EXHIBIT 10.1
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VIDEO-ON-DEMAND PURCHASE AGREEMENT
This Video-On-Demand Purchase Agreement ("this Agreement") is made this 1st day
of December, 2000, by and between SeaChange International, Inc., 000 Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 ("SeaChange"), and Comcast Cable
Communications of Pennsylvania, Inc., 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
("Comcast") setting forth the terms and conditions governing the sale and
licensing from time to time by SeaChange to Comcast of SeaChange's video-on-
demand equipment (the "Equipment") and software (the "Software") and related
documentation and services. The Equipment and Software are collectively
referred to as "Product" or the "Products".
1. ORDERING PROCESS AND PROCEDURE
All purchases by Comcast hereunder shall be pursuant to a purchase order
issued by Comcast and accepted by SeaChange ("Order"). SeaChange shall
accept an Order by written acknowledgment or by commencement of
performance. Comcast may issue Orders in writing, by facsimile, or, if
available, by means of Electronic Data Interchange (EDI). All Orders shall
be subject to the terms this Agreement, whether or not this Agreement is
referenced in such Order. No other terms shall apply to an Order, unless
agreed upon by both parties in writing.
2. PRICES
2.1 The list prices and license fees applicable to the Products shall be
SeaChange's then current prices and fees, including SeaChange's then
standard discounts and allowances, set forth in SeaChange's published Price
List in effect on the date of order. A copy of SeaChange's Price List in
effect on the date of this Agreement is set forth in Attachment A. All
prices and license fees are for delivery FOB Maynard, Massachusetts and are
net of all taxes, duties and other governmental charges. All
transportation, rigging and draying charges shall be paid by Comcast.
There shall be added to the prices and license fees all taxes, and other
governmental charges, however designated, levied or based on the sale or
license of the Products or their use, including, without limitation, state
and local privilege or excise taxes based on gross revenue and import or
export duties, and any taxes or amounts in lieu thereof paid or payable by
SeaChange in respect of the foregoing, exclusive, however, of taxes based
on SeaChange's income. Any personal property taxes assessable on the
Products after delivery to the carrier shall be borne by Comcast. Freight
charges for shipments outside the continental United States shall be on a
prepaid or collect basis only.
2.2 Service prices for integration of Comcast-owned equipment will be quoted on
a case-by-case basis and will assume that such equipment meets SeaChange's
specifications and that it is available and ready to install at time of
system integration. Service charges for labor required to integrate or
repair Comcast-
owned equipment or to dismantle and make such equipment ready for
integration will be billed separately plus expenses.
2.3 In addition to SeaChange's standard discounts applicable to the Products,
all Product prices and fees (other than fees for services of any kind)
shall be subject to the additional discounts set forth in Attachment A
during the term of this Agreement, including any renewals thereof.
2.4 Notwithstanding anything herein to the contrary, the prices and fees for
Products hereunder shall be no greater than those offered to other
SeaChange commercial customers under substantially similar terms and
conditions for substantially similar volume purchases at the time of
purchase, pursuant to the terms more fully set forth in Section 18 below.
3. PAYMENT TERMS
3.1 Payment for all Products and services ordered shall be made in United
States Dollars in two installments as follows:
(a) 50% with Comcast's Order;
(b) 50% within thirty (30) days after the date of delivery as evidenced by
SeaChange's notice of delivery and invoice.
3.2 All payments are to be paid to SeaChange at the address set forth in
SeaChange's invoice.
4. TITLE AND RISK OF LOSS
Title to the Equipment shall pass to Comcast upon delivery at the FOB
point. Title to Software shall not pass to Comcast at any time, but shall
remain with SeaChange or its licensor. The Products will be packaged in
accordance with standard commercial practices for domestic shipment and
will be shipped by means deemed most appropriate by SeaChange unless
shipping instructions are otherwise specified in writing by Comcast.
