleable in the ordinary course of business or which are obsolete
or below standard quality, which in each case have been written down to their
current realizable value or adequately reserved for as reflected on the Company
Financial Statements.
(p) ERISA Compliance. Schedule 3(p) of the Disclosure Schedule
sets forth a true and complete list of each "pension
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plan," as such term is defined by Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")(the "Pension Plans"), each "welfare
plan," as such term is defined in Section 3(1) of ERISA (the "Welfare Plans"),
and each other plan of deferred compensation for one or more employees,
established or maintained by the Company or to which the Company makes or has
made contributions (collectively, the "Benefit Plans"). Sellers have delivered
true and complete copies of all Benefit Plans as currently in effect, and the
three most recent annual reports relating thereto, to Buyers. Each Benefit Plan
complies in all material respects with the requirements of ERISA and no such
Plan has incurred "any accumulated funding deficiency" within the meaning of
Section 302 of ERISA. No liability to the Pension Benefit Guaranty Corporation
("PBGC") has been incurred with respect to any Benefit Plan nor, to Sellers'
knowledge, has any event or circumstance occurred in connection with any Benefit
Plan maintained by the Company which could result in any liability to the PBGC.
No "reportable event", within the meaning of Section 4043 of ERISA, has occurred
with respect to any Benefit Plan and no such Plan has been terminated, nor has
the PBGC been given notice of any intention to terminate any such Plan. Neither
the Company nor any fiduciary of any such plan has engaged in, nor is any Seller
aware of the occurrence or continuing existence of, any "prohibited transaction"
within the
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meaning of Section 406(a) or (b) of ERISA or of Section 4975(c) of the Code.
Each Benefit Plan has received a determination letter from the Internal Revenue
Service to the effect that it is qualified under Section 401(a) and, to the best
of Sellers' knowledge, nothing has occurred before or since the receipt of the
latest determination letter with respect to each such Plan to affect adversely
its continued qualification. The Company has, for all periods ending on or
before the date hereof, administered each Benefit Plan, in all material respects
in compliance with the fiduciary, funding, reporting and disclosure requirements
applicable thereto under ERISA, the Code or any other Federal, state or local
law. No Benefit Plan constitutes a "multiemployer plan" as defined in Section
3(37) of ERISA. No Pension Plan invests in stock of the Company. There is no
arrangement with any employee of the Company that could give rise to a payment
that would not be deductible under Section 280G or 162(a)(i) of the Code. No
event has occurred that will result in a material penalty, excise tax or other
tax to the Company under Chapter 43 of the Code. The Company does not maintain
or have any obligation for any post-retirement health, medical or welfare
benefits for retired employees. No condition exists that would prevent the
Company from amending or terminating a Pension Plan or Welfare Plan. No change,
or announcement relating to any change, to any Benefit Plan has been made nor
shall be made prior
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to Closing without the written consent of Buyer. There are no pending or
anticipated lawsuits and no outstanding claims for benefits (except initial
claims in the ordinary course) with respect to any Benefit Plan.
(q) Restrictions. Except as disclosed herein or in Schedule
3(q) hereto, the Company is not a party to any non-compete or similar agreement
which in any material way restricts the ability of the Company to compete with
any party to such agreement.
(r) Corporate Records. (i) The minute books of the Company, as
previously made available to Buyer, contain complete and accurate records of all
meetings of and action by the stockholders and boards of directors of the
Company.
(ii) Schedule 3(r) of the Disclosure Schedule
contains a true and complete list of (A) all directors and officers of the
Company; (B) the name of each bank in which the Company has an account or safe
deposit box, the identifying numbers or symbols thereof, and the name of each
person authorized to draw thereon or to have access thereto; and (C) the name of
each person, if any, holding powers of attorney from the Company, and a summary
statement of the terms thereof.
(s) Interests in Other Businesses. Sellers do not have any
direct or indirect interest in any business entity which is competitive with or
related to the business of the Company.
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(t) Accounts Receivable. All accounts receivable of the
Company are reflected on the Interim Balance Sheet in accordance with GAAP, or
were accrued thereafter in the ordinary course of business and all arose only
from bona fide sales transactions in accordance with the Company's customary
terms of sale and practices. Sellers have no reason to believe that all such
receivables are not collectible in the ordinary course of business with the
exercise of diligent collection efforts, at the aggregate recorded amounts
thereof shown on the books of the Company, less the reserves established with
respect to such receivables.
(u) Relationships with Customers and Suppliers. Sellers have
not received written notice to the effect that the benefits of any material
relationship of the Company with its customers or suppliers will not continue to
be available to Buyer.
(v) Securities Act Representations. Sellers are acquiring the
shares of Class A Stock issuable pursuant to Section 1 hereof for investment and
not with a view to the distribution or resale thereof. Sellers understand that
such shares have not been registered under the Securities Act and cannot be
resold unless they are so registered or unless an exemption from registration is
available, and, as a result, that such shares may be held for an indefinite
period of time. Each
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Seller further represents that it (and any permitted designee of Seller) is an
"accredited investor" as that term is defined in Regulation D under the
Securities Act and possesses such knowledge and experience in financial and
business matters so that such Seller is capable of evaluating the risks and
merits of an investment in such shares. Each Seller acknowledges and agrees that
the certificates for such shares will bear a legend restricting transferability
of such shares except in compliance with the Securities Act.
(w) Environmental Matters. Except as set forth in Schedule
3(x) of the Disclosure Schedule, the Company has not received any notice
alleging the present, past or threatened violation of any applicable Federal,
state, or local laws or regulations related to the protection of the environment
("Environmental Laws") and, to the best knowledge of Sellers, the Company is and
has been in compliance with all Environmental Laws in all material respects.
(x) Product Warranties. Except as set forth in Schedule 3(x)
of the Disclosure Schedule, the Company has no unexpired express product
warranty with respect to any product manufactured or sold on or prior to the
Closing Date, nor is there any basis for any claim (actual, contingent, asserted
or unasserted) based upon any product warranty, except as adequately reflected
or reserved against in the Interim Balance Sheet or
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other claims against the Company not exceeding $50,000 in the aggregate
(collectively, the "Warranty Reserve").
(y) No Misrepresentation. No representation or warranty
contained in this Agreement or in any exhibit hereto or in any certificate or
other instrument furnished to Buyer pursuant to the terms hereof contains any
untrue statement of a material fact, or, taken together, omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
4. Representations and Warranties of Buyer and Parent. Buyer and
Parent hereby jointly and severally represent and warrant to Sellers as follows:
(a) Organization and Good Standing. Each of Buyer and Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has full power and authority to own its
property and carry on its business as it is now being conducted.
(b) Authority for Agreements, etc. Each Buyer and Parent has
full power and authority to execute and deliver this Agreement and to carry out
its obligations hereunder and the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by each of Buyer and
Parent and, assuming its due authorization, execution and delivery by Sellers,
constitutes the valid and legally binding obligation of
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each of Buyer and Parent in accordance with its terms except as the same may be
limited by (a) bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws or equitable principles relating to or affecting the enforcement of
creditors' rights generally, or (b) general principles of equity, whether
considered in a proceeding in equity or at law. The instruments referred to in
Section 2 will be duly authorized, executed and delivered by each of Buyer and
Parent at Closing and, assuming their due authorization, execution and delivery
by the other parties thereto, will constitute valid and legally binding
obligations of each of Buyer and Parent in accordance with their respective
terms (except as aforesaid). The execution, delivery and performance of this
Agreement by Buyer and Parent will not conflict with or result in any violation
of, or constitute a default under, or give rise to a right of termination or
acceleration of, (a) the Certificate Of Incorporation or By-Laws of Buyer or
Parent, or (b) any mortgage, indenture, lease, agreement or other instrument to
which any Buyer or Parent is a party, or by which their respective properties
are bound, or (c) any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or
Parent, or any of their respective properties, except in the case of clauses (b)
and (c) as would not result in a Material Adverse Effect or materially and
adversely affect the ability of
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Buyer or Parent to consummate the transactions contemplated by this Agreement.
Except for filings under Federal or state securities laws and as contemplated by
the Registration Rights Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with any governmental authority or
any other person is required to be made or obtained by Buyer or Parent in
connection with their execution, delivery, and performance of this Agreement.
(c) Authorization of Class A Stock. The issuance and delivery
of the Class A Stock issuable to Sellers as contemplated by Section 1 hereof has
been duly authorized by all requisite corporate action on behalf of Parent, and
when issued and delivered in accordance with the terms of this Agreement, the
Class A Stock will be validly issued, fully paid and nonassessable, and not
subject to any preemptive or similar rights of stockholders of Parent.
(d) Parent SEC Reports; Financial Statements. Parent has
delivered to Sellers true and complete copies of Parent's annual report on Form
10-K for the fiscal year ended December 31, 1997 and of all reports on Form 8-K
or 10-Q (excluding exhibits) filed by Parent with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended since December 31, 1997 (collectively, the "Parent SEC Reports"),
receipt of which is hereby acknowledge by Sellers. As
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of their respective dates, the Parent SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Parent SEC
Reports (including the related notes and schedules) fairly presents in all
material respects the consolidated financial position of Parent and its
Subsidiaries as of its date, and each of the consolidated statements of income
and cash flows included in or incorporated by reference into the Parent SEC
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, retained earnings and cash flows,
as the case may be, of Parent and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein. Since March 31,
1998, there has been no material adverse change in the business, operations or
financial condition of Parent and no material change in the capitalization of
Parent.
713283.7
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(e) Securities Act Representations; Listing of Class A Stock.
Parent has not, directly or indirectly, solicited any offer to buy or offered to
sell, and will not, directly or indirectly, solicit any offer to buy or offer to
sell, any security which is or would be integrated with the offer and sale of
the Class A Stock to be issued to Sellers pursuant to this Agreement. None of
Parent, Buyer or any of their affiliates (as such term is defined in Rule 501(b)
under the Securities Act), or any person acting on their behalf, has engaged or
will engage, in connection with the offer and sale of the Class A Stock, in any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act. Assuming the accuracy of the representations
and warranties of Sellers in Section 3(v) hereof, it is not necessary in
connection with the offer, sale and delivery of the Class A Stock to Sellers in
the manner contemplated by this Agreement to register the Class A Stock under
the Securities Act. The shares of Class A Stock to be issued to Sellers have
been or, at the Closing, will have been, approved for listing on the American
Stock Exchange upon issuance as contemplated by this Agreement.
5. Covenants of the Sellers. From and after the date hereof and until the
Closing Date, Sellers hereby covenant and agree that:
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(a) Access to Documents; Opportunity to Ask Questions. Sellers
shall cause the Company to grant to Buyer or its representatives, during normal
business hours, access to the properties, corporate records, books of account,
contracts and all other documents, of the Company reasonably requested by Buyer,
its managerial employees, counsel and accountants in order to permit Buyer and
such representatives to make such engineering, legal, financial, accounting and
other reviews and investigations as Buyer shall reasonably desire to make
concerning the business and affairs of the Company, and shall instruct the
Company's independent public accountants to permit Buyer's independent public
accountants to inspect its accounting and tax accrual work papers and other
non-privileged records relating to the Company. Seller shall further cause the
managerial employees, counsel and accountants of the Company to be available
upon reasonable notice to answer questions of Buyer's representatives concerning
their businesses and affairs, and shall further cause them to make available all
relevant books and records in connection with such inspection and examination
and to furnish such additional financial, technical and other data and
information as the Buyer shall from time to time reasonably request.
(b) Maintenance of Insurance. Sellers shall cause the Company
to maintain in full force and effect all its presently
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existing insurance coverage, or insurance comparable to such existing coverage.
(c) Conduct of Business. Sellers shall cause the business of
the Company to be conducted in the ordinary course, consistent with the present
conduct of its business, and will use their reasonable best efforts to maintain,
preserve and protect the assets and goodwill of the Company. During such period
of time, except upon the prior written consent of Buyer, Sellers will not permit
the Company to: (i) amend its By-Laws or Certificate of Incorporation, except
that on or prior to the Closing Date the Sellers shall cause the Certificate of
Designations to be authorized, executed and filed by the Company in the State of
Delaware, (ii) issue any additional shares of capital stock or issue, sell or
grant any option or right to acquire or otherwise dispose of any of its
authorized but unissued capital stock or other corporate securities or redeem or
repurchase any shares of its capital stock, except such as are necessary to
effectuate the transactions contemplated by this Agreement, (iii) declare or pay
any dividends or make any other distribution in cash or property on its capital
stock, (iv) incur any obligation or liability (absolute or contingent) except
current obligations and liabilities incurred in the ordinary course of business,
(v) enter into any employment agreement or become liable for any bonus,
profit-sharing or incentive payment
713283.7
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to any of its officers, directors or employees, except pursuant to
presently existing plans, arrangements or agreements disclosed herein or in an
exhibit hereto, (vi) sell, transfer or acquire any properties or assets,
tangible or intangible, other than in the ordinary course of business, (vii)
make any material changes in its customary method of operations, including
marketing and pricing policies and maintenance of business premises, fixtures
and equipment, (viii) modify, amend or cancel any of its existing leases or
enter into any contracts, agreements, leases or understandings other than in the
ordinary course of business, or enter into any loan agreements, (ix) make any
investments other than in certificates of deposit or short-term commercial
paper, or accounts receivable and other trade credit extended in the ordinary
course of business, or (x) take any other action which would cause any of the
representations and warranties made by Sellers in this Agreement not to be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date.
