Exhibit 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
among
XXXXX CORPORATION,
a Delaware corporation
("Xxxxx")
GRAPE ACQUISITION CORP.,
a California corporation and wholly-owned
subsidiary of Xxxxx,
and
PIXELCAM, INC.,
a California corporation
Dated June 28, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of June 28, 2000, by and among Xxxxx Corporation, a Delaware
corporation ("Xxxxx"), Grape Acquisition Corp., a California corporation and
wholly-owned subsidiary of Xxxxx ("Sub"), and PixelCam, Inc., a California
corporation ("PixelCam").
RECITALS
WHEREAS, the Boards of Directors of Xxxxx, Sub and PixelCam deem it
advisable and in the best interests of each corporation and its respective
shareholders that Xxxxx and PixelCam combine in order to advance the long-term
business interests of Xxxxx and PixelCam;
WHEREAS, the combination of Xxxxx and PixelCam shall be effected by the
terms of this Agreement through a transaction (the "Merger") in which Sub will
merge with and into PixelCam, PixelCam will become a wholly-owned subsidiary of
Xxxxx and the shareholders of PixelCam will become shareholders of Xxxxx; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, an Agreement of Merger (the "Agreement of Merger") in such form
as is required by the relevant provisions of the California General Corporation
Law (the "GCL") shall be duly prepared, executed and acknowledged by Sub and by
PixelCam as the Surviving Corporation (as defined in Section 1.3(a)) and
delivered to the California Secretary of State for filing, along with
certificates of officers (the "Officers' Certificates") of the Constituent
Corporations (as defined in Section 1.3(a)) as soon as practicable on or after
the Closing Date (as defined in Section 1.2). The Merger shall become effective
upon the filing of the Agreement of Merger and the Officers' Certificates with
the California Secretary of State (the "Effective Time").
SECTION 1.2 CLOSING. The closing of the Merger (the "Closing") will
take place at 1:00 p.m., Pacific Time, on a date to be specified by Xxxxx and
PixelCam (the "Closing Date"), which shall be no later than the second business
day after satisfaction of the latest to occur of the
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conditions set forth in Sections 7.1, 7.2(b) (other than the delivery of the
officers' certificate referred to therein) and 7.3(b) (other than the delivery
of the officers' certificate referred to therein), provided that the other
closing conditions set forth in Article VII have been met or waived as provided
in Article VII at or prior to the Closing, at the offices of Xxxx Xxxx Xxxx &
Freidenrich, 000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000 unless another date or
place is agreed to in writing by Xxxxx and PixelCam.
SECTION 1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) the separate existence of Sub
shall cease, and Sub shall be merged with and into PixelCam (the "Surviving
Corporation"), (ii) the Articles of Incorporation of PixelCam shall be amended
so that Article V of such Articles of Incorporation shall read as follows: "The
total number of shares of all classes which this corporation shall have
authority to issue shall be 1,000, all of which shall consist of Common Stock"
and, as so amended, such Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of PixelCam as
in effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation. (Sub and PixelCam are sometimes referred to herein as the
"Constituent Corporations.")
(b) At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises of a public as
well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation, and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thereafter attach to the Surviving
Corporation, and may be enforced against it to the same extent as if such debts
and liabilities had been incurred by it.
SECTION 1.4 DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each of whom will hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed.
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ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "2000 CONTINGENCY SHARES" means a number of shares of
Xxxxx Common Stock equal to $6,300,000 divided by the Average Closing Price.
(b) "2000 PER-SHARE AMOUNT" means a number of shares of Xxxxx
Common Stock equal to the 2000 Contingency Shares divided by the Fully-Diluted
PixelCam Shares.
(c) "2001 CONTINGENCY AMOUNT" means a sum determined in
accordance with Section 2.4.
(d) "2001 CONTINGENCY SHARES" means a number of shares of
Xxxxx Common Stock equal to the 2001 Contingency Amount divided by the Average
Closing Price.
(e) "2001 PER-SHARE AMOUNT" means a number of shares of Xxxxx
Common Stock equal to the 2001 Contingency Shares divided by the Fully-Diluted
PixelCam Shares.
(f) "AVERAGE CLOSING PRICE" means the average closing sale
price of the Xxxxx Common Stock on the Nasdaq National Market (the "NNM") on the
10 trading days ending on the trading day preceding the date when the Effective
Time occurs, PROVIDED that if such average closing sale price is less than
$49.00, then the Average Closing Price shall be $49.00, and if such average
closing sale price is greater than $56.00, then the Average Closing Price shall
be $56.00.
(g) "CMOS SENSOR" means PixelCam's silicon imager,
electro-mechanical modules and associated software and circuit boards.
(h) "CMOS SENSOR PRODUCTS" means CMOS Sensors or modules
consisting of a CMOS Sensor and lens assembly.
(i) "COST OF GOODS SOLD" means fabrication costs, assembly and
test costs, and the cost of materials and overhead from operations allocated to
CMOS Sensor Products, determined in accordance with GAAP on a basis that is
consistent with the determination of the cost of product sales as reported in
Zoran's audited consolidated financial statements.
(j) "ESCROW SHARES" has the meaning set forth in Section 2.9
hereof.
(k) "FIRM MERGER SHARES" means a number of whole shares of
Xxxxx Common Stock equal to (i) $21,000,000 less the amount by which PixelCam
Transaction Expenses exceed $150,000, divided by (ii) the Average Closing Price.
(l) "FULLY-DILUTED PIXELCAM SHARES" means the aggregate of the
number of shares of PixelCam Common Stock (i) outstanding as of the Effective
Time, (ii) issuable, directly or indirectly, upon conversion of convertible debt
or equity securities that are
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outstanding as of the Effective Time or (ii) issuable upon exercise of all
options or warrants that are outstanding as of the Effective Time.
(m) "GAAP" means generally accepted accounting principles.
(n) "GROSS MARGIN" means Gross Profit as a percentage of Net
Selling Price, subject to Section 2.5.
(o) "GROSS PROFIT" means Net Selling Price less Cost of Goods
Sold, determined in accordance with GAAP, subject to Section 2.5.
(p) "INITIAL PER-SHARE AMOUNT" means a number of shares of
Xxxxx Common Stock equal to the Firm Merger Shares divided by the Fully-Diluted
PixelCam Shares.
(q) "NET SELLING PRICE" means product sales revenues
determined in accordance with GAAP on a basis that is consistent with Zoran's
revenue recognition policies as set forth in its audited consolidated financial
statements.
(r) "PIXELCAM COMMON STOCK" means the Common Stock of
PixelCam.
(s) "PIXELCAM OPERATING PLAN" means the operating plan
attached hereto as EXHIBIT A.
(t) "PIXELCAM TRANSACTION EXPENSES" means all legal fees paid
or owed by PixelCam to Xxxxxx Xxxx & Priest LLP since January 1, 2000 and any
other legal, accounting and financial advisory fees and expenses and other
out-of-pocket expenses incurred by PixelCam relating to the negotiation,
preparation and carrying out of this Agreement and the transactions contemplated
hereby, as set forth on a schedule which PixelCam shall submit to Xxxxx not
later than two (2) business days prior to the Closing.
(u) "PRINCIPAL SHAREHOLDERS" means Xxxxx Xxxxxxx, Xxx Xxxxxx
and Xxxxx Xxxxxx.
(v) "XXXXX COMMON STOCK" means the Common Stock, $.001 par
value, of Xxxxx.
SECTION 2.2 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of PixelCam or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
the capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
(b) CONVERSION OF PIXELCAM COMMON STOCK. Subject to Section
2.8, each issued and outstanding share of PixelCam Common Stock, other than
Dissenting Shares (as defined in Section 2.10), shall be converted into the
right to receive: (A) the Initial Per-Share Amount, issuable at the Closing
or thereafter upon surrender of the certificate representing such share of
PixelCam Common Stock pursuant to Section 2.8, (B) the 2000 Per-Share Amount,
issuable on January 31, 2001, if issuable as provided with Section 2.3, and
(C) the 2001 Per-Share Amount, if any, determined pursuant to Section 2.4,
issuable on January 31, 2002.
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All such shares of PixelCam Common Stock, when so converted, shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right
to receive shares of Xxxxx Common Stock as set forth above and any cash in
lieu of fractional shares of Xxxxx Common Stock to be issued or paid in
consideration therefor, or cash as set forth in this paragraph (ii), upon the
surrender of such certificate in accordance with this Article II.
(c) PIXELCAM STOCK OPTIONS. At the Effective Time, all then
outstanding options to purchase PixelCam Common Stock (the "PixelCam Options")
issued under PixelCam's 1998 Equity Incentive Plan (the "PixelCam Option Plan")
not exercised as of the Effective Time will be assumed by Xxxxx in accordance
with Section 6.11.
SECTION 2.3 2000 CONTINGENCY SHARES. The 2000 Contingency Shares
shall be issuable subject to the achievement of the following milestones on
or prior to December 31, 2000:
(a) the hiring of an additional CMOS sensor expert
satisfactory to Xxxxx;
(b) the completion of CMOS sensor documentation at a level
that will enable a third party to effectively modify PixelCam's CMOS Sensor
Products; and
(c) Zoran's Gross Profit from the sale of CMOS Sensor Products
between the Effective Time and December 31, 2000 ("2000 Gross Profit") of not
less than $1,600,000 at a Gross Margin of not less than 33%, calculated on an
aggregate basis.
SECTION 2.4 2001 CONTINGENCY AMOUNT.
(a) Except as provided for in Section 3.5 of the PixelCam
Operating Plan, and subject to Section 2.4(b), the 2001 Contingency Amount shall
be determined as follows:
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(i) If (x) Zoran's Gross Profit from the sale of CMOS
Sensor Products during 2001 ("2001 Gross Profit") is not greater than $6,750,000
or (y) the Gross Margin on such sales (the "2001 Gross Margin") is less than
38%, then the 2001 Contingency Amount shall be $0.
(ii) If (x) 2001 Gross Profit is greater than or
equal to $13,500,000 and (y) the 2001 Gross Margin is greater than or equal to
38%, then the 2001 Contingency Amount shall be $14,700,000.
(iii) If (x) 2001 Gross Profit is greater than
$6,750,000 but less than $13,500,000 and (y) the 2001 Gross Margin is greater
than or equal to 38%, then the 2001 Contingency Amount shall be equal to
$14,700,000 multiplied by a fraction, the numerator of which is the amount by
which 2001 Gross Profit exceeds $6,750,000, and the denominator of which is
$6,750,000.
(b) If the 2000 Contingency Shares do not become issuable but
would have been issuable had 2000 Gross Profit equaled or exceeded $1,600,000,
then the difference between $1,600,000 and 2000 Gross Profit (the "2000
Rollover") shall be added to the Gross Profit targets used in calculating the
2001 Contingency Amount, and the 2001 Contingency Amount shall be determined as
follows:
(i) If (x) 2001 Gross Profit is not greater than the
sum of $6,750,000 and the 2000 Rollover (the "Adjusted Minimum Performance") or
(y) the 2001 Gross Margin is less than 38%, then the 2001 Contingency Amount
shall be $0.
(ii) If (x) 2001 Gross Profit is greater than or
equal to the sum of $13,500,000 and the 2000 Rollover (the "Adjusted Maximum
Performance") and (y) the 2001 Gross Margin is greater than or equal to 38%,
then the 2001 Contingency Amount shall be $18,900,000.
(iii) If (x) 2001 Gross Profit is greater than the
Adjusted Minimum Performance but less than the Adjusted Maximum Performance and
the 2000 Rollover and (y) 2001 Gross Margin is greater than or equal to 38%,
then the 2001 Contingency Amount shall be equal to $18,900,000 multiplied by a
fraction, the numerator of which is the amount by which 2001 Gross Profit
exceeds the Adjusted Minimum Performance, and the denominator of which is
$6,750,000.
SECTION 2.5 SPECIAL PROVISIONS REGARDING 2000 CONTINGENCY SHARES AND
2001 CONTINGENCY SHARES.
(a) For purposes of calculating 2001 Gross Profit and 2001
Gross Margin, the Principal Shareholders shall have the right to exclude
certain sales from the calculation of 2001 Gross Profit for purposes of
achieving a 2001 Gross Margin of 38%.
(b) The calculation of 2001 Gross Profit and 2001 Gross Margin
shall include customer orders whose shipment is scheduled for a date after
December 31, 2001, but which are actually shipped on or prior to that date,
provided that (i) Xxxxx receives written approval from the customer for early
shipment of such order, and (ii) the aggregate amount of orders that are
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included pursuant to this Section 2.5(b) shall not exceed 25% of the revenue
from the sale of CMOS Sensor Products for the fourth quarter of 2001 as set
forth in Zoran's operating plan.
(c) The calculation of 2001 Gross Profit and 2001 Gross Margin
shall include 50% of the Net Selling Price for orders scheduled for shipment
prior to year end but not shipped until after year end due to a failure on the
part of a wafer fabrication facility, the color filter application process or
package and assembly (each, a "Third Party Provider") to timely deliver wafers
for reasons that are the financial responsibility of a Third Party Provider,
including yield problems, unexpected delays due to limited capacity, shortages
of raw materials, labor strikes, war, acts of God and similar occurrences.
SECTION 2.6 PROCEDURES FOR DETERMINING ACHIEVEMENT OF MILESTONES.
(a) The achievement of each of the milestones set forth in
Sections 2.3(a) and (b) (collectively, the "Operating Milestones") shall be
determined on the basis of the criteria set forth in the PixelCam Operating
Plan.
(b) 2000 Gross Profit, 2001 Gross Profit and the Gross Margins
associated with 2000 Gross Profit or 2001 Gross Profit (collectively, "PixelCam
Performance") shall be calculated by Xxxxx and shall be set forth in a statement
certified by Zoran's Chief Financial Officer and its independent accountants
(each a "Performance Certification"). Each Performance Certification will be
delivered to the Principal Shareholders as soon as practicable after the end of
the period for which performance is reported and in no event more than 30 days
thereafter.
(c) Upon the written request of the Principal Shareholders
made not more frequently than once during any 12-month period, Xxxxx shall allow
the Principal Shareholders and their accountants access to Zoran's books and
records relating to the calculation of Company Performance for the limited
purpose of reviewing such calculation, provided that such Principal Shareholders
and accountants have entered into confidentiality and non-disclosure agreements
reasonably acceptable to Xxxxx. All expenses incurred by the Principal
Shareholders in performing such review shall be borne by the Principal
Shareholders, unless such review discloses (i) an error in the Gross Margin
calculation would cause the 2000 Contingency Shares or the 2001 Contingency
Shares to be withheld in their entirety or (ii) that the 2001 Gross Profit shown
on Zoran's books and records was at least 5% below the actual 2001 Gross Profit
for the period reviewed, in which case Xxxxx shall reimburse the Principal
Shareholders for such expenses.
(d) The Principal Shareholders shall give Xxxxx written notice
of any objection (which notice shall specify the factual basis of such objection
and the amount at issue) to the calculation of PixelCam Performance set forth in
any Performance Certification. A Performance Certification shall be deemed final
and binding on all parties for all purposes of this Agreement if the Principal
Shareholders do not object to such Performance Certification within 30 days
after receipt.
(e) If the Principal Shareholders timely object to the
calculation of PixelCam Performance set forth in any Performance Certification,
Xxxxx shall promptly meet with the Principal Shareholders and attempt in good
faith to reach a resolution of such disagreement. Any
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dispute with respect to PixelCam Performance that is not resolved by Xxxxx and
the Principal Shareholders and their respective accountants within 30 days after
delivery of notice of the dispute by the Principal Shareholders shall, upon
written request by either Xxxxx or the Principal Shareholders delivered to the
other party, be submitted for final resolution to an independent certified
public accounting firm of national reputation that shall be selected jointly by
Zoran's independent accountants and an independent certified public accounting
firm designated by the Principal Shareholders. Each party shall, within 10
business days after submission of such dispute, deliver to such accounting firm
the information such party wishes to have considered by such accounting firm in
making its determination. Each party shall also provide such firm with access to
such party's books and records as such firm shall reasonably request and that
shall be relevant to the resolution of such dispute, provided that such firm has
entered into a confidentiality and non-disclosure agreement reasonably
acceptable to such party. Such accounting firm shall present its determination
and resolution of any dispute within 30 business days after submission of such
dispute to the firm. The determination and resolution by such accounting firm
shall be binding and conclusive among the parties. The fees of such accounting
firm shall be borne by the Principal Shareholders, unless such firm's conclusion
discloses (i) an error in the Gross Margin calculation last proposed by Xxxxx
during its meeting(s) with the Principal Shareholders held pursuant to the first
sentence of this paragraph (e) that caused the 2000 Contingency Shares or the
2001 Contingency Shares to be withheld in their entirety or (ii) that the 2001
Gross Profit last proposed by Xxxxx during such meetings was at least 5% below
the actual 2001 Gross Profit, in which case Xxxxx shall reimburse the Principal
Shareholders for such expenses.
