Exhibit 6.1
PLAN AND AGREEMENT OF REORGANIZATION
BETWEEN
INNOVACOM INC.
AND
SIERRA VISTA ENTERTAINMENT, INC.
DATED FEBRUARY 27, 1997
as amended on April 1, 1997, and May 14, 1997
Sierra Vista/InnovaCom
Reorg. Agreement 04/01/97
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TABLE OF CONTENTS
TRANSFER OF SIERRA VISTA SHARES ............................ 1
1.1. Establishment of Escrow. ........................ 1
1.2. Delivery of Sierra Vista Shares to Escrow Agent. 1
ISSUANCE OF INNOVACOM STOCK
TO SIERRA VISTA SHAREHOLDERS ............................... 2
2.1 Issuance and Delivery of Exchange Stock. .......... 2
2.2 No Lien or Encumbrances on Exchange Stock. ........ 2
2.3 No Registration of the Exchange Stock. ............ 2
CLOSING ..................................................... 3
3.1 Closing of Transaction; First Closing Date and Final
Closing Date....................................... 3
3.2 Deliveries at Signing of Agreement. .............. 3
3.3 Deliveries on the First Closing Date by Sierra Vista. 3
3.4 Deliveries on the First Closing Date by InnovaCom. 4
3.5 Deliveries on the Final Closing Date by Sierra Vista. 5
3.6 Deliveries on the Final Closing Date by InnovaCom. 5
3.7 Filings; Cooperation. ............................. 6
REPRESENTATIONS AND WARRANTIES BY SIERRA VISTA .............. 6
4.1 Representations and Warranties of Sierra Vista. ... 6
4.2 Disclosure. ....................................... 9
REPRESENTATIONS AND WARRANTIES BY INNOVACOM ................ 10
5.1 Representations and Warranties of InnovaCom. ..... 10
5.2 Disclosure. ....................................... 14
REGISTRATION RIGHTS ......................................... 14
6.1.1. Demand Registration. ........................... 14
6.1.2. Company Registration. .......................... 16
6.1.3. Expenses of Registration. .................... 18
6.1.4. Registration Procedures. ..................... 18
6.2. Indemnification and Contribution. ................. 20
6.3. Information by the Holder. ........................ 22
6.4. Limitations on Registration of Issues of Securities. 22
6.5. Transfer or Assignment of Registration Rights. .... 22
6.6. "Market Stand-off" Agreement. ..................... 22
CONDUCT OF PARTIES PENDING CLOSING .......................... 23
7.1 Conduct of Sierra Vista Business Pending Closing. . 23
7.2 Conduct of InnovaCom Pending Closing. ............. 24
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CONDITIONS PRECEDENT TO CLOSING ............................. 25
8.1 Conditions Precedent to Closing. .................. 25
ADDITIONAL COVENANTS OF THE PARTIES ......................... 26
9.1 Cooperation. ...................................... 26
9.2 Expenses. ......................................... 26
9.3 Publicity. ........................................ 26
9.4 Confidentiality. .................................. 26
9.5 Post-Closing Covenants. ........................... 27
TERMINATION ................................................. 28
10.1 Mutual Termination. ............................... 28
SURVIVAL OF REPRESENTATIONS AND WARRANTIES .................. 28
11.1 As to Sierra Vista. ............................... 28
11.2 As to InnovaCom. .................................. 28
MISCELLANEOUS ............................................... 28
12.1 Entire Agreement, Amendments. .................... 28
12.2 Binding Agreement. ............................... 28
12.3 Indemnification ................................... 29
12.4 Attorney's Fees. ................................. 29
12.5 Severability. .................................... 29
12.6 Governing Law. ................................... 29
12.7 Notices. ......................................... 29
12.8 Counterparts; Signatures. ........................ 30
EXHIBIT LIST
Exhibit A--List of Shareholders owning the
outstanding common stock of Sierra Vista Entertainment, Inc.
SCHEDULE LIST .......................................... 31
Sierra Vista/InnovaCom
Reorg.Agreement 04/01/97
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PLAN AND AGREEMENT OF REORGANIZATION
This PLAN AND AGREEMENT OF REORGANIZATION ("Agreement") is entered
into as of this 27th day of February, 1997, and amended as of April 1, 1997
and May 14, 1997, by and between InnovaCom, Inc., a Nevada corporation
("InnovaCom"), and Sierra Vista Entertainment, Inc., a Nevada corporation
("Sierra Vista").
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be a
"tax free" exchange (the "Share Exchange") as contemplated by the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. InnovaCom will offer to acquire 100% of Sierra Vista's issued and
outstanding common stock, par value $0.001 per share (the "Sierra Vista
Stock" or the "Sierra Vista Shares"), in exchange for 8,500,000 shares of
InnovaCom's voting common stock, par value $.001 per share (the "Exchange
Stock"). Upon the consummation of the exchange transaction and the
issuance and transfer of the Exchange Stock as set forth in Section 2
hereinbelow, Sierra Vista will be a wholly-owned subsidiary of InnovaCom.
AGREEMENT
SECTION 1
TRANSFER OF SIERRA VISTA SHARES
1.1. ESTABLISHMENT OF ESCROW. In order to facilitate the exchange of
Sierra Vista Shares for the Exchange Stock, the parties have entered into
an escrow agreement with Xxxxxx Eng Xxxx & Xxxxxxxx (the "Escrow Agent")
establishing an escrow for the deposit and delivery of the Sierra Vista
Shares and the Exchange Stock.
1.2. DELIVERY OF SIERRA VISTA SHARES TO ESCROW AGENT. The Sierra
Vista Shareholders listed in Exhibit A as of the First Closing Date as such
term is defined in Section 3 hereof, shall transfer, assign, convey and
deliver to Escrow Agent, at the First Closing Date, certificates
representing 6,500,000 shares of the Sierra Vista Stock. Since it is
contemplated that an additional 2,000,000 shares of Sierra Vista common
stock will be issued for cash prior to the Final Closing Date, Sierra Vista
will ensure that the shares issued after the First Closing Date will be
delivered to the Escrow Agent prior to the Final Closing Date as that term
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is defined in Section 3 hereof. The transfer of all Sierra Vista Shares
shall be made free and clear of all liens, mortgages, pledges, encumbrances
or charges, whether disclosed or undisclosed, except as any Sierra Vista
shareholder and InnovaCom shall have otherwise agreed in writing.
SECTION 2
ISSUANCE OF INNOVACOM STOCK
TO SIERRA VISTA SHAREHOLDERS
2.1 ISSUANCE AND DELIVERY OF EXCHANGE STOCK. As consideration
for the transfer, assignment, conveyance and delivery of the Sierra Vista
Shares hereunder, on the First Closing Date, as that term is defined in
Section 3 hereof, or as soon as pratical thereafter, InnovaCom shall
deliver to the Escrow Agent, on behalf of and issued in the name of the
Sierra Vista Shareholders, one share of InnovaCom voting common stock for
each one share of Sierra Vista common stock outstanding immediately prior
to the First Closing Date, representing 6,500,000 shares of InnovaCom
Common Stock and an additional 2,000,000 shares of InnovaCom Common Stock
issued in the name of "Xxxxxx Eng Linn & Xxxxxxxx, as Escrow Agent" for the
shareholders of Sierra Vista who purchase the additional 2,000,000 shares
of Sierra Vista common stock after the First Closing Date and before the
Final Closing Date (the "Exchange Stock").