Comcast shall be responsible for all risk of loss or damage or destruction
to the Products from and after delivery of the Products by SeaChange to the
carrier at the FOB point.
5. SECURITY INTEREST
SeaChange reserves a purchase money security interest in all of the
Products until the price and license fees shall have been paid in full.
Comcast agrees to execute any documents requested by SeaChange to protect
SeaChange's security interest.
6. INSTALLATION
SeaChange shall install the Products in accordance with its standard
installation and testing procedures, which are set forth in Attachment B,
and shall notify
Comcast of the successful completion of installation. Comcast shall provide
a suitable installation environment with all necessary facilities, as
specified by SeaChange, on or before the scheduled date of delivery of the
Products and shall furnish all labor required for unpacking and placing the
Products in the desired location in accordance with SeaChange's standard
procedures. SeaChange shall be given reasonable access to the Products upon
arrival of the Products at Comcast's installation site for the purpose of
installation and testing of the Products. The "Installation Date" shall be
the (a) date SeaChange furnishes Comcast with its certificate of successful
completion of installation and testing procedures, or (b) if Comcast has
not provided SeaChange with a suitable installation environment or
installation support as required herein which results in a delay in
commencement of installation, on the thirtieth (30/th/) day following
delivery of the Products.
7. DOCUMENTATION
Two (2) sets of manuals for each Product will be provided by SeaChange on
or before the Installation Date at no cost to Comcast. Additional copies
of such manuals are available from SeaChange at prevailing prices.
8. MAINTENANCE SERVICE
SeaChange shall provide to Comcast maintenance service and technical
support on all Products through December 31, 2002 in accordance with the
terms set forth in Attachments A and C. Thereafter, pursuant to its
standard maintenance agreement, a form of which is attached hereto as
Attachment C, SeaChange will offer Comcast maintenance service for the
Products at SeaChange's then current prices and fees in accordance with its
then current published Price List.
9. LICENSE OF SOFTWARE
9.1 The Software provided hereunder is furnished to Comcast under a
nontransferable, nonexclusive license for use solely on the Equipment on
which first installed for the sole purpose of operating the Equipment. In
the event SeaChange furnishes to Comcast media containing additional
software programs or routines not specified as Software licensed hereunder,
Comcast shall make no attempt to copy or otherwise use or disclose any such
additional software program or routines for any purpose.
9.2 Comcast shall NOT remove any copyright, trademark, proprietary rights,
legal or warning notice included on or embedded in any part of the
Software.
9.3 Comcast will not sell, license, sublicense, rent, lease or otherwise
transfer or assign the Software, whether by operation of law or otherwise,
without the written permission of SeaChange, except that Comcast may
transfer the Software to an affiliate of Comcast provided that the
Equipment on which such Software is used is also transferred to such
affiliate and such affiliate agrees in writing to be bound by the Software
license terms set forth in this Agreement.
9.4 No reproduction rights in or to the Software or related documentation are
granted hereunder to Comcast. Comcast agrees that it will not, except for
archival purposes, copy, reproduce, duplicate by any means, or translate
into a machine language the Software or any portion thereof without the
prior written approval of SeaChange. Further, Comcast shall not, nor shall
Comcast permit any other person to, compile, decompile, or reverse engineer
the Software (except and only to the extent that such activity is expressly
permitted by applicable law notwithstanding this limitation), or otherwise
permit the unauthorized use of the Software, and any attempt to do so shall
be a material breach of this Agreement.
9.5 The license granted hereunder to the Software shall be effective from the
date of delivery of the Software and shall remain in force until terminated
as provided herein. SeaChange reserves the right to terminate any license
of the Software upon written notice in the event that Comcast shall fail to
pay any portion of the purchase price or license fee for the Products when
due, or Comcast shall make any improper use, transfer, duplication or
disclosure of the Software or in any other way breach this Agreement,
provided that Comcast shall have thirty (30) days from the date of such
notice to cure such breach. If the breach is not cured within the
applicable cure period, the applicable license shall terminate immediately
and Comcast shall immediately return the applicable Software, documentation
and any copies thereof to SeaChange. The opportunity to cure, however,
shall not affect SeaChange's right to obtain injunctive relief immediately.