(d) Covenant to Satisfy Closing Conditions. Sellers will use
their reasonable best efforts to cause the conditions set forth in Section 7 to
be satisfied at or prior to the Closing and that the deliveries by Sellers
contemplated by Sections 1 and
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2 are made, insofar as such matters are within the control of the Sellers.
(e) Preferred Stock. (i) At or prior to Closing, Sellers will
cause the Company to adopt, execute and file, in the requisite public offices in
the State of Delaware, (i) an amendment to its Certificate of Incorporation
increasing the authorized number of its shares of preferred stock to 130,000
shares, and (ii) the Certificate of Designations in the form attached as Exhibit
B hereto and to issue the shares of Junior Preferred Stock in exchange for the
outstanding shares of Old Preferred Stock as contemplated by Section 1(c)
hereof. In connection therewith, Sellers covenant to effect such exchange in
reliance upon the exemption from registration under Section 4(2) of the
Securities Act pursuant to Rule 506 thereunder and to file a Form D with the
Securities and Exchange Commission and the California Department of
Corporations. The certificates for the Junior Preferred Stock shall bear a
legend restricting transfer absent registration under the Securities Act or an
available exemption from registration.
(ii) Subject to the Company's right to redeem
shares of Junior Preferred Stock in accordance with Section 6 of the Certificate
of Designations, Parent shall have the option, exercisable by written notice
given in the manner provided in Section 6 of the Certificate of Designations, to
purchase shares
713283.7
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of Junior Preferred Stock from Sellers, in whole at any time or in part from
time to time, on any Redemption Date (as defined in the Certificate of
Designations), at a price equal to 100% of the Redemption Price (as so defined)
which would be payable by the Company on such Date if the Company were then
redeeming the shares pursuant to said Section 6. The purchase price payable by
Parent for such shares shall be payable in cash or at Parent's election in
shares of Class A Stock, valued in the manner specified in Section 1 (a) hereof.
Sellers shall deliver the certificates for the shares of Junior Preferred Stock
being purchased by Parent on the date specified in the notice of purchase
referred to above, and shall take all such other actions as Parent may
reasonably request in order effectively to transfer such shares to Parent free
and clear of any liens, claims or encumbrances. Parent agrees to execute and
deliver to Sellers a registration rights agreement covering the shares of Class
A Stock issued to Sellers pursuant to this Section 5(e) having terms and
conditions substantially similar to those contained in the Registration Rights
Agreement. The restrictions, notice requirements and other provisions relating
to the Company's redemption rights under Section 6 of the Certificate of
Designations, shall apply equally to Parent's redemption rights hereunder.
713283.7
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(f) Adjustment of Accounts Payable and Accrued Liabilities. In
order to satisfy the conditions set forth in Section 7(g), in the event that
accounts payable and accrued liabilities at the Closing are greater than $3
million (or the adjusted amount referred to in Section 7(g)(ii)), Sellers will
apply the proceeds of the sale or release of collateral under the CIT Pledge
Agreements pursuant to Section 1(b) hereof or contribute cash to the Company in
an amount sufficient to enable the Company to meet the conditions specified in
said Section 7(g).
(g) Additional Financial Statements. Sellers shall furnish
Buyer with unaudited financial statements similar to those referred to in
Section 3(e) as at the end of each month subsequent to March 31, 1998 occurring
prior to the Closing Date, and for the fiscal period then ended, all certified
by the chief financial officer of the Company, as soon as such financial
statements become available, and in any event no later than 15 days after the
end of each such month.
(h) Confidentiality Agreements. Sellers will use reasonable
efforts to cause the Company to enter into confidentiality agreements in form
and substance reasonably satisfactory to Buyer with each employee of the Company
designated by Buyer not less than 10 days prior to the Closing Date.
713283.7
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6. Covenants of Buyer. From and after the date hereof and
until the Closing Date, Buyer hereby covenants and agrees that:
(a) Representations and Warranties. Buyer will not take any
action which would cause any of the representations and warranties made by it in
this Agreement not to be true and correct in all material respects on and as of
the Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
(b) Covenant to Satisfy Closing Conditions. Buyer will use
reasonable best efforts to insure that the conditions set forth in Section 8 are
satisfied and that the deliveries by Buyer contemplated by Sections 1 and 2 are
made, insofar as such matters are within the control of Buyer.
(c) Financial Statements. Following the Closing, so long as
any of the shares of Junior Preferred Stock are held by any Sellers, Buyer will
cause the Company to deliver to the holders of the then outstanding Junior
Preferred Stock, as soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, a consolidated balance sheet of the
Company and its consolidated subsidiaries for such fiscal year, and consolidated
statements of income and retained earnings and changes in financial position of
the Company and its consolidated subsidiaries for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
713283.7
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year, prepared in accordance with GAAP consistently applied, certified by the
Chief Financial Officer of the Company.
7. Buyer's Closing Conditions. Buyer's obligation to purchase and pay for the
Shares pursuant to this Agreement is subject to the fulfillment before or at the
Closing of each of the following conditions, any of which Buyer may waive, in
whole or in part.
(a) Representations and Warranties True. All the
representations and warranties of Sellers contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date except as
affected by the transactions herein contemplated.
(b) Covenants and Agreements Performed. Sellers, before or at
the Closing, shall have performed and complied in all material respects with all
the covenants, terms, conditions and agreements required by this Agreement to be
performed or complied with by Sellers before or at the Closing.
(c) Legal Matters Satisfactory. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
herein and all related legal matters shall have been reasonably satisfactory to
and approved by counsel for Buyer, and such counsel shall have been furnished
with such certified copies of actions and proceedings and such
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other instruments and documents as they shall have reasonably requested.
(d) No Litigation. No action or proceeding shall have been
instituted against Buyer, Sellers or the Company before any court or other
governmental body, seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, which in the reasonable judgment of Buyer
makes it inadvisable to proceed with the transaction contemplated hereby.
(e) Certificate. Sellers shall have delivered to Buyer a
certificate executed by Sellers, dated as of the Closing Date, certifying the
fulfillment of the matters specified in Sections 7(a) and (b).
(f) Audited Financial Statements. Sellers shall have delivered
to Buyer the combined balance sheets, statements of operations, statements of
net capital deficiency and statements of cash flows for the Company and its
Subsidiaries as at December 31, 1996 and 1997 and for the three years ended
December 31, 1997, audited by Ernst & Young LLP. Such financial statements shall
be prepared in accordance with GAAP on a basis consistent with the audited
Company Financial Statements, shall be accompanied by a certificate of the Chief
Financial Officer to the effect provided in Section 3(e) and shall otherwise be
in form and substance satisfactory to Buyer.
(g) Certain Financial Conditions. At the Closing:
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(i) (A) the aggregate amount of borrowings by the Company under
the CIT Loan Agreement, including accrued interest and fees (the "CIT Loan"), as
of the Closing Date, shall not exceed $6 million, (B) the outstanding amount of
the CIT Loan shall not exceed the amount of accounts receivable of the Company
(net of accounts receivable arising in connection with the shipment of inventory
on approval, for evaluation or subject to similar contingencies), computed in a
manner consistent with the Interim Balance Sheet included in the Company
Financial Statements, by more than $1.4 million (as such amount may be adjusted
in the manner specified in subsection (g(ii) below), as of the Closing Date, and
(C) no default or event which with notice or lapse of time or both would
constitute a default shall have occurred and be continuing under the CIT Loan
Agreement;
(ii) the Company's outstanding accounts payable and accrued
liabilities, computed in accordance with GAAP in a manner consistent with the
Interim Balance Sheet included in the Company Financial Statements (but
excluding any accrual for warranty expense under GAAP for potential claims
related to component products manufactured by Micropolis (USA), Inc., a Delaware
corporation ("Micropolis"), shall not exceed $3 million in the aggregate, of
which not more than $2.5 million shall consist of accounts payable; provided,
however, that if the amount (if any) by which the outstanding CIT Loan exceeds
713283.7
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outstanding accounts receivable (determined as provided in clause (B) of
subsection (g(i) above) (the "A/R Excess") is more or less than $1.4 million as
of the Closing Date, then the amount of such accounts payable, as of the Closing
Date, shall not exceed an adjusted amount, which adjusted amount shall be $2.5
million minus the amount by which the A/R Excess is greater than $1.4 million or
plus the amount by which the A/R Excess is less than $1.4 million; provided
further, however, that notwithstanding any such adjustment, in no event shall
the Company's accounts payable and accrued liabilities, as of the Closing Date,
exceed $3.5 million in the aggregate, of which not more than $3 million shall
consist of accounts payable; and
(iii) the amount of the Company's inventories, valued in a manner
consistent with the Interim Balance Sheet included in the Company Financial
Statements, shall not be less than $3.5 million.
(iv) Solely for purposes of making the calculations contemplated
by this Section 7(g), accounts receivable of the Company shall be deemed to
include confirmed sales orders outstanding at the Closing Date, identified to
Buyer's reasonable satisfaction, providing for deferral of shipments until after
the Closing Date but on or prior to July 31, 1998; and loans or advances made by
Parent or Buyer, directly to the Company or through arrangements with CIT, to
fund
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working capital requirements of the Company relating to such deferred sales
orders, shall be added to the balance of the CIT Loan outstanding at the Closing
Date.
(v) Buyer shall have received a certificate of the Chief
Financial Officer of the Company, dated the Closing Date, setting forth in
reasonable detail the foregoing calculations, and such other documentation as it
may reasonably request in order to verify satisfaction with the conditions
specified in this Section 7(g).
(h) Contribution of Indebtedness by Sellers. On or prior to the
Closing, Sellers shall have contributed to the capital of the Company and
cancelled all outstanding indebtedness of the Company or its Subsidiaries owing
to Sellers or their affiliates, together with all accrued interest, fees and
other claims, if any, with respect to such indebtedness, and all notes and other
evidences of such indebtedness shall have been surrendered to the Company; and
Buyer shall have received such evidence thereof as it may reasonably request.
(i) Cancellation of Stock Options and Warrants. On or prior to Closing
all outstanding stock options, warrants and similar instruments covering shares
of the Company's common stock shall have been cancelled, and the holders thereof
shall have surrendered such options to the Company without payment by the
713283.7
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Company of any consideration therefor; and Buyer shall have received such
evidence thereof as it may reasonably request.
(j) Accountants' Report. Buyer shall have received a report, from
Coopers & Xxxxxxx, LLP, independent public accountants, satisfactory in form and
substance to Buyer, as to the Company's operations and financial statements.
(k)Opinion of Counsel. Buyer shall have received an opinion, dated the
Closing date, of Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP, counsel for Sellers, in
form and substance satisfactory to Battle Xxxxxx LLP, counsel for Buyer, to the
effect that:
(i) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
corporate power to carry on its business as, to the knowledge of such counsel,
such business is now conducted and to own, lease and operate the property and
assets now owned or leased and operated by it; and is qualified to do business
as a foreign corporation in each jurisdiction in which it has certified to such
counsel that it owns or leases real or personal property or permanently
maintains assets or employees, except where the failure to be so qualified would
not have a material adverse effect on the Company;
(ii) The Company's authorized and outstanding capital stock is as
stated in Section 3(b);
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(iii) Each of the Sellers is the holder of record of that number
of Shares set forth opposite his name in Exhibit A of this Agreement and, to the
best of the knowledge of such counsel, owns all of such shares free and clear of
all liens, claims, charges, restrictions, equities or encumbrances of any kind
and, to the best of such counsel's knowledge, has full power and the legal right
to sell such shares to Buyer pursuant to this Agreement;
(iv) Each of this Agreement, the Escrow Agreement and the
Registration Rights Agreement has been duly executed and delivered by each of
the Sellers and is a legal, valid and binding obligation of each of the Sellers
enforceable against the Sellers in accordance with its terms, except as the same
may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent
conveyance or other laws or equitable principles relating to or affecting the
enforcement of creditors' rights generally; (b) general principles of equity,
whether considered in a proceeding in equity or at law; and (c) other conditions
specified therein, which shall be reasonably satisfactory to Buyer's counsel;
(v) The execution and delivery of this Agreement by each of the
Sellers and the consummation of the transactions provided for in this Agreement
will not violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of
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the Company or, to the best knowledge of such counsel, result in any breach of
any Material Contract;
(vi) No authorization, approval or consent of, or any action by,
or filing with, any United States federal or state court or regulatory authority
or by or with any court or regulatory authority of any foreign jurisdiction that
has not been obtained, taken or made, is required for the execution, delivery or
performance of this Agreement by Sellers (other than state security or blue sky
laws as to which such counsel need express no opinion);
(vii) By delivery of a certificate or certificates representing
the Shares, the Sellers will transfer to the Buyer who has purchased such Shares
pursuant to the Agreement (without notice of any defect in the title of Sellers
and who is otherwise a bona fide purchaser for purposes of the Uniform
Commercial Code) valid and marketable title to such Shares, free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind;
(viii) Such counsel knows of no litigation, proceeding or
investigation pending, threatened or proposed in any manner involving any Seller
or the Company or any of the properties or assets of any of them or which
questions the validity of this Agreement or any action taken or to be taken by
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any Seller under this Agreement except as disclosed in Schedule 3( ); and
(ix) Assuming the due authorization, execution and delivery by
the Creditors named therein and due payment by the Company of the Settlement
Payment specified therein, each of the Releases will be valid and binding
obligations of the Company and the Creditors, enforceable in accordance with its
terms subject to same exceptions referenced in (iv).