2.2 NO LIEN OR ENCUMBRANCES ON EXCHANGE STOCK. The issuance of
the Exchange Stock shall be made free and clear of all liens, mortgages,
pledges, encumbrances or charges, whether disclosed or undisclosed, except
as the Sierra Vista Shareholders and InnovaCom shall have otherwise agreed
in writing. As provided herein and immediately prior to the First Closing
Date, InnovaCom shall have issued and outstanding not more than 12,111,084
shares of InnovaCom Common Stock.
2.3 NO REGISTRATION OF THE EXCHANGE STOCK. The Exchange Stock
issued to the Sierra Vista Shareholders shall be issued pursuant to an
exemption under the Securities Act of 1933, as amended (the "Act") pursuant
to Section 3(a)(10) of the Act, or such other exemption as may be
available. The Company shall file an application for a permit to issue its
securities pursuant to Section 25121 of the California Corporate Securities
Laws of 1968, as amended, ("CCSL") and request a fairness hearing from the
Commissioner of Corporations pursuant to Section 25146 of the CCSL.
InnovaCom's transfer agent shall issue the Exchange Stock to the Escrow
Agent without legend to be delivered to the Sierra Vista Shareholders after
the Section 25146 fairness hearing and the issuance of the permit by the
California Commissioner of Corporaitons. In addition, Sierra Vista
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Shareholders shall have registration rights as more specifically provided
for in this Agreement.
SECTION 3
CLOSING
3.1 CLOSING OF TRANSACTION; FIRST CLOSING DATE AND FINAL CLOSING
DATE. The Closing of the Share Exchange (the "Closing") shall take place
in two closings, the first of which shall occur when all of the conditions
precedent provided for in Section 8.1 to the first closing shall have been
satisfied or waived and all deliveries provided for in Sections 3.3. and
3.4. have been made, (the "First Closing Date") and the second of which
shall occur on or before May 15, 1997, at 11:00 a.m., Pacific Standard
Time, (the "Final Closing Date") unless another date shall be mutually
agreed upon by the parties. The Closing shall take place at the offices of
Xxxxxx Eng Linn & Xxxxxxxx, 000 Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, XX
and simultaneously at such other places mutually agreed to by the parties.
3.2 DELIVERIES AT SIGNING OF AGREEMENT. Prior to executing this
Agreement InnovaCom and Sierra Vista shall provide respective Board Minutes
and/or consents approving the terms of this Agreement and the transaction
contemplated herein.
3.3 DELIVERIES ON THE FIRST CLOSING DATE BY SIERRA VISTA. Sierra
Vista shall deliver or cause to be delivered to InnovaCom or the Escrow
Agent, as the case may be, the following on or before the First Closing
Date:
(a) to InnovaCom, a copy of the minutes and/or consent of Sierra
Vista's Board of Directors authorizing Sierra Vista to take the necessary
steps toward Closing the transaction described by this Agreement;
(b) to InnovaCom, a copy of a Certificate of Good Standing for
Sierra Vista issued not more than thirty days prior to the First Closing
Date by the Nevada Secretary of State;
(c) to InnovaCom, by wire transfer or cashier's check, $250,000;
(d) to the Escrow Agent, share certificates representing
8,500,000 shares of Sierra Vista common stock, sufficiently endorsed by
stock powers for transfer to InnovaCom pursuant to the terms and conditions
of this Agreement;
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(e) to InnovaCom, a voting agreement, executed by certain Sierra
Vista Shareholders, as more specifically provided for in Section 8.1(e) of
this Agreement; and
(f) to InnovaCom, a certificate signed by Sierra Vista's Chief
Executive Officer dated as of the First Closing Date stating that all of
Sierra Vista's representations and warranties set forth in this Agreement
are true and correct and that all of the conditions of this Agreement
applicable to the First Closing Date have been satisfied or waived.
3.4 DELIVERIES ON THE FIRST CLOSING DATE BY INNOVACOM. InnovaCom
shall deliver, or cause to be delivered, to the Sierra Vista or the Escrow
Agent, as the case may be, the following on or before the First Closing
Date:
(a) to the Escrow Agent, certificates representing the Exchange
Stock, in the name of the Sierra Vista Shareholders, or any nominee as may
be designated by any Sierra Vista Shareholders, and in the name of the
Escrow Agent as provided for in Section 2 hereof, each in the appropriate
denomination, requested by the Sierra Vista Shareholders, in the aggregate
amount of 8,500,000 shares.
(b) to Sierra Vista, a copy of the minutes and/or consents of
InnovaCom's Board of Directors authorizing InnovaCom to take the necessary
steps toward Closing the transaction described by this Agreement;
(c) to Sierra Vista, a copy of a Certificate of Good Standing
for InnovaCom issued not more than thirty days prior to the Closing by the
Nevada Secretary of State;
(d) to Sierra Vista, an originally signed Notice of Sale
Pursuant to Corporations Code Section 25102(f) and an SEC Form D relating
to this transaction;
(e) to Sierra Vista, a promissory note providing for the
borrowing of $250,000 on or before the First Closing Date and an additional
$750,000 thereafter, executed by InnovaCom;
(f) to Sierra Vista, a voting agreement, executed by Xx. Xxxx
Xxx, as more specifically provided for in Section 8.1(e) of this Agreement;
and
(f) to Sierra Vista, a certificate signed by InnovaCom's Chief
Executive Officer dated as of the First Closing Date stating that all of
InnovaCom's representations and warranties set forth in this Agreement are
true and correct and that all of the conditions of this Agreement
applicable to the First Closing Date have been satisfied or waived.
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3.5 DELIVERIES ON THE FINAL CLOSING DATE BY SIERRA VISTA. Provided
that all of the terms and conditions of this Agreement have been satisfied,
Sierra Vista or the Escrow Agent, as the case may be, shall deliver to
InnovaCom the following on the Final Closing Date:
(a) the Escrow Agent will deliver all 8,500,000 Sierra Vista
Shares to InnovaCom which were deposited with the Escrow Agent pursuant to
this Agreement; and
(b) Sierra Vista will deliver to InnovaCom a certificate signed
by Sierra Vista's Chief Executive Officer dated as of the Final Closing
Date stating that all of Sierra Vista's representations and warranties set
forth in this Agreement are true and correct and that all of the conditions
of this Agreement applicable to the final Closing Date have been satisfied
or waived.
3.6 DELIVERIES ON THE FINAL CLOSING DATE BY INNOVACOM. Provided that
all of the terms and conditions of this Agreement have been satisfied,
InnovaCom or the Escrow Agent, as the case may be, shall deliver to the
Sierra Vista Shareholders the following on the Final Closing Date:
(a) the Escrow Agent will deliver all of the InnovaCom Common
Stock to the Sierra Vista Shareholders which were deposited with the Escrow
Agent pursuant to Section 3.4(a) hereof;
(b) InnovaCom will deliver to Sierra Vista an unaudited balance
sheet, dated as of a date within three (3) days of the Final Closing Date,
showing InnovaCom's assets and liabilities; and
(c) InnovaCom will deliver to Sierra Vista a certificate signed
by InnovaCom's Chief Executive Officer dated as of the Final Closing Date
stating that all of InnovaCom's representations and warranties set forth in
this Agreement are true and correct and that all of the conditions of this
Agreement applicable to the final Closing Date have been satisfied or
waived.