10. WARRANTY
10.1 SeaChange warrants that the Equipment shall be fully functional and free
from defects in material and workmanship, and shall materially conform to
the functional specifications set forth in Attachment D, for a period of
two (2) years from the Installation Date. The foregoing warranty shall not
apply unless the Products are operated in strict conformance with
SeaChange's manuals furnished with the Products. Written notice of any
claimed defect must be given within thirty (30) days after such defect is
first discovered. SeaChange's obligation under this warranty is limited,
at its option, to the repair or replacement of the Equipment, components,
or parts thereof which prove to be other than as warranted above. Such
repair or replacement will be made at SeaChange's designated plant or
repair facility, and shall be at SeaChange's expense; however,
transportation or inspection charges covering any Equipment, component or
part returned that proves not to be defective in accordance with the terms
of this warranty shall be paid by Comcast. No Equipment is to be returned
to SeaChange without first receiving instructions regarding return
procedures. This warranty does not extend to any labor charges for
physical removal and/or replacement of defective Equipment or components or
parts thereof.
10.2 SeaChange warrants that the Software furnished hereunder will perform in
material conformance with its published specifications for a period of two
(2) years from the Installation Date. In the event of any failure to so
perform,
SeaChange will use all reasonable commercial efforts to repair or
circumvent the defect, which shall be Comcast's sole remedy. It is
understood that SeaChange does not warrant that the Software will be error-
free.
10.3 Notwithstanding anything herein to the contrary, Products that are not
manufactured or developed by SeaChange, but are supplied or sublicensed by
SeaChange, and which are wholly or partially integrated into a system are
warranted only to the extent, and subject to the terms, of the original
warranty given by the manufacturer to SeaChange. Comcast must give prompt
written notice to SeaChange of any defect or failure of such Products and
provide satisfactory proof thereof.
10.4 The warranties set forth herein shall not apply to Products requiring
adjustments, correction, repair, or replacement, or increase in service
time, caused by:
(a) electrical work external to the Products(discuss with Comcast &
SeaChange), or the attachment or use of accessories or other devices,
including networking devices, not furnished, approved or recommended
by SeaChange; or failure to properly maintain the same;
(b) accident, transportation, neglect or misuse;
(c) alterations, including, but not limited to, any deviation from circuit
or network designs or structural equipment recommended by SeaChange,
installation or removal of Product features not recommended by
SeaChange, and all other modifications not recommended by SeaChange,
whenever any of the foregoing is performed by any person other than
those authorized by SeaChange;
(d) failure to provide and maintain a suitable installation environment
with all facilities specified by SeaChange (including, but not limited
to, failure of, or failure to provide, adequate electrical power, air-
conditioning, humidity control) or from use of supplies or materials
not meeting SeaChange's specifications;
(e) repair or replacement of consumable supplies or parts which have
reached the end of their useful life; or
(f) the use of a Product for other than the purposes for which designed.