In rendering the opinion described above, Seller's counsel may rely on
an opinion or opinions, copies of which shall be furnished to Buyer, of local
counsel satisfactory to Buyer with respect to the laws of jurisdictions other
than the United States of America and the State of California, and as to matters
of fact, upon certificates of public officials and officers of the Company. The
opinion described in (ix) above may be rendered by Xxxxx & Opera, special
counsel to the Company.
(l) Resignations of Directors. The directors of the Company shall have
executed and delivered to Buyer their resignations as directors of the Company
effective at the Closing.
(m) The Note payable by the Company to Micropolis in the principal
amount of $577,068, described in Schedule 3(d) of the Disclosure Schedule, shall
have been paid in full or otherwise satisfied by Sellers on terms reasonably
satisfactory
713283.7
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to Buyer not involving any cost to the Company; or (i) Sellers shall have
expressly agreed to assume the defense of, and fully indemnify Buyer and the
Company against, all claims and expenses relating to such Note in accordance
with Section 11(b) hereof, and (ii) 265,000 shares of Class A Stock shall have
been deposited in escrow under the Escrow Agreement, in addition to the shares
to be deposited pursuant to Section 2(a) hereof, in order to secure Buyer and
the Company against the incurrence of any obligation or expense in respect of
such Note.
(n) The claims of Xxxxxxx Xxxx against the Company, described in
Schedule 3(f) of the Disclosure Schedule, shall have been settled on terms
reasonably satisfactory to Buyer not involving any cost to the Company; or
Sellers shall have expressly agreed to assume the defense of, and indemnify
Buyer and the Company against, claims and expenses relating to such suit in
accordance with Section 11(b) hereof.
(o) The stipulated judgment relating to the claims of The Irvine
Company, in the form of Exhibit C to Schedule 3(f) of the Disclosure Schedule,
shall have been executed by the Company and duly filed with the applicable
court, and all claims of The Irvine Company referred to therein shall have been
settled and released to the reasonable satisfaction of Buyer in accordance with
the terms of such stipulated judgment.
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8. Sellers' Closing Conditions. Sellers' obligations to sell and deliver the
Shares pursuant to this Agreement are subject to the fulfillment before or at
the Closing of each of the following conditions, any of which Sellers may waive,
in whole or in part.
(a) Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on and as of the Closing Date, except as affected by the transactions
contemplated herein.
(b) Covenants and Agreements Performed. Buyer, before or at the
Closing, shall have performed and complied in all material respects with all the
covenants, terms, conditions and agreements required by this Agreement to be
performed by it before or at the Closing.
(c) Legal Matters Satisfactory. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated herein and all
related legal matters shall have been reasonably satisfactory to and approved by
counsel for Sellers, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as they shall have reasonably requested.
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(d) No Litigation. No action or proceeding shall have been instituted
by any governmental authority against Buyer, Sellers or the Company before any
court or other governmental body, seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, which in the reasonable
judgment of Sellers makes it inadvisable for Sellers to proceed with the
transactions contemplated hereby.
(e) Certificate. Buyer shall have delivered to Sellers a certificate
executed by its President or any Vice-President, dated as of the Closing Date,
as to the fulfillment of the matters specified in Sections 8(a) and (b).
(f) Opinion of Counsel. Sellers shall have received an opinion of
Battle Xxxxxx LLP, counsel for Buyer and Parent, dated the Closing Date, as to
the following matters:
(i) Each of Buyer and Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to carry on its business as, to the knowledge of
such counsel, now conducted and to acquire and own the Shares;
(ii) Each of this Agreement, the Escrow Agreement and the
Registration Rights Agreement has been duly authorized, executed and delivered
by Buyer and Parent and is a valid and binding obligation of Buyer and Parent
enforceable against Buyer and Parent in accordance with its terms, except (a) as
the same
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may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or other laws or equitable principles relating to or affecting the enforcement
of creditors' rights generally, (b) general principles of equity, whether
considered in a proceeding in equity or at law and (c) other customary
conditions specified therein, which shall be reasonably satisfactory to counsel
to Sellers;
(iii) The issuance and delivery of the shares of Class A Stock
issuable to Sellers pursuant to Section 1(a) has been duly authorized by all
necessary corporate action on behalf of Parent and, upon issuance and delivery
in accordance with this Agreement, such shares of Class A Stock will be validly
issued and outstanding, fully-paid and non-assessable and not subject to any
preemptive or other similar rights of the stockholders of Parent;
(iv) All corporate proceedings required to be taken by Buyer and
Parent at or before the Closing in connection with this Agreement and the
transactions contemplated hereby have been duly taken; and
(v) The execution and delivery of this Agreement and the
consummation of the transactions provided for in this Agreement will not violate
or conflict with any provision of the Certificate of Incorporation or By-Laws of
Buyer or Parent or, to the best of the knowledge of such counsel, result in any
breach
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of any contract or agreement known to such counsel to which Buyer or Parent is a
party or by which Buyer or Parent is bound or to which the properties or assets
of Buyer or Parent are subject.
In rendering the opinion described above, Battle Xxxxxx LLP may rely
on an opinion or opinions, copies of which shall be furnished to Sellers, of
local counsel satisfactory to Sellers with respect to the laws of jurisdictions
other than the United States of America and the States of New York and Delaware
(with respect only to the General Corporation Law of Delaware), and as to
matters of fact upon certificates of public officials and officers of Buyer.
9. Closing and Closing Date. The closing contemplated by this Agreement (the
"Closing") shall be held at the offices of Battle Xxxxxx LLP, 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., local time, on July 15, 1998 or
at such other time, place or date as the parties may agree (the "Closing Date");
provided,however, that if any of the conditions provided in Sections 7 and 8
hereof to the obligations of any party hereunder shall not have been met or
waived by such party by such date, then the party which has been unable to meet
such condition or conditions will be entitled to postpone the Closing for up to
one month by giving notice to the other party to such effect, but in no event
will any party be entitled to postpone the scheduled date of the Closing beyond
July 31, 1998. At the Closing,
713283.7
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Sellers shall deliver to Buyer all certificates representing the Shares in
proper form for transfer to Buyer, together with all requisite stock transfer
stamps or cash in lieu thereof, Buyer shall pay the consideration specified in
Section l(a) for the Shares, and the related transactions specified in Sections
1 and 2 shall have been completed.
10. Survival of Representations and Warranties. The parties agree that the
representations and warranties contained in this Agreement or in any
certificate, document or instrument delivered in connection herewith, shall
survive the execution and delivery of this Agreement and the Closing hereunder
for the period ending March 31, 1999, regardless of any investigation made by
the parties except for the representations and warranties contained (i) in
Section 3(b), which shall survive the Closing indefinitely, (ii) in Section 3(g)
hereof, which shall survive until the expiration of all applicable Federal,
state, local, foreign or other statutes of limitations and (iii) in Section 3(x)
hereof, which shall survive until June 30, 2000. No claims for indemnity under
Section 11 shall be made after the expiration of the applicable survival periods
of Sellers' representations and warranties.
713283.7
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11. Indemnification of Buyer.
------------------------
(a) Subject to the provisions of Section 10 and subsection 11(c),
Sellers agree jointly and severally to indemnify and hold Buyer harmless from
and against:
(i) Any and all liabilities, obligations, damages, deficiencies
and expenses resulting from the breach of any representation or warranty of
Sellers contained in this Agreement or non-fulfillment of any agreement on the
part of Sellers under the terms of this Agreement; and
(ii) All actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to the foregoing.
(b) If any legal proceedings are instituted or any claim or demand is
asserted by any person in respect of which Buyer may seek indemnification from
Sellers under this Section 11, Buyer shall promptly cause written notice of the
assertion of any claim of which it has knowledge and which is covered by this
indemnity to be forwarded to Sellers. Sellers shall have the right, at Sellers'
option and expense, to defend such proceeding, claim or demand with a single
counsel of their choice, which counsel must be reasonably satisfactory to Buyer,
and to defend against, negotiate, settle or otherwise deal with any proceeding,
claim or demand which relates to any loss, liability, damage or deficiency
indemnified against hereunder; provided, however, that
713283.7
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no settlement shall be made without the prior written consent of Buyer unless
Buyer is unconditionally released from all liability relating to the action
which is the subject of such settlement; and provided further, that Buyer may
participate in any such proceeding with counsel of its choice and at its
expense. To the extent Sellers elect not to defend such proceeding, claim or
demand and Buyer defends against, settles or otherwise deals with any such
proceeding, claim or demand, which settlement may be made without the consent of
Sellers, Buyer will act reasonably and in accordance with its good faith
business judgment. The parties agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such legal
proceeding, claim or demand.
(c) Notwithstanding anything contained herein to the contrary, the
indemnity provided for in this Section 11(i) shall be Buyer's exclusive remedy
for monetary damages against Sellers or any of them, and (ii) shall not be
enforceable except to the extent that the aggregate amount of claimed losses,
liabilities, damages or deficiencies exceeds the sum of Fifty Thousand Dollars
($50,000), and then only to the extent of such excess, and (iii) with respect to
monetary damages, shall be limited to the rights of Buyer to recover against the
property of Sellers which is subject to the Escrow Agreement.
(d) For purposes of this Section 11:
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(i) the indemnification by Sellers provided for in Section
11(a)(i) shall be deemed to include, without limitation, product warranty claims
relating to products manufactured and sold by the Company prior to the Closing
Date, to the extent the aggregate amount of such claims incurred by the Company
prior to June 30, 2000, exceeds the Warranty Reserve referred to in Section
3(x), notwithstanding any disclosures contained in Schedule 3(x) or elsewhere in
the Disclosure Schedule; and
(ii) the indemnification by Sellers provided for in Section 7(m)
and 7(n) shall continue in effect until satisfaction by Sellers of the
respective claims covered thereby, notwithstanding the limitations with respect
to assertion of claims for indemnification contained in the last sentence of
Section 10 hereof.
12. Closing Date Balance Sheet.
(a) Promptly following the Closing Date, Sellers shall prepare an
unaudited balance sheet of the Company as of the close of business on the
Closing Date, which balance sheet is herein referred to as the Closing Date
Balance Sheet. Sellers and their independent public accountants shall have
access to, and be permitted to retain copies of, the Company's books and records
after Closing and the reasonable assistance of the Company's employees, for the
purpose of preparing such Closing Date Balance
713283.7
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Sheet. Sellers shall keep the information contained in such books and records
confidential and shall not disclose the same to others except for the purposes
contemplated hereby or as required by law. Except to the extent specifically
provided for herein, the Closing Date Balance Sheet shall be prepared on the
same basis as the Interim Balance Sheet and shall be delivered to Buyer as soon
as reasonably possible after the Closing Date. The Closing Date Balance Sheet
shall be subject to verification by Buyer and its independent public accountants
during the 30-day period following delivery thereof to Buyer.
Unless Buyer delivers written notice to Sellers on or prior to the
30th day after Buyer's receipt of the Closing Date Balance Sheet of Buyer's
objection to the Closing Date Balance Sheet and specifying in reasonable detail
all disputed items and the basis therefor, Buyer shall be deemed to have
accepted and agreed to the Closing Date Balance Sheet. If Buyer so notifies
Sellers of its objection to the Closing Date Balance Sheet, Buyer and Sellers
shall, within 30 days following such notice (the "Resolution Period"), attempt
to resolve their differences and any resolution by them as to any disputed
amounts shall be final, binding and conclusive.
(b) If, at the conclusion of the Resolution Period, one or more items
remain in dispute, then the disputed items shall be submitted to KMPG Peat
Marwick LLP (the "Neutral
713283.7
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Auditors"). Each party agrees to execute, if requested by the Neutral Auditors,
a reasonable engagement letter. All fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors shall be borne equally by Sellers
and Buyer. The Neutral Auditors' determination shall be made within 30 days of
their selection, whether or not such presentations by Sellers and Buyer have
been made within such period, and shall be set forth in a written statement
delivered to Sellers and Buyer and shall be final, binding and conclusive. The
term "Adjusted Closing Date Balance Sheet," as hereinafter used, shall mean the
definitive Closing Date Balance Sheet agreed to by Buyer and Sellers in
accordance with Section 12(a) or the definitive Closing Date Balance Sheet
resulting from the determinations made by the Neutral Auditors in accordance
with this Section 12(b) (in addition to those items theretofore agreed to by
Sellers and Buyer).
(c) The Purchase Price shall be decreased (but not increased), dollar
for dollar, to the extent the aggregate amount of accounts receivable or
inventories of the Company reflected in the Adjusted Closing Date Balance Sheet
are less than the aggregate amounts thereof reflected in the certificate
delivered pursuant to Section 7(f) or the amounts of the CIT Loan, accounts
payable or accrued liabilities are greater than the applicable amounts so
certified. The amount of any reduction of the
713283.7
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Purchase Price pursuant to this Section 12(c) shall be withdrawn from the number
of shares of Class A Stock deposited in escrow pursuant to Section 1.6 and
returned to Purchaser, within ten business days after the Adjusted Closing Date
Balance Sheet is agreed to or any remaining disputed items are ultimately
determined by the Neutral Auditors. Any matter which forms a basis of an
adjustment in the Purchase Price pursuant to this Section 12(c) shall not give
rise to a separate claim for indemnification under Section 11 hereof or any
breach by Sellers of any of their representations, warranties or covenants under
this Agreement.