3.7 FILINGS; COOPERATION. Sierra Vista and InnovaCom shall, on
request and without further consideration, cooperate with one another by
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furnishing or using their best efforts to cause others to furnish any
additional information and/or executing and delivering or using their best
efforts to cause others to execute and deliver any additional documents
and/or instruments, and doing or using their best efforts to cause others
to do any and all such other things as may be reasonably required by the
parties or their counsel to consummate or otherwise implement the
transactions contemplated by this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES BY SIERRA VISTA
4.1 REPRESENTATIONS AND WARRANTIES OF SIERRA VISTA. Subject to the
schedules, attached hereto and incorporated herein by this reference,
(which schedules shall be acceptable to InnovaCom), Sierra Vista represents
and warrants to InnovaCom as follows:
(a) ORGANIZATION AND GOOD STANDING OF SIERRA VISTA. The
Articles of Incorporation of Sierra Vista and all amendments thereto as
presently in effect, certified by the Nevada Secretary of State, and the
Bylaws of Sierra Vista as presently in effect, certified by the President
and Secretary of Sierra Vista, have been delivered to InnovaCom and are
complete and correct and since the date of such delivery, there has been no
amendment, modification or other change thereto.
(b) CAPITALIZATION. Sierra Vista's authorized capital stock
consists of 50,000,000 shares, 40,000,000 of which are common stock, $0.001
par value and of which 8,500,000 shares of voting common stock are issued
and currently outstanding or will be issued and outstanding as of the Final
Closing Date, and 10,000,000 of which are preferred stock and none of which
will be issued and outstanding as of the Final Closing Date. All of such
outstanding shares are validly issued, fully paid and non-assessable.
Sierra Vista has no currently outstanding promissory notes, other
securities or debt instruments except as set forth in SCHEDULE 4.1(B). No
other equity securities or debt instruments of Sierra Vista are authorized,
issued or outstanding.
According to Sierra Vista's books and records, it currently has
approximately 98 shareholders, and all such shareholders are currently
residents of one of the following jurisdictions: California, Arizona,
Canada, and Sweden. All securities issued by Sierra Vista as of the date
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of this Agreement have been issued in compliance with all applicable state
and federal laws.
(c) SUBSIDIARIES. Sierra Vista has no subsidiaries and no other
material investments, directly or indirectly, or other material financial
interest in any other corporation or business organization, joint venture
or partnership of any kind whatsoever.
(d) FINANCIAL STATEMENTS. Sierra Vista is a recently organized
Nevada corporation. As such, it has not commenced operations.
Consequently, Sierra Vista has not prepared audited financial statements.
Schedule 4.1(d) contains the unaudited financial statements of Sierra Vista
as of March 31, 1997.
(e) ABSENCE OF UNDISCLOSED LIABILITIES. Except for accounts
payable and other liabilities as disclosed in SCHEDULES 4.1(D) AND 4.1(E),
Sierra Vista has no other liabilities, other than those incurred in the
ordinary course of business, secured or unsecured and whether accrued,
absolute, contingent, direct, indirect or otherwise, which would be
individually, or in the aggregate, material to the results of operations or
financial condition of Sierra Vista as of the First Closing Date.
(f) LITIGATION. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory
body or arbitration tribunal against Sierra Vista or its properties. There
are no actions, suits or proceedings pending, or, to the knowledge of
Sierra Vista, threatened against or affecting Sierra Vista, any of its
officers or directors relating to their positions as such, or any of its
properties, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, in connection with the
business, operations or affairs of Sierra Vista which might result in any
material adverse change in the operations or financial condition of Sierra
Vista, or which might prevent or materially impede the consummation of the
transactions under this Agreement.
(g) COMPLIANCE WITH LAWS. To the best of its knowledge, the
operations and affairs of Sierra Vista do not violate any law, ordinance,
rule or regulation currently in effect, or any order, writ, injunction or
decree of any court or governmental agency, the violation of which would
substantially and adversely affect the business, financial condition or
operations of Sierra Vista.
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(h) EMPLOYEES. Except as disclosed in Schedule 4.1(h), there
are no collective bargaining, bonus, profit sharing, compensation, or other
plans, agreements or arrangements between Sierra Vista and any of its
directors, officers or employees and there is no written employment,
consulting, severance or indemnification a agreements between Sierra Vista
on the one hand, and any current or former directors, officers or employees
of Sierra Vista on the other hand.
(i) ASSETS. All of Sierra Vista's assets are set forth in
SCHEDULE 4.1(I), and Sierra Vista owns outright and has good and marketable
title, or holds valid and enforceable leases or options, to all of such
assets, and no liens exist, except for liens placed upon the property at
the time of purchase or lease or through one or more financing
transactions.
(j) TAX MATTERS. Except as set forth in SCHEDULE
4.1(J) all federal, foreign, state and local tax returns, reports and
information statements required to be filed by or with respect to the
activities of Sierra Vista have been timely filed. Such returns, reports
and information statements are true and correct in all material respects
insofar as they relate to the activities of Sierra Vista.
(k) CONTRACTS. Set forth on SCHEDULE 4.1(K) hereto is a true
and complete list of all material contracts, agreements or commitments to
which Sierra Vista is a party or is bound. All such material contracts,
agreements and commitments are valid and binding on Sierra Vista in
accordance with their terms.
(l) OPERATING AUTHORITIES. Except as set forth on SCHEDULE
4.1(L), to the best of its knowledge, Sierra Vista has all material
operating authorities, governmental certificates and licenses, permits,
authorizations and approvals ("Permits") required to conduct its business
as presently conducted. Except as set forth on SCHEDULE 4.1(L) or
otherwise disclosed in this Agreement during the last 2 years, there has
not been any notice or adverse development regarding such Permits; such
Permits are in full force and effect; no material violations are or have
been recorded in respect of any Permit; and no proceeding is pending or
threatened to revoke or limit any Permit.
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(m) BOOKS AND RECORDS. The books and records of Sierra Vista
are complete and correct, are maintained in accordance with good business
practice and accurately present and reflect, in all material respects, all
of the transactions therein described, and there have been no transactions
involving Sierra Vista which properly should have been set forth therein
and which have not been accurately so set forth.
(n) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
Sierra Vista, pursuant to the power and authority legally vested in it, has
duly authorized the execution and delivery by Sierra Vista of this
Agreement, and has duly agreed to each of the transactions hereby
contemplated. Sierra Vista has the power and authority to execute and
deliver this Agreement, to approve the transactions hereby contemplated and
to take all other actions required to be taken by it pursuant to the
provisions hereof. Sierra Vista has taken all actions required by law, its
Articles of Incorporation, as amended, or otherwise to authorize the
execution and delivery of this Agreement. This Agreement is valid and
binding upon Sierra Vista in accordance with its terms. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or breach of
the Articles of Incorporation, as amended, or the Bylaws, as amended, of
Sierra Vista, or any agreement, stipulation, order, writ, injunction,
decree, law, rule or regulation applicable to Sierra Vista.