(f) The holders of PixelCam Common Stock (collectively, the
"PixelCam Shareholders"), without any further action on the part of any PixelCam
Shareholder, shall be deemed to have consented to the appointment of the
Principal Shareholders as the representatives of the PixelCam Shareholders for
all purposes relating to the calculation and payment of the Additional Merger
Consideration and to the taking by the representatives of any and all actions
and the making of any and all decisions required or permitted to be taken or
made by them pursuant to this Section 2 including, without limitation, the
exercise of the power to (i) negotiate and resolve any disputes relating to the
calculation of PixelCam Performance or the achievement of Operating Milestones,
(ii) amend or modify the PixelCam Operating Plan, and (iii) prosecute or settle
litigation or arbitration proceedings with respect to any such disputes. All
actions taken by the Principal Shareholders under this Article II shall be taken
by Principal Shareholders holding a majority in interest of the PixelCam Common
Stock held by all Principal Shareholders on a fully-diluted basis immediately
prior to the Effective Time. Each of the PixelCam Shareholders will be bound by
all actions taken by the Principal Shareholders hereunder, and Xxxxx shall be
entitled to rely on any action or decision of the Principal Shareholders so
taken. At any time, PixelCam Shareholders representing a majority of the
aggregate number of shares of PixelCam Common Stock outstanding immediately
prior to the Effective Time (assuming conversion of all outstanding shares of
PixelCam Preferred Stock) may, by written consent, appoint a new representative
or representatives by sending a notice and copy of such written consent to
Xxxxx. Such appointment will be effective upon the later of the date indicated
in the written consent or the date on which such written consent is received by
Xxxxx.
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SECTION 2.7 OBLIGATIONS OF XXXXX WITH RESPECT TO ACHIEVEMENT OF
MILESTONES. The obligations of Xxxxx with respect to the achievement of the
Operating Milestones and the PixelCam Performance targets shall be as set forth
in the PixelCam Operating Plan.
SECTION 2.8 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of PixelCam Common Stock for Xxxxx Common Stock pursuant to
the Merger are as follows:
(a) EXCHANGE AGENT. At the Effective Time, Xxxxx shall deposit
with an exchange agent designated by Xxxxx (the "Exchange Agent"), for the
benefit of the holders of shares of PixelCam Common Stock, for exchange in
accordance with this Section 2.8, through the Exchange Agent, certificates
representing the Firm Merger Shares issuable to the holders of PixelCam Common
Stock pursuant to Section 2.2 less the Escrow Shares (such shares of Xxxxx
Common Stock deposited with the Exchange Agent, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"), in exchange for outstanding shares of PixelCam Common Stock.
(b) EXCHANGE PROCEDURES. At the Closing or as soon as
reasonably practicable thereafter, Xxxxx shall provide to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of PixelCam Common Stock (each a "Certificate,"
and collectively, the "Certificates") whose shares were converted pursuant to
Section 2.2 into the right to receive shares of Xxxxx Common Stock (i) a letter
of transmittal, which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Xxxxx and PixelCam may reasonably specify, and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Xxxxx Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Xxxxx, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole Firm
Merger Shares which such holder has the right to receive pursuant to the
provisions of Section 2.2(b) less such holder's pro rata portion of the Escrow
Shares and (y) certificates representing those numbers of whole 2000 Contingency
Shares and 2001 Contingency Shares which such holder has the right to receive
pursuant to the provisions of Section 2.2(b), when and if the 2000 Contingency
Shares and 2001 Contingency Shares become issuable, and the Certificate so
surrendered shall immediately be canceled. In the event of a transfer of
ownership of PixelCam Common Stock which is not registered in the transfer
records of PixelCam, certificates representing the proper numbers of shares of
Xxxxx Common Stock may be issued to a transferee if the Certificate representing
such PixelCam Common Stock is presented to the Exchange Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.8, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Xxxxx Common Stock and cash in
lieu of any fractional shares of Xxxxx Common Stock as contemplated by this
Section 2.8.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Xxxxx Common Stock
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with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Xxxxx Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to subsection (e) below until the holder of
record of such Certificate shall surrender such Certificate. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of Xxxxx Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a fractional
share of Xxxxx Common Stock to which such holder is entitled pursuant to
subsection (e) below and the amount of dividends or other distributions with a
record date after the Effective Time previously paid with respect to such whole
shares of Xxxxx Common Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Xxxxx Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN PIXELCAM COMMON STOCK. All
shares of Xxxxx Common Stock issued upon the surrender for exchange of shares of
PixelCam Common Stock in accordance with the terms hereof (including any cash
paid pursuant to subsection (c) or (e) of this Section 2.8 and the Escrow
Shares) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of PixelCam Common Stock, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of PixelCam Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 2.8.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing
fractional shares of Xxxxx Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a shareholder of Xxxxx.
Notwithstanding any other provision of this Agreement, each holder of shares of
PixelCam Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Xxxxx Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Xxxxx Common Stock multiplied by the Average Closing Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the shareholders of PixelCam after one year
after the Effective Time shall be delivered to Xxxxx, upon demand, and any
shareholders of PixelCam who have not previously complied with this Section 2.8
shall thereafter look only to Xxxxx for payment of their claim for Xxxxx Common
Stock, any cash in lieu of fractional shares of Xxxxx Common Stock, and any
dividends or distributions with respect to Xxxxx Common Stock.
(g) NO LIABILITY. Neither Xxxxx nor PixelCam shall be liable
to any holder of shares of PixelCam Common Stock or Xxxxx Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
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(h) LOST CERTIFICATES: In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed, Xxxxx
shall issue in exchange for such lost, stolen or destroyed Certificate the
shares of Xxxxx Common Stock issuable in exchange therefor pursuant to the
provisions of Article II of this Agreement, together with cash, if any, in lieu
of fractional shares in accordance with Section 2.8(e) hereof. The Board of
Directors of Xxxxx may in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to provide to Xxxxx an indemnity agreement against any claim that
may be made against Xxxxx with respect to the Certificate alleged to have been
lost, stolen or destroyed.
SECTION 2.9 ESCROW. At the Closing, Xxxxx will deduct from the number
of Firm Merger Shares deliverable to the shareholders of PixelCam pursuant to
Section 2.2(b), on a pro rata basis, and will deposit into escrow (the "Escrow")
certificates representing ten percent (10%) of the aggregate number of Firm
Merger Shares (the "Escrow Shares"). The Escrow Shares shall be held by U.S.
Bank Trust or such other party as Xxxxx and PixelCam shall mutually determine
(the "Escrow Agent") in accordance with and subject to the provisions of an
Escrow Agreement substantially in the form of EXHIBIT B hereto (the "Escrow
Agreement"). The Escrow Shares shall be held as collateral for the
indemnification obligations of the persons who were shareholders of PixelCam
immediately prior to the Effective Time under Article IX of this Agreement. To
the extent any shareholder of PixelCam is issued Firm Merger Shares that are
subject to continued vesting pursuant to an employment or consulting
relationship with PixelCam, no unvested Firm Merger Shares shall be deposited
into the Escrow unless all of such shareholder's vested Firm Merger Shares have
been deposited into the Escrow. Thereafter, unvested Firm Merger Shares shall be
allocated to the Escrow in the order in which they are scheduled to vest.
Notwithstanding the foregoing, the Firm Merger Shares that are deposited in the
Escrow on behalf of Xxxxx Xxxxxxx shall include the same proportion of unvested
shares, subject to the same vesting schedule as the Firm Merger Shares that are
issued to him in the aggregate.
SECTION 2.10 APPRAISAL RIGHTS. Any shares of PixelCam Common Stock held
by shareholders of PixelCam who properly exercise and perfect the dissenters'
appraisal rights set forth in Chapter 13 of the GCL ("Dissenting Shares") shall
not be converted into the right to receive Xxxxx Common Stock pursuant to
Section 2.2 but shall instead be converted into the right to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to the provisions of the GCL. PixelCam shall give Xxxxx prompt
notice of any demand received by PixelCam for appraisal of PixelCam Common
Stock, and Xxxxx shall have the right to control all negotiations and
proceedings with respect to such demand. PixelCam agrees that, except with the
prior written consent of Xxxxx or as required under the GCL, it will not
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for appraisal. Each holder of Dissenting Shares (a "Dissenting
Shareholder") who, pursuant to the provisions of the GCL, becomes entitled to
payment of the value of shares of PixelCam Common Stock shall receive payment
therefor (but only after the value therefor shall have been agreed upon or
finally determined pursuant to the provisions of the GCL). In the event that any
holder of shares of PixelCam Common Stock fails to make an effective demand for
payment or otherwise loses his or her status as a Dissenting Shareholder, Xxxxx
shall, as of the later of the Effective Time or the occurrence of such event,
issue and deliver, upon surrender by such Dissenting Shareholder of its
Certificate or Certificates, the
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shares of Xxxxx Common Stock and any cash payment in lieu of fractional shares,
in each case without interest thereon, to which such Dissenting Shareholder
would have been entitled under Section 2.2 (less such Dissenting Shareholder's
pro rata portion of the Escrow Shares).
SECTION 2.11 CERTIFICATE LEGENDS. The shares of Xxxxx Common Stock to
be issued pursuant to this Agreement shall not have been registered and shall be
characterized as "restricted securities" under the Securities Act of 1933, as
amended (the "Securities Act"), and under such laws such shares may be resold
without registration under the Securities Act only in certain limited
circumstances. Each certificate evidencing shares of Buyer Common Stock to be
issued pursuant to this Agreement shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN
EXEMPTION UNDER THE SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PixelCam
In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means a material adverse effect on
the business, assets (including intangible assets), financial condition,
prospects, or results of operations of such entity and its subsidiaries, taken
as a whole.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after reasonable inquiry of its directors, officers,
and other management level employees reasonably believed to have knowledge of
such matters.
In this Agreement, any reference to the "prospects" of PixelCam or its
business, or to PixelCam's business "as proposed to be conducted," means such
prospects or business without taking into account the effects of the Merger or
any changes to PixelCam's business that are initiated by Xxxxx thereafter.
As used in this Agreement, the word "Subsidiary" means, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
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Except as disclosed in the disclosure schedule provided to Xxxxx on or
before the date of this Agreement (the "PixelCam Disclosure Schedule"), PixelCam
represents and warrants to Xxxxx as follows:
SECTION 3.1 ORGANIZATION, STANDING AND POWER. Each of PixelCam and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its properties and to carry
on its business as currently being conducted and as currently proposed to be
conducted, and is duly qualified to transact business and is in good standing in
each jurisdiction in which the nature of its operations requires such
qualification, except where the failure to so qualify has not and will not have
a Material Adverse Effect on PixelCam. PixelCam has delivered true and correct
copies of the Articles of Incorporation and Bylaws of PixelCam and each of its
Subsidiaries, each as amended to date, to Xxxxx. Neither PixelCam nor any of its
Subsidiaries is in violation of any of the provisions of its Articles of
Incorporation, Bylaws or other charter documents. PixelCam does not directly or
indirectly own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
SECTION 3.2 PIXELCAM CAPITAL STRUCTURE.
(a) The authorized capital stock of PixelCam consists of
10,000,000 shares of PixelCam Common Stock and 6,500,000 shares of PixelCam
Preferred Stock, of which 3,700,000 shares are designated Series A Preferred
Stock and 2,500,000 shares are designated Series B Preferred Stock. As of the
date hereof, 8,546,655 shares of PixelCam Common Stock and no shares of PixelCam
Preferred Stock are issued and outstanding and held of record by those persons
set forth on the PixelCam Disclosure Schedule. The PixelCam Disclosure Schedule
sets forth the number of shares of PixelCam Common Stock into which shares of
PixelCam Preferred Stock held by each holder of such Preferred Stock will be
convertible as of the Effective Time. All such outstanding shares of PixelCam
Common Stock and PixelCam Preferred Stock have been duly authorized, validly
issued, fully paid and are nonassessable, have been issued in compliance with
all applicable federal and state securities laws, and, except as set forth on
the PixelCam Disclosure Schedule, are subject to no preemptive rights or rights
of first refusal created by statute, the charter documents of PixelCam or any
agreement to which PixelCam is a party or by which it is bound. As of the date
hereof, 1,750,000 shares of PixelCam Common Stock are reserved for issuance
under the PixelCam Option Plan, of which 177,008 shares are available for grant,
and of which 95,000 shares are subject to outstanding options held by those
persons set forth in the PixelCam Disclosure Schedule.
(b) Except as set forth in this Section 3.2, there are (i) no
equity securities of any class of PixelCam, or any securities exchangeable into
or exercisable for such equity securities, issued, reserved for issuance, or
outstanding and (ii) no outstanding subscriptions, options, warrants, puts,
calls, rights, or other commitments or agreements of any character to which
PixelCam is a party or by which it is bound obligating PixelCam to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any equity securities of PixelCam or obligating
PixelCam to grant, extend, accelerate the vesting of, change the exercise price
of, or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no contracts, commitments or agreements
relating to
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voting, purchase or sale of PixelCam's capital stock (i) between or among
PixelCam and any of its shareholders or (ii) to PixelCam's knowledge, between or
among any of PixelCam's shareholders.
SECTION 3.3 AUTHORITY; REQUIRED FILINGS AND CONSENTS.
(a) PixelCam has all requisite corporate power and authority
to enter into this Agreement and all other documents required to be executed and
delivered by PixelCam hereunder, including the Agreement of Merger
(collectively, the "Transaction Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents to which PixelCam is or will be a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of PixelCam,
subject only to the approval of the Merger by PixelCam's shareholders under the
GCL. This Agreement and the other Transaction Documents to which PixelCam is a
party have been or will be duly executed and delivered by PixelCam and
constitute or will constitute the valid and binding obligations of PixelCam,
enforceable against PixelCam in accordance with their respective terms, except
as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to creditors' rights generally, and
(ii) general principles of equity.
(b) The execution and delivery by PixelCam of this Agreement
and the other Transaction Documents to which it is or will be a party do not,
and the consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with, or result in any violation or breach of any provision
of, the Articles of Incorporation or Bylaws of PixelCam, (ii) result in any
violation or breach of or constitute (with or without notice or lapse of time,
or both) a default under, or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit under, any note,
mortgage, indenture, lease, contract or other agreement or obligation to which
PixelCam is a party or by which PixelCam or any of its properties or assets may
be bound, or (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to PixelCam or any of its properties or assets.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to PixelCam in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Agreement of Merger and
Officer's Certificates with the California Secretary of State in accordance with
the GCL, (ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws, and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on PixelCam and would not prevent or materially alter or
delay any of the transactions contemplated by this Agreement.
SECTION 3.4 FINANCIAL STATEMENTS. PixelCam has delivered to Xxxxx (i)
its audited financial statements for each of the years ended December 31, 1998
and 1999, and (ii) its unaudited financial statements, including statements of
operations and cash flows and balance
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sheet data, for the four-month period ended April 30, 2000 (collectively, the
"PixelCam Financial Statements"). The PixelCam Financial Statements were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, except that the
unaudited PixelCam Financial Statements do not contain footnotes. The PixelCam
Financial Statements present fairly the financial position of PixelCam as of the
respective dates and the results of its operations and cash flows for the
periods indicated, subject to normal year-end adjustments. PixelCam maintains
and will continue to maintain a standard system of accounting established and
administered in accordance with GAAP.
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES. PixelCam does not have
any liabilities, either accrued or contingent (whether or not required to be
reflected in financial statements in accordance with GAAP), and whether due or
to become due, other than (i) liabilities reflected or provided for on the
balance sheet as of April 30, 2000 (the "PixelCam Balance Sheet") contained in
the PixelCam Financial Statements, (ii) liabilities specifically described in
this Agreement or the PixelCam Disclosure Schedule, and (iii) normal or
recurring liabilities incurred since April 30, 2000 in the ordinary course of
business consistent with past practices.
SECTION 3.6 ACCOUNTS RECEIVABLE. The accounts receivable shown on the
PixelCam Balance Sheet arose in the ordinary course of business and have been
collected or are collectible in the book amounts thereof, less an amount not in
excess of the allowance for doubtful accounts and returns provided for in the
PixelCam Balance Sheet. The accounts receivable of PixelCam arising after the
date of the PixelCam Balance Sheet and prior to the Closing Date arose, or will
arise, in the ordinary course of business and have been collected or will be
collectible in the book amounts thereof, less allowances for doubtful accounts
and returns determined in accordance with the past practices of PixelCam. None
of such accounts receivables is subject to any material claim of offset or
recoupment or counterclaim, and PixelCam has no knowledge of any specific facts
that would be likely to give rise to any such claim. No material amount of such
accounts receivable is contingent upon the performance by PixelCam of any
obligation and no agreement for deduction or discount has been made with respect
to any such accounts receivable.
SECTION 3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The inventories shown
on the PixelCam Balance Sheet or thereafter acquired by PixelCam consist of
items of a quantity and quality usable or salable in the ordinary course of
business. Since April 30, 2000, PixelCam has continued to replenish inventories
in a normal and customary manner consistent with past practices. PixelCam has
not received notice that it will experience in the foreseeable future any
difficulty in obtaining, in the desired quantity and quality and at a reasonable
price and upon reasonable terms and conditions, the supplies or component
products required for the manufacture, assembly or production of its products.