13. Brokerage; Expenses. The parties represent and warrant to each other that
there are no valid claims for brokerage commissions or finder's fees in
connection with the negotiation of this Agreement and the performance of the
transactions contemplated hereby resulting from any action taken by them, except
for a fee payable to Xxxxx, Green Inc., which shall be payable solely by
Sellers. The parties agree to indemnify, defend, and hold harmless each other
against any and all losses and expenses sustained by the other as a result of
liability or alleged liability to any other broker or finder on the basis of any
arrangement, agreement or acts relating to or arising out of the transactions
contemplated by this Agreement made or performed by the other party. Except as
otherwise specifically provided
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elsewhere herein, each party hereto shall pay its own expenses incident to the
negotiation, preparation, execution, delivery and performance of this Agreement
and related documents, including the expenses of its respective counsel and
accountants.
14. Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns but shall not
confer any rights upon any other person. This Agreement may not be assigned by
any party without the other's consent.
15. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York without giving effect to any
conflicts of laws principles.
16. Further Assurances. The parties agree to execute such other documents or
agreements as may be necessary or desirable for the implementation of this
Agreement and the consummation of the transactions contemplated hereby.
17. Termination.
-----------
(a) This Agreement may be terminated and abandoned at any time prior
to Closing:
(i) by the mutual consent of Sellers and Buyer;
(ii) by Buyer, without liability to Sellers, (x) at any time on
or prior to the Closing Date if Sellers shall default in the above performance
or observance of any of the terms hereof to be performed by Sellers and the same
have not
713283.7
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been cured prior to the Closing Date, (y) at Buyer's election, by written notice
given to Sellers on or prior to the Closing Date, if Buyer has become aware of
any event or condition which, in Buyer's sole judgment, materially and adversely
affects or may affect the business, properties, revenues, operations or
prospects of the Company and (z) subject to Section 9 hereof, on July 31, 1998
if any of the conditions precedent to the performance of Buyer's obligations at
the Closing shall not have been fulfilled on or prior to that date;
(iii) by Sellers, without liability to Buyer, (x) at any time on
or prior to the Closing Date if Buyer shall default in the due performance or
observance of any of the terms hereof to be performed by Buyer and the same have
not been cured on or prior to the Closing Date and (y) subject to Section 9
hereof, on July 31, 1998, if any of the conditions precedent to Sellers'
obligations at the Closing shall not have been fulfilled by, on or prior to that
date; or
(iv) by either Sellers or Buyer in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree or
ruling or other action shall have become final and non-appealable.
713283.7
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(b) Procedure and Effect of Termination. In the event of termination
and abandonment of this Agreement by Sellers or Buyer pursuant to this Section
17, written notice thereof shall forthwith be given to the other party. If the
transactions contemplated by this Agreement are terminated as provided herein:
(i) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(ii) All confidential information received by Buyer with respect
to the business of the Company or Sellers shall be treated in accordance with
the provisions of the Confidentiality Agreement, dated as of March 18, 1998,
between Purchaser and Xxxxx, Green Inc. (the "Confidentiality Agreement"), which
shall survive the termination of this Agreement; and
(iii) No party to this Agreement will have any liability under
this Agreement to the other except (x) as stated in subparagraphs (i) and (ii)
of this Section 17(b) and (y) for any liability resulting from such party's
breach of any provision of this Agreement and (z) as provided in the
Confidentiality Agreement.
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18. Consent to Service. Sellers, Buyer and Parent each hereby consent to the
jurisdiction of the United States District Court for the District of Los Angeles
and of any of the courts of the State of California in any action, suit or
proceeding arising under this Agreement, the Escrow Agreement or the
Registration Agreement and agree further that service of process or notice in
any such action, suit or proceeding shall be effective if given the manner set
forth in Section 21 hereof.
19. Entire Agreement; Amendments. This Agreement and any other documents
delivered on the date hereof in connection with the transactions contemplated
hereby constitute the entire agreement between the parties relating to the
subject matter hereof and supersede all prior negotiations and agreements
between the parties relating thereto. No supplement, modification, waiver or
amendment of this Agreement shall be binding unless executed in writing by the
parties and no waiver shall be deemed a continuing waiver or a waiver of any
subsequent breach or default, either of a similar or different nature, unless
expressly so stated in writing.
20. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when:
(a) served personally on the party to whom notice is to be given, (b) one
business day after being delivered to a nationally recognized overnight air
713283.7
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courier, (c) five business days after being sent by first-class mail, registered
or certified, postage prepaid, or (d) when sent by telecopier (with written
confirmation of receipt by recipient's telecopier), and properly addressed as
follows:
(a) To Sellers at their respective addresses set forth in Exhibit A
hereto:
With a copy to:
Xxxxx Xxxxxxxx, Esq.
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No. (000) 000-0000
(b) To Buyer and Parent at:
000 Xxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopier No. (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
Any party may change its address for the receipt of notice by notifying the
other parties to this Agreement in the manner provided above.
21. Designated Subsidiary. It is understood and agreed among the parties that
with the prior written consent of the Sellers, which consent shall not be
unreasonably withheld, Parent may
713283.7
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cause one or more Subsidiaries other than Buyer designated by Parent to carry
out all or part of the transactions contemplated by this Agreement.
22. Miscellaneous. The headings contained in this Agreement are for reference
only and shall not in any way affect the meaning or interpretation of this
Agreement. References to a schedule or an exhibit are, unless otherwise
specified, to a schedule or an exhibit to this Agreement, and references to a
section or subsection are, unless otherwise specified, references to a section
or subsection of this Agreement. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
[END OF TEXT]
713283.7
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
AMPEX CORPORATION
By:
------------------------------
Title:
------------------------------
AMPEX HOLDINGS CORPORATION
By:
------------------------------
Title:
------------------------------
SELLERS:
-----------------------------------
Name: Xxxxx Barzilary
-----------------------------------
Name: Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx
-----------------------------------
Name: Chloe Holdings, Inc.
XXXXX XXXXXX MICRONET PARTNERS LLC
By:
------------------------------
Title:
------------------------------
713283.7
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EXHIBIT A
LIST OF SELLERS
A-1
EXHIBIT A
Shares of Class A Common Stock Owned by Sellers
Xxxxx Xxxxxxxx 6,666
Xxxx Xxxxxx 6,666
Xxxx Xxxxxx 3,668
Xxxx Xxxxxx 1,500
Chloe Holdings, Inc. 645
Shares of Class B Common Stock Owned by Sellers
Xxxxx Xxxxxx MicroNet
Partners LLC 30,150
Pledge Agreements pursuant to which certificates of deposits are pledged to CIT:
Third Party Pledge Agreements, dated as of November 25, 1997 and December 18,
1997, by Xxxxx Xxxxxx California SBIC, L.P. in favor of the CIT Group/Credit
Finance, Inc.
Third Party Pledge Agreement dated as of December 20, 1996 by Xxxxx Xxxxxxxx in
favor of the The CIT Group/Credit Finance, Inc.
Preferred Stock
Preferred Stockholder Preferred Shares Currently Held
Xxxxx Hawkes MicroNet 3,500 shares of Series A
Partners LLC Redeemable Preferred Stock
Xxxxx Xxxxxxxx 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
Xxxx Xxxxxx 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
Xxxx Xxxxxx 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
741117.1
Notice Addresses of the Sellers:
Xxxxx Xxxxxxxx 12840 Hanover
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Xxxx Xxxxxx 00000 Xxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Xxxx Xxxxxx 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Xxxx Xxxxxx 000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Chloe Holdings, Inc 000 00xx Xxxxxx, Xxxxx 0
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Xxxxx Xxxxxx MicroNet
Partners LLC 00000 Xxx Xxxxxxx Xxxxxxxxx, Xxx. 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: J. Xxx Xxxxxxxx
Telecopier No.: (000) 000-0000
741117.1
EXHIBIT B
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
B-1
EXHIBIT B
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF THE
8% NONCUMULATIVE JUNIOR PREFERRED STOCK, SERIES A
(Par Value $0.001 Per Share)
of
MICRONET TECHNOLOGY, INC.
------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------------------------------------
MicroNet Technology, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), does hereby certify:
That, pursuant to authority conferred on the Board of Directors of the
Corporation by the Restated Certificate of Incorporation of said Corporation,
and pursuant to the provisions of Section 151 of Title 8 of the Delaware Code of
1953, as amended, said Board of Directors, at a meeting duly convened and held
on , 1998, adopted the following resolution:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with provisions of the Restated
Certificate of Incorporation of the Corporation, a series of preferred stock,
par value $0.001 per share ("Preferred Stock") of the Corporation known as 8%
Noncumulative Junior Preferred Stock, Series A, be, and it hereby is, created,
classified, authorized and the issuance thereof provided for, and that the
designation and number of shares, and relative rights, preferences and
limitations thereof, shall be as set forth in the form appended hereto.
Section 1. Designation and Amount.
The shares of this series of Preferred Stock shall be designated as "8%
Noncumulative Junior Preferred Stock, Series A" (herein referred to as the
"Series A Junior Preferred Stock"). The number of shares constituting such
series shall be fixed at Three Thousand Five Hundred Shares (3,500), and cannot
be increased except with the consent of the holders thereof given as provided in
Section 9 hereof. The relative rights, preferences, restrictions and
707096.5
other matters relating to the Series A Junior Preferred Stock are contained in
this Certificate of Designations.
Section 2. Definitions. As used in this Certificate of Designations,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or under common control with
such Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Ampex" means Ampex Corporation, a Delaware corporation and its
successors.
"Annual Dividend Rate" has the meaning set forth in Section 4(a)
hereof.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, New York are authorized
or obligated by law or executive order to close.
"Capital Stock" means any and all shares, rights to purchase, warrants,
options, participations or other equivalents of or interests (other than
security interests) in (however designated and whether voting or nonvoting)
corporate stock.
"Certificate of Designations" means this Certificate of Designations,
Rights and Preferences establishing the Series A Junior Preferred Stock pursuant
to Section 151 of the General Corporation Law of the State of Delaware, as the
same may be amended, supplemented or modified from time to time in accordance
with the terms hereof and pursuant to applicable law.
"Common Stock" means the Common Stock, par value $0.001 per share, and
all shares hereafter authorized of any class of common stock, of the
Corporation.
"Consolidated Net Income" means, for any period, the aggregate net
income of the Corporation and its Subsidiaries for such period on a consolidated
basis, determined in accordance with generally accepted accounting principles
consistently applied, after provision for all dividends accruing on any
outstanding shares of any other series of Preferred Stock having cumulative
dividend rights ranking prior to the shares of Series A Junior Preferred Stock
provided that there shall be excluded from Consolidated Net Income any charge
during
707096.5
2
such period representing litigation or other expenses relating to or arising out
of a dispute relating to that certain Acquisition Agreement, dated , 1998, among
Ampex, Ampex Holdings Corporation, a Delaware corporation, and the initial
Holders of the Series A Junior Preferred Stock.
"Default" has the meaning set forth in Section 4(c) hereof.
"Dividend Payment Date" has the meaning set forth in Section 4(a)
hereof.
"Dividend Period" has the meaning set forth in Section 4(a) hereof.
"Holder" means the person in whose name shares of Series A Junior
Preferred Stock are registered on the books of the Corporation.
"Issue Date" means the date of the initial issuance of shares of the
Series A Junior Preferred Stock.
"Junior Stock" means all classes of Common Stock, and any other class
or series of Capital Stock of the Corporation now or hereafter issued and
outstanding that by its terms expressly ranks junior as to dividends and/or upon
liquidation, dissolution or winding up of the Corporation to the Series A Junior
Preferred Stock.
"Liquidation Preference" means, with respect to each share of Series A
Junior Preferred Stock, the sum of $1,000.00 (as adjusted to reflect any stock
dividend, subdivision, reclassification, distribution or similar event relating
to the Series A Junior Preferred Stock).
"Mandatory Redemption Obligation" has the meaning set forth in Section
6(a) hereof.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint-stock company, a trust, a business trust, a
government or any agency or any political subdivision, any unincorporated
organization, or any other entity.
"Preferred Stock" has the meaning set forth above.
"Redemption Date" means any date on which shares of Series A Junior
Preferred Stock are to be redeemed pursuant to Section 6 hereof.
"Redemption Price" has the meaning set forth in Section 6(a) hereof.
"Subsidiary" means (i) a corporation a majority of the Voting Stock of
which is, at the time, directly or indirectly owned by the Corporation, by a
Subsidiary or Subsidiaries of the Corporation (as the case may be) or by the
Corporation and a Subsidiary or Subsidiaries of the
707096.5
3
Corporation (as the case may be), or (ii) any other Person (other than a
corporation) in which the Corporation, one or more Subsidiaries of the
Corporation (as the case may be), or the Corporation and one or more of its
Subsidiaries (as the case may be), directly or indirectly, at the date of
determination thereof, has at least majority ownership interest.
"Voting Stock" means, with respect to any Person, all classes of
Capital Stock of such Person then outstanding and normally entitled to vote for
the election of directors of such Person. Any reference to a percentage of
Voting Stock shall refer to the percentage of votes eligible to be cast for the
election of directors which are attributable to the applicable shares of Voting
Stock.
Section 3. Rank. All shares of Series A Junior Preferred Stock shall,
as to payment of dividends and/or as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, rank (i) junior to,
or on a parity with, as the case may be, any other series of the Preferred Stock
established by the Board of Directors, the terms of which shall specifically
provide that such series shall rank senior to, or on a parity with, as the case
may be, the Series A Junior Preferred Stock with respect to dividend rights
and/or rights on liquidation, dissolution or winding up of the Corporation, and
(ii) prior to all of the Corporation's now or hereafter issued and outstanding
Junior Stock.
Section 4. Dividends.
(a) Payment of Dividends. The Holders of the Series A Junior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, in its sole discretion, out of funds legally available
therefor, cash dividends at the rate per annum of 8% (the "Annual Dividend
Rate") on the Liquidation Preference.