(o) FINDER'S, BROKER'S, CONSULTING FEES. Sierra Vista is not
liable or obligated to pay any finder's, agent's, broker's or consultant's
fee arising out of or in connection with this Agreement or the transactions
contemplated by this Agreement other than to X.X Xxxxxx and Yorkton
Securities, Inc.
4.2 DISCLOSURE. Sierra Vista has disclosed all events, conditions
and facts materially affecting the business and prospects of Sierra Vista.
Sierra Vista has not withheld knowledge of any such events, conditions or
facts which Sierra Vista knows, or has reasonable grounds to know, may
materially affect Sierra Vista's business and prospects. No representation
or warranty by Sierra Vista in this Agreement nor any certificate, exhibit,
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schedule or other written document or statement, furnished to InnovaCom by
Sierra Vista in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to be stated in
order to make the statements contained herein or therein not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES BY INNOVACOM
5.1 REPRESENTATIONS AND WARRANTIES OF INNOVACOM. InnovaCom
represents and warrants to Sierra Vista as follows:
(a) ORGANIZATION AND GOOD STANDING. InnovaCom is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full corporate power and authority to own or lease
its properties and to carry on its business as now being conducted and as
proposed to be conducted.
(b) CAPITALIZATION. InnovaCom's authorized capital stock
consists of 50,000,000 shares of $.001 par value Common Stock (defined
above as "InnovaCom Common Stock"), of which 12,111,084 are currently
outstanding and will be issued and outstanding as of the First Closing Date
and held by approximately 442 shareholders. SCHEDULE 5.1(B) sets forth the
names and share ownership of each InnovaCom shareholder owning over 5% of
InnovaCom's outstanding common stock as of the date of this Agreement.
There are options to purchase 5,4000,000 shares of InnovaCom Common Stock
issued and outstanding pursuant to the InnovaCom Stock Option Plan and to
officers, directors and consultants and there is no other authorized and/or
outstanding options and warrants for InnovaCom Common Stock and no other
equity securities or debt obligations of InnovaCom authorized, issued or
outstanding and there is no other outstanding options, warrants,
agreements, contracts, calls, commitments or demands of any character,
preemptive or otherwise, other than this Agreement, relating to any
InnovaCom stock, and there is no outstanding security of any kind
convertible into InnovaCom stock.
(c) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
InnovaCom, pursuant to the power and authority legally vested in it, has
duly authorized the execution and delivery by InnovaCom of this Agreement,
and has duly agreed to each of the transactions hereby contemplated.
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InnovaCom has the power and authority to execute and deliver this
Agreement, to approve the transactions hereby contemplated and to take all
other actions required to be taken by it pursuant to the provisions hereof.
InnovaCom has taken all actions required by law, its Articles of
Incorporation, as amended, or otherwise to authorize the execution and
delivery of this Agreement. This Agreement is valid and binding upon
InnovaCom. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will constitute a
violation or breach of the Articles of Incorporation, as amended, or the
Bylaws, as amended, of InnovaCom, or any agreement, stipulation, order,
writ, injunction, decree, law, rule or regulation applicable to InnovaCom.
(d) SUBSIDIARIES. InnovaCom has no subsidiaries and no
investments, directly or indirectly, or other financial interest in any
other corporation or business organization, joint venture or partnership of
any kind whatsoever.
(e) FINANCIAL STATEMENTS. InnovaCom will deliver to Sierra
Vista, prior to the First Closing Date, copies of all of InnovaCom's
audited and unaudited financial statements through the most recent
practical date, all of which, to the best of its knowledge, are true and
complete and have been prepared in accordance with generally accepted
accounting principles. In addition, InnovaCom shall provide an internally
prepared, unaudited balance sheet dated as of a date within three business
days of the Final Closing Date (the "Pre-closing Balance Sheet") showing
its assets and liabilities.
(f) ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE
5.1(F), since the date of the most recent unaudited financial statements
specified in Section 5.1(e) above, to the best of its knowledge, there has
been no material change in InnovaCom's financial condition, assets or
liabilities, except capital contributions and the incurring of expenses in
connection with the acquisition of Sierra Vista. Further, since the Pre-
closing Balance Sheet, other than as set forth in SCHEDULE 5.1(F), to the
best of its knowledge, there has been no change in InnovaCom's financial
condition, assets or liabilities.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 5.1(G) or to the extent reflected in InnovaCom's most recent
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financial statements specified in Section 5.1(e) above, or in the Pre-
closing Balance Sheet, InnovaCom has no knowledge of any other liabilities,
as of the Final Closing Date, of any nature, whether accrued, absolute,
contingent, or otherwise except the expenses in connection with the
acquisition of Sierra Vista, which would be material, individually or in
the aggregate, to the results of operation or financial condition of
InnovaCom.
(h) LITIGATION. Except as set forth in SCHEDULE 5.1(H), there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against InnovaCom
or its properties. There are no actions, suits or proceedings pending, or,
to the knowledge of InnovaCom, threatened against or relating to InnovaCom.
InnovaCom is not in default under or with respect to any judgment, order,
writ, injunction or decree of any court or of any federal, state, municipal
or other governmental authority, department, commission, board, agency or
other instrumentality.
(i) CONTRACTS. All of InnovaCom's material contracts are set
forth in SCHEDULE 5.1(I) and except as disclosed therein, InnovaCom is not
a party to any contract, nor is InnovaCom a party to any written or oral
commitment for capital expenditures. InnovaCom has in all material
respects performed all obligations required to be performed by it to date
and is not in default in any material respect under any agreements or other
documents to which it was a party.
(j) TAX MATTERS. Except as set forth in SCHEDULE 5.1(J), all
federal, foreign, state and local tax returns, reports and information
statements required to be filed by or with respect to the activities of
InnovaCom have been filed for all the years and periods for which such
returns and statements were due, including extensions thereof. InnovaCom
has not incurred any liability with respect to any federal, foreign, state
or local taxes except in the ordinary and regular course of business.
Except as set forth in SCHEDULE 5.1(J), InnovaCom is not delinquent in the
payment of any such tax or assessment, and no deficiencies for any amount
of such tax have been proposed or assessed.
(k) INTELLECTUAL PROPERTIES. All of InnovaCom's intellectual
properties, including, but not limited to, the DVImpact chip, are set forth
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in SCHEDULE 5.1(K). InnovaCom owns outright and has good and marketable
title, or holds valid and enforceable license agreements or assignments, to
all of such assets, and no liens or encumbrances exists thereon.
(l) COMPLIANCE WITH LAWS. To the best of its knowledge, the
operations and affairs of InnovaCom do not violate any law, ordinance, rule
or regulation currently in effect, or any order, writ, injunction or decree
of any court or governmental agency, the violation of which would
substantially and adversely affect the business, financial condition or
operations of InnovaCom.
(m) EMPLOYEES. Except as disclosed in SCHEDULE 5.1(M), there
are no collective bargaining, bonus, profit sharing, compensation, or other
plans, agreements or arrangements between InnovaCom and any of its
directors, officers or employees and there is no employment, consulting,
severance or indemnification arrangements, agreements or understandings
between InnovaCom on the one hand, and any current or former directors,
officers or employees of InnovaCom on the other hand.