10.5 SEACHANGE MAKES NO REPRESENTATION OR WARRANTY OTHER THAN THOSE SET FORTH
IN THIS AGREEMENT. THE WARRANTY STATED HEREIN IS EXPRESSLY IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
11. Infringement Indemnity
SeaChange shall, at its expense, defend, indemnify and hold harmless
Comcast from and against any claim of infringement of any United States
patents or copyrights by any Products manufactured or developed by
SeaChange, provided that (i) SeaChange is promptly informed in writing of
such claim and furnished a copy of each communication, notice or other
action relating to the alleged infringement, (ii) SeaChange shall have
control over the defense and negotiations for a settlement or compromise,
(iii) SeaChange is given all reasonable authority, information and
assistance from Comcast (at SeaChange's expense) necessary to defend or
settle such suit or proceeding, and (iv) Comcast incurs no obligation or
liability without the prior written consent of SeaChange. The foregoing
obligation of SeaChange does not apply to Products or portions or
components thereof (a) which are modified by persons or entities other than
SeaChange (or persons or entities employed or contracted by SeaChange) if
the alleged infringement relates to such modification unless such
modification was recommended or approved by SeaChange or (b) combined with
other products, processes or materials not supplied or recommended by
SeaChange where the alleged infringement relates to such combination. If
any claim that SeaChange is obligated to defend has occurred or, in
SeaChange's opinion, is likely to occur, SeaChange may, at its option,
either (i) procure for Comcast the right to continue to use the applicable
Product, (ii) replace or modify the Product so it becomes non-infringing,
or (iii) refund the undepreciated portion of the price paid by Comcast for
such Product, assuming a 60-month straight-line depreciation schedule.
This Section states the entire liability of SeaChange with respect to
infringement of any copyrights, patents, or other intellectual property
rights by the Products.
12. LIMITATION OF LIABILITY
Except with respect to SeaChange's obligations under Section 11 above, and
except for personal injury or tangible property damage caused by the gross
negligence or willful misconduct of SeaChange in the performance of
services hereunder, SeaChange's liability in contract, tort or otherwise
arising out of or in connection with the sale, license or use of the
Product, shall not exceed the purchase price or license fee paid by Comcast
with respect to the Product that is the subject of the claim. IN NO EVENT
SHALL SEACHANGE OR ITS DEVELOPERS, DIRECTORS, OFFICERS, EMPLOYEES OR
AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT, EXEMPLARY, INCIDENTAL,
MULTIPLE, CONSEQUENTIAL, OR TORT DAMAGES (INCLUDING ANY DAMAGES RESULTING
FROM LOSS OF USE, LOSS OF DATA, LOSS OF PROFITS, LOSS OF SAVINGS, LOSS OF
BUSINESS OR OTHER ECONOMIC LOSS) ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE OF THE PRODUCT, CUSTOMER'S INABILITY TO USE THE PRODUCT OR
SEACHANGE'S PERFORMANCE OF SERVICES, EVEN
IF SEACHANGE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13. CONFIDENTIALITY
13.1 It is anticipated that the parties may be required to exchange certain
confidential information ("Information") to the other in the course of
performing this Agreement. From the date of disclosure, and until two (2)
years following such date, the recipient of Information ("Recipient") shall
maintain the Information in confidence and limit its use to the performance
of this Agreement, using at least the same degree of care as it employs to
protect its own confidential information of a similar nature, but not less
than a reasonable standard of care, provided the Information is identified
in writing as confidential at the time of disclosure, or if orally
disclosed is identified as confidential at the time of disclosure and
confirmed in writing within 20 days after the oral disclosure. Recipient
shall have no obligation hereunder with respect to any Information that is:
(a) generally known to the public at the time of disclosure, or becomes
known to the public without breach of this Agreement; or
(b) known to the Recipient prior to the disclosure, or is independently
developed by the Recipient without reference to or use of any other
portion of the Information; or
(c) obtained by the Recipient in good faith from a third party not under
obligation of secrecy to the disclosing party (hereafter called
"Discloser");
(d) the subject of a court or government agency order to disclose,
provided the Recipient gives prompt notice to the Discloser to allow
the Discloser to contest such order.
The Recipient shall have the burden of proving that any of the above
exceptions apply by means of documentary evidence available at the time
Recipient claims the exception first became applicable.
13.2 Title to all tangible forms of the Information, and all copies thereof,
shall be and remain with Discloser. Recipient shall not copy or otherwise
reproduce, in whole or in part, any Information without the prior written
authorization of Discloser, except as may be reasonably necessary to
fulfill the purpose of this Agreement. Recipient shall not disclose any
Information to any third party other than employees and contractors having
a need to know to support performance of this Agreement and who are subject
to written confidentiality agreements whose terms are substantially similar
to this Section. Recipient shall promptly return or destroy all tangible
forms of the Information, and copies thereof, upon Discloser's request or
termination of this Agreement.