The value at which inventories are carried reflect the inventory valuation
policy of PixelCam, which is consistent with its past practice and in accordance
with GAAP. Due provision has been made on the books of PixelCam, consistent with
past practices, to provide for all slow-moving, obsolete, or unusable
inventories at their estimated useful or scrap values, and such inventory
reserves are adequate to provide for such slow-moving, obsolete or unusable
inventory and inventory shrinkage.
15
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 30, 2000,
PixelCam has conducted its business in the ordinary course and in a manner
consistent with past practices and, since such date, PixelCam has not:
(a) suffered any event or occurrence that has had a Material
Adverse Effect on PixelCam;
(b) suffered any damage, destruction or loss, whether covered
by insurance or not, having a material adverse effect on its properties or
business;
(c) granted any material increase in the compensation payable
or to become payable by PixelCam to its officers or employees;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of its capital stock or declared any
direct or indirect redemption, retirement, purchase or other acquisition of such
shares;
(e) issued any shares of its capital stock or any warrants,
rights, or options for, or entered into any commitment relating to such capital
stock;
(f) made any change in the accounting methods or practices it
follows, whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates;
(g) sold, leased, abandoned or otherwise disposed of any real
property, machinery, equipment or other operating property other than in the
ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise
disposed of any patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret or interest thereunder or
other material intangible asset;
(i) entered into any material commitment or transaction
(including without limitation any borrowing or capital expenditure) other than
in the ordinary course of business;
(j) incurred any material liability, except in the ordinary
course of business and consistent with past practice;
(k) permitted or allowed any of its property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind, except for liens for current taxes not yet due
and purchase money security interests incurred in the ordinary course of
business;
(l) made any capital expenditure or commitment for additions
to property, plant or equipment individually in excess of $10,000, or, in the
aggregate, in excess of $25,000;
(m) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with, any of its officers,
16
directors or shareholders or any affiliate of any of the foregoing, other than
employee compensation and benefits and reimbursement of employment related
business expenses incurred in the ordinary course of business;
(n) agreed to take any action described in this Section 3.8 or
which would constitute a breach of any of the representations or warranties of
PixelCam contained in this Agreement; or
(o) except as disclosed in the PixelCam Disclosure Schedule,
taken any other action that would have required the consent of Xxxxx pursuant to
Section 5.1 of this Agreement (and which has not been obtained) had such action
occurred after the date of this Agreement.
SECTION 3.9 TAXES.
(a) For purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all material federal, state and local taxes of any
country, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) PixelCam has prepared and timely filed all returns,
estimates, information statements and reports required to be filed with any
taxing authority ("Returns") relating to any and all Taxes concerning or
attributable to PixelCam or its operations, such Returns are true and correct in
all material respects and have been completed in all material respects in
accordance with applicable law, and PixelCam has disclosed on its Returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law).
(c) PixelCam, as of the Closing Date, (i) will have paid all
Taxes it is required to pay prior to the Closing Date and (ii) will have
withheld with respect to its employees all Taxes required to be withheld.
(d) PixelCam has not been delinquent in the payment of any
Tax. There is no Tax deficiency outstanding or assessed or proposed against
PixelCam that is not reflected as a liability on the PixelCam Balance Sheet or
set forth on the PixelCam Disclosure Schedule, nor has PixelCam executed any
agreements or waivers extending any statute of limitations on or extending the
period for the assessment or collection of any Tax.
(e) The amount of PixelCam's liability for unpaid Taxes
(whether actual or contingent) for all periods through the date hereof and the
Closing Date does not and will not, in the aggregate, exceed the amount of the
current liability accruals for Taxes (excluding reserves for deferred Taxes)
reflected on the PixelCam Balance Sheet (other than Taxes which have accrued
after the date of such PixelCam Balance Sheet).
17
(f) PixelCam is not a party to any tax-sharing agreement or
similar arrangement with any other party, and PixelCam has not assumed to pay
any Tax obligations of, or with respect to any transaction relating to, any
other person or agreed to indemnify any other person with respect to any Tax.
(g) PixelCam's Returns have never been audited by a government
or taxing authority, nor is any such audit in process or pending, and PixelCam
has not been notified of any request for such an audit or other examination.
(h) PixelCam has never been a member of an affiliated group of
corporations filing a consolidated federal income tax return.
(i) PixelCam has made available to Xxxxx copies of all Returns
filed for all periods since its inception.
(j) PixelCam has never filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(4) apply to any
disposition of assets owned by PixelCam.
(k) PixelCam is not a party to any contract, agreement, plan
or arrangement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of PixelCam that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 464 or 162(m) of the Code by PixelCam or
Sub as an expense under applicable law.
(l) PixelCam has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code (i) in the two years prior
to the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(m) PixelCam has not agreed to make, nor is it required to
make, any adjustment under Section 481 of the Code by reason of any change in
accounting method.
(n) None of PixelCam's assets is treated as "tax-exempt use
property," within the meaning of Section 168(h) of the Code.
(o) PixelCam is not, nor has it been, a "reporting
corporation" subject to the information reporting and record maintenance
requirements of Section 6038A of the Code and the regulations thereunder.
(p) PixelCam has never been a party to any joint venture,
partnership or other agreement that could be treated as a partnership for Tax
purposes.
(q) There are (and immediately following the Effective Time
there will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively
"Liens") on the assets of PixelCam relating to or attributable to Taxes, other
than Liens for Taxes not yet due and payable.
18
SECTION 3.10 TANGIBLE ASSETS AND REAL PROPERTY.
(a) PixelCam owns or leases all tangible assets and properties
which are necessary for the conduct of its business as currently conducted or
which are reflected on the PixelCam Balance Sheet or acquired since the date of
the PixelCam Balance Sheet (the "Material Tangible Assets"). The Material
Tangible Assets are in good operating condition and repair. PixelCam has good
and marketable title to all Material Tangible Assets that it owns (except
properties, interests in properties and assets sold or otherwise disposed of
since the date of the PixelCam Balance Sheet in the ordinary course of
business), free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except as reflected in the PixelCam
Financial Statements and except for liens for current taxes not yet due and
payable. Assuming the due execution and delivery thereof by the other parties
thereto, all leases of Material Tangible Assets to which PixelCam is a party are
in full force and effect and valid, binding and enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors' rights generally, and general principles of equity. The PixelCam
Disclosure Schedule sets forth a true and correct list of all such leases, and
true and correct copies of all such leases have been provided to Xxxxx.
(b) PixelCam owns no real property. The PixelCam Disclosure
Schedule sets forth a true and complete list of all real property leased by
PixelCam. Assuming the due execution and delivery thereof by the other parties
thereto, all such real property leases are in full force and effect and valid,
binding and enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors' rights generally, and
general principles of equity. True and correct copies all such of real property
leases have been provided to Xxxxx.
SECTION 3.11 INTELLECTUAL PROPERTY.
(a) PixelCam owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights and mask works, and any applications for and registrations of
such patents, trademarks, trade names, service marks, copyrights and mask works
and all processes, formulas, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of PixelCam
as currently conducted, or as currently proposed to be conducted, free and clear
of all liens, claims or encumbrances (all of which are referred to as the
"PixelCam Intellectual Property Rights"). The foregoing representation as it
relates to Licensed Intellectual Property (as defined below) is limited to
PixelCam's interest pursuant to licenses from third parties, each of which is in
full force and effect, is valid, binding and enforceable and grants PixelCam
such rights to such intellectual property as are necessary to the business of
PixelCam as currently conducted or currently proposed to be conducted.
(b) The PixelCam Disclosure Schedule contains an accurate and
complete description of (i) all patents and patent applications and all
trademarks, trade names, service marks and registered copyrights included in the
PixelCam Intellectual Property Rights, including the jurisdictions in which each
such PixelCam Intellectual Property Right has been issued or
19
registered or in which any such application for such issuance and registration
has been filed, (ii) all licenses, sublicenses, distribution agreements and
other agreements to which PixelCam is a party and pursuant to which any person
is authorized to use any PixelCam Intellectual Property Rights or has the right
to manufacture, reproduce, market or exploit any product of PixelCam (a
"PixelCam Product") or any adaptation, translation or derivative work based on
any PixelCam Product or any portion thereof, (iii) all licenses, sublicenses and
other agreements to which PixelCam is a party and pursuant to which PixelCam is
authorized to use any third party technology, trade secret, know-how, process,
patent, trademark or copyright, including software ("Licensed Intellectual
Property"), which is used in the manufacture of, incorporated in or forms a part
of any PixelCam Product (other than licenses for off-the-shelf software used in
the conduct of PixelCam's business), (iv) all joint development agreements to
which PixelCam is a party, and (v) all agreements with Governmental Entities or
other third parties pursuant to which PixelCam has obtained funding for research
and development activities.
(c) PixelCam is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the PixelCam Intellectual Property Rights or Licensed Intellectual
Property.
(d) All patents and registered trademarks, service marks and
copyrights claimed by or issued to PixelCam which relate to any PixelCam Product
are valid and subsisting. The manufacturing, marketing, licensing or sale of any
PixelCam Product does not infringe any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party. PixelCam
(i) has not received notice that it has been sued in any suit, action or
proceeding which involves a claim of infringement of any patent, trademark,
service xxxx, copyright, trade secret or other proprietary right of any third
party and (ii) has no knowledge of any claim challenging or questioning the
validity or effectiveness of any license or agreement relating to any PixelCam
Intellectual Property Rights or Licensed Intellectual Property.
(e) All designs, drawings, specifications, source code, object
code, documentation, flow charts and diagrams incorporated, embodied or
reflected in any PixelCam Product at any stage of its development (the "PixelCam
Components") were written, developed and created solely and exclusively by (i)
employees of PixelCam without the assistance of any third party or (ii) third
parties who assigned ownership of their rights with respect thereto to PixelCam
by means of valid and enforceable agreements, which are listed and described in
the PixelCam Disclosure Schedule and copies of which have been provided to
Xxxxx. PixelCam has at all times used commercially reasonable efforts to protect
its trade secrets and has not acted in such a manner as to cause the loss of
such trade secrets by their release into the public domain.
(f) Each person currently or formerly employed by PixelCam
(including independent contractors, if any) that has or had access to
confidential information of PixelCam has executed and delivered to PixelCam a
confidentiality and non-disclosure agreement in one of the forms previously
provided to Xxxxx. Neither the execution or delivery of any such agreement by
any such person, nor the carrying on by any such person, as an employee or
independent contractor, of PixelCam's business as currently conducted and as
currently proposed to be conducted, has or will conflict with or result in a
breach of the terms, conditions or provisions of,
20
or constitute a default under, any contract, covenant or instrument under which
any of such persons is obligated.
SECTION 3.12 BANK ACCOUNTS. The PixelCam Disclosure Schedule sets forth
the names and locations of all banks and other financial institutions at which
PixelCam maintains accounts of any nature, the type of accounts maintained at
each such institution and the names of all persons authorized to draw thereon or
make withdrawals therefrom.
SECTION 3.13 CONTRACTS.
(a) Except as set forth in the PixelCam Disclosure Schedule,
PixelCam is not a party or subject to any agreement, obligation or commitment,
written or oral:
(i) that calls for any fixed or contingent payment or
expenditure or any related series of fixed or contingent payments or
expenditures by or to PixelCam totaling more than $25,000 in any twelve-month
period;
(ii) with agents, advisors, salesmen, sales
representatives, independent contractors or consultants that are not cancelable
by it on no more than thirty (30) days' notice and without liability, penalty or
premium;
(iii) that restricts PixelCam from carrying on
anywhere in the world its business or any portion thereof as currently
conducted;
(iv) to provide funds to or to make any investment in
any other person or entity (in the form of a loan, capital contribution or
otherwise);
(v) with respect to obligations as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any other person or entity;
(vi) for any line of credit, standby financing,
revolving credit or other similar financing arrangement; or
(vii) with any distributor, original equipment
manufacturer, value added remarketer or other person for the distribution of any
of the PixelCam Products.
(b) To PixelCam's knowledge, no party to any such contract,
agreement or instrument intends to cancel, withdraw, modify or amend such
contract, agreement or instrument.
(c) PixelCam is not in default under or in breach or violation
of, nor is there any valid basis for any claim of default by PixelCam under, or
breach or violation by PixelCam of, any material contract, commitment or
restriction to which PixelCam is a party or by which PixelCam or any of its
properties or assets is bound or affected. To PixelCam's knowledge, no other
party is in default under or in breach or violation of, nor is there any valid
basis for any claim of default by any other party under, or any breach or
violation by any other party of, any material contract, commitment, or
restriction to which PixelCam is a party or by which PixelCam or any of its
properties or assets is bound or affected.
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SECTION 3.14 LABOR DIFFICULTIES. PixelCam is not engaged in any unfair
labor practice or in violation of any applicable laws respecting employment,
employment practices or terms and conditions of employment. There is no unfair
labor practice complaint against PixelCam pending or threatened before any
Governmental Entity. There is no strike, labor dispute, slowdown, or stoppage
pending or threatened against PixelCam. PixelCam is not now and has never been
subject to any union organizing activities. PixelCam has not experienced any
work stoppage or other labor difficulty. To PixelCam's knowledge, (i) the
consummation of the transactions contemplated by this Agreement will not have a
material adverse effect on its relations with PixelCam employees, and (ii) none
of the PixelCam employees intends to leave their employment, whether as a result
of the transactions contemplated by this Agreement or otherwise.
SECTION 3.15 TRADE REGULATION. PixelCam has not terminated its
relationship with or refused to ship PixelCam Products to any dealer,
distributor, third party marketing entity or customer which had theretofore paid
or been obligated to pay PixelCam in excess of $10,000 over any consecutive
twelve (12) month period. All of the prices charged by PixelCam in connection
with the marketing or sale of any of its products or services have been in
compliance with all applicable laws and regulations. No claims have been
asserted or, to PixelCam's knowledge, threatened against PixelCam with respect
to the wrongful termination of any dealer, distributor or any other marketing
entity, discriminatory pricing, price fixing, unfair competition, false
advertising, or any other material violation of any laws or regulations relating
to anti-competitive practices or unfair trade practices of any kind, and, to
PixelCam's knowledge, no specific situation, set of facts, or occurrence
provides any basis for any such claim.
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) As of the date hereof, except as set forth in the PixelCam
Disclosure Schedule, no material amount of any substance that has been
designated by applicable law or regulation to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, excluding office, janitorial
and similar substances (a "Hazardous Material"), is present, as a result of the
actions of PixelCam or, to PixelCam's knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water, that PixelCam has at any
time owned, operated, occupied or leased. To the knowledge of PixelCam, no
underground storage tanks are present under any property that PixelCam has at
any time owned, operated, occupied or leased.
(b) At no time has PixelCam transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials (collectively, "Hazardous Materials Activities") in
violation of any law, rule, regulation or treaty promulgated by any Governmental
Entity, except for Hazardous Materials Activities which have not had and are not
likely to have a Material Adverse Effect on PixelCam.
(c) PixelCam currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of its business as such businesses is currently being
conducted, except for such Environmental Permits the absence of which would not
be likely to have a Material Adverse Effect on XxxxxXxx.
00
(x) No action, proceeding, writ, injunction or claim is
pending or, to the knowledge of PixelCam, threatened concerning any
Environmental Permit or any Hazardous Materials Activity of PixelCam. PixelCam
is not aware of any fact or circumstance which could reasonably be expected to
involve PixelCam in any environmental litigation or impose upon PixelCam any
liability concerning Hazardous Materials Activities which would be reasonably
likely to have a Material Adverse Effect on PixelCam.
SECTION 3.17 EMPLOYEE BENEFIT PLANS.
(a) PixelCam has set forth in the PixelCam Disclosure Schedule
(i) all employee benefit plans, (ii) all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar employee benefit plans, and (iii) all unexpired severance agreements,
written or otherwise, for the benefit of, or relating to, any current or former
employee of PixelCam (individually, a "PixelCam Employee Plan," and
collectively, the "PixelCam Employee Plans").
(b) With respect to each PixelCam Employee Plan, PixelCam has
made available to Xxxxx a true and correct copy of (i) such PixelCam Employee
Plan and (ii) each trust agreement and group annuity contract, if any, relating
to such PixelCam Employee Plan.
(c) With respect to the PixelCam Employee Plans, individually
and in the aggregate, no event has occurred, and there exists no condition or
set of circumstances in connection with which PixelCam could be subject to any
liability which would be reasonably likely to have a Material Adverse Effect on
PixelCam.
(d) With respect to the PixelCam Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the financial statements or books
of PixelCam which obligations would be reasonably likely to have a Material
Adverse Effect on PixelCam .
(e) PixelCam is not a party to any oral or written (i) union
or collective bargaining agreement, (ii) agreement with any officer or other key
employee of PixelCam, the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving
PixelCam of the nature contemplated by this Agreement, (iii) agreement with any
officer of PixelCam providing any term of employment or compensation guarantee
or for the payment of compensation in excess of $100,000 per annum, or (iv)
agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
SECTION 3.18 COMPLIANCE WITH LAWS. To its knowledge, PixelCam has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any statute, law or regulation applicable to the
ownership or operation of its business.