(n) OPERATING AUTHORITIES. Except as set forth on SCHEDULE
5.1(N), to the best of its knowledge, InnovaCom has all material operating
authorities, governmental certificates and licenses, permits,
authorizations and approvals ("Permits") required to conduct its business
as presently conducted. Except as set forth on SCHEDULE 5.1(N) or
otherwise disclosed in this Agreement during the last 2 years, there has
not been any notice or adverse development regarding such Permits; such
Permits are in full force and effect; no material violations are or have
been recorded in respect of any Permit; and no proceeding is pending or
threatened to revoke or limit any Permit.
(o) BOOKS AND RECORDS. The books and records of InnovaCom are
complete and correct, are maintained in accordance with good business
practice and accurately present and reflect, in all material respects, all
of the transactions therein described, and there have been no transactions
involving InnovaCom which properly should have been set forth therein and
which have not been accurately so set forth.
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(p) FINDER'S FEES. InnovaCom is not liable or obligated to pay
any finder's, agent's or broker's fee arising out of or in connection with
this Agreement or the transactions contemplated by this Agreement.
5.2 DISCLOSURE. No representation or warranty by InnovaCom in this
Agreement, nor any statement or certificate furnished or to be furnished to
Sierra Vista pursuant hereto, or in connection with the transactions
contemplated hereby, knowingly contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
SECTION 6
REGISTRATION RIGHTS
6.1.1. DEMAND REGISTRATION. Upon the election of a majority of the
Exchange Stock issued by InnovaCom to the Sierra Vista Shareholder (the
"Holders") pursuant to this Agreement, InnovaCom shall promptly initiate a
registration with respect to all or a part of the Exchange Stock
(hereinafter referred to as the "Registrable Securities"). In this
respect, and in connection with all Registrable Securities, InnovaCom will:
(a) promptly give written notice of the proposed registration to all
other Holders; and
(b) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, and appropriate compliance
with applicable regulations issued under the Securities Act and applicable
state securities laws) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given within
thirty (30) days after receipt of such written notice from InnovaCom;
provided that InnovaCom shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this SECTION 6.1 in any
particular jurisdiction in which InnovaCom would be required to qualify to
do business as a foreign corporation in such jurisdiction unless InnovaCom
is already qualified as a foreign corporation in such jurisdiction and
except as may be required by the Securities Act or applicable rules or
regulations thereunder;
(c) The Holders of Registrable Securities shall be entitled to
only one (1) registration pursuant to this SECTION 6.1.1 which has been
15
declared or ordered effective by the Commission for a period of at least
(90) days; PROVIDED, HOWEVER, if in such registration the Holders are not
able to sell in such registration at least 90% of their Registrable
Securities requested to be included in such registration, then such Holders
will be entitled to demand one additional registration pursuant to the
provisions of this SECTION 6.1.1;
(d) Such registration shall be on a Long-Form Registration or a
Short-Form Registration to the extent InnovaCom meets the applicable
requirements under the Securities Act for a Short-Form Registration.
Subject to the foregoing clauses (b), (c) and (d), InnovaCom shall file a
registration statement covering the Registrable Securities so requested to
be registered as soon as practicable after receipt of the request or
requests of the Holders demanding registration pursuant to the provisions
of this Section 6.1.1 (the "Initiating Holders").
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of set forth below,
include other securities of InnovaCom which are held by persons who, by
virtue of agreements with InnovaCom, are entitled to include their
securities in any such registration, and InnovaCom shall have the right to
include securities in such registration for its own account.
If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise InnovaCom as a part of their request made pursuant to SECTION
6.1.1 and InnovaCom shall include such information in the written notice
referred to in SECTION 6.1.1(A). The right of any Holder to registration
pursuant to SECTION 6.1.1 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder
with respect to such participation and inclusion) to the extent provided
herein. A Holder may elect to include in such underwriting all or a part
of the Registrable Securities he holds.
If InnovaCom shall request inclusion of its securities in
any registration pursuant to SECTION 6.1.1, or if holders of Other
Registrable Securities request such inclusion, securities of InnovaCom and
holders of Other Registrable Securities may be included in the underwriting
conditioned on their acceptance of the further applicable provisions of
this SECTION 6. InnovaCom shall (together with all Holders, officers,
directors, and holders of Other Registrable Securities proposing to
distribute their securities through such underwriting) enter into an
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underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders and acceptable to InnovaCom (which
acceptance shall not be unreasonably withheld or delayed). Notwithstanding
any other provision of this SECTION 6.1.1, if the representative advises
the Initiating Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, the securities of
InnovaCom held of record by officers or directors (other than Other
Registrable Securities) of InnovaCom shall be excluded from such
registration to the extent so required by such limitation, and if a
limitation of the number of shares is still required, then the securities
of InnovaCom shall be excluded from such registration to the extent so
required by such limitation, and if a limitation of the number of shares is
still required, then the Other Registrable Securities shall be excluded
from such registration to the extent so required by such limitation, and if
a limitation is still required, the number of shares that may be included
in the registration and underwriting shall be allocated among all Holders
of Registrable Securities in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities which such Holders requested
to be included in such registration at the time of filing the registration
statement. No Registrable Securities or any other securities excluded from
the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. If any holder of Registrable Securities,
Other Registrable Securities, or any officer or director who has requested
inclusion in such registration as provided above disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to InnovaCom, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration.
6.1.2. COMPANY REGISTRATION. If InnovaCom, at any time or from
time to time during the period commencing on the date of this Agreement and
ending on the fifth anniversary of the Final Closing Date, shall determine
to register any of its securities for its own account or for the account of
others, other than a registration relating solely to "employee benefit
plans" (Form S-8), or a registration relating solely to a Commission Rule
145 transaction (Form S-4), or a registration on any registration form
which does not permit secondary sales, InnovaCom will:
(a) promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which InnovaCom intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(b) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in
17
a written request or requests, made by any Holder within thirty (30) days
after receipt of the written notice from InnovaCom described in clause (a)
above, except as set forth below. Such written request may specify all or
a part of a Holder's Registrable Securities.
If the registration of which InnovaCom gives notice is for a
registered public offering involving an underwriting, InnovaCom shall so
advise the Holders as a part of the written notice given pursuant to
SECTION 6.1.2(A). In such event the right of any Holder to registration
pursuant to SECTION 6.1.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with InnovaCom and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting. Notwithstanding any other
provision of this SECTION 6.1.2, if the underwriter determines that
marketing factors require a limitation on the number of shares to be
underwritten, the underwriter may (subject to the allocation priority set
forth below) limit the number of Registrable Securities to be included in
the registration and underwriting. InnovaCom shall so advise all holders
of securities requesting registration, and the number of shares that are
entitled to be included in the registration and underwriting shall be
allocated in the following manner. The securities of InnovaCom held by
officers and directors of InnovaCom (other than Other Registrable
Securities) shall be excluded from such registration and underwriting to
the extent required by such limitation and, if a limitation on the number
of shares is still required, then:
(i) if the registration is initiated by InnovaCom for its
account, the securities of InnovaCom held by holders of Other Registrable
Securities and by each of the Holders of Registrable Securities shall be
excluded to the extent required by such limitation, in proportion, as
nearly as practicable, to the respective amount of Other Registrable
Securities and Registrable Securities then owned by each such holder, prior
to limiting the inclusion of the securities of InnovaCom to be included in
such registration; PROVIDED, HOWEVER, that in no event shall the number of
Registrable Securities included in the registration be reduced if such
reduction would cause the Registrable Securities to be less than 10% of the
securities included in such registration;
(ii) if the registration is initiated at the request of
holders of Other Registrable Securities, then the securities of InnovaCom
18
held by the Holders of Registrable Securities shall be excluded to the
extent required by such limitation, in proportion, as nearly as
practicable, to the respective amount of Registrable Securities which each
such Holder had requested to be included in such registration at the time
of filing the registration statement; PROVIDED, HOWEVER, that in no event
shall the number of Registrable Securities included in the registration be
reduced if such reduction would cause the Registrable Securities to be less
than 10% of the securities included in such registration. If the
underwriter has not limited the number of Registrable Securities requested
to be underwritten under this paragraph (ii), InnovaCom may include its
securities for its own account in such registration if the underwriter so
agrees and if the number of Registrable Securities which would otherwise
have been included in such registration and underwriting will not thereby
be limited.