Dividends on the Series A Junior Preferred Stock declared by the Board
of Directors shall be payable quarterly, in arrears, on March 31, June 30,
September 30, and December 31 of each year commencing September 30, 1998 (each
such date, a "Dividend Payment Date"); provided that if any such date is not a
Business Day, then such dividend shall be paid on the next succeeding Business
Day. Each such dividend shall be payable to Holders of record on the record date
established by the Board of Directors which shall be not more than 60 days prior
to the date fixed for payment thereof. Quarterly dividend periods (each a
"Dividend Period") shall commence on and include the first day of January,
April, July and October of each year and shall end on and include the next
Dividend Payment Date; provided, however, that the first Dividend Period shall
commence on the Issue Date and shall end on and include September 30, 1998. The
amount of dividends payable per share of Series A Junior Preferred Stock for
each full Dividend Period shall be computed by applying the Dividend Rate to the
Liquidation Preference and dividing such amount by four (4)(the "Dividend
Amount"). The Dividend Amount payable for the initial Dividend Period and any
period shorter than a full Dividend Period shall be computed on the basis of
actual days elapsed and a 360-day year consisting of twelve 30-day months.
707096.5
4
(b) Distribution of Dividend Payments. All payments of
dividends on the Series A Junior Preferred Stock shall be distributed ratably
among the Holders thereof based upon the aggregate number of shares of Series A
Junior Preferred Stock held by each Holder.
(c) Additional Dividends. In the event that (i) the
Corporation shall fail to comply with its obligations under Section 4(d) below,
(ii) the Corporation shall fail to discharge a Mandatory Redemption Obligation
for any reason other than the insufficiency of legally available funds therefor,
or (iii) the Corporation shall fail to comply with any of its obligations under
Section 7 below and such failure shall continue uncured for a period of 30 days
(each such event, a "Default"), then from the date of such Default and so long
as such Default shall continue to exist unwaived or uncured, the Annual Dividend
Rate applicable to the Series A Junior Preferred Stock shall be increased to a
rate per annum of 10% on the Liquidation Preference.
(d) Limitations on Certain Payments. (i) So long as any shares
of Series A Junior Preferred Stock shall be outstanding, the Corporation shall
not declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption,
exchange or other retirement of, any Junior Stock with respect to any Dividend
Period, except any dividend or distribution payable solely in shares of Junior
Stock, or the purchase, redemption, exchange or other retirement of shares of
Junior Stock in exchange solely for shares of Common Stock, unless the
Corporation shall have paid to the Holders of the Series A Junior Preferred
Stock the Dividend Amount with respect to such Dividend Period.
(ii) If at any time the Corporation shall have failed to pay
all dividends which have accrued on any outstanding shares of any other series
of Preferred Stock of the Corporation having cumulative dividend rights ranking
prior to or on a parity with the shares of Series A Junior Preferred Stock at
the times such dividends are payable, no cash dividends shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation on any
shares of the Series A Junior Preferred Stock unless prior to or concurrently
with such declaration, payment or setting apart for payment, all accrued and
unpaid dividends on all outstanding shares of such other series of Preferred
Stock shall have been or be declared, paid or set apart for payment.
Section 5. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
the holders of the Series A Junior Preferred Stock shall be entitled to receive
out of assets of the Corporation available for distribution to shareholders an
amount equal to all declared and unpaid dividends on such shares plus a sum
equal to the Liquidation Preference for each share of Series A Junior Preferred
Stock then held by them, before any payment shall be made or any assets
distributed to the holders of Junior Stock, provided, however, that the Holders
of outstanding shares of the Series A Junior Preferred Stock shall not be
entitled to receive such liquidation payment until the liquidation payments on
all outstanding shares of any other series of the Preferred
707096.5
5
Stock having liquidation rights ranking prior to the shares of the Series A
Junior Preferred Stock shall have been paid in full. If the assets and funds
thus distributed among the holders of the Series A Junior Preferred Stock shall
be insufficient to permit the payment to such holders of the full preferential
amount described above, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of the
Series A Junior Preferred Stock in proportion to the shares of Series A Junior
Preferred Stock then held by them before any distribution is made to holders of
Junior Stock and until such holders have received such full preferential amount.
The consolidation or merger of the Corporation with another entity shall not be
deemed a voluntary liquidation or involuntary liquidation, dissolution or
winding up of the Corporation and shall not give rise to any right provided for
in this Section 5.
Section 6. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem, out of
funds legally available therefor, outstanding shares of Series A Junior
Preferred Stock, at a price per share in cash equal to 100% of the Liquidation
Preference thereof plus all declared but unpaid dividends on such shares (the
"Redemption Price"), (i) annually, on each March 31, commencing on March 31,
2000, and ending on the earlier of March 31, 2003 or the date that all shares of
Series A Junior Preferred Stock have been so redeemed, but only to the extent of
50% of Consolidated Net Income of the Corporation for the fiscal year ending on
the December 31 next preceding the applicable redemption date less the sum of
(x) all dividends actually declared and paid on the Series A Junior Preferred
Stock during such period plus (y) all optional redemption payments thereon made
pursuant to Section 6(b) hereof during such period, and (ii) on March 31, 2004,
shall redeem any and all remaining shares of Series A Junior Preferred Stock to
the extent of 100% of cumulative Consolidated Net Income of the Corporation for
the period from January 1, 1999 to December 31, 2003 (treated as a single
accounting period and giving effect to any deficit in Consolidated Net Income
recorded in such period). If the Corporation shall fail at any time to discharge
its obligation to redeem shares of Series A Junior Preferred Stock pursuant to
this Section 6 (a) (a "Mandatory Redemption Obligation"), the Corporation shall
discharge such Mandatory Redemption Obligation as soon as the Corporation is
legally able to do so. If and for so long as any Mandatory Redemption Obligation
shall not fully be discharged, the Corporation shall not (except out of shares
of Junior Stock), directly or indirectly, purchase, redeem or discharge any
mandatory redemption, sinking fund or other similar obligation in respect of, or
declare or pay any dividend or make any distribution on, any Preferred Stock
ranking on a parity with the Series A Junior Preferred Stock with respect to
dividends and/or rights upon liquidation, dissolution or winding up of the
Corporation or any Junior Stock .
(b) Optional Redemption. The Corporation may, at its option on
any date set by the Board of Directors, redeem, out of funds legally available
therefor, shares of Series A Junior Preferred Stock in whole at any time or in
part from time to time, for an amount in cash equal to the Redemption Price.
Notwithstanding the foregoing, the Corporation shall not
707096.5
6
redeem less than all outstanding shares of Series A Junior Preferred Stock until
all declared and unpaid dividends on all outstanding shares of Series A Junior
Preferred Stock shall have been or shall concurrently be paid in full.
(c) Procedures for Redemption.
(i) If fewer than all outstanding shares of Series
A Junior Preferred Stock are to be redeemed, the number of shares of
Series A Junior Preferred Stock to be redeemed from each Holder thereof
shall be the number of shares determined by multiplying the total
number of shares of Series A Junior Preferred Stock to be redeemed by a
fraction, the numerator of which shall be the total number of shares of
Series A Junior Preferred Stock held by such Holder and the denominator
of which shall be the total number of shares of Series A Junior
Preferred Stock then outstanding. Upon surrender of a stock certificate
evidencing shares of Series A Junior Preferred Stock that are redeemed
in part, the Corporation shall issue and deliver or cause to have
issued and delivered to a Holder (at the Corporation's expense) a new
stock certificate evidencing the unredeemed shares.
(ii) At least 30 days but not more than 60 days
before the applicable Redemption Date, the Corporation or, at the
Corporation's request, the Corporation's transfer agent (the "Transfer
Agent"), shall mail a notice of redemption by first-class mail postage
prepaid to each Holder, addressed to each such Holder at its last
address shown on the stock transfer books of the Corporation. Such
notice shall identify the shares of Series A Junior Preferred Stock to
be redeemed and shall, among other things, state:
(A) the Redemption Date;
(B) the Redemption Price;
(C) that the shares of Series A Junior
Preferred Stock called for redemption must be surrendered to
the Corporation to collect the Redemption Price;
(D) if fewer than all of the outstanding shares
of Series A Junior Preferred Stock are to be redeemed,
the identification and amounts of the shares of Series A
Junior Preferred Stock to be redeemed, and that after the
applicable Redemption Date, upon surrender of the stock
certificate or certificates evidencing such shares, a new
stock certificate equal to the unredeemed portion will be
issued; and
707096.5
7
(E) the section of the Certificate of
Designation pursuant to which the shares of Series A Junior
Preferred Stock called for redemption are being redeemed.
Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice given to
any other Holder.
(iii) No later than one Business Day prior to the
applicable Redemption Date, the Corporation shall deposit with the
Transfer Agent funds sufficient to pay the Redemption Price for all
shares of Series A Junior Preferred Stock to be redeemed.
(iv) As long as the Corporation has complied with
the requirements set forth in this Section 6(c), from and after the
applicable Redemption Date, shares of Series A Junior Preferred Stock
so redeemed shall be cancelled and shall no longer be deemed to be
outstanding, and, to the extent the Holders thereof no longer hold any
Capital Stock, all rights of such Holders as stockholders of the
Corporation (except the right to receive from the Corporation the
Redemption Price) shall cease.
Section 7. Certain Covenants.
(a) The Corporation shall not and shall not permit any
Subsidiary to enter into any transaction or series of related transactions
(including the purchase, sale, lease, exchange of any property or the rendering
of any service but excluding the payment of reasonable compensation or the grant
of stock options to, or similar compensatory transactions with, officers and
directors of the Corporation or a Subsidiary in the ordinary course of business
or the payment of any dividend or distribution on shares of Capital Stock not
otherwise prohibited by any of the terms of this Certificate of Designations)
having a total value in excess of $50,000 per transaction or series of related
transactions with any Affiliate (other than a wholly-owned Subsidiary), unless
the terms of such transaction or series of transactions are at least as
favorable to the Corporation or such Subsidiary as terms that would be
reasonably obtainable at the same time for a comparable transaction or series of
similar transactions in arm's length dealings with an unrelated third person as
reasonably determined in good faith by the Board of Directors, provided that the
foregoing shall not prohibit (i) the payment by the Corporation or any
Subsidiary of amounts due to its parent corporation under a tax consolidation
agreement on a separate return basis, (ii) payment by the Corporation or any
Subsidiary to an Affiliate of reasonable charges for services or facilities
provided by such Affiliate or (iii) the payment of dividends on shares of
Preferred Stock of the Corporation at a rate not exceeding 8% per annum of the
liquidation preference thereof or the payment of interest on debt securities of
the Corporation at a rate not exceeding 12% per annum.
707096.5
8
(b) The Corporation shall at all times perform its obligations
under this Certificate of Descriptions in good faith with due regard to its
obligations to the Holders of the Series A Junior Preferred Stock .
Section 8. Voting Rights of Preferred Stock.
(a) General. Except as set forth in this Section 9 or as is
otherwise required by law, the shares of Series A Junior Preferred Stock shall
have no voting rights, and consent of the Holders of Series A Junior Preferred
Stock shall not be required for taking any corporate action. In connection with
any right to vote, each Holder of a share of Series A Junior Preferred Stock
shall have one vote for each share held. Any shares of Series A Junior Preferred
Stock owned, directly or indirectly, by the Corporation or any of its
Subsidiaries shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum.
(b) Certain Amendments. So long as any shares of Series A
Junior Preferred Stock remain outstanding:
(i) the affirmative vote of the Holders of 100% of
the outstanding shares of Series A Junior Preferred Stock, voting
together as a separate class, shall be required in order to change (A)
the amount of the Liquidation Preference or the dividend rate of, or
any provision of Section 4 hereof relating to the calculation of the
dividend on, the Series A Junior Preferred Stock, or (B) any provision
of subsection 6(a) or subsection 6(b) hereof adversely affecting the
rights of Holders of Series A Junior Preferred Stock or this Section 8;
and
(ii) the affirmative vote of the Holders of at least
51% of the outstanding shares of Series A Junior Preferred Stock,
voting together as a separate class, shall be required in order to (A)
increase the authorized number of shares of Series A Junior Preferred
Stock or reclassify the Series A Junior Preferred Stock, or to amend,
alter or repeal any of the provisions of the Restated Certificate of
Incorporation of the Corporation, as amended to date, or this
Certificate of Designations, so as to adversely affect any right,
preference or voting power of the holders of Series A Junior Preferred
Stock.
The foregoing voting provisions shall not apply if,
at or prior to the time when the action with respect to which such vote would
otherwise be required to be effected, all outstanding shares of Series A Junior
Preferred Stock shall have been redeemed or notice of redemption shall have been
provided and sufficient funds (and, if applicable, shares of Ampex Common Stock)
shall have been delivered to the Transfer Agent to effect such redemption.
Section 9. Transfers; Replacement of Certificates.
(a) Transfers. Subject to any restrictions on transfer under
applicable securities or other laws, shares of Series A Junior Preferred Stock
may be transferred on the books of
707096.5
9
the Corporation by the surrender to the Corporation of the certificate therefor
properly endorsed or accompanied by a written assignment and power of attorney
properly executed, with transfer stamps (if necessary) affixed, and such proof
of the authenticity of signature as the Corporation or the Transfer Agent may
reasonably require.