13.3 It is understood, however, that SeaChange has performed substantial
development relating to the design and manufacture of digital video and
other products, and that SeaChange has relationships with other companies
which may be competitors
of Comcast. It is further understood that Comcast has relationships with
other companies that may be competitors of SeaChange. Neither this
Agreement, nor receipt of Information hereunder, shall limit either party's
independent development, manufacture, or marketing of products or systems
involving technology or ideas similar to those disclosed, nor will this
Agreement or receipt of Information hereunder prevent either party from
undertaking similar efforts or discussions with third parties, including
competitors of the other party.
14. TERM AND TERMINATION
14.1 This Agreement will become effective as of the date first above written
and will continue for an initial term of four (4) years. This Agreement
may be renewed by Comcast for an additional two (2) year period with
written notice to SeaChange at least ninety (90) days prior to the
expiration of the initial term. If Comcast renews this Agreement pursuant
to the previous sentence, this Agreement shall be automatically renewed
thereafter for successive one (1) year periods until terminated at the end
of the then current renewal period by either party with at least ninety
(90) days prior written notice.
14.2 Either party shall be in default of this Agreement if such party:
(a) substantially fails to perform any material provision of this
Agreement;
(b) assigns this Agreement, or any obligation or right under this
Agreement to a third party that is not an affiliate of such party; or
(c) becomes insolvent or makes an assignment for the benefit of creditors,
or a receiver or similar officer is appointed to take charge of all or
part of that party's assets.
In the event of a default, the non-defaulting party may terminate the
Agreement and any outstanding Orders if the other party has failed to cure
such default within thirty (30) calendar days after its receipt of a notice
of default and intent to terminate. Notwithstanding the previous sentence
(except with respect to non-payment), if a cure is not possible within such
thirty (30) days, and if the defaulting party diligently pursues a cure of
such default during such thirty (30) day period and thereafter, then the
cure period shall extend up to a total of sixty (60) calendar days.
14.3 Termination or expiration of this Agreement shall not relieve either party
of any of its then-accrued obligations, including without limitation
payment obligations for delivered Products or for any then applicable
cancellation charges pursuant to this Agreement.
14.4 Notwithstanding any other provision of this Agreement, in the event that
SeaChange and Comcast SC Investment, Inc. (the "Investor"), an affiliate of
Comcast, terminate that certain Common Stock and Warrant Purchase Agreement
of even date herewith prior to the consummation of the investment by the
Investor in SeaChange as described therein, either SeaChange or Comcast may
terminate
this Agreement upon fifteen (15) days prior written notice to the other
party within ten (10) days of the date on which such Common Stock and
Warrant Purchase Agreement is terminated, whereupon this Agreement shall
become null and void and of no further force or effect and neither party
shall have any further obligations to the other hereunder.
15. CANCELLATION OF AN ORDER AND RETURN OF PRODUCTS
15.1 Comcast may not cancel any Order within thirty (30) days of the scheduled
delivery date. To the extent that SeaChange can not use the products to
fulfill another Order from Comcast or another third party within a
reasonable time frame, cancellation of any Order by Comcast, other than as
provided in Section 14.2 above, shall obligate Comcast to pay all expenses
incurred in commitments made by SeaChange and all unrecoverable costs
incurred by SeaChange. In the event of any such cancellation, SeaChange
shall use reasonable commercial efforts to mitigate such costs and
expenses.
15.2 Acceptance of goods for return shall be made only with prior written
authorization by SeaChange and in accordance with SeaChange's standard
policy relevant to restocking charges.
16. CHANGES
SeaChange reserves the right, at its option, to modify or change the
Equipment in whole or in part, at any time prior to delivery thereof in
order to include electrical or mechanical improvements deemed appropriate
without incurring any liability to modify or change the Equipment
previously delivered.