If any Holder of Registrable Securities, Other Registrable
Securities or any officer or director disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to
InnovaCom and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
6.1.3. EXPENSES OF REGISTRATION. All Registration Expenses
relating to the Registrable Securities incurred in connection with any
registration, qualification or compliance pursuant to this SECTION 6 shall
be borne by InnovaCom. All Selling Expenses shall be borne by the holders
of the securities so registered, pro rata on the basis of the number of
their shares so registered.
6.1.4. REGISTRATION PROCEDURES. In the case of each
registration effected by InnovaCom pursuant to SECTION 6, InnovaCom will
keep each Holder advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, InnovaCom
will:
(a) Keep such registration effective for a period of one
hundred eighty (180) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such one hundred eighty (180) day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that
19
Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file
a post-effective amendment, permit, in lieu of filing a post-effective
amendment which (y) includes any Prospectus required by Section 10(a)(3) of
the Securities Act or (z) reflects facts or events representing a material
or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in clause (y) and (z) above to be contained in periodic reports
filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement;
(b) Furnish such number of prospectuses, including a
summary or a preliminary prospectus, and other documents incident thereto
as each Holder from time to time may reasonably request;
(c) In connection with any underwritten offering pursuant
to a registration statement filed pursuant to SECTION 6.1 hereof, InnovaCom
will enter into any underwriting agreement reasonably necessary to effect
the offer and sale of the securities, provided such underwriting agreement
contains customary underwriting provisions and provided further that if the
underwriter so requests the underwriting agreement will contain customary
indemnification and contribution provisions;
(d) Use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable (but not more than 18 months)
after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act, and the rules and regulations promulgated thereunder;
(e) Use its best efforts to list such Registrable
Securities on any securities exchange on which any equity security of
InnovaCom is then listed, if such Registrable Securities are not already so
listed and if such listing is then permitted under the rules of such
exchange, and to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(f) Furnish to each seller of Registrable Securities
included in such registration such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by
such sellers;
(g) Make available at InnovaCom's offices for inspection by
any seller of such Registrable Securities covered by such registration
statement, by any underwriter participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such
20
underwriter, all financial and other records, corporate documents and
properties of InnovaCom material to such registration, and cause all of
InnovaCom's officers, directors and employees to supply all information
material to such registration reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement;
(h) Furnish or cause to be furnished to each seller of
Registrable Securities covered by such registration statement, a copy of
the opinion of counsel for InnovaCom, and a copy of the "comfort" letter
signed by the independent public accounts who have certified InnovaCom's
financial statements included in the registration statement, delivered on
the closing date to the underwriters of such Registrable Securities; and
(i) In the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any order
suspending or preventing the use of any prospectus or suspending the
qualification of any Registrable Securities for sale in any jurisdiction,
use its best efforts promptly to obtain its withdrawal.
6.2. INDEMNIFICATION AND CONTRIBUTION.
(a) InnovaCom will indemnify the Holder and its successors
and each of its officers, directors and partners, and each person
controlling the Holder, and its successors, with respect to which
registration, qualification or compliance has been effected pursuant to
this SECTION 6, and each underwriter, if any, and each person who controls
any underwriter, 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
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, 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 not misleading, or any
violation by InnovaCom of the Securities Act or any rule or regulation
thereunder applicable to InnovaCom and relating to action or inaction
required of InnovaCom in connection with any such registration,
qualification or compliance, and will reimburse the Holder, and its
successors and its officers, directors and partners, and each person
controlling the Holder, its successors, each such underwriters and each
person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending
any such claim, loss, damage, liability or action, provided that InnovaCom
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 based upon written information furnished to InnovaCom
by any Holder, successor or underwriter and stated to be specifically for
use therein.
21
(b) The Holder, and its successors will, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify
InnovaCom, each of its directors and officers and each underwriter, if any,
of InnovaCom's securities covered by such a registration statement, each
person who controls InnovaCom or such underwriter within the meaning of the
Securities Act and the rules and regulations thereunder, 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 InnovaCom and its directors, officers, partners,
underwriters 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, 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 InnovaCom by any
Holder (or the Holder's successors) and stated to be specifically for use
therein; provided, however, that the obligations of the Holder (or the
Holder's successors) hereunder shall be limited to an amount equal to the
net proceeds to the Holder (or the Holder's successors) of Registrable
Securities sold or to be sold in such registration.
(c) Each party entitled to indemnification under this
SECTION 6.2 (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 any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld or delayed), and the Indemnified Party may participate in such
defense at its own expense (except in the event such Indemnified Party may
not be represented by the counsel retained by the Indemnifying Party due to
a conflict of interest, in which case the Indemnifying Party shall pay the
counsel fees incurred by the Indemnified Party), and provided further that
the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
SECTION 6. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party,
22
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 alleged by such claimant or plaintiff.
Each Indemnified Party shall furnish such information regarding itself or
the claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made
by or on behalf of the Indemnified Party or any officer, director or
controlling person of such Indemnified Party and will survive the transfer
of securities. The Indemnifying Party also agrees to make such provisions,
as are reasonably requested by any Indemnified Party, for contribution to
such party in the event the Indemnifying Party's indemnification is
unavailable for any reason.
6.3. INFORMATION BY THE HOLDER. If Registrable Securities of the
Holder (or its successors) are included in any registration, the Holder (or
its successors) shall furnish to InnovaCom such information regarding the
Holder (or its successors) and the distribution proposed by them as
InnovaCom may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this SECTION 6.
6.4. LIMITATIONS ON REGISTRATION OF ISSUES OF SECURITIES.
Any right given by InnovaCom to any holder or prospective holder of
InnovaCom's securities in connection with the registration of securities
shall comply with this SECTION 6.
6.5. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights
to cause InnovaCom to register Registrable Securities under SECTION 6.1.1
OR 6.1.2 may not be assigned but shall inure to the benefit of any
successor of the Holder.
6.6. "MARKET STAND-OFF" AGREEMENT. Except for securities of the
Holder (or its successors) being distributed pursuant to an effective
registration statement under this SECTION 6, the Holder (or the Holder's
successors) agree, if requested by InnovaCom and an underwriter of Common
Stock (or other securities) of InnovaCom, not publicly to sell or otherwise
transfer or dispose of any Common Stock (or other securities) of InnovaCom
held by it during the seven (7) day period prior to and the ninety (90) day
period following the effective date of a registration statement of
InnovaCom filed under the Securities Act.