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SECTION 3.19 EMPLOYEES AND CONSULTANTS. The PixelCam Disclosure
Schedule contains a list of the names of all employees and consultants of
PixelCam as of the date of this Agreement and their salaries or wages, other
compensation, dates of employment and positions.
SECTION 3.20 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending before any agency, court or tribunal or, to
PixelCam's knowledge, threatened against PixelCam or any of its properties or
officers or directors (in their capacities as such). There is no judgment,
decree or order against PixelCam or, to its knowledge, any of its directors or
officers (in their capacities as such) that could prevent, enjoin or materially
alter or delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect on PixelCam. All
litigation to which PixelCam is a party (or, to its knowledge, threatened to
become a party) is disclosed in the PixelCam Disclosure Schedule.
SECTION 3.21 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no
agreement, judgment, injunction, order or decree binding upon PixelCam which has
or could reasonably be expected to have the effect of prohibiting or materially
impairing any current or future business practice of PixelCam, any acquisition
of property by PixelCam or the conduct of business by PixelCam as currently
conducted or as currently proposed to be conducted.
SECTION 3.22 GOVERNMENTAL AUTHORIZATION. PixelCam has obtained each
governmental consent, license, permit, grant or other authorization of a
Governmental Entity that is required for the operation of the business of
PixelCam (collectively, the "PixelCam Authorizations"), and all of such PixelCam
Authorizations are in full force and effect.
SECTION 3.23 INSURANCE. PixelCam has insurance policies of the type and
in amounts customarily carried by persons conducting businesses or owning assets
similar to those of PixelCam. The PixelCam Disclosure Schedule contains a list
and description of all such policies. There is no material claim pending under
any of such policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies. All premiums due and payable
under all such policies have been paid, and PixelCam is otherwise in compliance
with the terms of such policies. PixelCam has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
SECTION 3.24 INTERESTED PARTY TRANSACTIONS.
(a) Except as set forth on the Disclosure Schedule, no
director, officer or shareholder of PixelCam has any interest in (i) any
material equipment or other material property or asset, real or personal,
tangible or intangible, including, without limitation, any of the PixelCam
Intellectual Property Rights, used in connection with or pertaining to the
business of PixelCam, (ii) any creditor, supplier, customer, manufacturer,
agent, representative, or distributor of any of the PixelCam Products, (iii) any
entity that competes with PixelCam, or with which PixelCam is affiliated or has
a business relationship, or (iv) any material agreement, obligation or
commitment, written or oral, to which PixelCam is a party; PROVIDED, HOWEVER,
that no such person shall be deemed to have such an interest solely by virtue of
ownership of less than five percent (5%) of the outstanding stock or debt
securities of any company whose stock or debt securities are traded on a
recognized stock exchange or quoted on the NNM.
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(b) Except as contemplated by the Transaction Documents or
otherwise set forth in the PixelCam Disclosure Schedule, PixelCam is not a party
to any (i) agreement with any officer or other employee of PixelCam the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving PixelCam in the nature of any of the
transactions contemplated by this Agreement, or (ii) agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 3.25 NO EXISTING DISCUSSIONS. As of the date hereof, PixelCam
is not engaged, directly or indirectly, in any discussions or negotiations with
any party other than Xxxxx with respect to an PixelCam Acquisition Proposal (as
defined in Section 6.1).
SECTION 3.26 REAL PROPERTY HOLDING CORPORATION. PixelCam is not a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
SECTION 3.27 CORPORATE DOCUMENTS. PixelCam has furnished to Xxxxx, or
its representatives, for its examination (i) its minute book containing all
records required to be set forth of all proceedings, consents, actions, and
meetings of the shareholders, the Board of Directors and any committees thereof
and (ii) all permits, orders, and consents issued by any Governmental Entity
with respect to PixelCam. The corporate minute books and other corporate records
of PixelCam are complete and accurate in all material respects, and the
signatures appearing on all documents contained therein are the true signatures
of the persons purporting to have signed the same. All actions reflected in such
books and records were duly and validly taken in material compliance with the
laws of the applicable jurisdiction. PixelCam has delivered or made available to
Xxxxx or its representatives true and complete copies of all documents which are
referred to in this Article III or in the PixelCam Disclosure Schedule.
SECTION 3.28 NO MISREPRESENTATION. No representation or warranty by
PixelCam in this Agreement, or any statement, certificate or schedule furnished
or to be furnished by or on behalf of PixelCam pursuant to this Agreement, when
taken together, contains or shall contain any untrue statement of a material
fact or omits or shall omit to state a material fact required to be stated
therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX AND SUB
Except as set forth in the disclosure schedule delivered by Xxxxx to
PixelCam on or before the date of this Agreement (the "Xxxxx Disclosure
Schedule"), Xxxxx and Sub represent and warrant to PixelCam as follows:
SECTION 4.1 ORGANIZATION. Each of Xxxxx, Sub and Zoran's Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its
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incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted and as proposed to
be conducted, and is duly qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on Xxxxx. Except as set forth in
the Xxxxx SEC Reports (as defined in Section 4.4) or the Xxxxx Disclosure
Schedule, neither Xxxxx nor any of its Subsidiaries directly or indirectly owns
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business association or entity.
SECTION 4.2 XXXXX CAPITAL STRUCTURE.
(a) The authorized capital stock of Xxxxx consists of
20,000,000 shares of Xxxxx Common Stock and 3,000,000 shares of Preferred Stock,
$.001 par value ("Xxxxx Preferred Stock"). As of March 31, 2000: (i) 14,051,106
shares of Xxxxx Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable; (ii) no shares of Xxxxx Common
Stock were held in the treasury of Xxxxx or by Subsidiaries of Xxxxx; (iii)
____________ shares of Xxxxx Common Stock were reserved for issuance pursuant to
stock options granted and outstanding under Zoran's stock option plans (the
"Xxxxx Option Plans"), and rights outstanding under Zoran's Employee Stock
Purchase Plan (the "Xxxxx Purchase Plan"). No material change in such
capitalization has occurred between March 31, 2000 and the date of this
Agreement. As of the date of this Agreement, none of the shares of Xxxxx
Preferred Stock are issued and outstanding. All shares of Xxxxx Common Stock
subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. All of
the outstanding shares of capital stock of Sub are duly authorized, validly
issued, fully paid and nonassessable, and all such shares are owned by Xxxxx
free and clear of all security interests, liens, claims, pledges, agreements,
limitations on Zoran's voting rights, charges or other encumbrances of any
nature.
(b) Except as set forth in this Section 4.2 or as reserved for
future grants of options under the Xxxxx Option Plans or the Xxxxx Purchase
Plan, there are (i) no equity securities of any class of Xxxxx, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding and (ii) no outstanding subscriptions, options,
warrants, puts, calls, rights or other commitments or agreements of any
character to which Xxxxx is a party or by which it is bound obligating Xxxxx to
issue, deliver, sell, repurchase or redeem or cause to be issued, delivered,
sold, repurchased or redeemed any equity securities of Xxxxx or obligating Xxxxx
to xxxxx, extend, accelerate the vesting of, change the exercise price of or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. To Zoran's knowledge, there are no voting trusts, proxies or other
agreements or understandings with respect to the shares of capital stock of
Xxxxx.
(c) The shares of Xxxxx Common Stock to be issued pursuant to
the Merger, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid, and nonassessable and, assuming the
truthfulness of the representations and warranties of PixelCam's shareholders
set forth in the Shareholder Agreement (as defined in Section 7.2(n) hereof),
will be issued in compliance with the registration requirements of the
Securities Act or a valid exemption therefrom.
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SECTION 4.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Xxxxx and Sub have all requisite corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which they are or will be parties and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents to which Xxxxx or Sub is or will be a party
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Xxxxx and
Sub, respectively. This Agreement and the other Transaction Documents to which
Xxxxx and/or Sub are parties have been or will be duly executed and delivered by
Xxxxx and/or Sub and constitute or will constitute the valid and binding
obligations of Xxxxx and/or Sub, enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy laws and other
similar laws affecting creditors' rights generally and general principles of
equity.
(b) The execution and delivery by Xxxxx and Sub of this
Agreement and the other Transaction Documents to which they are or will be
parties do not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) conflict with, or result in any violation or breach of any
provision of the Certificate of Incorporation or Bylaws of Xxxxx or Sub, (ii)
result in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or loss of any material
benefit under, any note, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Xxxxx or Sub is a party or by which
either of them or any of their properties or assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Xxxxx
or Sub or any of its or their properties or assets, except in the case of (ii)
and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not be reasonably likely to have a
Material Adverse Effect on Xxxxx.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Xxxxx or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Agreement of Merger and
Officer's Certificates with the California Secretary of State in accordance with
the GCL, (ii) if required, the filing of a report on Form 8-K with the
Securities and Exchange Commission (the "SEC"), (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws, and (iv) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not prevent or materially alter or delay any of the
transactions contemplated by this Agreement or be reasonably likely to have a
Material Adverse Effect on Xxxxx.
SECTION 4.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Xxxxx has timely filed and made available to PixelCam all
forms, reports and documents required to be filed by Xxxxx with the SEC since
January 31, 1999 other than registration statements on Form S-8 (collectively,
the "Xxxxx SEC Reports"). The Xxxxx SEC
27
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Xxxxx SEC Reports or necessary in order to make the statements in
such Xxxxx SEC Reports, in the light of the circumstances under which they were
made, not misleading. None of Zoran's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the Xxxxx SEC Reports, including
any Xxxxx SEC Reports filed after the date of this Agreement until the Closing,
complied or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
promulgated by the SEC) and presented fairly or will present fairly, in all
material respects, the consolidated financial position of Xxxxx and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount. The unaudited consolidated balance sheet of Xxxxx as of March 31, 2000
is referred to herein as the "Xxxxx Balance Sheet."
SECTION 4.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
the Xxxxx SEC Reports, Xxxxx and its Subsidiaries do not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect on Xxxxx, other than (i) liabilities reflected or
provided for on the Xxxxx Balance Sheet, (ii) liabilities specifically described
in this Agreement, or in the Xxxxx Disclosure Schedule, and (iii) normal or
recurring liabilities incurred since January 31, 1999 in the ordinary course of
business consistent with past practices.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 2000,
there has been no material adverse change in the business, assets, financial
condition or results of operations of Xxxxx, and Xxxxx has conducted its
business in the ordinary course and in a manner consistent with past practices.
Xxxxx Xxxxx 00, 0000, Xxxxx has not agreed to take any action outside the
ordinary course of business or that would constitute a breach of any of the
representations or warranties of Xxxxx contained in this Agreement.
SECTION 4.7 LITIGATION. Except as described in the Xxxxx SEC Reports,
there is no action, suit or proceeding, claim, arbitration or investigation
against Xxxxx pending or as to which Xxxxx has received any written notice of
assertion, which is reasonably likely to have a Material Adverse Effect on Xxxxx
or a material adverse effect on the ability of Xxxxx to consummate the
transactions contemplated by this Agreement.
SECTION 4.8 OPINION OF FINANCIAL ADVISOR. The financial advisor of
Xxxxx, Pacific Growth Equities, has delivered to Xxxxx an opinion dated the date
of this Agreement to the effect
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that the consideration to be issued to the PixelCam Shareholders in the Merger
is fair from a financial point of view to the shareholders of Xxxxx.
SECTION 4.9 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
SECTION 4.10 NO MISREPRESENTATION. No representation or warranty by
Xxxxx or Sub in this Agreement, or any statement, certificate or schedule
furnished or to be furnished by or on behalf of Xxxxx or Sub pursuant to this
Agreement, when taken together, contains or shall contain any untrue statement
of a material fact or omits or shall omit to state a material fact required to
be stated therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
CONDUCT OF BUSINESS
SECTION 5.1 COVENANTS OF PIXELCAM. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, PixelCam agrees (except to the extent that
Xxxxx shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due, to pay or perform its
other obligations when due (subject to good faith disputes with respect to such
obligations), and, to the extent consistent with such business, to use all
reasonable efforts consistent with past practices and policies to (i) preserve
intact its present business organization, (ii) keep available the services of
its present officers and key employees and (iii) preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others having
business dealings with it. PixelCam shall promptly notify Xxxxx of any event or
occurrence not in the ordinary course of business of PixelCam where such event
or occurrence would result in a breach of any covenant of PixelCam set forth in
this Agreement or cause any representation or warranty of PixelCam set forth in
this Agreement to be untrue as of the date of, or giving effect to, such event
or occurrence. Except as expressly contemplated by this Agreement, PixelCam
shall not, without the prior written consent of Xxxxx:
(a) Grant or accelerate, amend or change the period of vesting
or exercisability of options or restricted stock granted under any employee
stock plan of PixelCam or authorize cash payments in exchange for any options
granted under any of such plans except as required by the terms of such plans or
any related agreements in effect as of the date of this Agreement;
(b) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the PixelCam Intellectual Property Rights
other than in the ordinary course of business consistent with past practices;
(c) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify
29
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or purchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service by such party;
(d) Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the sale of Series B Preferred Stock, or debt securities convertible
into such stock, to accredited investors with proceeds of not more than $500,000
or (ii) the issuance of shares of PixelCam Common Stock upon the exercise or
conversion of PixelCam Options or PixelCam Preferred Stock outstanding as of the
date of this Agreement;
(e) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise acquire or
agree to acquire any assets other than acquisitions involving aggregate
consideration of not more than $25,000;
(f) Sell, lease, license or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to
the business of PixelCam, except for transactions entered into in the ordinary
course of business;
(g) Take any action to (i) increase or agree to increase the
compensation payable or to become payable to its officers or employees, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any officers, (iii) grant any severance
or termination pay to, or enter into any employment or severance agreement, with
any non-officer employee, except in accordance with past practices, (iv) enter
into any collective bargaining agreement, or (v) establish, adopt, enter into or
amend in any material respect any bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(h) Revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable, other than in
the ordinary course of business;
(i) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others, other
than indebtedness incurred under outstanding lines of credit consistent with
past practice;
(j) Amend or propose to amend its Articles of Incorporation or
Bylaws, except as contemplated by this Agreement;
30
(k) Incur or commit to incur any individual capital
expenditure in excess of $10,000 or aggregate capital expenditures in excess of
$25,000, in addition to the existing commitments set forth in the PixelCam
Disclosure Schedule;
(l) Enter into or amend any agreements or amendments to
existing agreements pursuant to which any third party is granted exclusive
marketing or distribution rights with respect to any PixelCam Product;
(m) Amend or terminate any contract, agreement or license to
which it is a party, except in the ordinary course of business;
(n) Waive or release any material right or claim, except in
the ordinary course of business;
(o) Initiate any litigation or arbitration proceeding; or
(p) Take or agree to take, in writing or otherwise, any of the
actions described in paragraphs (a) through (o) above, or any action which is
reasonably likely to make any of PixelCam's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on the
date made (to the extent so limited) or as of the Effective Time.
SECTION 5.2 COVENANTS OF XXXXX. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Xxxxx agrees (except to the extent that PixelCam shall
otherwise consent in writing), to carry on its business in the usual, regular
and ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due, subject to good faith disputes over such debts
or Taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to (i) preserve intact its present business organization,
(ii) keep available the services of its present officers and key employees and
(iii) preserve its relationships with customers, suppliers, distributors,
licensors, licensees and others having business dealings with it. Xxxxx shall
promptly notify PixelCam of any event or occurrence not in the ordinary course
of business of Xxxxx where such event or occurrence would result in a breach of
any covenant of Xxxxx set forth in this Agreement or cause any representation or
warranty of Xxxxx set forth in this Agreement to be untrue as of the date of, or
giving effect to, such event or occurrence.
SECTION 5.3 COOPERATION. Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of Xxxxx and PixelCam shall
confer on a regular and frequent basis with one or more representatives of the
other party to report operational matters of materiality and the general status
of ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 NO SOLICITATION.
(a) During the period from the date of this Agreement until
the earlier of the termination of this Agreement or the Effective Time, PixelCam
shall not, directly or indirectly, through any officer, director, employee,
representative or agent, (i) take any action to solicit, initiate, encourage or
support any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving PixelCam, other than the transactions contemplated or expressly
permitted by this Agreement (any of the foregoing inquiries or proposals being
referred to in this Agreement as a "PixelCam Acquisition Proposal"), (ii) engage
in negotiations or discussions concerning, or provide any non-public information
to any person or entity relating to, any PixelCam Acquisition Proposal, or (iii)
agree to, approve or recommend any PixelCam Acquisition Proposal.
(b) PixelCam shall notify Xxxxx no later than twenty-four (24)
hours after receipt by PixelCam (or its advisors) of any PixelCam Acquisition
Proposal or any request for nonpublic information in connection with a PixelCam
Acquisition Proposal or for access to the properties, books or records of
PixelCam by any person or entity that informs PixelCam that it is considering
making, or has made, a PixelCam Acquisition Proposal. Such notice shall be made
orally and in writing and shall indicate in reasonable detail the identity of
the offeror and the terms and conditions of such proposal, inquiry or contact.