(b) Replacement of Certificates. If any mutilated certificate
representing shares of Series A Junior Preferred Stock is surrendered to the
Corporation, or if a Holder claims the certificate representing shares of Series
A Junior Preferred Stock has been lost, destroyed or willfully taken, the
Corporation shall issue a replacement certificate of like tenor and date if (i)
the Holder provides an indemnity bond or other security sufficient, in the
reasonable judgment of the Corporation, to protect the Corporation and any
authenticating agent and any of their officers, directors, employees or
representatives from any loss which any of them may suffer if a certificate
representing shares of Series A Junior Preferred Stock is replaced, and (ii) the
Holder satisfies any other reasonable requirements of the Corporation.
Section 10. Reacquired Shares. Any shares of Series A Junior Preferred
Stock which are purchased, redeemed or otherwise acquired by the Corporation,
shall be retired and canceled by the Corporation promptly thereafter. No such
shares shall upon their cancellation be reissued.
707096.5
10
IN WITNESS WHEREOF, Micronet Technology, Inc. has caused this
Certificate of Designations to be duly signed by , its Vice President, and
attested by , its Assistant Secretary, this ____ day of __________, 1998.
MICRONET TECHNOLOGY, INC.
By:____________________________
Title: Vice President
Attest:
By:____________________________
Title: Assistant Secretary
707096.5
11
EXHIBIT C
ESCROW AGREEMENT
C-1
EXHIBIT C
ESCROW AGREEMENT
ESCROW AGREEMENT, dated June , 1998, by and among AMPEX HOLDINGS
CORPORATION, a Delaware corporation ("Buyer"), AMPEX CORPORATION, a Delaware
corporation ("Parent"), each of the shareholders named below ("Sellers"), and
IBJ XXXXXXXX BANK & TRUST COMPANY, as escrow agent (the "Escrow Agent").
Concurrently herewith, pursuant to an Acquisition Agreement, dated June
, 1998 (the "Acquisition Agreement"), by and among Buyer, Parent, and Sellers,
Buyer is purchasing all of the issued and outstanding shares of common stock of
MicroNet Technology, Inc., a Delaware corporation (the "Company") owned by
Sellers. Except as defined herein, all capitalized terms used herein shall have
the same meanings ascribed to them in the Acquisition Agreement.
This Escrow Agreement is being entered into pursuant to Section 2(a) of
the Acquisition Agreement for the purpose of securing to Buyer the right to be
indemnified by Sellers from and against claims against the Company (hereinafter,
"Claims") in accordance with the terms and conditions set forth in this Escrow
Agreement and Section 11 of the Acquisition Agreement.
In consideration of the execution of the Acquisition Agreement and the
agreements and covenants contained herein, Sellers, Parent and Buyer agree, and
in consideration of the agreements and covenants contained herein, the Escrow
Agent agrees, as follows:
705573.6
I. ESCROWED FUND
1.01 Concurrently with the execution of this Escrow Agreement, Buyer is
delivering to the Escrow Agent [____] shares of Parent's Class Common Stock (the
"Class A Stock") and 3,500 shares of the 8% Noncumulative Junior Preferred
Stock, Series A (the "Preferred Stock" and, collectively with the shares of
Class A Stock, the "Shares") of the Company (the "Escrowed Fund"), the receipt
of which is hereby acknowledged by the Escrow Agent.
1.02 Subject to the provisions of this Escrow Agreement, the Escrow
Agent will from time to invest all cash proceeds held in the Escrow Fund
(including, without limitation, dividends and other distributions received on or
in respect of the Shares ("the "Escrowed Income") in such direct obligations of
the United States Government, or in certificates of deposit issued by the Escrow
Agent or any United States bank or trust company having a combined capital and
surplus of at least $100,000,000, as Sellers shall instruct, provided, however,
that the Escrow Agent shall not be required to invest or reinvest the Escrowed
Income if such amount to be invested or reinvested is less than $25,000.
Upon delivery of any Shares pursuant to this Escrow Agreement, the
recipient thereof shall also receive a portion of the Escrowed Income determined
by multiplying the then existing Escrowed Income by a fraction the numerator of
which equals the number of such Shares delivered and the denominator of which
equals the total of all Shares then held in the Escrowed Fund.
1.03 Sellers and Buyer and the Escrow Agent agree that the Escrow Agent
will hold the Escrowed Fund in its possession, under the provisions of this
Escrow Agreement, until authorized hereunder to deliver the Escrowed Fund or any
specified portion thereof as follows:
705573.6
2
(a) In the event that, and from time to time but on or prior
to June 30, 2000 (the "Last Claim Date"), Buyer reasonably determines that a
Claim is or may be chargeable against the Escrowed Fund, Buyer will promptly
notify the Escrow Agent and Sellers in writing of the Claim, identifying such
Claim with reasonable specificity based on the information then available to
Buyer, and stating the amount or a reasonably estimated amount thereof and the
manner in which such amount is to be delivered to Buyer and under which Section
of the Acquisition Agreement the Claim is being made. Promptly upon receipt by
the Escrow Agent of the notice of Buyer of the existence of a Claim, the Escrow
Agent shall notify Sellers thereof, and unless the Escrow Agent receives notice
from Sellers pursuant to Section 1.03(c) hereof within a thirty day period
following the giving by the Escrow Agent of such notice (which period shall
exclude the day Escrow Agent sends notice to Sellers but include the thirtieth
day) (the "Thirty Day Notice Period"), the Escrow Agent will release and deliver
to Buyer that portion of the Escrowed Fund equal to a number of shares of Class
A Stock from the Escrowed Fund determined by dividing the amount of the Claim by
the Closing Stock Price (as defined below), or if there are no remaining shares
of Class A Stock in the Escrowed Fund, a number of shares of Preferred Stock
determined by dividing the amount of the Claim by $1,000. The term "Closing
Stock Price" shall mean the average of the closing prices of the Class A Stock
as reported on the American Stock Exchange for the five business day period
ending on the second business day before the date of determination.
(b) Notwithstanding anything to the contrary herein, none of
the Escrowed Fund will be released and delivered to Buyer pursuant to any Claim
except to the extent that
705573.6
3
the aggregate amount of all Claims exceeds the sum of $50,000 (the "Basket
Amount"), and then only to the extent of such excess.
(c) Sellers will have the right to reasonably dispute the
asserted Claim by delivering to the Escrow Agent, within the Thirty Day Notice
Period, written notice that it disputes the matters set forth in such notice
from Buyer either with respect to the validity or the amount of the Claim in
question. Such notice shall describe with reasonable specificity based on the
information then available to Sellers, the basis of Sellers' dispute. Upon
receipt of such notice from Sellers, the Escrow Agent shall set aside in a
separate fund (the "Disputed Fund") the Shares which it would have delivered to
Buyer had such notice from Sellers not been received. The Escrow Agent shall
distribute the Shares held in the Disputed Fund only upon delivery of, and in
accordance with, joint written notice of Sellers and Buyer providing
instructions therein.
(d) Sellers and Buyer hereby agree that, unless otherwise
agreed to by Sellers and Buyer, upon obtaining a Final Determination (as
hereinafter defined) with respect to any dispute concerning Shares held in the
Disputed Fund, Sellers and Buyer shall promptly deliver joint written notice to
the Escrow Agent instructing the Escrow Agent to release such Shares in
accordance with the terms of said Final Determination. The term "Final
Determination" shall mean a settlement between Buyer and Sellers, entry of a
final order, decree or judgment by a court of competent jurisdiction in the
United States of America (the time for appeal therefrom having expired and no
appeal having been perfected), or consent to entry of any judgment concerning a
Claim. If, in accordance with the terms of the Final Determination any Shares to
be released from the Disputed Fund are not to be delivered to
705573.6
4
Buyer, Sellers and Buyer shall deliver written notice to the Escrow Agent
instructing the Escrow Agent to cause such Shares to be held in the Escrowed
Fund until released pursuant to this Section 1.03; provided, however, that, at
the time of such release of Shares from the Disputed Fund which are not to be
delivered to Buyer, if there are outstanding any Claims, made in a timely manner
hereunder, which are not secured by the Disputed Fund, the joint written notice
of Sellers and Buyer shall instruct the Escrow Agent to retain Shares in the
Escrowed Fund necessary to secure such outstanding Claim. In the event that
either party shall refuse to deliver such written notice to the Escrow Agent
within fifteen days following the receipt of a final order, decree or judgment
by a court of competent jurisdiction in the United States of America, the Escrow
Agent shall be entitled to act on the basis of such final order, decree or
judgment duly authenticated by such court.
(e) If the Shares necessary to satisfy any disputed Claim,
that has been ultimately determined pursuant to a Final Determination in the
manner herein provided, is in excess of the Shares held in the Disputed Fund
with respect thereto, additional Shares necessary to satisfy such Claim shall be
delivered from the Escrowed Fund to Buyer. However, in the absence of sufficient
Shares in the Escrowed Fund, no additional Shares shall be paid by Sellers to
Buyer.
(f) On September 30, 1998 (or such later date as the Adjusted
Closing Date Balance Sheet shall have been finally determined in accordance with
Section 12 of the Acquisition Agreement), the Escrow Agent shall release and
deliver to Sellers [insert a number of shares of Class A Stock equal to one-half
of the shares issued to Sellers pursuant to Section 1(a) of the Acquisition
Agreement] reduced by (i) the number of shares of Class A Stock, if
705573.6
5
any, theretofore released to Buyer in satisfaction of any Claim in accordance
with this Agreement and (ii) the number of shares of Class A Stock, if any, then
held in the Disputed Fund. On March 31, 1999, the Escrow Agent shall release and
deliver to Sellers all shares of Preferred Stock then held in the Escrowed Fund
(except for shares of Preferred Stock, if any, then held in the Disputed Fund).
Shares released and delivered to Sellers shall thereafter no longer be subject
to any claims by Buyer. Any Shares from the Disputed Fund not released and
delivered to Buyer after the Final Determination pursuant thereto shall be
released and delivered to Sellers on the Last Claim Date.
(g) On the Last Claim Date, the Escrow Agent shall deliver to
Sellers the Shares remaining in the Escrowed Fund, except for such amounts
relating to Claims with respect to which Buyer has given notice to the Escrow
Agent and to Sellers as provided in Section 1.03(a) hereof and any Shares held
in the Disputed Fund. With respect to any Claims that are not resolved as of the
Last Claim Date, the provisions of this Escrow Agreement shall continue in full
force and effect and govern the rights of the parties with respect to all such
Claims, except that on the date of any Final Determination regarding Claims for
which amounts are held in the Disputed Fund, to the extent that any dispute is
resolved in favor of Buyer as provided in Article II hereof, the Shares held in
the Disputed Fund shall be distributed to Buyer and to the extent that any
dispute is resolved in favor of Sellers as provided in Article II hereof, the
Shares held in the Disputed Fund shall be distributed to Sellers. If after the
Final Determination of all Claims, any amounts remain in the Escrowed Fund or in
the Disputed Fund, such Shares shall be distributed to Sellers as soon
thereafter as practicable.
705573.6
6
1.04 This Escrow Agreement shall remain in full force and effect until,
and shall terminate upon, the release of all amounts held in the Escrowed Fund
pursuant to Section 1.03 hereof.
1.05 Shares held in the Escrowed Fund may be voted by the registered
holders thereof until delivered to Buyer pursuant to this Escrow Agreement.
1.06 Buyer and Parent agree that at any time and from time to time
after the second anniversary of the Closing, Sellers may, upon not less than 10
business days' written notice to the Escrow Agent and Buyer, substitute for the
Shares then held in the Escrowed Fund, including any Shares in the Disputed
Fund, collateral of a type constituting permissible investments under Section
1.02 hereof. Any such collateral shall have an aggregate principal amount,
valued at the lower of cost or market on the business day preceding the date of
substitution, of not less than the total of the Closing Stock Price multiplied
by the number of Shares being withdrawn by Sellers. All questions concerning the
valuation of substitute collateral, and the form and methods of effectuating
such substitution shall be determined in the reasonable judgment of Buyer.
II. SETTLEMENT OF DISPUTES.
Any dispute which may arise with respect to the Escrowed Fund shall be
settled either by mutual agreement of the parties concerned (evidenced by
appropriate instructions in writing to the Escrow Agent signed by the parties
concerned) or by entry of a final order, decree or judgment by a court of
competent jurisdiction in the United States of America (the time for appeal
therefrom having expired and no appeal having been perfected). Subject to the
provisions of Section 4.07 hereof, Sellers, on the one hand, and Buyer, on the
other hand,
705573.6
7
shall each bear all of the fees and expenses incurred by it in resolving any
dispute arising under this Agreement. The Escrow Agent shall be under no duty to
institute or defend any such proceedings and none of the costs and expenses of
any such proceeding shall be borne by the Escrow Agent. Prior to the settlement
of any dispute as provided in this Article II, the Escrow Agent is authorized
and directed to retain in its possession, without liability to anyone, such
portion of the Escrowed Fund, including the Disputed Fund, which is the subject
of or involved in the dispute.
III. CONCERNING THE ESCROW AGENT.
3.01 The Escrow Agent shall be entitled to reasonable compensation for
its services hereunder and shall be reimbursed for all reasonable expenses,
disbursements and advances (including reasonable attorneys' fees and expenses)
incurred or made by it in performance of its duties hereunder. Buyer and Sellers
shall each pay one-half of all such reasonable compensation, disbursements,
expenses and advances, which, until so paid, will constitute, along with any
amounts due under Section 3.04 hereof, a first lien against the Escrowed Fund.
3.02 The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to Sellers and Buyer
specifying a date (not less than 30 days after the giving of such notice) when
such resignation shall take effect. Promptly after such notice, Sellers and
Buyer shall appoint a successor escrow agent, such successor escrow agent to be
the Escrow Agent hereunder upon the resignation date specified in such notice.