23
InnovaCom agrees (x) not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven (7)
days prior to and the ninety (90) days after any underwritten registration
pursuant to SECTION 6.1.1. OR 6.1.2 has become effective, except as part of
such underwritten registration and except pursuant to registrations on Form
S-4 or S-8 or any successor or similar forms thereto, and (y) to use its
best efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of such
securities who is an affiliate of InnovaCom to agree not to effect any such
public sale or distribution of such securities during such period. Such
agreement shall be in writing in a form satisfactory to InnovaCom and such
underwriter. InnovaCom may impose stop-transfer instructions with respect
to the shares (or securities) subject to the foregoing restriction until
the end of said ninety (90) day period.
SECTION 7
CONDUCT OF PARTIES PENDING CLOSING
7.1 CONDUCT OF SIERRA VISTA BUSINESS PENDING CLOSING. Sierra
Vista, covenants that pending the Final Closing Date:
(a) Sierra Vista's business will be conducted only in the
ordinary course.
(b) No change will be made in Sierra Vista's Articles of
Incorporation or bylaws other than such changes as may be first approved in
writing by InnovaCom.
(c) Sierra Vista will not consider any inquiries or
proposals relating to the possible merger or reorganization of Sierra Vista
or its assets, except to the extent that they may be legally obligated to
do so in which case InnovaCom would be notified in writing.
(d) Other than in the ordinary course of business, no
contract or commitment will be entered into by or on behalf of Sierra Vista
or indebtedness otherwise incurred, except with the prior consent of
InnovaCom.
(e) No dividends shall be declared, no stock bonuses or
options shall be granted and no extraordinary increases in compensation to
employees, including officers, shall be declared and no new employment
agreements shall be entered into with officers or directors of Sierra
Vista, except with notice in writing to InnovaCom.
24
(f) Sierra Vista will use its best efforts to preserve
Sierra Vista's business organization intact; to keep available to Sierra
Vista the services of its present officers and employees; and to preserve
the goodwill of those having business relations with Sierra Vista.
(g) Subject to the protection provided by Section 9.4
herein, Sierra Vista has given or will give to InnovaCom, its accountants
and other representatives full access during normal business hours
throughout the period prior to the Final Closing Date, to all of Sierra
Vista's properties, books, contracts, commitments, and records, and has
furnished InnovaCom during such period with all such information concerning
Sierra Vista's affairs as InnovaCom may reasonably request.
7.2 CONDUCT OF INNOVACOM PENDING CLOSING. InnovaCom covenants
that, pending the Closing:
(a) No change will be made in InnovaCom's Articles of
Incorporation or bylaws or in InnovaCom's authorized or issued shares of
stock, and, except for shares issued for cash for working capital purposes,
no change will be made in InnovaCom's issued shares of stock except as may
be first approved in writing by Sierra Vista.
(b) InnovaCom will not discuss or negotiate with any other
corporation, firm or other person, or entertain or consider any inquiries
or proposals relating to the possible disposition of its shares of capital
stock, or its assets, except to the extent that it may be legally obligated
to do so in which case Sierra Vista would be notified in writing.
(c) No dividends shall be declared, no stock options
granted and no employment agreements shall be entered into with officers or
directors of InnovaCom, except as may be first approved in writing by
Sierra Vista.
(d) Other than in the ordinary course of business, no
contract or commitment will be entered into by or on behalf of InnovaCom or
indebtedness otherwise incurred, except with the prior consent of Sierra
Vista.
(e) Subject to the protection provided by Section 9.4
herein, InnovaCom has given or will give to Sierra Vista, its accountants
and other representatives, full access, during normal business hours
25
throughout the period prior to the Final Closing Date, to all of
InnovaCom's books and records concerning InnovaCom's affairs as Sierra
Vista may reasonably request.
SECTION 8
CONDITIONS PRECEDENT TO CLOSING
8.1 CONDITIONS PRECEDENT TO CLOSING. All obligations of
InnovaCom, and Sierra Vista under this Agreement are subject to the
fulfillment, prior to or at the First Closing Date and the Final Closing
Date, as the case may be, of all conditions herein set forth, including,
but not limited to, receipt by the appropriate party of all deliveries
required by Section 3 herein, and fulfillment, prior to the First Closing
Date and the Final Closing Date, as the case may be, of each of the
following conditions:
(a) Sierra Vista's and InnovaCom's representations,
warranties and covenants contained in this Agreement shall be true at the
time of the First Closing Date and the Final Closing Date as though such
representations, warranties and covenants were made at such time.
(b) Sierra Vista shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or
complied with prior to or at the First Closing Date and the Final Closing
Date.
(c) On the First Closing Date, Sierra Vista shall loan
Innovacom $250,000 and prior to the Final Closing Date, up to an additional
$750,000.
(d) Before the Final Closing Date, Sierra Vista shall have
raised at least $3,000,000 through the private placement of its equity
securities and shall have a cash balance of $3,000,000 on the Final Closing
Date, less the amounts loaned to InnovaCom pursuant to this Agreement,
commissions (which shall not exceed five percent (5%) of the proceeds
raised), finder's fees of $100,000, professional fees, and expenses.
(e) Effective as of the First Closing Date, the current
members of InnovaCom's board of directors shall take all steps necessary to
expand the authorized number of directors to six and to appoint three
directors, nominated by letter from Sierra Vista's Chief Executive Officer.
26
In addition, as of the First Closing Date, certain Sierra Vista
Shareholders totaling 3,700,000 shares of voting common stock and Xx. Xxxx
Xxx will have entered into a voting agreement wherein Mr. Koz will have the
right to nominate three (3) members of the six (6) member board of
directors and the Sierra Vista Shareholders will have the right to nominate
three (3) members of the six (6) members of the board of directors and all
shares subject to the voting agreement will vote in favor of the six
nominees.
(f) Before the Final Closing Date, Xx. Xxxx Xxx shall enter
into a five (5) year employment agreement with InnovaCom as president and
chief executive officer on terms mutually acceptable to Mr. Koz, InnovaCom
and Sierra Vista and Mr. F. Xxxxx Xxxxxxxx shall enter into a five (5) year
employment agreement with InnovaCom as the president of InnovaCom's Sierra
Vista Entertainment division on terms mutually acceptable to Xx. Xxxxxxxx,
InnovaCom and Sierra Vista. No other employee of InnovaCom or Sierra Vista
shall have any employment agreements which are not "at will" agreements
without severance benefits provided for therein.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 COOPERATION. Sierra Vista and InnovaCom will cooperate with
each other and their respective agents in carrying out the transactions
contemplated by this Agreement, and in delivering all documents and
instruments deemed reasonably necessary or useful by the other party.
9.2 EXPENSES. Each of the parties hereto shall pay all of its
respective costs and expenses (including attorneys' and accountants' fees,
finder's and consultant's fees, costs and expenses) incurred in connection
with this Agreement and the consummation of the transactions contemplated
herein.