(c) During the period from the date of this Agreement until
the earlier of the termination of this Agreement or the Effective Time, Xxxxx
shall not, directly or indirectly, through any officer, director, employee,
representative or agent, (i) make any inquiries or proposals that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, purchase of substantial assets, purchase of
shares of capital stock (including without limitation by way of a tender offer)
or similar transactions involving any other individual or entity whose business
is competitive with that of PixelCam (any of the foregoing inquiries or
proposals being referred to in this Agreement as a "Xxxxx Acquisition
Proposal"), (ii) engage in negotiations or discussions concerning, or provide
any non-public information to any person or entity relating to, any Xxxxx
Acquisition Proposal, or (iii) agree to, approve or recommend any Xxxxx
Acquisition Proposal.
SECTION 6.2 REGISTRATION RIGHTS.
(a) Xxxxx shall use all reasonable efforts to cause the Firm
Merger Shares other than the Escrow Shares (such Firm Merger Shares being
referred to herein as "Registrable Securities") to be registered under the
Securities Act so as to permit the resale thereof, and in connection therewith
shall use its best efforts to prepare and file with the SEC within ten (10) days
following the Closing Date, and shall use all reasonable efforts to cause to
become effective no later than sixty (60) days thereafter, a registration
statement (the "Registration Statement") on
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Form S-3 or on such other form as is then available under the Securities Act
covering the Registrable Securities; PROVIDED, HOWEVER, that each holder of
Registrable Securities ("Holder") shall provide all such information and
materials to Xxxxx and take all such action as may be required in order to
permit Xxxxx to comply with all applicable requirements of the SEC and to obtain
any desired acceleration of the effective date of such Registration Statement.
Such provision of information and materials is a condition precedent to the
obligations of Xxxxx pursuant to this Section 6.2. Xxxxx shall not be required
to effect more than one (1) registration under this Section 6.2. The offering
made pursuant to such registration shall not be underwritten.
(b) Notwithstanding Section 6.2(a), Xxxxx shall be entitled to
postpone the declaration of effectiveness of the Registration Statement for a
reasonable period of time up to sixty (60) calendar days after the deadline
therefore set forth in Section 6.2(a), if the Board of Directors of Xxxxx,
acting in good faith, determines that there exists material nonpublic
information about Xxxxx which the Board does not wish to disclose in a
registration statement, which information would otherwise be required by the
Securities Act to be disclosed in the Registration Statement to be filed
pursuant to Section 6.2(a) above. Xxxxx shall have the right to extend such
60-day postponement upon the written consent of the Principal Shareholders;
PROVIDED, HOWEVER, that Xxxxx will use all reasonable efforts to limit the
extension to as short a period as possible. In each case, Xxxxx shall furnish
the Principal Shareholders with a written notice summarizing in reasonable
detail the material nonpublic information upon which the postponement or
extension of such postponement is based, which information the Principal
Shareholders shall treat as confidential.
(c) Subject to the limitations of Section 6.2(b) above, Xxxxx
shall: (i) prepare and file the Registration Statement with the SEC in
accordance with Section 6.2(a) hereof with respect to the Registrable Securities
and shall use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable after filing and to keep the
Registration Statement effective until one (1) year after the Effective Time;
(ii) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary, and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities proposed to be registered in
the Registration Statement until one (1) year after the Effective Time; and
(iii) furnish to each Holder such number of copies of any prospectus (including
any preliminary prospectus and any amended or supplemented prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as each Holder may reasonably request in order to effect the offering
and sale of the Registrable Securities to be offered and sold, but only while
Xxxxx shall be required under the provisions hereof to cause the Registration
Statement to remain current.
(d) Notwithstanding any other provision of this Section 6.2,
Xxxxx shall have the right at any time to require that all Holders suspend
further open market offers and sales of Registrable Securities whenever, and for
so long as, in the reasonable judgment of Xxxxx in good faith after consultation
with counsel, there is or may be in existence material undisclosed information
or events with respect to Xxxxx (the "Suspension Right"). In the event Xxxxx
exercises the Suspension Right, such suspension will continue for the period of
time reasonably necessary for disclosure to occur at a time that is not
materially detrimental to Xxxxx and its shareholders or until such time as the
information or event is no longer material, each as determined in good faith by
Xxxxx after consultation with counsel. Xxxxx will promptly give the
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Principal Shareholders notice of any such suspension, summarizing in reasonable
detail the information or events on which such suspension is based, PROVIDED
that the Principal Shareholders shall maintain the confidentiality of the
contents of such summary. Xxxxx will use all reasonable efforts to limit the
length of the suspension to thirty (30) calendar days or less. Xxxxx agrees to
notify the Principal Shareholders promptly upon termination of the suspension.
(e) Xxxxx will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, preliminary
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any registration, qualification or compliance effected
pursuant to this Section 6.2, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation or any alleged violation by Xxxxx of any rule
or regulation promulgated under the Securities Act or the Exchange Act in
connection with any such registration, qualification or compliance, and Xxxxx
will reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that Xxxxx will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to Xxxxx by
such Holder or controlling person and specifically for use therein.
(f) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration is being
effected, indemnify Xxxxx, each of its directors and officers, each person who
controls Xxxxx within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
Xxxxx, such other Holders, directors, officers, persons or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
such expenses are incurred, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to Xxxxx by such Holder specifically for use therein.
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(g) Each party entitled to indemnification under Section
6.2(e) or 6.2(f) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; PROVIDED, HOWEVER, that an Indemnified Party
(together with all other Indemnified Parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to differing or potentially
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under Section 6.2(e) or 6.2(f) unless the failure to give
such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(h) Xxxxx shall pay all of the out-of-pocket expenses, other
than underwriting discounts and commissions, if any, incurred in connection with
any registration of Registrable Securities pursuant to this Section 6.2,
including, without limitation, all registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of Zoran's outside counsel and independent accountants.
SECTION 6.3 CONSENTS. Each of Xxxxx and PixelCam shall use all
reasonable efforts to obtain all necessary consents, waivers and approvals under
any of Zoran's or PixelCam's material agreements, contracts, licenses or leases
as may be necessary or advisable to consummate the Merger and the other
transactions contemplated by this Agreement.
SECTION 6.4 NASDAQ QUOTATION. Xxxxx agrees to continue the quotation of
Xxxxx Common Stock on the NNM during the term of this Agreement.
SECTION 6.5 ACCESS TO INFORMATION. Upon reasonable notice, PixelCam
shall afford to the officers, employees, accountants, counsel and other
representatives of Xxxxx, reasonable access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, PixelCam shall furnish promptly
to Xxxxx or its representatives all other information concerning its business,
properties and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will treat any such information which is
nonpublic in confidence in accordance with the Joint Confidentiality Agreement
dated March 21, 2000 (the "Confidentiality Agreement") between Xxxxx and
PixelCam, which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms. No information or knowledge obtained in any
investigation pursuant to this Section 6.5 shall affect or be deemed to modify
any representation or warranty
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contained in this Agreement or the conditions to the obligations of the parties
to consummate the Merger.
SECTION 6.6 CONSENT SOLICITATION STATEMENT.
(a) PixelCam has prepared, with the cooperation of Xxxxx, a
Consent Solicitation Statement describing this Agreement and the transactions
contemplated hereby and thereby for the purpose of soliciting the approval of
PixelCam Shareholders. The information supplied by PixelCam for inclusion in the
Consent Solicitation Statement shall not, on the date the solicitation statement
is first mailed to PixelCam Shareholders or at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication which has become false or misleading.
Notwithstanding the foregoing, PixelCam makes no representation, warranty or
covenant with respect to any information supplied by Xxxxx or Merger Sub which
is contained in any of the foregoing documents. The information supplied by
Xxxxx for inclusion in the solicitation statement shall not, on the date the
solicitation statement is first mailed to PixelCam's shareholders, nor at the
Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which it is made, not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication which has
become false or misleading. Notwithstanding the foregoing, Xxxxx and Merger Sub
make no representation, warranty or covenant with respect to any information
supplied by PixelCam which is contained in any of the foregoing documents.
(b) The Consent Solicitation Statement shall constitute a
disclosure document for the offer and issuance of shares of Xxxxx Common Stock
to be received by the holders of PixelCam Common Stock in the Merger. Xxxxx and
PixelCam shall each use reasonable commercial efforts to cause the Consent
Solicitation Statement to comply with applicable federal and state securities
laws requirements. Each of Xxxxx and PixelCam agrees to provide promptly to the
other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of the providing party or its counsel,
may be required or appropriate for inclusion in the solicitation statement or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the
solicitation statement. PixelCam will promptly advise Xxxxx, and Xxxxx will
promptly advise PixelCam, in writing if at any time prior to the Effective Time
either PixelCam or Xxxxx shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the solicitation statement in
order to make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law. The solicitation statement shall
contain the recommendation of the Board of Directors of PixelCam that the
PixelCam shareholders approve the Merger and this Agreement and the conclusion
of the Board of Directors that the terms and conditions of the Merger are fair
and reasonable to the shareholders of PixelCam. Anything to the contrary
contained herein notwithstanding, PixelCam shall not include in the solicitation
statement any information with respect to Xxxxx or its affiliates or associates,
the form and content of which information shall not have been approved by Xxxxx
prior to such inclusion.
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SECTION 6.7 LEGAL CONDITIONS TO MERGER. Each of Xxxxx and PixelCam will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger (which
actions shall include, without limitation, furnishing all information in
connection with approvals of or filings with any Governmental Entity) and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon either of them or any of their Subsidiaries
in connection with the Merger. Each of Xxxxx and PixelCam will take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other third party, required to be obtained or
made by PixelCam, Xxxxx or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement and
to enable the Closing to occur no later than June 30, 2000, but in any event as
promptly as practicable.
SECTION 6.8 PUBLIC DISCLOSURE. Xxxxx and PixelCam shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law or by the rules or regulations of the SEC or
the NNM.
SECTION 6.9 TAX-FREE REORGANIZATION. Xxxxx and PixelCam shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code. Xxxxx and PixelCam agree to make, and
PixelCam agrees to use its best efforts to cause its shareholders to make,
reasonable representations as requested by counsel to Xxxxx and PixelCam with
respect to the rendering of the opinions required pursuant to Section 7.1(d).
SECTION 6.10 NASDAQ QUOTATION. Xxxxx shall use its best efforts to
cause the shares of Xxxxx Common Stock to be issued in the Merger to be approved
for quotation on the NNM, subject to official notice of issuance, prior to the
Closing Date.
SECTION 6.11 STOCK OPTIONS.
(a) At the Effective Time, each outstanding PixelCam Option,
whether vested or unvested, shall be deemed to constitute an option (an "Assumed
Option") to acquire, on the same terms and conditions as were applicable under
the PixelCam Option, such number of shares of Xxxxx Common Stock (not including
2000 Contingency Shares and 2001 Contingency Shares, if issued) as the holder of
such PixelCam Option would have been entitled to receive pursuant to the Merger
had such holder exercised such option in full (without regard to vesting)
immediately prior to the Effective Time (rounded down to the nearest whole
share), at a price per share (rounded up to the nearest whole cent) equal to (i)
the aggregate exercise price of PixelCam Common Stock otherwise purchasable
pursuant to such PixelCam Option immediately prior to the Effective Time divided
by (ii) the number of full shares of Xxxxx Common Stock deemed purchasable
pursuant to such PixelCam Option in accordance with the foregoing.
(b) Each holder of shares of Xxxxx Common Stock issued upon
exercise of an Assumed Option shall have the right to receive additional shares
of Xxxxx Common Stock ("Additional Option Shares") simultaneously with the
issuance of the 2000 Contingency Shares
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or the 2001 Contingency Amount; provided, however, that if any portion of such
Assumed Option is not exercised until after the issuance of the 2000 Contingency
Shares or the 2001 Contingency Amount, as the case may be, then the Additional
Option Shares that would have become issuable at such time in respect of the
shares of Xxxxx Common Stock underlying such unexercised portion will not become
issuable until such time as the shares of Xxxxx Common Stock are acquired
pursuant to the Assumed Option (the "Time of Exercise"). The number of
Additional Option Shares that shall be issuable simultaneously with the 2000
Contingency Shares (or the Time of Exercise, if later) with respect to any
Assumed Option shall be equal to the number of shares of Xxxxx Common Stock
issued or issuable upon exercise of the Assumed Option divided by (x) the
Initial Per-Share Amount and multiplied by (y) the 2000 Per-Share Amount. The
number of Additional Option Shares that shall be issuable simultaneously with
the 2001 Contingency Amount (or the Time of Exercise, if later) shall be equal
to (x) the number of shares of Xxxxx Common Stock issued or issuable upon
exercise of the Assumed Option divided by (y) the Initial Per-Share Amount and
multiplied by (z) the 2001 Per-Share Amount. Any Additional Option Shares that
are issued in respect of unvested shares of Xxxxx Common Stock that are subject
to a right of repurchase upon termination of service ("Restricted Xxxxx Shares")
shall be subject to the same vesting terms as the Restricted Xxxxx Shares, as if
the Additional Option Shares had been issued for a purchase price of $0.00, and
shall at any time be vested in the same ratio as the Restricted Xxxxx Shares are
vested at such time. In the event any Additional Option Shares remain unvested
upon the termination of the holder's employment with Xxxxx, such unvested
Additional Option Shares will be cancelled without any payment by Xxxxx to the
holder.
(c) As soon as practicable after the Effective Time, Xxxxx
shall deliver to the participants in the PixelCam Option Plan an appropriate
notice setting forth such participants' rights pursuant thereto and the grants
pursuant to the PixelCam Option Plan shall continue in effect on the same terms
and conditions (subject only to the adjustments required by this Section 6.11
after giving effect to the Merger). Xxxxx shall comply with the terms of the
PixelCam Option Plan and ensure, to the extent required by and subject to the
provisions of the PixelCam Option Plan, that the Assumed Options representing
assumed PixelCam Options which qualified as incentive stock options prior the
Effective Time continue to qualify as incentive stock options after the
Effective Time.
(d) Xxxxx shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Xxxxx Common Stock for delivery
under the Assumed Options. As soon as practicable after the Effective Time,
Xxxxx shall file a registration statement on Form S-8 (or any successor or other
appropriate forms), with respect to the shares of Xxxxx Common Stock subject to
the Assumed Options and shall use its best efforts to maintain the effectiveness
of such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses in connection therewith) for so
long as any Assumed Options remain outstanding. With respect to those
individuals who, subsequent to the Merger, will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, Xxxxx
shall administer the Assumed Options in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
(e) Prior to the Merger, PixelCam will issue options to
purchase up to a number of shares of PixelCam Common Stock equal to the
unallocated share reserve under the
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PixelCam Option Plan, vesting over a four-year period, pursuant to a hiring and
retention plan that is mutually agreeable to PixelCam and Xxxxx.
SECTION 6.12 EMPLOYEE STOCK PURCHASE PLAN. Employees of PixelCam as of
the Effective Time shall be permitted to participate in the Xxxxx Purchase Plan
commencing on the first enrollment date following the Effective Time, subject to
compliance with the eligibility provisions of such plan.
SECTION 6.13 BROKERS OR FINDERS. Each of Xxxxx and PixelCam represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
Pacific Growth Equities, financial advisor to Xxxxx, to which Xxxxx has agreed
to pay fees and expenses in connection with financial advisory services, and
each of Xxxxx and PixelCam agrees to indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
other fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have been made by such party or its Affiliate.
SECTION 6.14 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party, including by
provision of information. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
SECTION 6.15 EXPENSES. The parties shall each pay their own legal,
accounting and financial advisory fees and other out-of-pocket expenses related
to the negotiation, preparation and carrying out of this Agreement and the
transactions herein contemplated. In the event the Merger is consummated, the
PixelCam Transaction Expenses shall be borne by the Surviving Corporation except
to the extent such expenses are offset against the number of Firm Merger Shares
pursuant to Section 2.1(n) hereof.
SECTION 6.16 VOTING AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, PixelCam will cause the persons and entities listed
on Schedule 6.16 to execute Voting Agreements in the form attached hereto as
EXHIBIT C agreeing, among other things, to vote in favor of the Merger.
SECTION 6.17 COVENANT NOT TO HIRE. Xxxxx agrees that it will not
solicit any PixelCam employees until the earlier of the Closing Date or June 30,
2002.
SECTION 6.18 XXXXX PLANS. All PixelCam employees who remain employees
of Xxxxx, PixelCam or any other Subsidiary of Xxxxx following the Effective Time
shall be entitled to participate in all employee benefit plans and programs (the
"Xxxxx Plans") that are available to
39
other Xxxxx employees holding comparable positions. The Xxxxx Plans shall give
full credit for each participant's period of continuous service with PixelCam
prior to the Effective Time, to the extent permitted by such Xxxxx Plans. In the
case of medical and health insurance coverage, Xxxxx shall cause the Surviving
Corporation to continue to insure PixelCam employees under PixelCam's existing
insurance plans or provide them with the opportunity to participate in Xxxxx
Plans providing generally comparable medical and health insurance coverage.