If Sellers and Buyer are unable to agree upon a successor escrow agent within 30
days after such notice, the Escrow Agent shall be entitled to either appoint its
successor or, at the joint and several expense of Sellers, on the one hand, and
Buyer, on the other hand, petition
705573.6
8
any court of competent jurisdiction to appoint its successor. The Escrow Agent
shall continue to serve until its successor accepts the escrow and receives the
Escrowed Fund. Sellers and Buyer may agree at any time to substitute a new
escrow agent by giving 15 days' notice thereof to the Escrow Agent then acting.
The Escrow Agent and any successor thereto appointed hereunder shall be a bank
or trust company located in New York, New York which has a combined capital and
surplus of at least $100,000,000.
3.03 The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein, and specifically with respect to Section 1.02
hereof shall have no responsibility thereunder other than to invest the Escrowed
Fund held hereunder in the amounts and as specified in the instructions provided
for therein. The Escrow Agent, acting or refraining from acting in good faith,
shall not be liable for any mistake of fact or error of judgment by it or for
any acts or omissions by it of any kind unless caused by willful misconduct or
gross negligence, and shall be entitled to rely, and shall be fully protected in
doing so, upon (i) any written notice, instrument or other document provided for
herein or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so, and (ii) the
advice of counsel (which may be of the Escrow Agent's own choosing, but shall
not be counsel to any other party hereto). The Escrow Agent shall not be liable
either for any lost interest on the Escrowed Fund which results from the failure
of Sellers to provide adequate instruction pursuant to Section 1.02 hereof or
for any loss incurred in connection with the investment of the Escrowed Fund
pursuant to instruction of Seller or, as provided in Section 1.02 hereof,
changes in investments which are necessary to make distributions of the Escrowed
Fund.
705573.6
9
3.04 Sellers, on the one hand, and Buyer, on the other hand, agree
jointly and severally to indemnify the Escrow Agent and hold it harmless against
any and all losses, liabilities, expenses (including attorney's fees and
expenses, claims, or demands (collectively, "Losses") arising out of or in
connection with the performance of its obligations in accordance with the
provisions of this Agreement, except for Losses resulting from the gross
negligence or willful misconduct of the Escrow Agent. The foregoing
indemnification shall survive the resignation of the Escrow Agent or the
termination of this Agreement.
IV. MISCELLANEOUS
4.01 This Agreement will be binding upon, inure to the benefit of, and
be enforceable by the respective beneficiaries, representatives, successors and
permitted assigns of the parties hereto, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
with respect to the Escrow Agent as provided in Article III hereof.
4.02 This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof, and may be amended only by a written
instrument duly executed by Sellers, Buyer and the Escrow Agent.
4.03 All notices, claims, requests, demands and other communications
hereunder shall be in writing and shall be given as follows:
If to Buyer or Parent:
Ampex Corporation
000 Xxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
705573.6
10
Copy to:
Battle Xxxxxx LLP
00 Xxxx 00 Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to Sellers:
Xxxxx, Green Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Copy to:
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No. (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
If to the Escrow Agent:
IBJ Xxxxxxxx Bank & Trust Company
Xxx Xxxxx Xxxxxx Xxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust & Agencies Dept.
or to such other address as the persons to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth below,
provided that notices of changes of address shall only be effective upon
receipt. A notice given in accordance with the preceding sentence shall be
deemed to have been duly given if personally delivered or on the date of receipt
or refusal indicated on the return receipt if delivered or mailed (registered or
certified mail, postage prepaid, return receipt requested). Any notice delivered
by Sellers or
705573.6
11
Buyer to the Escrow Agent pursuant hereto shall be executed by the President,
any Vice President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of said party. Sellers, on the one hand, and Buyer, on the
other hand, shall be obligated to deliver to the other party a copy of each
notice delivered to the Escrow Agent hereunder concurrently with the delivery of
such notice to the Escrow Agent. The Escrow Agent shall be required to give each
of Sellers and Buyer at least forty-eight hours' written notice prior to the
release of any portion of the Escrowed Fund to any party hereunder.
4.04 Xxxx Xxxxxxxx is hereby appointed the agent (the "Sellers' Agent")
of the Sellers for the purposes of receiving all notices, giving all notices,
giving all approvals and doing all other things and exercising all other rights
of the Sellers hereunder. If at any time while this Escrow Agreement is still in
effect, the Sellers' Agent (including any successor thereto) should cease to act
as Sellers' Agent for any reason, then a substitute agent (the "Substitute
Sellers' Agent") shall immediately become the Sellers' Agent without further
action by the Sellers and the Sellers shall promptly appoint a new Substitute
Sellers' Agent by an instrument in writing delivered to Buyer and the Escrow
Agent. [ ] is hereby appointed the initial Substitute Sellers' Agent. Sellers
and the Escrow Agent may continue to deal with said Sellers' Agent until Sellers
have received notice that he has ceased so to act and that the Substitute
Sellers' Agent is then acting. Buyer and the Escrow Agent are entitled to rely
upon any agreement, certificate or other notice from the Sellers' Agent as being
binding upon the Sellers.
705573.6
12
4.05 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to its
conflicts of law rules.
4.06 This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4.07 Article headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
4.08 The Escrow Agreement Terms and Conditions are attached hereto as
Exhibit A and are made a part hereof.
[END OF TEXT]
705573.6
13
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and
delivered by and on behalf of Sellers, Buyer, Parent and the Escrow Agent on the
date first above written.
AMPEX HOLDINGS CORPORATION
By:-------------------------------------
Title: Vice President
AMPEX CORPORATION
By:-------------------------------------
Title: Vice President
SELLERS:
----------------------------------
Name:
----------------------------------
Name:
----------------------------------
Name:
705573.6
14
Exhibit A
ESCROW AGREEMENT
TERMS AND CONDITIONS
These following Terms and Conditions are incorporated into and form a part of
the Escrow Agreement to which this Exhibit A is attached, as entered into by and
among IBJ Xxxxxxxxx Bank & Trust Company, a banking corporation organized under
the laws of the State of New York (the "Escrow Agent"), Ampex Holdings
Corporation, a Delaware corporation ("Buyer"), Ampex Corporation, a Delaware
corporation ("Parent" and, together with Buyer, "Ampex"), and each of the
selling shareholders named in the Escrow Agreement ("Sellers").
A. It is understood and agreed that the duties of the Escrow
Agent are purely ministerial in nature. It is further agreed
that:
1. the Escrow Agent shall not be responsible for the
performance of Ampex or Sellers under this Escrow
Agreement or any other agreement;
2. the Escrow Agent may conclusively rely and shall be
protected in acting or refraining from acting upon
any document, instrument, certificate, instruction or
signature believed by it to be genuine and may assume
and shall be protected in assuming that any person
purporting to give any notice or instructions in
accordance with this Escrow Agreement or in
connection with any transaction to which this Escrow
Agreement relates has been duly authorized to do so.
The Escrow Agent shall not be obligated to make any
inquiry as to the authority, capacity, existence or
identity of any person purporting to have executed
any such document or instrument or have made any such
signature or purporting to give any such notice or
instructions;
3. in the event any party to this agreement instructs
the Agent to disburse funds from the Escrow to any
party other than Ampex or Sellers (i) the Agent shall
disburse such funds by mailing a check to such party
at the address set forth in the instruction; or (ii)
if the Agent is instructed to transfer funds from the
Escrow to any bank for the account of any other
party, the Escrow Agent may refuse to comply unless
the Escrow Agent can verify to its satisfaction that
the instruction is authentic and correct or the party
issuing the instruction has previously agreed to
other appropriate security procedures relating
thereto;
4. the Escrow Agent undertakes to perform only such
duties as are expressly set forth in the Escrow
Agreement and shall not be bound in any way by any
agreement between Ampex and Sellers (whether or not
the Escrow Agent has knowledge thereof);
705573.6
5. the Escrow Agent shall not be liable for any action
taken by it in good faith and believed by it to be
authorized or within the rights or powers conferred
upon it by the Escrow Agreement, and may consult with
counsel of its own choice and shall have full and
complete authorization and protection for any action
taken or suffered by it hereunder in good faith and
in accordance with the opinion of such counsel; and
6. the Escrow Agent shall not assume any responsibility
or liability for the completeness, correctness or
accuracy of the Escrow or for any transactions
between Ampex and Sellers.
B. Ampex and Sellers agree to indemnify the Escrow Agent, its
directors, officers, agents and employees and any person who
"controls" the Escrow Agent within the meaning of Section 15
of the Securities Act of 1933, as amended (collectively the
"Indemnified Parties") against, and hold them harmless from,
any and all loss, liability, cost, damage and expense,
including, without limitation, costs of investigation and
reasonable counsel fees and expenses, which any of the
Indemnified Parties may suffer or incur by reason of any
action, claim or proceeding brought against any of the
Indemnified Parties, arising out of or relating in any way to
this Escrow Agreement or any transaction to which this Escrow
Agreement relates, other than any action, claim or proceeding
resulting from the gross negligence or willful misconduct of
such Indemnified Party. The provisions of this paragraph shall
survive the termination of this Escrow Agreement.
C. This Escrow Agreement may be altered, amended or terminated
only with the written consent of Ampex, Sellers and the Escrow
Agent. Should Ampex and Sellers attempt to change this Escrow
Agreement in a manner which, in the Escrow Agent's sole
opinion, is undesirable, the Escrow Agent may resign as Escrow
Agent upon two weeks' written notice to Ampex and Sellers;
otherwise, notwithstanding any provision hereof to the
contrary, it may resign as Escrow Agent at any time upon 60
days' written notice to Ampex and Sellers.
In the case of the Escrow Agent's resignation, its only duty
shall be to hold and dispose of the Escrow in accordance with
the original provisions of this Escrow Agreement until a
successor Escrow Agent shall be appointed by Ampex and Sellers
and a written notice of the name and address of such successor
escrow agent shall be given to the Escrow Agent by Ampex and
Sellers, whereupon the Escrow Agent's only duty shall be to
turn over, in accordance with the written instructions of
Ampex and Sellers, to the successor escrow agent the Escrow.
In the event that a successor escrow agent shall not have been
appointed and the Escrow Agent shall not have turned over to
the successor escrow agent the Escrow within the time
705573.6
periods specified above, of the Escrow Agent's written notice
of resignation, as the case may be, the Escrow Agent may
deposit the Escrow with the Clerk of the United States
District Court for the Southern District of New York or with
the clerk or registry of any other court of competent
jurisdiction, at which time the Escrow Agent's duties
hereunder shall terminate.
D. The Escrow Agent shall be entitled to an acceptance fee of
$____________ upon execution of this Escrow Agreement. In
addition, the Escrow Agent shall receive a fee of
$____________ per year, or part thereof (payable in advance)
as well as reasonable expenses incurred in connection with the
preparation or performance of this Escrow Agreement,
including, but not limited to, reasonable counsel fees.
E. This Escrow Agreement shall be binding upon the parties hereto
and their respective successors and assigns; provided,
however, that any assignment or transfer by any party of its
rights under this Escrow Agreement or with respect to the
Escrow shall be void as against the Escrow Agent unless:
1. written notice thereof shall be given to the Escrow
Agent; and
2. the Escrow Agent shall have consented, in writing, to
such assignment or transfer.
705573.6
SCHEDULE A
Upon receipt of disbursement instructions from Ampex directing the Escrow Agent
to release Shares or disburse amounts from the Escrow Funds, the Escrow Agent
will confirm the instructions set forth in such notice with one of the
authorized individual(s) listed below at an authorized telephone number
appearing opposite such individual's name:
Authorized Individual(s) Authorized Telephone
of the Ampex Numbers(s)
------------------------ --------------------
Xxxxxx X. Xxxxxxx 212-759-6301
Xxxxx X. XxXxxxxx 212-759-6301
Xxxxx X. Xxxxxxx 000-000-0000
705573.6
SCHEDULE B
Upon receipt of disbursement instructions from the Sellers directing the Escrow
Agent to release Shares or disburse amounts from the Escrow Funds, the Escrow
Agent will confirm the instructions set forth in such notice with one of the
authorized individual(s) listed below at an authorized telephone number
appearing opposite such individual's name:
Authorized Individual(s) Authorized Telephone
of the Sellers Numbers(s)
----------------------- ---------------------
Xxxx Xxxxxxxx 310-829-0255
Xxxxx Xxxxxxxx, Esq. 000-000-0000
705573.6
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
D-1
713283.7
Exhibit D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated July 15, 1998, among AMPEX
CORPORATION, a Delaware corporation ("Parent"), and the shareholders named below
("Sellers").