9.3 PUBLICITY. Prior to the Final Closing Date, any written
news releases and/or other shareholder communication by any party
pertaining to this Agreement or the transactions contemplated herein shall
be submitted to the other parties for their review and approval prior to
such news release and/or other shareholder communication provided, however,
that (a) such approval shall not be unreasonably withheld, and (b) such
review and approval shall not be required of disclosures required to
comply, in the judgment of counsel, with federal or state securities or
corporate laws or policies.
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9.4 CONFIDENTIALITY. While each party is obligated to provide
access to and furnish information in accordance with this Agreement, it is
understood and agreed that such disclosure and information obtained as a
result of such disclosures are proprietary and confidential in nature.
Each party agrees to hold such information in confidence and not to reveal
any such information to any person who is not a party to this Agreement, or
an officer, director or key employee thereof, and not to use the
information obtained for any purpose other than assisting in its due
diligence inquiry. This subsection 9.4 shall survive the execution and
delivery of this Agreement, the Closing and the consummation of the
transaction called for by this Agreement and shall not be limited to the
time period otherwise set forth in Section 12 below.
9.5 POST-CLOSING COVENANTS. The parties hereto agree to the
following covenants to be performed after the Closing:
(a) The Sierra Vista Shareholders and InnovaCom, by and
through its newly constituted board of directors, shall use their very best
efforts to raise at least $12 million through the issuance of InnovaCom
common stock at a price equal to or greater than $5.00 per share. Final
terms and conditions to the issuance of additional shares shall be subject
to the approval of the newly constituted board of directors. The proceeds
from the private placement shall be used to bring the DVImpact chip into
production, for acquisitions, and for other general corporate and working
capital purposes. The parties shall commence their fund raising activities
immediately with a view towards completing the private placement as soon as
possible.
(b) Promptly after meeting the financial listing criteria
for the NASDAQ Stock Market, InnovaCom will commence the SEC registration
and NASD application procedure to have its stock listed and traded on the
NASDAQ Stock Market.
(c) InnovaCom agrees that of the $3 million raised by
Sierra Vista prior to the Final Closing Date, after deducting commissions,
finder's fees, professional fees and expenses, shall be allocated two
thirds to the operations of InnovaCom in furtherance of its efforts to
commercialize the DVImpact chip and one third to the operations of Sierra
Vista, a wholly owned subsidiary of InnovaCom, in furtherance of its effort
to develop commercially viable entertainment properties, such as screen
plays and the production of movies.
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SECTION 10
TERMINATION
10.1 MUTUAL TERMINATION. Sierra Vista and InnovaCom may agree to
mutually terminate this Agreement prior to Closing without any liability to
each other.
SECTION 11
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
11.1 AS TO SIERRA VISTA. The representations and warranties of
Sierra Vista contained herein shall survive the execution and delivery of
this Agreement, the Closing and the consummation of the transactions called
for by this Agreement for a period of 2 years from the date of this
Agreement unless a lesser time period is specified.
11.2 AS TO INNOVACOM. The representations and warranties of
InnovaCom contained herein shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions called for
by this Agreement for a period of 2 years from the date of this Agreement
unless a lesser time period is specified.
SECTION 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT, AMENDMENTS. This Agreement (including
the Exhibits and Schedules hereto) contains the entire agreement between
the parties with respect to the transactions contemplated hereby, and
supersedes all negotiations, representations, warranties, commitments,
offers, contracts, and writings prior to the date hereof. No waiver and no
modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the
parties to this Agreement.
12.2 BINDING AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective assigns
and successors in interest; provided, that neither this Agreement nor any
right hereunder shall be assignable by InnovaCom or Sierra Vista without
the prior written consent of the other parties.
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12.3 INDEMNIFICATION
(a) BY INNOVACOM. InnovaCom covenants and agrees to
defend, indemnify and hold harmless Sierra Vista, each of its officers,
directors, employees, agents, advisors and shareholders and affiliates
(collectively, the "Sierra Vista Indemnitees") from and against, any loss,
liability, damage or expense (including reasonable attorney's fees and
costs) which any Sierra Vista Indemnitee may suffer, sustain or become
subject to as a result of a breach of any representation or warranty by
InnovaCom contained in this Agreement.
(b) BY SIERRA VISTA. Sierra Vista covenants and agrees to
defend, indemnify and hold harmless each of the officers, directors,
employees, agents, advisors of InnovaCom, and shareholders owning over 10%
of InnovaCom's common stock, as such persons existed prior to the Final
Closing Date (collectively, the "InnovaCom Indemnitees") from and against
any loss, liability, damage or expense (including reasonable attorney's
fees and costs) which the InnovaCom Indemnitees may suffer, sustain or
become subject to, as a result of a breach of any representation, warranty
or covenant by Sierra Vista contained in this Agreement.
12.4 ATTORNEY'S FEES. Except as otherwise provided for in
Section 12.3 above, in the event of any controversy, claim or dispute among
the parties to this Agreement arising out of or relating to this Agreement
or breach thereof, each party hereto shall pay its own legal expenses,
attorney's fees and costs.
12.5 SEVERABILITY. If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction or as a
result of future legislative action, such holding or action shall be
strictly construed and shall not affect the validity or effect on any other
provisions hereof.
12.6 GOVERNING LAW. In any action or proceeding arising out of
or related to this Agreement, the law of the State of California shall be
followed.
12.7 NOTICES. All notices or other communications required
hereunder shall be in writing and shall be sufficient in all respects and
shall be deemed delivered after 3 days if sent via registered or certified
mail, postage prepaid; the next day if sent by overnight courier service;
or upon completion of transmission if sent by facsimile to the following:
30
IF TO SIERRA VISTA:
Mr. F. Xxxxx Xxxxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Fax: 000-000-0000
IF TO INNOVACOM:
Xx. Xxxx Xxx, CEO
InnovaCom, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Fax: 000-000-0000
12.8 COUNTERPARTS; SIGNATURES. This Agreement may be executed
in one or more counterparts, each of which may be deemed an original, but
all of which together, shall constitute one and the same instrument. This
Agreement may be executed by a party and sent to the other parties via
facsimile transmission and the facsimile transmitted copy shall have the
same integrity, force and effect as an original document.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
INNOVACOM INC, a Nevada SIERRA VISTA ENTERTAINMENT,
corporation INC., a Nevada corporation
By: XXXX XXX By: F. XXXXX XXXXXXXX
Xxxx Xxx, President F. Xxxxx Xxxxxxxx, CEO
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EXHIBIT LIST
Exhibit A--List of Shareholders owning the
outstanding common stock of Sierra Vista Entertainment, Inc.
SCHEDULE LIST
SIERRA VISTA
Schedule 4.1(b) Capitalization
Schedule 4.1(e) Absence of Undisclosed Liabilities
Schedule 4.1(I) Assets
Schedule 4.1(j) Tax Matters
Schedule 4.1(k) Contracts
Schedule 4.1(l) Operating Authorities
INNOVACOM
Schedule 5.1(b) Capitalization
Schedule 5.1(f) Absence of Undisclosed Certain Changes
Schedule 5.1(g) Absence of Undisclosed Liabilities
Schedule 5.1(h) Litigation
Schedule 5.1(i) Tax Matters
Schedule 5.1(k) Intellectual Properties
Schedule 5.1(m) Employees
Schedule 5.1(n) Operating Authorities