17. INSURANCE
SeaChange will provide the following insurance coverage at its own expense
throughout the term of this Agreement:
(a) Workers' compensation insurance, as required by law, and employer's
liability insurance with at least a $100,000.00 limit.
(b) Personal injury, bodily injury, and property damage liability
insurance, including automobile coverage, with personal injury and
bodily injury of not less than $1,000,000.00 combined single limit,
and property damage of at least $500,000.00 for any one occurrence.
SeaChange will also furnish upon request a certificate of insurance to
Comcast for the required coverage's, which certificate shall name Comcast
as an additional insured.
18. MOST FAVORED CUSTOMER PROVISION
18.1 Most Favored Customer Provision. Notwithstanding any other provision in
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any other agreement entered into between SeaChange or any of its affiliates
and Comcast or any of its affiliates, Comcast and each of its affiliates
are hereby accorded the right to receive "most favored customer" terms and
conditions from SeaChange and any of its affiliates, meaning that each of
Comcast and its affiliates shall be entitled to such terms and conditions,
including, but not limited to, price and any and all kinds of incentives
(including any equity incentives awarded), with respect to the purchase of
SeaChange's or any of its affiliates' Products and services hereunder, that
are no less favorable than each of those terms and conditions offered by
SeaChange or any of its affiliates to any other party, individually or
collectively, at any time and from time to time, without regard to the size
(through volume discounts or otherwise) or identity of such other parties
or their ownership interests in SeaChange or any of its affiliates;
provided that such "most favored customer" terms and conditions shall not
apply to any existing customer agreements that were disclosed to Comcast
prior to the date first above written in a written document referring
specifically to this Section 18. Without limiting the generality of the
foregoing, in the event that SeaChange enters into any agreement with any
other party, which agreement contains a "most favored customer" provision
that is superior to the provisions of this Section 18, Comcast and each of
its affiliates shall be entitled to the benefit of such superior "most
favored customer" provision. The "most favored customer" status afforded
Comcast and its affiliates hereunder shall apply by comparison of complete
offerings of Products and services offered Comcast and its affiliates on
the one hand and a third party on the other, such that the overall
contractual relationship between Comcast or any of its affiliates and
SeaChange or any of its affiliates shall be on no less favorable terms than
SeaChange's or its affiliates' contractual relationship with such third
party, taken in its entirety. Comcast acknowledges that a third party may
have more favorable terms with regard to a specific line item, and such
shall not in and of itself constitute a violation or breach of this Section
18.
18.2 Audit Right. Comcast may, upon reasonable notice to SeaChange, instruct
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an external independent auditor to audit the relevant books and records of
SeaChange to ensure compliance with Section 18.1. In the event that
SeaChange is found to be in violation of Section 18.1, SeaChange agrees to
(i) pay the reasonable expenses of the independent auditor, (ii) refund or
credit overpaid amounts to Comcast or its Affiliates, as the case may be,
against future license fees (at the election of Comcast or the Affiliate)
and (iii) to the extent possible, give retroactive and prospective effect
to non-economic terms and conditions as required by Section 18.1.
19. HARDWARE AND SOFTWARE INTEGRATION
SeaChange shall provide to Comcast, at no additional charge, from the
signing of this Agreement until December 31, 2002, all reasonable hardware
and software integration services required to provide a fully functional
SeaChange VOD system, as described in Attachment D, to Comcast including,
but not limited to, the following integration:
. Motorola headend controller and set top platform including DAC controller
and DCT 2000 and DCT 5000 class set tops.
. Scientific Atlanta headend controller and set top platform including DNCS
controller and Explorer 2000 and Explorer 6000 class set tops.
. PACE Genesis class set top.
. Integrated QAM modulation equipment internal to the SeaChange Product.
. Integrated Up-Conversion equipment internal to the Seachange Product.
. Comcast VOD Navigator and User Interface.
