EXHIBIT 10.5
PROPRIETARY INFORMATION ESCROW AGREEMENT
This Proprietary Information Escrow Agreement (the "Escrow Agreement")
is made and entered into as of June 25, 2002 by and among Princeton Video Image,
Inc ("PVI"), Cablevision Systems Corporation ("Cablevision"), and Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP (the "Escrow Agent").
A. PVI and Cablevision are parties to an Amended and Restated L-VIS(R)
System License Agreement (the "Restated L-VIS Agreement"), an Amended and
Restated Joint Collaboration and License Agreement (the "Restated Collaboration
Agreement"), an iPoint(TM) Technology License Agreement (the "iPoint
Agreement"), and an Option Agreement (the "Option Agreement"), each dated the
date hereof.
B. PVI has agreed to place in escrow the Proprietary Information
licensed to Cablevision and its Affiliates, including without limitation any
Proprietary Information used in connection with the Restated L-VIS Agreement,
the Restated Collaboration Agreement and the iPoint Agreement (collectively the
"Licensed Proprietary Information").
C. Escrow Agent has agreed to serve as escrow agent, on the terms and
conditions herein set forth.
D. For purposes of this Agreement, "Proprietary Information" means
technical data, designs, computer software programs (including object code and
source code), layouts, development tools, and all manuals, documentation and
media constituting describing or relating to the above, including without
limitation (i) full source code for all software and microcode to make files,
build and test scripts, and any custom environmental or testing infrastructure,
(ii) all xxxxxxx, board schematics, chip schematics and high level language
specifications (e.g., VHDL/Verilog) and test vectors and (iii) to the extent
such exist during the term of this Agreement, design, manufacturing or packaging
plans, specifications or diagrams.
NOW, THEREFORE, PVI, Cablevision and the Escrow Agent hereby agree as
follows:
1. Deposit in Escrow. Simultaneously with the execution and delivery
herewith, PVI is depositing with the Escrow Agent the Licensed Proprietary
Information required under this Agreement. PVI hereby represents and warrants
that all of the Licensed Proprietary Information is being deposited herewith.
All Licensed Proprietary Information deposited under this Agreement shall be
suitably labeled or otherwise identified. On September 1, 2002, January 1, 2003
and every six months thereafter in which the Licensed Proprietary Information
has been revised, updated or supplemented in any way, PVI shall deposit with the
Escrow Agent such updated, supplemented or revised version of the Licensed
Proprietary Information, which must be labeled or otherwise identified so as to
distinguish it from the Licensed Proprietary Information which is being updated.
PVI shall bear the cost of preparing each version of the Licensed Proprietary
Information to be deposited into escrow.
2. Term; Termination. This Escrow Agreement and the escrow created
hereby shall remain in effect until the earlier of (i) the delivery of the
Licensed Proprietary Information to
Cablevision pursuant to the terms of this Escrow Agreement or (ii) three (3)
years from the date hereof.
3. Delivery of the Proprietary Information to PVI and Cablevision.
3.1. Delivery to Cablevision. The Escrow Agent is hereby
instructed and empowered to deliver the Licensed Proprietary Information to
Cablevision, upon compliance with the procedure set forth in Paragraph 3.3 of
this Escrow Agreement, in the event that any of the following events occur:
(a) PVI fails to meet the Financial Test (as
defined in the Option Agreement) including
without limitation providing written notice
to Cablevision setting forth with reasonable
specificity of how the Financial Test has
been met;
(b) PVI (i) ceases to use commercially
reasonable efforts to develop its iPoint(TM)
technology (as defined in the iPoint
Agreement); or (ii) ceases doing business or
shall be adjudicated a bankrupt by a court
of competent jurisdiction (not including
reorganization under Chapter 11 of the
United States Bankruptcy Code or any similar
or successor statute); or
(c) An Event of Default occurs as defined in the
Note Purchase and Security Agreement of even
date herewith.
3.2. Delivery to PVI. The Escrow Agent is hereby instructed
and empowered to deliver the Proprietary Information to PVI, upon compliance
with the procedure set forth in Paragraph 3.3 of this Escrow Agreement, in the
event that either of the following events shall occur: (a) the expiration of
this Agreement; or (b) Cablevision elects to terminate the escrow.
3.3. Procedure for Instructing the Escrow Agent to Deliver the
Licensed Proprietary Information. Upon the occurrence of any event or
circumstance entitling Cablevision or PVI to delivery of the Licensed
Proprietary Information from escrow under Paragraphs 3.1 or 3.2 of this Escrow
Agreement, the party claiming the right to delivery of the Licensed Proprietary
Information (the "Demanding Party") shall give written notice, as set forth in
Section 8, to the Escrow Agent and to the other party (the "Opposing Party") of
the event or circumstance entitling it to delivery of the Licensed Proprietary
Information. The Escrow Agent hereby is instructed and empowered to deliver the
Licensed Proprietary Information to the Demanding Party on the tenth (10th)
business day following the receipt of such notice from the Demanding Party
unless on or before such tenth (10th) business day Opposing Party gives written
notice to the Demanding Party and the Escrow Agent that it objects to the
delivery of the Licensed Proprietary Information to the Demanding Party and its
reasons therefor.