SECTION 6.19 RELEASE FROM PERSONAL GUARANTIES. Xxxxx shall use its
reasonable best efforts to cause Xxxxx Xxxxxxx and Xxx Xxxxxx (each a
"Guarantor") to be released from the personal guaranties that they have granted
to the parties set forth on SCHEDULE 6.19 (each a "Guaranty"). In the event any
Guaranty remains in effect after the Closing, Xxxxx hereby agrees to indemnify,
defend and hold harmless each Guarantor from and against any and all losses,
damages, costs and expenses (including reasonable legal fees and expenses) which
any Guarantor may incur arising out of such Guaranty.
SECTION 6.20 UPDATING SCHEDULES. After execution of this Agreement and
prior to the Effective Time, each of PixelCam and Xxxxx will promptly supplement
or amend their respective Disclosure Schedules to reflect any matter that, if
existing, occurring or known on the date set forth or discussed in such
Disclosure Schedules, should have been so disclosed, or which is necessary to
correct any information in such Disclosure Schedules which was or has been
rendered inaccurate thereby; PROVIDED, HOWEVER, that for the purpose of
determining the rights and obligations of the parties under this Agreement, any
such supplemental or amended disclosure by either party shall not be deemed to
have been disclosed as of the date hereof or to constitute part of or an
amendment or supplement to such party's Disclosure Schedule or to cure any
breach or inaccuracy of a representation or warranty unless so agreed to in
writing by the other party, which agreement shall not be unreasonably withheld
if such supplemental or amended disclosure is not reasonably likely,
individually or in the aggregate, to result in a Material Adverse Effect on the
party making such disclosure.
ARTICLE VII
CONDITIONS TO MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of the requisite number of
outstanding shares of PixelCam Common Stock.
(b) All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity the failure of which to obtain or comply with would be
reasonably likely to have a Material Adverse Effect on Xxxxx or PixelCam or a
Material Adverse Effect on the consummation of the transactions contemplated
hereby shall have been filed, occurred or been obtained.
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(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition preventing the consummation of the
Merger or limiting or restricting Zoran's conduct or operation of the business
of Xxxxx or PixelCam after the Merger shall have been issued, nor shall any
proceeding brought by a domestic administrative agency or commission or other
domestic Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
(d) Xxxxx shall have received a written opinion from its
counsel, Xxxx Xxxx Xxxx & Freidenrich LLP, and PixelCam shall have received a
written opinion from its counsel, Xxxxxx Xxxx & Priest LLP, in form and
substance reasonably satisfactory to both parties, to the effect that the Merger
will be treated for federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinions,
counsel may rely upon reasonable representations and certificates of Xxxxx, Sub,
PixelCam and their respective directors, officers and shareholders.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF XXXXX AND SUB. The
obligations of Xxxxx and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Xxxxx and Sub:
(a) The representations and warranties of PixelCam set forth
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, except (i) for changes contemplated by this Agreement, (ii)
that representations and warranties which specifically relate to a particular
date or period shall be true and correct as of such date and for such period and
(iii) where the failure of any such representation or warranty to be true and
correct on and as of the Closing Date, individually and in the aggregate, would
not be reasonably likely to have a Material Adverse Effect on PixelCam, or a
material adverse effect upon the consummation of the transactions contemplated
hereby; and Xxxxx shall have received a certificate to such effect signed on
behalf of PixelCam by the chief executive officer of PixelCam.
(b) PixelCam shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Xxxxx shall have received a certificate to such effect
signed on behalf of PixelCam by the chief executive officer of PixelCam.
(c) Xxxxx shall have received from PixelCam written evidence
that the execution, delivery and performance of PixelCam's obligations under
this Agreement have been duly and validly approved and authorized by the Board
of Directors and the shareholders of PixelCam.
(d) Xxxxx shall have received all permits and other
authorizations required under applicable state blue sky laws for the issuance of
shares of Xxxxx Common Stock pursuant to the Merger.
41
(e) Xxxxx shall have been furnished with evidence satisfactory
to it of the consent or approval of those persons whose consent or approval
shall be required in connection with the Merger under the material contracts of
PixelCam, as set forth on SCHEDULE 7.2(e) hereto.
(f) There shall have been no material adverse change in the
financial condition, results of operations, business or properties of PixelCam
from April 30, 2000 through the Closing Date other than changes contemplated
hereby.
(g) All outstanding convertible debt securities of PixelCam
shall have been converted into PixelCam Common Stock.
(h) Xxxxx Xxxxxxx shall have agreed to and accepted the terms
of an offer letter in the form of EXHIBIT D hereto (the "Offer Letter").
(i) Xxxxx shall have received satisfactory assurance, as
determined by Xxxxx in good faith, that the key employees listed on SCHEDULE
7.2(i) will remain employed by the Surviving Corporation or Xxxxx after the
Merger, provided that the offer letters provided to such key employees by Xxxxx
are in substantially the form that has been provided to PixelCam by Xxxxx.
(j) Xxxxx Xxxxxxx and Xxxx Xxxxxxxxx shall have executed and
delivered Noncompetition Agreements in the form of EXHIBIT E hereto
("Noncompetition Agreements").
(k) The Merger shall have been approved by the affirmative
vote of the holders of 99% of the outstanding shares of PixelCam Common Stock.
(l) Xxxxx shall have received a legal opinion from Xxxxxx Xxxx
& Priest LLP, counsel to PixelCam, substantially in the form of EXHIBIT F
hereto.
(m) The Escrow Agreement shall have been executed and
delivered by the Principal Shareholders and the Escrow Agent.
(n) The holders of 99% of the outstanding shares of PixelCam
Common Stock shall have executed and delivered to Xxxxx a Shareholder Agreement
in the form attached hereto as EXHIBIT G (the "Shareholder Agreement").
(o) Xxxxx shall have been furnished with evidence satisfactory
to it of the termination of [Registration Rights Agreement, other shareholder
agreements that don't terminate automatically].
(p) All shares of convertible preferred stock of PixelCam that
are outstanding prior to the Closing will have been converted to PixelCam Common
Stock.
(q) The Average Closing Price shall not be more than $65.00
(r) PixelCam's rights under the Stock Restriction Agreement
dated May 19, 2000 between PixelCam and Xxxxx Xxxxxxx shall have been assigned
to Xxxxx pursuant to an assignment agreement in form and substance acceptable to
Xxxxx, with the effect that the shares
42
of Xxxxx Common Stock issued to Xx. Xxxxxxx in the Merger will be subject to
substantially the same vesting terms as apply to Xx. Xxxxxxx'x shares of
PixelCam Common Stock, with Xxxxx standing in the same position as PixelCam.
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PIXELCAM. The
obligation of PixelCam to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by PixelCam:
(a) The representations and warranties of Xxxxx and Sub set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such representations speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for (i) changes contemplated by this Agreement and (ii)
where the failure to be true and correct would not be reasonably likely to have
a Material Adverse Effect on Xxxxx and its Subsidiaries, taken as a whole, or a
material adverse effect upon the consummation of the transactions contemplated
hereby; and PixelCam shall have received a certificate to such effect signed on
behalf of Xxxxx by the chief financial officer of Xxxxx.
(b) Xxxxx and Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and PixelCam shall have received a certificate
to such effect signed on behalf of Xxxxx by the chief financial officer of
Xxxxx.
(c) PixelCam shall have received from Xxxxx and Sub written
evidence that the execution, delivery and performance of Zoran's and Sub's
obligations under this Agreement have been duly and validly approved and
authorized by the Boards of Directors of Xxxxx and Sub.
(d) There shall have been no material adverse change in the
financial condition, results of operations, business or properties of Xxxxx from
March 31, 2000 through the Closing Date.
(e) Xxxxx shall have signed and delivered the Offer Letter.
(f) PixelCam shall have received a legal opinion from Xxxx
Xxxx Xxxx & Freidenrich LLP, counsel to Xxxxx, substantially in the form of
EXHIBIT H hereto.
(g) The Escrow Agreement shall have been and delivered by
Xxxxx and the Escrow Agent.
(h) The Average Closing Price shall not be less than $40.00
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ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.1(b) through 8.1(g), by
written notice by the terminating party to the other party):
(a) by the mutual written consent of Xxxxx and PixelCam;
(b) by either Xxxxx or PixelCam if the Merger shall not have
been consummated by June 30, 2000 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(c) by either Xxxxx or PixelCam if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, except, if the party relying on such order, decree or ruling or other
action has not complied with its obligations under Section 6.7 of this
Agreement;
(d) by Xxxxx if the Board of Directors of PixelCam shall have
withdrawn or modified its recommendation of this Agreement or the Merger in a
manner adverse to Xxxxx or shall have publicly announced or disclosed to any
third party its intention to do any of the foregoing; or
(e) by Xxxxx or PixelCam, if there has been a material
breach of any representation, warranty, covenant or agreement on the part of
the other party set forth in this Agreement, which breach (i) causes the
conditions set forth in Section 7.2(a) or (b) (in the case of termination by
Xxxxx) or 7.3(a) or (b) (in the case of termination by PixelCam) not to be
satisfied and (ii) shall not have been cured within ten (10) business days
following receipt by the breaching party of written notice of such breach
from the other party.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, there shall be no liability or obligation
on the part of Xxxxx, PixelCam, Sub or their respective officers, directors,
shareholders or Affiliates, except to the extent that such termination results
from the willful breach by a party of any of its representations, warranties or
covenants set forth in this Agreement; provided that the provisions of Sections
6.13 and 6.15 of this Agreement and the confidentiality provisions set forth
herein shall remain in full force and effect and survive any termination of this
Agreement.
SECTION 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of PixelCam, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
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SECTION 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
ESCROW AND INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. If the Merger
occurs, all of the representations and warranties contained in this Agreement
shall survive the Closing Date (except that representations and warranties that
specifically relate to a particular date or period shall be true and correct as
of such date and for such period) and shall continue in full force and effect
until the date of the first anniversary of the Closing Date (the "Termination
Date").
SECTION 9.2 INDEMNIFICATION BY PIXELCAM SHAREHOLDERS.
(a) Subject to the terms and conditions contained herein, each
of the shareholders of PixelCam shall indemnify, defend and hold harmless Xxxxx,
its officers, directors, employees and attorneys, all Subsidiaries and
Affiliates of Xxxxx, and the respective officers, directors, employees and
attorneys of such entities (all such persons and entities being collectively
referred to as the "Xxxxx Group") from, against, for and in respect of any and
all losses, damages, costs and expenses (including reasonable legal fees and
expenses) which any member of the Xxxxx Group may sustain or incur which are
caused by or arise out of (i) any inaccuracy in or breach of any of the
representations, warranties or covenants made by PixelCam in this Agreement,
including the PixelCam Disclosure Schedule, or (ii) any breach by the
shareholders of PixelCam or the Principal Shareholders of this Article IX or the
Escrow Agreement (collectively, "Xxxxx Losses"). References to shareholders of
PixelCam, PixelCam shareholders or words of similar import in this Article IX
shall be deemed to be references to the persons who were shareholders of
PixelCam immediately prior to the Effective Time.
(b) Except as set forth in Sections 9.2(c) or (h), no
shareholder of PixelCam shall be required to indemnify any member of the Xxxxx
Group for any Xxxxx Losses until the aggregate amount of all Xxxxx Losses under
all claims shall exceed $50,000 (the "Floor"); PROVIDED, HOWEVER, that if the
aggregate amount of Xxxxx Losses in respect of such claims exceeds the Floor,
the shareholders of PixelCam shall indemnify such member or members of the Xxxxx
Group for all Xxxxx Losses (including the initial $50,000) in respect of such
claims, subject to the further limitations set forth herein; and PROVIDED,
FURTHER, except as specifically provided in Section 9.2(d), the maximum
aggregate liability of the shareholders of PixelCam pursuant to Section 9.2(a)
shall in no event exceed the value of the Escrow Shares, as determined pursuant
to Section 2 of the Escrow Agreement.
45
(c) No shareholder of PixelCam shall be required to indemnify
any member of the Xxxxx Group for any Xxxxx Losses arising directly or
indirectly out of a breach of the PixelCam's representations and warranties
contained in Section 3.11 of this Agreement ("Xxxxx IP Losses") until the
aggregate amount of all Xxxxx IP Losses under all claims arising out of Section
3.11 shall exceed $100,000; PROVIDED, HOWEVER, that if the aggregate amount of
Xxxxx Losses in respect of such claims exceeds the $100,000, the shareholders of
PixelCam shall indemnify such member or members of the Xxxxx Group for all Xxxxx
IP Losses (including the initial $100,000) in respect of such claims.
(d) The obligation of the shareholders of PixelCam to
indemnify members of the Xxxxx Group for a Xxxxx Loss under this Article IX is
subject to the condition that the Principal Shareholders shall have received
written notice of an Indemnification Claim (as defined in Section 9.3 hereof)
for such Xxxxx Loss on or before the Termination Date.
(e) The provisions of Section 9.2(b) and (c) above and 9.5
below shall not limit, in any manner, (i) any remedy at law or in equity to
which any member of the Xxxxx Group shall be entitled against PixelCam or any
shareholder of PixelCam as a result of willful fraud or intentional
misrepresentation by PixelCam, any shareholder of PixelCam or any of their
respective representatives, (ii) any rights that Xxxxx may have under federal or
state securities laws or (iii) the applicability of the conditions to the
issuance of the 2000 Contingency Shares set forth in Section 2.3 hereof or the
provisions for determining the 2001 Contingency Amount set forth in Section 2.4
hereof.
(f) Except as set forth in clause (i) of Section 9.2(d), each
shareholder of PixelCam shall be liable for Xxxxx Losses only to the extent of
such shareholder's Proportionate Interest (as defined in the Escrow Agreement)
in the aggregate Escrow Shares.
(g) The amount of Xxxxx Losses shall be computed after giving
effect to the receipt of any insurance proceeds and tax benefits with respect
thereto.
(h) Notwithstanding any other provision of this Agreement, the
shareholders of PixelCam shall indemnify, defend and hold harmless the Xxxxx
Group from, against, for and in respect of any and all losses, damages, costs
and expenses, including reasonable legal fees and expenses, which any member of
the Xxxxx Group may sustain or incur in connection with any claims, suits,
actions, investigations, proceedings, demands or judgments whether now known or
unknown initiated by or on behalf of any former employee of PixelCam based on
any action arising from or relating to the employee-employer relationship,
including but not limited to violations of state or federal law regarding the
relationship between employers and employees prior to the Closing that are
disclosed in the PixelCam Disclosure Schedule ("Employment Losses"), to the
extent Employment Losses exceed $50,000 in the aggregate.
SECTION 9.3 PROCEDURES FOR INDEMNIFICATION.
(a) As used in this Article IX, the term "Indemnitee" means
the member or members of the Xxxxx Group seeking indemnification hereunder.
(b) A claim for indemnification hereunder (an "Indemnification
Claim") shall be made by Indemnitee by delivery of a written notice to the
Principal Shareholders and the
46
Escrow Agent requesting indemnification and specifying the basis on which
indemnification is sought in reasonable detail (and shall include relevant
documentation related to the Indemnification Claim), the amount of the asserted
Xxxxx Losses and, in the case of a Third Party Claim (as defined in Section
9.4), containing (by attachment or otherwise) such other information as
Indemnitee shall have concerning such Third Party Claim.
(c) If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 9.4 hereof shall be observed by Indemnitee
and the Principal Shareholders.
(d) The Escrow Agent will not release any Escrow Shares held
in the Escrow Account pursuant to an Indemnification until such Indemnification
Claim has been resolved in accordance with Section 9.5 below.
SECTION 9.4 DEFENSE OF THIRD PARTY CLAIMS. Should any claim be made or
suit or proceeding be instituted against an Indemnitee which, if prosecuted
successfully, would be a matter for which such Indemnitee is entitled to
indemnification under this Article IX (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give the Principal Shareholders and the
Escrow Agent written notice of any such Third Party Claim promptly after receipt
by Indemnitee of notice thereof, and the Principal Shareholders may, subject to
the prior written consent of Xxxxx, undertake control of the defense thereof by
counsel of its own choosing reasonably acceptable to Indemnitee. Indemnitee may
participate in the defense through its own counsel at its own expense. If,
however, the Principal Shareholders fail or refuse to undertake the defense of
such Third Party Claim within fifteen (15) days after written notice of such
claim has been delivered to the Principal Shareholders by Indemnitee, Indemnitee
shall have the right to undertake the defense, compromise and, subject to
Section 9.5, settlement of such Third Party Claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such Third Party Claim,
make an Indemnification Claim as specified in Section 9.3(b), which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the purposes
of the procedures set forth herein. Failure of Indemnitee to furnish written
notice to the Principal Shareholders or the Escrow Agent of a Third Party Claim
shall not release the shareholders of PixelCam from their obligations hereunder,
except to the extent they are prejudiced by such failure.