. Comcast Interactive Programming Guide.
. Set top operating system software or Comcast chosen middleware software,
including VRTX, Power TV, Liberate Technologies, Microsoft and WorldGate.
. Comcast billing system, including Cable Data and Convergys.
. Content encoding, encryption, distribution (digital linear tape and
satellite), loading, tracking and auditing including requirements by
content providers In Demand, Intertainer, TVN or an industry standard.
20. APPLICATION INTEGRATION
SeaChange shall make available to Comcast an application integration
laboratory for Comcast and SeaChange to jointly develop new products such
as User Interface design, interactive advertising with streaming media,
Internet Protocol media storage and streaming, time shifted programming and
personal video recording/streaming to a television through a set top box.
21. DEPLOYMENT COMMITMENT
21.1 Comcast shall commit to deploy SeaChange Equipment on two-way capable
digital headends that serve 1 million basic subscribers by December 31,
2002 (the "Deployment Commitment"), subject to SeaChange's obligation to
fulfill the conditions precedent set forth in Section 21.2. Should
SeaChange fail to fulfill the conditions set forth in Section 21.2 by
December 31, 2000, then the terms of the
Deployment Commitment and related provisions of this Agreement shall shift
out in time, from December 31, 2002, proportionally to the time
differential between December 31,2000 and the date that SeaChange fulfills
the conditions set forth in Section 21.2.
21.2 The Deployment Commitment shall not activate until SeaChange has provided
to Comcast a fully functional VOD Product, as described in Attachment D,
and met the following conditions precedent:
(a) SeaChange VOD Product is integrated, with respect to all material
functions, with the Motorola headend DAC controller and DCT 2000 set
top platform.
(b) SeaChange VOD Product is integrated, with respect to all material
functions, with the Scientific Atlanta headend DNCS controller and
Explorer 2000 set top platform.
(c) SeaChange VOD Product has internal integrated QAM modulation equipment
or an option for Comcast to accept an external High Density Integrated
QAM/Up-Conversion solution at no additional cost to Comcast.
(d) SeaChange VOD Product is integrated, with respect to all material
functions, with the Power TV set top operating system software for the
Scientific Atlanta Explorer 2000 set top platform, WorldGate
Communications middleware software for the Motorola DCT 2000 set top
platform, and Liberate Technologies middleware software for the
Motorola DCT 2000 set top platform.
(e) SeaChange VOD Product is integrated, with respect to all material
functions, with the Cable Data Comcast billing system.
22. WARRANT ISSUANCE
22.1 On the terms set forth in this Section 22, and without any additional
consideration therefor, SeaChange shall issue to Comcast Cable SC
Investment, Inc. (the "Holder"), an affiliate of Comcast, warrants (each,
an "Incentive Warrant," and collectively, the "Incentive Warrants") to
purchase shares of SeaChange's common stock, par value $0.01 per share (the
"Common Stock"), at a per share exercise price equal to the average of the
Current Market Prices (as defined below) of the Common Stock for the
fifteen consecutive Trading Days (as defined below) ending on the
Determination Date (as defined below) with respect to which such Incentive
Warrant is issued, or, if such Determination Date is not a Trading Day,
then ending on the last Trading Day immediately prior to such Determination
Date. Each Incentive Warrant shall be exercisable by the Holder for a
period of five years from the date of issuance, and shall have such other
rights, preferences, privileges and restrictions as are set forth in the
form of Incentive Warrant attached hereto as Attachment E. The shares of
Common
Stock purchasable upon exercise of each Incentive Warrant (the "Warrant
Shares") shall have those registration rights set forth in that certain
Registration Rights Agreement dated as of the date hereof among SeaChange,
Comcast SC Investment, Inc. and the Holder, substantially in the form
attached hereto as Attachment F.