3.4. Disputes Regarding Delivery of the Licensed Proprietary
Information.
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(a) If the Opposing Party objects to the delivery of
the Licensed Proprietary Information to the Demanding Party as set forth in
Section 3.3, the Escrow Agent shall not deliver or release the Licensed
Proprietary Information until (i) the Escrow Agent receives notice from
Cablevision and PVI that the objection has been resolved and they agree to
delivery of the Licensed Proprietary Information to the Demanding Party, the
delivery to be performed within five (5) business days of receipt of such notice
from Cablevision and PVI, or (ii) the Escrow Agent receives notice from an
arbitrator of the dispute (as described below) instructing the Escrow Agent to
deliver the Licensed Proprietary Information to the Demanding Party.
(b) If Cablevision and PVI do not resolve the
objection(s) to the delivery of the Licensed Proprietary Information within ten
(10) business days from the Demanding Party's receipt of the Opposing Party's
objection, then the issue of whether or not the Licensed Proprietary Information
should be delivered to the Demanding Party shall be resolved by binding
arbitration to be completed within sixty (60) days after receipt of the
objection (unless earlier resolved between the parties). The binding arbitration
shall be conducted before a single arbitrator mutually selected by a designated
representative of PVI and a designated representative of Cablevision, the
representatives to be selected no later than ten (10) business days after
receipt of the objection. In the arbitration proceeding, Cablevision and PVI
shall each be entitled (i) to make a paper submission to the arbitrator, within
forty (40) days after Cablevision's receipt of PVI's objection, setting forth
reasons in support of their respective positions (to be filed concurrently by
the parties) and (ii) to make a half hour presentation to the arbitrator at a
hearing to be held no sooner than five (5) business days after submission of the
parties' papers to the arbitrator. The arbitrator shall decide the dispute based
on each party's papers and oral presentation. The arbitrator's decision shall be
final and binding on Cablevision and PVI and rendered within two (2) business
days of the oral presentation to the arbitrator. If the designated
representatives of Cablevision and PVI cannot agree on the selection of an
arbitrator, then either party may apply to the American Arbitration Association
to select an arbitrator in accordance with its rules on an expedited basis.
4. Obligations of the Escrow Agent.
4.1. Storage Facilities. The Licensed Proprietary Information
shall be held by the Escrow Agent in a manner the Escrow Agent determines in its
sole discretion to be reasonably likely to preserve and maintain the integrity,
accuracy, and confidentiality of the Proprietary Information.
4.2. Access to and Delivery of the Licensed Proprietary
Information. The Escrow Agent shall be in sole control of access to and delivery
of the Licensed Proprietary Information. Upon receipt of the written notice from
the Demanding Party as set forth in Paragraph 3.3 of this Escrow Agreement, the
Escrow Agent shall not be required to determine whether the Demanding Party's
request for delivery of the Licensed Proprietary Information is valid; rather,
if the Demanding Party has complied with the written notice requirements set
forth in Paragraph 3.3, the Escrow Agent hereby is instructed and empowered to
deliver the Licensed Proprietary Information to the Demanding Party unless the
Escrow Agent receives a timely written objection to such delivery from the
Opposing Party. Upon receipt of a timely written objection to delivery of the
Licensed Proprietary Information from the Opposing Party, the
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Escrow Agent shall not deliver the Licensed Proprietary Information to either
party until the earlier to occur of (a) receipt of a final decision of the
arbitrator directing the Escrow Agent to deliver the Proprietary Information; or
(b) receipt of a written instruction signed by an authorized representative of
each of PVI and Cablevision instructing delivery of the Licensed Proprietary
Information.
4.3. Non-disclosure. The Escrow Agent acknowledges and agrees
that the Licensed Proprietary Information constitutes confidential and
proprietary information. So long as the Licensed Proprietary Information remains
in escrow, the Escrow Agent agrees that it will not, directly or indirectly, (i)
reveal, report, publish, disclose or transfer the Licensed Proprietary
Information to any third party in a manner likely to compromise the confidential
nature of the Licensed Proprietary Information, or (ii) use the Licensed
Proprietary Information for any purpose or for the benefit of any third party,
except as permitted by this Escrow Agreement. The Escrow Agent agrees that it
will make efforts that it deems reasonable to notify and inform its agents,
representatives and employees who have access to the Licensed Proprietary
Information of its limitations, duties and obligations regarding non-disclosure
and use of the Licensed Proprietary Information. In no event will the Escrow
Agent use less care to maintain the confidentiality of the Licensed Proprietary
Information than it uses to maintain the confidentiality of its own confidential
and proprietary information.
5. Compensation of the Escrow Agent. Cablevision shall be solely
responsible for compensation of the Escrow Agent for its service hereunder,
except as expressly provided in Section 6 of this Escrow Agreement.