(b) Indemnitee and the Principal Shareholders shall cooperate
with each other in all reasonable respects in connection with the defense of any
Third Party Claim, including making available records relating to such claim and
furnishing employees of Indemnitee as may be reasonably necessary for the
preparation of the defense of any such Third Party Claim or for testimony as
witness in any proceeding relating to such claim.
(c) Unless the Principal Shareholders have failed to fulfill
their obligations under this Article IX, no settlement by Indemnitee of a Third
Party Claim shall be made without the prior written consent by or on behalf of
the Principal Shareholders, which consent shall not be unreasonably withheld or
delayed. If the Principal Shareholders have assumed the defense of a Third Party
Claim as contemplated by this Section 9.4, no settlement of such Third Party
Claim
47
may be made by the Principal Shareholders without the prior written consent by
or on behalf of Indemnitee, which consent shall not be unreasonably withheld or
delayed.
SECTION 9.5 MANNER OF INDEMNIFICATION.
(a) To provide a fund against which members of the Xxxxx Group
may assert claims of indemnification under this Article IX, the Escrow Shares
shall be withheld and deposited into Escrow pursuant to the Escrow Agreement in
accordance with the provisions of Section 2.8 hereof. The Escrow Shares so
deposited shall be held and distributed in accordance with the Escrow Agreement.
(b) Each claim for indemnification asserted against the
shareholders of PixelCam pursuant to this Article IX shall be made only in
accordance with the Escrow Agreement, subject to the provisions of Section
9.2(d) hereof.
SECTION 9.6 PRINCIPAL SHAREHOLDERS. For purposes of this Agreement, the
PixelCam Shareholders, without any further action on the part of any such
shareholder, shall be deemed to have consented to the appointment of the
Principal Shareholders as the attorneys-in-fact for and on behalf of each such
shareholder, and the taking by the Principal Shareholders of any and all actions
and the making of any decisions required or permitted to be taken by them under
this Agreement, including, without limitation, the exercise of the power to (i)
execute the Escrow Agreement, (ii) authorize delivery to Xxxxx of the Escrow
Shares, or any portion thereof, in satisfaction of Indemnification Claims, (iii)
agree to, negotiate, enter into settlements and compromises of and comply with
orders of courts and awards of arbitrators with respect to such Indemnification
Claims, (iv) resolve any Indemnification Claims and (v) take all actions
necessary in the judgment of the Principal Shareholders for the accomplishment
of the foregoing and all of the other terms, conditions and limitations of this
Agreement and the Escrow Agreement. Accordingly, the Principal Shareholders have
unlimited authority and power to act on behalf of each PixelCam Shareholder with
respect to this Agreement and the Escrow Agreement and the disposition,
settlement or other handling of all Indemnification Claims, rights or
obligations arising from and taken pursuant to this Agreement. The PixelCam
Shareholders will be bound by all actions taken by the Principal Shareholders in
connection with this Agreement, and Xxxxx shall be entitled to rely on any
action or decision of the Principal Shareholders. The Principal Shareholders
will incur no liability with respect to any action taken or suffered by them in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by him to be genuine and to have been signed by the proper
person (and shall have no responsibility to determine the authenticity thereof),
nor for any other action or inaction, except his own willful misconduct, bad
faith or gross negligence. In all questions arising under this Agreement or the
Escrow Agreement, the Principal Shareholders may rely on the advice of counsel,
and the Principal Shareholders will not be liable to anyone for anything done,
omitted or suffered in good faith by the Principal Shareholders based on such
advice. Except as expressly provided herein, the Principal Shareholders will not
be required to take any action involving any expense unless the payment of such
expense is made or provided for in a manner satisfactory to them. At any time
during the term of the Escrow Agreement, holders of a majority of the Escrow
Shares may, by written consent, appoint a new representative or representatives
as Principal Shareholder by sending notice and a copy of the written consent
appointing such new Principal Shareholder signed by holders of a majority of the
Escrow Shares
48
to Xxxxx and the Escrow Agent. Such appointment will be effective upon the later
of the date indicated in the consent or the date such consent is received by
Xxxxx and the Escrow Agent.
SECTION 9.7 INDEMNIFICATION BY XXXXX. Subject to the terms and
conditions contained herein, Xxxxx shall indemnify, defend and hold harmless the
shareholders of PixelCam from, against, for and in respect of any and all
losses, damages, costs and expenses (including reasonable legal fees and
expenses) which the shareholders of the Company may sustain or incur which are
caused by or arise out of any inaccuracy in or breach of any of the
representations, warranties or covenants made by Xxxxx in this Agreement,
SECTION 9.8 CONTESTED CLAIMS.
(a) Each claim by Xxxxx pursuant to Section 9.2 hereof or
claim by the shareholders of PixelCam pursuant to Section 9.7 hereof (each, a
"Contested Claim") will be settled by binding arbitration pursuant to Section
9.8(c) hereof unless otherwise agreed by the Principal Shareholders and Xxxxx.
Any portion of the Indemnification Claim which is not contested shall be
resolved as set forth in Section 5(b) of the Escrow Agreement. The final
decision of the arbitrator shall be furnished to the Escrow Agent, the Principal
Shareholders and Xxxxx in writing and will constitute a conclusive determination
of the issue in question, binding upon PixelCam, the shareholders of PixelCam
and Xxxxx and shall not be contested or appealed by any of them. After notice
that the Indemnification Claim is contested by the Principal Shareholders, the
Escrow Agent will continue to hold in the Escrow Fund Escrow Shares having a
value sufficient to cover such Indemnification Claim, as determined pursuant to
Section 2 of the Escrow Agreement (notwithstanding the expiration of the Release
Date), until the earlier of (i) execution of a settlement agreement by Xxxxx and
the Principal Shareholders setting forth a resolution of the Indemnification
Claim, or (ii) receipt of a copy of the final award of the arbitrator.
(b) The number of Escrow Shares to be delivered or held in
Escrow pursuant to a Contested Claim shall be equal to (i) the aggregate dollar
amount of the Contested Claim as determined pursuant to this Section 9.8 divided
by (ii) the value of the Escrow Shares on the Effective Date.
(c) Any Contested Claim shall be settled by arbitration in
Palo Alto, California and, except as herein specifically stated, in accordance
with the commercial arbitration rules of the American Arbitration Association
("AAA Rules") then in effect. However, in all events, these arbitration
provisions shall govern over any conflicting rules which may now or hereafter be
contained in the AAA Rules. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in any judicial proceeding instituted
to resolve a Contested Claim.
49
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or within seventy-two (72) hours after being mailed
by registered or certified mail (return receipt requested) or sent via facsimile
(with confirmation of receipt) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Xxxxx, to:
Xxxxx Corporation
0000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
(b) if to PixelCam, to
PixelCam, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Priest LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
50
(c) if to the Principal Shareholders, to
Xxx Xxxxxx
00000 Xxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Tel: (000) 000-0000
Xxxxx Xxxxxx
Santolina
0000 Xxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Tel: (000) 000-0000
Xxxxx Xxxxxxx
PixelCam, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Priest LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
SECTION 10.2 INTERPRETATION. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to June ___, 2000. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. This Agreement has been negotiated by the respective parties
hereto and their attorneys and the language hereof shall not be construed for or
against any party.
SECTION 10.3 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original as against any
party whose signature appears on such counterpart and all of which shall be
considered one and the same agreement
51
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
SECTION 10.4 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
SECTION 10.5 ENTIRE AGREEMENT. This Agreement (including the schedules
and exhibits hereto and the other documents delivered pursuant hereto)
constitutes the entire agreement among the parties concerning the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof, other than
the Confidentiality Agreement.
SECTION 10.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of California without regard
to any applicable conflicts of law principles.
SECTION 10.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 10.8 THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to confer upon any person other than the parties hereto
and their respective successors and permitted assigns, any rights, remedies or
obligations under, or by reason of this Agreement, except that (i) the persons
who are shareholders of PixelCam immediately prior to the Effective Time (and
their successors and assigns) are express intended third party beneficiaries of
Articles I and II, Sections 6.2, 6.4 and 6.9 and Article IX, (ii) the persons
who hold PixelCam Options immediately prior to the Effective Time (and their
lawful successors and assigns) are express intended third party beneficiaries of
Section 6.11, (iii) each of the foregoing persons is an express intended third
party beneficiary of Article X, to the extent relevant to any of the foregoing,
and as such are entitled to rely on the provisions hereof as if a party hereto.
IN WITNESS WHEREOF, Xxxxx, Sub and PixelCam have caused this Agreement
to be signed by their respective officers thereunto duly authorized, and the
Principal Shareholders have signed this Agreement, as of the date first written
above.
52
PIXELCAM, INC. XXXXX CORPORATION
By: By:
-------------------------------------- -------------------------------------
Title: Title:
-------------------------------------- -------------------------------------
PRINCIPAL SHAREHOLDERS GRAPE ACQUISITION CORP.
By:
----------------------------------------- ----------------------------------
Xxx Xxxxxx
Title:
----------------------------------------- -------------------------------
Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxxx
53
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of June __, 2000, by
and among Xxxxx Corporation, Delaware corporation ("Xxxxx"), U.S. Bank Trust,
National Association (the "Escrow Agent"), and Xxx Xxxxxx, Xxxxx Xxxxxx and
Xxxxx Xxxxxxx (collectively, the "Principal Shareholders") for and on behalf of
the shareholders (the "Shareholders") and option holders (the "Option Holders"
or, collectively with the Shareholders, the "Securityholders") of PixelCam,
Inc., a California corporation ("PixelCam").
R E C I T A L S
A. Pursuant to that certain Agreement and Plan of Reorganization dated
as of June __, 2000 (the "Plan of Reorganization"), Xxxxx will issue to the
Shareholders shares of Xxxxx Common Stock, $.001 par value ("Xxxxx Common
Stock"), pursuant to the merger (the "Merger") of Grape Acquisition Corp., a
California corporation and wholly-owned subsidiary of Xxxxx ("Sub"), with and
into PixelCam and may issue additional shares of Xxxxx Common Stock to the
Option Holders upon exercise of Assumed Options (as defined in the Plan of
Reorganization);
B. Pursuant to Article IX of the Plan of Reorganization, a copy of
which is attached hereto as Appendix I and incorporated herein by reference, the
Shareholders have agreed to indemnify Xxxxx and other members of the Xxxxx Group
(as therein defined) with respect to inaccuracies in or breaches of
representations, warranties or covenants made by PixelCam in the Plan of
Reorganization and certain other matters; and
C. In accordance with the Plan of Reorganization, the parties desire to
establish an escrow for the purpose of providing a fund against which Xxxxx (on
behalf of itself and other members of the Xxxxx Group) may seek indemnification
under the Plan of Reorganization.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual obligations herein, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW. At the Closing (as defined in the Plan of
Reorganization), or as soon thereafter as practicable, Xxxxx shall deliver to
the Escrow Agent for deposit into escrow (the "Escrow") certificates
representing an aggregate of _______ shares of Xxxxx Common Stock otherwise
distributable to the Shareholders in the Merger (the "Escrow Shares"). The
Escrow Shares so delivered to the Escrow Agent and any other securities, cash or
other property from time to time held by the Escrow Agent pursuant to the terms
hereof is herein referred to as the "Escrow Fund." The Escrow Agent agrees to
accept the Escrow Shares and to hold the Escrow Fund in escrow subject to the
terms and conditions of this Agreement.
2. MAINTENANCE OF THE ESCROW. The Escrow Agent shall establish a
separate account for each Securityholder showing the number of Escrow Shares and
the amount and type of other property, if any, held in the Escrow for such
Securityholder on the basis of a list of the Securityholders' respective
ownership percentage provided to the Escrow Agent by the Principal Shareholders.
The Escrow Agent shall maintain records showing each Securityholder's
Proportionate Interest in the Escrow Fund and shall adjust each Securityholder's
account to
reflect distributions from, and additions or substitutions to, the property held
for the account of such Securityholder in the Escrow. For purposes of this
Agreement, each Securityholder's "Proportionate Interest" in the Escrow Fund as
of a specific date shall be equal to the percentage that the value of the Escrow
Shares and other property held for the account of such Securityholder in the
Escrow bears to the value of all property held for the account of all
Securityholders in the Escrow as of such date. For purposes of the provisions of
this Agreement relating to indemnification and claims, the Escrow Shares shall
be deemed to have a value equal to the average closing sale price of Xxxxx
Common Stock (as quoted on the Nasdaq National Market and reported in THE WALL
STREET JOURNAL) for the ten (10) trading days preceding the Effective Time (as
defined in the Plan of Reorganization) (the "Value Date"). The Escrow Agent is
hereby granted the power to effect any transfer of Escrow Shares required by
this Agreement. Xxxxx shall cooperate with the Escrow Agent in promptly issuing,
or causing its transfer agent to promptly issue, such stock certificates as
shall be required to effect such transfers. All Escrow Shares and any other
securities from time to time held in the Escrow Fund shall be registered in the
name of the Escrow Agent or its nominee.
3. PRINCIPAL SHAREHOLDERS. From and after the establishment of the
Escrow as provided in Section 1 hereof, the Shareholders shall be represented by
the Principal Shareholders, or their successors appointed in accordance with
Section 9.6 of the Plan of Reorganization, who shall have the duties and
authority set forth in said section.
4. DIVIDENDS, VOTING AND RIGHTS OF OWNERSHIP. Except for tax-free
dividends paid in stock declared with respect to the Escrow Shares pursuant to
Section 305(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
which shall be treated in the manner set forth in Section 1 hereof, any cash
dividends, dividends payable in securities or other distributions of any kind
made in respect of the Escrow Shares will be distributed currently to the
Securityholders and, if distributed to the Escrow Agent, shall promptly be paid
over to the Securityholders. Each Securityholder will have voting rights with
respect to the Escrow Shares deposited in the Escrow with respect to such
Securityholder so long as such Escrow Shares are held in escrow, and Xxxxx shall
take all reasonable steps necessary to allow the exercise of such rights. While
the Escrow Shares remain in the Escrow Agent's possession pursuant to this
Agreement, the Securityholders will retain and will be able to exercise all
other incidents of ownership of said Escrow Shares which are not inconsistent
with the terms and conditions of this Agreement. Subject to the rights of Xxxxx
and the other members of the Xxxxx Group under the Plan of Reorganization and
this Agreement, all beneficial interest in the Escrow Fund shall be the property
of the Securityholders from and after the Closing, and Xxxxx shall have no
interest therein. None of the rights of the Securityholders hereunder shall be
transferable except as otherwise provided by law. Each of the Securityholders
shall be obligated for all federal, state or local taxes applicable to such
Securityholder's interest in the Escrow Fund.
5. CLAIMS FOR INDEMNIFICATION; DISPOSITION THEREOF.
(a) If an Indemnitee (as defined in the Plan of
Reorganization) shall have any claim (a "Claim") for indemnification pursuant to
Article IX of the Plan of Reorganization, the Indemnitee or Xxxxx shall promptly
deliver to the Principal Shareholders and the Escrow Agent an Indemnification
Claim in accordance with Section 9.3 of the Plan of Reorganization Agreement.
2
(b) If the Principal Shareholders shall not have notified
Xxxxx and the Escrow Agent objecting to the delivery of any of the Escrow Fund
out of the Escrow to Xxxxx for application to such Claim within thirty (30)
calendar days after delivery of such Indemnification Claim (determined in
accordance with Section 14(d)), the Escrow Agent shall, as promptly as
practicable following the expiration of such period, deliver out of the Escrow
to Xxxxx the number of whole Escrow Shares having an aggregate value most nearly
equal to the amount of such Claim.
(c) If the Principal Shareholders give notice to the Escrow
Agent and Xxxxx objecting to the delivery of any of the Escrow Fund out of the
Escrow to Xxxxx for application to a Claim (a "Contested Claim") within the
thirty (30) calendar day period specified in Section 5(b) hereof, the Escrow
Agent shall make no delivery to Xxxxx out of the Escrow Fund with respect to
such Contested Claim until the rights of the Securityholders and the Indemnitee
with respect thereto have been agreed upon between the Principal Shareholders
and Xxxxx or until such rights are finally determined by arbitration pursuant to
Section 13 hereof. If the arbitrator in such proceeding shall determine that the
Escrow Fund, or any part thereof, is to be delivered out of the Escrow to Xxxxx
to satisfy such Contested Claim, the Escrow Agent shall, as promptly as
practicable following receipt of such determination, deliver out of the Escrow
to Xxxxx the number of whole Escrow Shares having an aggregate value most nearly
equal to the amount of such Contested Claim.
(d) If Xxxxx is entitled to a delivery of shares out of the
Escrow Fund pursuant to a Claim under this Section 5, then, as to each PixelCam
Shareholder whose allocated Escrow Shares include unvested shares subject to a
repurchase option, the Escrow Shares delivered to Xxxxx shall be drawn first
from that shareholder's vested shares, and thereafter from the shareholder's
unvested shares in the order in which such shares are scheduled to vest.