This Registration Rights Agreement is being entered into pursuant to
Section 2 (b) of an Acquisition Agreement, dated June 24, 1998 (the "Acquisition
Agreement"), among Parent, Ampex Holdings Corporation, a Delaware corporation
("Buyer) and Sellers, pursuant to which Buyer is purchasing from Sellers all the
issued and outstanding shares of Common Stock of MicroNet Technology, Inc., a
Delaware corporation (the "Company") in exchange for, among other consideration,
$720,000 shares (the "Shares") of Class A Common Stock, par value $0.01 per
share, of Parent, in order to provide for the registration of the Shares with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
In consideration of the execution of the Acquisition Agreement and the
agreements and covenants contained herein, Parent agrees with Sellers, for the
benefit of the holders of the shares (including Sellers, herein the "Holders")as
follows:
1. Registration Rights. Subject to the restrictions on resale of the
Shares contained in Section 6 hereof, Parent agrees to (i) prepare and file with
the SEC within one hundred twenty days of the date hereof one shelf registration
statement on the appropriate form for the registration of the Shares pursuant to
the Securities Act and use its best efforts to cause such registration statement
to become effective within one hundred eighty days of the date hereof in order
that the Holders may sell or distribute the Shares; (ii) prepare and file with
the SEC such amendments and post-effective amendments to such registration
statement and supplements to the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of 24
months following the date on which such registration statement is declared
effective by the SEC (subject to extension as provided below) and to comply with
the provisions of the Securities Act with respect to the offer or distribution
of the Shares covered by the registration statement during the period permitted
for sale or distribution of such Shares; (iii) comply with the rules of any
exchange on which the Shares are listed; and (iv) furnish to Holders such number
of copies of the prospectus (including any preliminary prospectus or
supplemented or amended prospectus) as Holders may reasonably request in order
to facilitate the sale or distribution of the Shares. Notwithstanding the
foregoing, Parent's obligation to maintain such registration statement in
705692.3
effect shall expire on the earlier of the date all the Shares have been sold by
Holders or the date the Shares become eligible for resale without registration
pursuant to Rule 144 of the SEC under the Securities Act. In addition, Parent's
obligation to maintain such registration statement in effect may be suspended
for a period of up to 120 days in any 12 month period if the Parent, in good
faith and for valid business reasons including, without limitation in connection
with the acquisition or divestiture of assets or a business, determines that it
is in the best interests of the Parent and its stockholders to suspend such
registration obligation, provided that, within such 120 day period the Parent
complies with the requirements of Section 4(b) hereof.
2. Expenses. Parent will bear all expenses in connection with any
registration statements under this Agreement, other than (i) transfer taxes and
(ii) expenses of Holders, including attorneys' fees.
3. Assurances. (a) Parent will notify Holders promptly, and will confirm
such advice in writing, (1) when any registration statement under Section 1
hereof covering such Shares has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the SEC for
amendments to the registration statements or supplements to the related
prospectuses or for additional information, (3) of the issuance by the SEC of
any stop order suspending the effectiveness of the registration statements or
the initiation of any proceedings for that purpose, (4) of the receipt by the
Parent of any notification with respect to the suspension of the qualification
of any of the registered Shares for sale in any jurisdiction or the initiation
of any proceedings for that purpose and (5) of the happening of any event during
the period mentioned in paragraph (d) below which makes any statement made in
the registration statements or the prospectuses untrue or which requires the
making of any changes in the registration statements or the prospectuses in
order to make the statements therein not misleading. If at any time the SEC
shall issue any order suspending the effectiveness of the registration
statements, Parent will make every reasonable effort to obtain the withdrawal of
such order as soon as practicable.
(b) Parent will furnish to Holders without charge, one signed copy
of any registration statement and any post-effective amendment thereto,
including financial statements and schedules and all exhibits (including those
incorporated therein by reference to the extent not previously furnished to
Holders).
(c) Parent will give Holders advance notice of its intention to
file any amendment to any registration statement or any amendment or supplement
to any prospectus, and will not
2
705692.3
file any such amendment or supplement to which Holders shall reasonably object
in writing in light of the requirements of the Securities Act and any other
applicable laws and regulations.
(d) Parent consents, in connection with the offering and sale of
any Shares covered by any prospectus or any amendment or supplement thereto and
for any such period of time thereafter as such prospectus is required by law to
be delivered in connection therewith, to the use of such prospectus or such
amendment or supplement thereto by Holders. If during such period of time any
event shall occur which should be set forth in any prospectus in order to make
the statements therein not misleading in the light of the circumstances under
which they were made, or if it is necessary to supplement or amend any
prospectus to comply with law, Parent will forthwith prepare and duly file with
the SEC (subject to Section 3(c) hereof) an appropriate supplement or amendment
thereto, and will deliver to the selling Holders, without charge, such number of
copies thereof as they may reasonably request.
(e) Prior to any public offering or distribution of any Shares
pursuant to this Agreement, Parent will cooperate with Holders in connection
with the registration or qualification of such Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as Holders may reasonably
request in writing, provided that in no event shall Parent be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject. Parent will pay all fees and
expenses (including counsel fees and expenses) relating to the qualification of
the Shares under such securities or Blue Sky laws.
(f) Parent will make generally available to its security holders a
consolidated earnings statement (which need not be audited) for the first twelve
month period after any registration statement filed hereunder becomes effective
as soon as it is reasonably practicable after the end of such period, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
(g) Parent may require Holders to furnish to Parent such
information regarding the distribution of such Shares as Parent may from time to
time reasonably request in writing.
4. Representations and Warranties
(a) Parent represents and warrants to Holders that each
preliminary prospectus filed as part of the registration statements as
originally filed or as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, will comply when so filed in all material respects
with the
705692.3
3
Securities Act, and when the registration statements become effective and at all
times subsequent thereto, the registration statements and the prospectuses, and
any supplements or amendments thereto, will fully comply with the provisions of
the Securities Act and the rules of any exchange on which the Shares are listed,
and the registration statements and the prospectuses at all such times will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not apply to
statements or omissions in any registration statement or any prospectus or any
preliminary prospectus made in reliance upon information furnished to Parent in
writing by Holders expressly for use therein. Holders agree that all information
furnished to Parent for inclusion in any of the foregoing will not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(b) Holders represent and warrant to Parent that, upon receipt of
any notice from Parent of the happening of any event of the kind described in
the last sentence of Section 1 hereof, or Section 3(a)(2), 3(a)(3), 3(a)(4), or
3(a)(5) hereof, Holders will forthwith discontinue disposition of such Shares
covered by such registration statement or prospectus until Holders' receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3(a)(1) hereof, or until advised in writing by the Parent that the use of the
applicable prospectus may be resumed, and have received copies of any additional
or supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by Parent, Holders will deliver to Parent (at Parent's
expense) all copies, other than permanent file copies then in Holders'
possession, of the prospectus covering such shares current at the time of
receipt of such notice. Any such period during which Holders are required to
discontinue disposition of Shares is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that Parent gives
notice that the shelf registration statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of Shares
and shall end on the date when each Holder of Shares covered by such
registration statement either receives the copies of the supplemented or amended
prospectus contemplated hereby may be resumed. If one or more Suspension Periods
occur, the shelf registration period referred to in Section 1 shall be extended
by the number of days included in each such Suspension Period.
5 (a). Indemnification. (a) In the event of any registration of
Shares under the Securities Act pursuant to this Agreement, Parent shall
indemnify and hold harmless Holders, each of its directors and officers, each
agent and representative of such Holder, any underwriter of such Holder and each
other
705692.3
4
person, if any, who controls any Holder (collectively, the "Indemnified
Persons"), against any losses, claims, damages, liabilities or expenses, joint
or several, to which any Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement or preliminary prospectus or final or summary
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
made therein not misleading, and will reimburse such Indemnified Person, as
incurred, for any legal or other expenses, reasonably incurred by them in
connection with investigating or defending any such action or claim, excluding
any amounts paid in settlement of any litigation, commenced or threatened, if
such settlement is effected without the prior written consent of Parent;
provided that Parent need not indemnify any such person for any such loss,
claim, damage, liability or expense which arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
therein made in reliance upon and in conformity with written information
furnished to Parent by such person or its affiliates or representatives
specifically for use in the preparation thereof.
(b) The indemnity provisions in Section 5(a) above are subject to
the condition that, insofar as they relate to any untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in a preliminary
prospectus or prospectus but eliminated or remedied in the amended prospectus on
file with the SEC at the time the registration statement becomes effective or
any amended prospectus filed with the SEC pursuant to Rule 424(b) or 424(c) (the
"Final Prospectus"), such indemnity provisions shall not inure to the benefit of
Holders, if Parent has previously delivered copies of such Final Prospectus to
Holders and if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(c) In the event of any registration of Shares under the
Securities Act pursuant to this Agreement, Holders shall furnish to Parent in
writing such information as Parent shall reasonably request for use in
connection with any registration statement or prospectus and agrees to indemnify
and hold harmless Parent, each of its directors and officers and each other
person, if any, who controls Parent within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
Parent or any such director, officer or controlling person may become subject
under
705692.3
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the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions in respect thereof) arise out of, or
are based upon, any untrue statement or alleged untrue statement of any material
fact provided by Holders to Parent in writing and contained in such registration
statement or preliminary prospectus or final or summary prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in such written information
provided by Holders to Parent for inclusion in such registration statement or
prospectus a material fact required to be stated therein or necessary to make
the statements made therein not misleading, and will reimburse Parent, each such
director, officer and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim, excluding any amounts paid in settlement of any
litigation, commenced or threatened, if such settlement is effected without the
prior written consent of such person; but in all such cases only if, and to the
extent that, any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission therein made in reliance upon and in conformity with written
information furnished to Parent by such person or its affiliates or
representatives specifically for use in the preparation thereof and provided,
however, that such person shall not be obligated to indemnify Parent if the
information supplied by such person for use in a preliminary prospectus contains
an untrue statement (or alleged untrue statement) or omission (or alleged
omission) and such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is corrected or eliminated prior to being contained in a
Final Prospectus.
(d) Promptly after receipt by a party entitled to indemnification
under this Section 5 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 5, notify the indemnifying party in
writing of the commencement thereof. In case any such action is brought against
the indemnified party and it shall so notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it so chooses, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party that it so chooses, such indemnifying party shall
not be liable for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof; provided, however,
that if the indemnifying party fails to take reasonable steps necessary to
diligently defend such claim within twenty (20) days after receiving notice from
the indemnified party that the indemnified party believes the indemnifying party
has failed to take such
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steps, the indemnified party may assume its own defense and the indemnifying
party shall be liable for any expenses therefor. The indemnity agreements in
this Section 5 shall be in addition to any liabilities which the indemnifying
parties may have pursuant to law.
(e) If a claim by an indemnified party for indemnification under
this Section 5 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such loses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the Securities Act) shall be entitled to any contribution
from any person who was not guilty of such fraudulent misrepresentation.
6. Restrictions on Transfer of the Shares.
(a) Holders may only transfer, sell or distribute the Shares
pursuant to (i) an effective registration statement under the Securities Act,
(ii) Rule 144 promulgated under the Securities Act if such rule is available, or
(iii) any other legally available means of transfer, subject to the conditions
specified in this Section 6.
(b) Each certificate for the Shares will be imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT.
(c) In connection with the transfer of any Shares (other than a
transfer referred to in Sections 6(a)(i)and/or (ii) above), Holders will deliver
written notice to Parent describing in reasonable detail the transfer or
proposed transfer, together
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with an opinion, in form and content reasonably satisfactory to Parent's
counsel, of counsel to Holders which (to Parent's reasonable satisfaction) is
knowledgeable in securities law matters, to the effect that such transfer of
Shares may be effected without registration of such shares under the Securities
Act and under any applicable state securities laws. In addition, if Holders
deliver to Parent an opinion of such counsel that no subsequent transfer of such
Shares will require registration under the Securities Act or under any
applicable state securities laws, Parent will promptly upon such contemplated
transfer deliver new certificates for such Shares which do not bear the legend
set forth in Section 6 (b)hereof.
(d) Notwithstanding anything in this Agreement to the contrary, in
the event of any registration of Shares pursuant to this Agreement, Parent or
its transfer agent will as promptly as practicable deliver to Holders or
Holders' designee or designees new certificates not bearing the legend set forth
in Section 6 hereof.
7. Rule 144. At all times so long as any of the Holders hold Shares the
certificates for which bear the legend set forth in Section 6(b) hereof, the
Company will file reports required to be filed by it under the Securities
Exchange Act of 1934, as amended, and will take such further action as may be
required to enable Holders to sell such Shares pursuant to Rule 144 of the SEC
under the Securities Act.
8. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns but
shall not confer any rights upon any other person. This Agreement may not be
assigned by any party without the other's consent.
9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York without regard to principles
of conflict of law.
10. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Parent has obtained the
written consent of Holders of at least a majority of the Shares. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of the Holders whose
Shares are being sold pursuant to a registration statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the shares being sold by such Holders pursuant
to such registration statement.
705692.3
8
11. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing overnight delivery:
(1) If to a Holder, at the most current address given by such
Holder to the Parent in accordance with the provisions of this
Section 11, which address initially is, with respect to each
Holder, the address of such Holder maintained by the transfer agent
for the Class A Common Stock of the Parent; and
(2) If to the Parent, initially at the address of the Parent set
forth in the Acquisition Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered by a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
12. Miscellaneous. The headings contained in this Agreement are for
reference only and shall not in any way affect the meaning or interpretation of
this Agreement. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
[END OF TEXT]
705692.3
9
IN WITNESS WHEREOF, this Registration Rights Agreement has been
duly executed and delivered by and on behalf of Holders Buyer and Parent on the
date first above written.
AMPEX CORPORATION
By:
-----------------------
Title: Vice President
HOLDERS:
-----------------------
Name: Xxxxx Barzilary
-----------------------
Name: Xxxx Xxxxxx
-----------------------
Name: Xxxx Xxxxxx
-----------------------
Name: Xxxx Xxxxxx
-----------------------
Name: Chloe Holdings, Inc.
XXXXX XXXXXX MICRONET PARTNERS LLC
By:
--------------------
Title:
705692.3
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EXHIBIT E
DISCLOSURE SCHEDULE
E-1
713283.7
Exhibit E
DISCLOSURE SCHEDULE
-------------------
[Omitted]
741130.1