6. Limitation of Liability and Indemnification of the Escrow Agent.
(a) The duties of the Escrow Agent hereunder shall be
limited to the observance of the express provisions of this Agreement. The
Escrow Agent shall not be subject to, or be obliged to recognize, any other
agreement between the parties hereto or directions or instructions not
specifically set forth or provided for herein. The Escrow Agent shall have no
duty to determine or inquire into the happening or the occurrence of any event
or the performance or failure of performance of any person or entity with
respect to any other arrangements or contracts between them or with others. The
Escrow Agent may rely and act upon any instrument received by it pursuant to the
provisions of this Agreement which it in good faith believes to be genuine and
in conformity with the requirements of this Agreement. If at any time the Escrow
Agent shall receive conflicting notices, claims, demands or instructions with
respect to the Escrowed Funds, or if for any other reason it shall in good faith
be unable to determine the party or parties entitled to receive the Licensed
Proprietary Information (or any portion thereof), the Escrow Agent may refuse to
make any delivery and may retain the Licensed Proprietary Information safely in
its possession until it shall have received instructions in writing concurred in
by all parties in interest, or until directed by a final arbitration order or a
final order or judgment of a court of competent jurisdiction, whereupon it shall
make such disposition in accordance with such instructions, order or judgment.
(b) Notwithstanding anything in this Agreement to the
contrary, the Escrow Agent shall not be liable to any person for any error in
judgment, or for any act done or step taken or omitted by it in good faith, or
for any mistake of fact or law, or for any act done or
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omitted by it in connection with this Agreement, excepting only the Escrow
Agent's intentional and deliberate misconduct. The Escrow Agent shall not, by
reason of its execution of this Escrow Agreement, assume any responsibility or
liability for any transactions between PVI and Cablevision other than for the
performance of the Escrow Agent's obligations with respect to the Licensed
Proprietary Information under this Escrow Agreement. PVI and Cablevision shall
jointly and severally indemnify and hold harmless the Escrow Agent and each of
its partners, officers, employees or agents, as the case may be from any and all
liability, damages, costs, attorneys' fees, claims, and other expenditures or
expenses that may be sustained or incurred by the Escrow Agent as a result of
serving in its capacity as escrow agent hereunder except that arising from the
Escrow Agent's willful misconduct. No implied covenants or obligations
whatsoever shall be inferred from this Agreement against the Escrow Agent, nor
shall the Escrow Agent be bound by the provisions of any agreement concerning
PVI or Cablevision beyond the specific terms hereof.
7. Successor Escrow Agent. In the event the Escrow Agent is unwilling
or unable for any reason to serve as the Escrow Agent hereunder, then a
successor escrow agent shall be selected by mutual agreement of the parties.
8. Notices. All notices or other communications to be delivered in
connection with this Escrow Agreement shall be in writing and shall be
considered given when personally delivered or when mailed by registered or
certified mail, postage prepaid, return receipt requested, or when sent via
commercial courier or telecopier, provided that such notice is followed with
notice sent by U.S. certified mail, return receipt requested and received within
four (4) business days, directed, as follows or to such other address as a party
may designate by notice:
(a) If to Cablevision:
Cablevision Systems Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
With a copies (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
And
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Kramer, Levin, Naftalis & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxxxx
Facsimile :(000) 000-0000
(b) If to PVI:
Princeton Video Image, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, X.X. 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Smith, Stratton, Wise, Xxxxx & Xxxxxxx, LLP
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(c) If to the Escrow Agent:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
9. Relationship of Parties. This Escrow Agreement shall not be
construed as creating a partnership, joint venture or employment relationship
between the parties, and nothing contained herein shall be construed as causing
any party to be the employee, partner, officer, associate, shareholder, member,
agent or representative of the other. No party shall make any warranties or
representations, or incur any obligations whatsoever, on behalf of or in the
name of any other party. Notwithstanding its duties as the Escrow Agent
hereunder, the Escrow Agent shall be entitled to continue to act as counsel for
Cablevision and PVI and neither its services as the Escrow Agent hereunder nor
any provision hereof, whether express or implied, shall restrict or inhibit the
Escrow Agent in any way from representing any party or any of its or their
respective affiliates, in any action, dispute, controversy, arbitration, suit or
negotiation arising under this Agreement, or in any other manner or context
whatsoever, whether or not directly or indirectly involving any of the parties
hereto, or the Proprietary Information or the disposition thereof. PVI hereby
waives any conflict of interest that may be based on Kramer, Levin, Naftalis &
Xxxxxxx LLP acting as the Escrow Agent under this Agreement.
10. General. This Escrow Agreement shall be governed by, and subject to
and interpreted in accordance with the laws of the State of New York. This
Escrow Agreement constitutes the entire agreement between the parties hereto
with respect to the subject hereof and shall be binding upon the legal
successors only permitted assigns of each of the parties hereto. No amendment,
alteration or modification of this Escrow Agreement shall be valid unless in
each instance such amendment, alteration or modification is expressed in a
written instrument duly executed by all the parties hereto.
***
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as indicated below.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Co-CEO
CABLEVISION SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice Chairman and General Counsel
XXXXXX XXXXX XXXXXXXX & XXXXXXX LLP,
as the Escrow Agent
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Partner