6. DISTRIBUTION OF ESCROW FUND; TERMINATION OF ESCROW. The portion of
the Escrow Fund not previously distributed in accordance with the terms of
Section 5 hereof shall be held by the Escrow Agent until ten (10) business days
following the Termination Date (as defined in the Plan of Reorganization) (the
"Release Date"). Notwithstanding the foregoing, there shall be retained in the
Escrow the lesser of (i) the number of Escrow Shares having an aggregate value
equal to 100% of the amount of all pending Claims asserted pursuant to Section 5
hereof and expenses reasonably estimated by Xxxxx to be necessary for the
disposition of all such Claims, and (ii) the entire remaining Escrow Fund. The
Escrow Fund not so distributed shall be retained by the Escrow Agent until all
such pending Claims are resolved and the remaining Escrow Fund deliverable to
any Xxxxx as a result thereof, if any, shall have been delivered to Xxxxx.
Thereafter, the Escrow Agent shall, as promptly as practicable, deliver the
remaining Escrow Fund to the Shareholders in accordance with their Proportionate
Interests.
7. TERM OF ESCROW AGREEMENT. This Agreement shall terminate upon the
distribution by the Escrow Agent of all property held in the Escrow Fund.
8. FEES OF THE ESCROW AGENT. The fees of the Escrow Agent, including
(i) the normal costs of administering the Escrow as set forth on the Fee
Schedule attached hereto as APPENDIX II and (ii) all fees and costs associated
with the administration of Claims, shall be paid by Xxxxx. In the event that the
Escrow Agent renders any service hereunder not provided for
3
herein or there is any assignment of any interest in the subject matter of the
Escrow or modification hereof, the Escrow Agent shall be reasonably compensated
for such extraordinary services by the party that is responsible for or requests
such services.
9. LIABILITY OF THE ESCROW AGENT. In performing any of its duties under
this Agreement, the Escrow Agent shall not be liable to any party for damages,
losses or expenses, except in the event of gross negligence or willful
misconduct on its part. The Escrow Agent shall not incur any such liability for
(i) any act or failure to act made or omitted in good faith, or (ii) any action
taken or omitted in reliance upon any instrument, including any written
statement or affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine; nor will the Escrow Agent be liable
or responsible for forgeries, fraud, impersonations, or determining the scope of
any agent's authority. In addition, the Escrow Agent may consult with legal
counsel in connection with its duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by it in good faith in
accordance with the advice of counsel. The Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
10. CONTROVERSIES. If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of the
Escrow, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and funds and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as, in the
Escrow Agent's discretion, it may require, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for interest or damage. Furthermore, the Escrow Agent may at its option, file an
action of interpleader requiring the parties to answer and litigate any claims
and rights among themselves. The Escrow Agent is authorized to deposit with the
clerk of the court all documents and funds held in the Escrow, except all costs,
expenses, charges and reasonable attorneys' fees incurred by it due to the
interpleader action and which the parties jointly and severally agree to pay.
Upon initiating such action, the Escrow Agent shall be fully released and
discharged of and from all obligations and liability imposed by the terms of the
Escrow.
11. INDEMNIFICATION OF ESCROW AGENT. Xxxxx and the Securityholders and
their respective successors and assigns agree jointly and severally to indemnify
and hold the Escrow Agent harmless against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation, counsel
fees, including allocated costs of in-house counsel, and disbursements that may
be imposed on the Escrow Agent, or incurred by it in connection with the
performance of its duties under this Agreement, including but not limited to any
arbitration or litigation arising from this Agreement or involving its subject
matter. Nothing contained in this Section 11 shall impair the rights of the
Securityholders and Xxxxx, as between themselves, including without limitation,
their rights to enforce the provisions of Section 8 hereof with respect to the
allocation of the Escrow Agent's fees.
12. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign at any
time upon giving at least thirty (30) days written notice to the other parties;
PROVIDED, HOWEVER, that no such resignation shall become effective until the
appointment of a successor Escrow Agent which shall be accomplished as follows:
Xxxxx and the Principal Shareholders shall use their best
4
efforts to agree on a successor Escrow Agent within thirty (30) days after
receiving such notice. If the parties fail to agree on a successor Escrow Agent
within such time, the Escrow Agent shall have the right to appoint a successor
Escrow Agent authorized to do business in the State of California. The successor
Escrow Agent shall execute and deliver to the Escrow Agent an instrument
accepting such appointment, and the successor Escrow Agent shall, without
further acts, be vested with all the estates, property rights, powers, and
duties of the predecessor Escrow Agent as if originally named as Escrow Agent
herein. The predecessor Escrow Agent then shall be discharged from any further
duties and liability under this Agreement.
13. ARBITRATION.
(a) Each Contested Claim will be settled by binding
arbitration pursuant to Section 13(c) hereof unless otherwise agreed by the
Principal Shareholders and Xxxxx. Any portion of the Claim which is not
contested shall be resolved as set forth in Section 5(b) hereof. The final
decision of the arbitrator shall be furnished to the Escrow Agent, the Principal
Shareholders and Xxxxx in writing and will constitute a conclusive determination
of the issue in question, binding upon PixelCam, the Securityholders and Xxxxx
and shall not be contested or appealed by any of them. After notice that the
Claim is contested by the Principal Shareholders, the Escrow Agent will continue
to hold in the Escrow Fund Escrow Shares having a value sufficient to cover such
Claim, as determined pursuant to Section 2 hereof (notwithstanding the
expiration of the Release Date), until the earlier of (i) execution of a
settlement agreement by Xxxxx and the Principal Shareholders setting forth a
resolution of the Indemnification Claim, or (ii) receipt of a copy of the final
award of the arbitrator.
(b) The number of Escrow Shares to be delivered or held in
Escrow pursuant to a Contested Claim shall be equal to (i) the aggregate dollar
amount of the Contested Claim as determined pursuant to this Section 13 divided
by (ii) the value of the Escrow Shares on the Value Date, as determined pursuant
to Section 2 hereof.
(c) Any Contested Claim shall be settled by arbitration in
Palo Alto, California and, except as herein specifically stated, in accordance
with the commercial arbitration rules of the American Arbitration Association
("AAA Rules") then in effect. However, in all events, these arbitration
provisions shall govern over any conflicting rules which may now or hereafter be
contained in the AAA Rules. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in any judicial proceeding instituted
to resolve a Contested Claim.
14. MISCELLANEOUS.
(a) ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. None of
the parties hereto may assign any of its rights or obligations hereunder without
the prior written consent of the other parties. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
5
(b) SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be held to be
invalid or unenforceable, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall be interpreted so as best
to reasonably effect the intent of the parties hereto. The parties further agree
to replace such invalid or unenforceable provision of this Agreement with a
valid and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
(c) ENTIRE AGREEMENT. This Agreement, the Appendices hereto,
the documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto and thereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
(d) NOTICES. No notice or other communication shall be deemed
given unless sent in the manner, and to the persons, specified in this Section
14(d). All notices and other communications hereunder will be in writing and
will be deemed given (i) upon receipt if delivered personally (or if mailed by
registered or certified mail), (ii) the day after dispatch if sent by overnight
courier, or (iii) upon dispatch if transmitted by facsimile (and confirmed by a
copy delivered in accordance with clause (i) or (ii)), addressed to the parties
at the following addresses:
To the Escrow Agent: U.S. Bank Trust, National Association
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxx Xxxxxx
To Xxxxx: Xxxxx Corporation
0000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: President
with a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
To the Principal Shareholders: Xxx Xxxxxx
00000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
6
Xxxxx Xxxxxx
Santolina
0000 Xxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxx Xxxxxxx
PixelCam, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxx & Priest LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
Any party may change its address for such communications by giving notice
thereof to the other parties.
(e) OTHER REMEDIES. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
(f) AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
(g) FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
(h) ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions
of this Agreement are intended, nor shall be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, partner of any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof shall be solely between the parties
to this Agreement.
7
(i) GOVERNING LAW. It is the intention of the parties hereto
that the internal laws of the State of California (irrespective of its choice of
law principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
(j) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
XXXXX CORPORATION
By:
---------------------------------
Title:
------------------------------
U.S. BANK TRUST, NATIONAL ASSOCIATION
By:
---------------------------------
Title:
------------------------------
PRINCIPAL SHAREHOLDERS:
------------------------------------
Xxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxxx
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
APPENDIX II
FEE SCHEDULE
EXHIBIT E
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is made and entered into this ___ day of
June 2000, by and between Xxxxx Xxxxxxx, an individual ("Shareholder"), and
Xxxxx Corporation, a Delaware corporation ("Xxxxx"). For the purposes of this
Agreement, "Xxxxx" shall be deemed to include Xxxxx and its majority owned
direct and indirect subsidiaries that operate the Business of PixelCam (as
hereinafter defined) during the term of this Agreement.
RECITALS
A. PixelCam, Inc., a California corporation ("PixelCam"), is engaged
throughout the United States of America and the world in the business of
designing and marketing CMOS image sensors and integrated lens/sensor modules
for digital still and video-camera products used in a wide variety of consumer
and commercial applications (the "Business of PixelCam");
B. Pursuant to that certain Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated June 28, 2000 by and among Xxxxx, Grape
Acquisition Corp., a California corporation and wholly-owned subsidiary of Xxxxx
("Sub"), and PixelCam, Xxxxx is acquiring PixelCam through a merger of Sub with
and into PixelCam (the "Merger") pursuant to which PixelCam, as the surviving
corporation, will continue to operate the Business of PixelCam as a wholly-owned
subsidiary of Xxxxx;
C. Shareholder is the beneficial owner of shares of capital stock of
PixelCam and is an officer or a key employee of PixelCam;
D. Shareholder has been actively involved in the design, development
and/or marketing of PixelCam's products, including the management of a key
function within PixelCam; and
E. In consideration of and as an inducement to Xxxxx and Sub to
consummate the Merger, Shareholder, intending to be bound hereby, has agreed to
execute this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. COVENANT NOT TO COMPETE. Shareholder agrees that, for a period of
three (3) years from the effective time of the Merger and for so long thereafter
as he is employed by or serves as a consultant to Xxxxx (the "Noncompetition
Period"), he will not, directly or indirectly, individually or as an owner,
partner, shareholder, joint venturer, corporate officer, director, employee,
consultant, principal, agent, trustee or licensor, or in any other similar
capacity whatsoever of or for any person, firm, partnership, company or
corporation (other than Xxxxx), (a) own, manage, operate, sell, control or
participate in the ownership, management, operation, sales or control of (i) any
business that competes with the Business of PixelCam (whether through
stand-alone products or broader products that include equivalent functionality),
and/or (ii) any business engaged in the research, development, design,
marketing, sales, manufacture or licensing of products that are or would be
competitive with the Business of PixelCam; (b) accept employment with a customer
of PixelCam with the intent or purpose of depriving PixelCam of
business performed by PixelCam by transferring such business to a department,
division or affiliate of the customer or to a third party; or (c) request or
advise any of the customers, suppliers or other business contacts of PixelCam
with which Shareholder had contact while employed by PixelCam to withdraw,
curtail, cancel or not increase their business with PixelCam. Notwithstanding
the foregoing, Shareholder is permitted to own as a passive investor up to a
five percent (5%) interest in any publicly traded entity. Shareholder agrees to
notify Xxxxx within 24 hours of each employment or consulting position he
accepts during the Noncompetition Period (including the name and address of the
hiring party) and will, upon request by Xxxxx, describe in reasonable detail the
nature of his duties in each such position.
2. NONSOLICITATION OF EMPLOYEES AND CONSULTANTS. During the
Noncompetition Period, Shareholder agrees that he will not directly or
indirectly solicit, influence, entice or encourage any person who at such time
is, or who at any time in the six (6) month period prior to such time had been,
an employee of or consultant to Xxxxx or PixelCam to cease or curtail his or her
relationship with such company.
3. NONDISRUPTION; OTHER MATTERS. During the Noncompetition Period,
Shareholder agrees that he will not directly or indirectly interfere with,
disrupt or attempt to disrupt any past, present or prospective relationship,
contractual or otherwise, between Xxxxx or PixelCam, on the one hand, and any of
their respective customers, suppliers or employees, on the other hand.
4. EQUITABLE RELIEF. Shareholder acknowledges and agrees that Zoran's
remedies at law for breach of any of the provisions of this Agreement would be
inadequate and, in recognition of this fact, Shareholder agrees that, in the
event of such breach, in addition to any remedies at law it may have, Xxxxx,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy that may be available.
Shareholder further acknowledges that should Shareholder violate any of the
provisions of this Agreement, it will be difficult to determine the amount of
damages resulting to Xxxxx and that in addition to any other remedies it may
have, Xxxxx shall be entitled to temporary and permanent injunctive relief
without the necessity of proving damages.
5. ACKNOWLEDGEMENT. Each of Shareholder and Xxxxx acknowledges and
agrees that the covenants and agreements contained in this Agreement have been
negotiated in good faith by the parties, are reasonable and are not more
restrictive or broader than necessary to protect the interests of the parties
thereto, and would not achieve their intended purpose if they were on different
terms or for periods of time shorter than the periods of time provided herein or
applied in more restrictive geographical areas than are provided herein. Each
party further acknowledges that Xxxxx would not enter into the Reorganization
Agreement and the transactions contemplated thereby in the absence of the
covenants and agreements contained in this Agreement and that such covenants and
agreements are essential to protect the value of PixelCam to Xxxxx.
6. SEPARATE COVENANTS. The covenants contained in this Agreement shall
be construed as a series of separate covenants, one for each of the counties in
each of the states of the United States of America, one for each province of
Canada, and one for each country outside the United States and Canada.
2
7. SEVERABILITY. The parties agree that construction of this Agreement
shall be in favor of its reasonable nature, legality and enforceability, and
that any construction causing unenforceability shall yield to a construction
permitting enforceability. It is agreed that the noncompetition,
nonsolicitation, and nonhiring covenants and provisions of this Agreement are
severable, and that if any single covenant or provision or multiple covenants or
provisions should be found unenforceable, the entire Agreement and remaining
covenants and provisions shall not fail but shall be construed as enforceable
without any severed covenant or provision in accordance with the tenor of this
Agreement. The parties specifically agree that no covenant or provision of this
Agreement shall be invalidated because of overbreadth insofar as the parties
acknowledge the scope of the covenants and provisions contained herein to be
reasonable and necessary for the protection of Xxxxx and PixelCam and not unduly
restrictive upon Shareholder. However, should a court or any other trier of fact
or law determine not to enforce any covenant or provision of this Agreement as
written due to overbreadth, then the parties agree that said covenant or
provision shall be enforced to the extent reasonable, with the court or such
trier to make any necessary revisions to said covenant or provision to permit
its enforceability.
8. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not, and nothing in
this Agreement shall be construed as, an agreement to provide employment to
Shareholder. The provisions of Paragraphs 1, 2, and 3 of this Agreement shall be
operative regardless of the reasons for any termination of Shareholder's
employment and regardless of the performance or nonperformance by any party
under any other section of this Agreement, except as specifically provided in
Paragraph 1(b) hereof.
9. GOVERNING LAW. This Agreement is made under and shall be governed
by, construed in accordance with and enforced under the internal laws of the
State of California. All disputes arising under this Agreement shall be brought
in the federal and state courts located in Santa Xxxxx County, California, as
permitted by law, and each of the parties hereby consents to the personal
jurisdiction, service of process and venue of such courts.
10. ENTIRE AGREEMENT. This Agreement, together with the Reorganization
Agreement, constitutes and contains the entire agreement and understanding
concerning the subject matter addressed herein between the parties, and
supersedes and replaces all prior negotiations and all agreements proposed or
otherwise, whether written or oral, concerning the subject matter hereof, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement that are not set forth herein
or in the Reorganization Agreement.
11. NOTICES. Any notice or other communication under this Agreement
shall be in writing, signed by the party making the same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
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If to Shareholder: Xxxxx Xxxxxxx
PixelCam, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
If to Xxxxx: Xxxxx Corporation
0000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attn: President
with a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
or to such other address as may hereafter be designated by either party hereto.
All such notices shall be deemed given on the date personally delivered or
mailed.
12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT.
13. AMENDMENTS; NO WAIVER.
(a) No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel to enforce any provision of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
14. ASSIGNMENT. This Agreement may be assigned by Xxxxx to any
affiliate of Xxxxx or to any nonaffiliate of Xxxxx that shall succeed to the
business and assets of Xxxxx or PixelCam or the Business of PixelCam. In the
event of any such assignment, Xxxxx shall cause such affiliate or nonaffiliate,
as the case may be, to assume the obligations of Xxxxx hereunder, by a written
agreement addressed to Shareholder, concurrently with any assignment with the
same effect as if such assignee were "Xxxxx" hereunder. This Agreement is
personal to Shareholder, and Shareholder may not assign any rights or delegate
any responsibilities hereunder.
15. HEADINGS. The headings of paragraphs in this Agreement are solely
for convenience of reference and shall not control the meaning or interpretation
of any provision of this Agreement.
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16. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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EXHIBIT E
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
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Xxxxx Xxxxxxx
XXXXX CORPORATION
By:
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Title:
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