22.2 Prior to the end of the calendar month immediately following each
Determination Date, Comcast shall provide to SeaChange a certification
signed by an officer of Comcast on behalf of Comcast of the number of
Committed Subscribers (as defined below) as of such Determination Date and
the applicable Warrant Number (as defined below) for the Incentive Warrant
to be issued by SeaChange in respect thereof, if any. Promptly upon
receipt of such certification, but in no event more than five Business Days
(as defined below) thereafter, SeaChange shall issue to the Holder an
Incentive Warrant to purchase a number of Warrant Shares equal to such
Warrant Number.
22.3 The Warrant Factors (as defined below) shall be subject to adjustment from
time to time as described in this Section 22.3.
(a) In case SeaChange shall pay or make a dividend or other distribution
on the Common Stock of SeaChange in Common Stock or any other security
convertible into or exchangeable for shares of Common Stock (other
than any rights, options or warrants described in subsection (b) of
this Section 22.3), the Warrant Factors shall each be adjusted by
multiplying such Warrant Factor by a fraction of which (i) the
numerator shall be the sum of (A) the number of shares of Common Stock
outstanding at the close of business on the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution and (B) the total number of shares of Common Stock
constituting such dividend or distribution (or, in the case of a
dividend or distribution of securities convertible into or
exchangeable for shares of Common Stock, the total number of shares of
Common Stock underlying such securities), and (ii) the denominator
shall be such number of shares referred to in clause (i)(A) above,
such adjustment to become effective immediately prior to the opening
of business on the next Business Day following the date fixed for such
determination. For the purposes of this subsection (a), the number of
shares of Common Stock at any time outstanding shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock.
(b) In case SeaChange shall hereafter issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock or any other security convertible into
or exchangeable for shares of Common Stock at a price per share less
than the Current Market Price of the Common Stock on the date fixed
for the determination of stockholders entitled to receive such rights,
options or warrants (other than pursuant to a dividend reinvestment
plan), (i) the
Warrant Factors shall each be adjusted by multiplying such Warrant
Factor by a fraction of which (A) the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase (or such number of
shares of Common Stock underlying any convertible securities so
offered for subscription or purchase), and (B) the denominator shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock that the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription or
purchase would purchase at such Current Market Price, such reduction
to become effective immediately prior to the opening of business on
the next Business Day following the date fixed for such determination
(for the purposes of this subsection (b), the number of shares of
Common Stock at any time outstanding shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock), and (ii) if any such rights, options or warrants expire
or terminate without having been exercised or are exercised for a
consideration different from that utilized in the computation of any
adjustment or adjustments on account of such rights, options or
warrants, the Warrant Factors shall be readjusted such that each
Warrant Factor would be the same as would have resulted had such
adjustment been made without regard to the issuance of such expired or
terminated rights, options or warrants or based upon the actual
consideration received upon exercise thereof, as the case may be,
which readjustment shall become effective upon such expiration,
termination or exercise, as applicable; provided, however, that all
readjustments in the Warrant Factors based upon any expiration,
termination or exercise for a different consideration of any such
right, option or warrant, in the aggregate, shall not cause the
Warrant Factors to be less than the Warrant Factors immediately prior
to the time such rights, options or warrants were initially issued
(without regard to any other adjustments of such number under this
subsection (b) that may have been made since the date of the issuance
of such rights, options or warrants).
(c) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Warrant Factors
shall each be proportionately increased, such increase to become
effective immediately prior to the opening of business on the next
Business Day following the day upon which such subdivision occurs,
and, conversely, in case the outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock, the
Warrant Factors shall each be proportionately decreased, such
reduction to become effective immediately prior to the opening of
business on the next Business Day following the day upon which such
combination occurs.
(d) In case SeaChange shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights, options or warrants
referred to in subsection (b) of this Section 22.3, any dividend or
distribution paid exclusively in cash and any dividend referred to in
subsection (a) of this Section 22.3), the Warrant Factors shall each
be adjusted by multiplying such Warrant Factor by a fraction of which
(i) the numerator shall be the Current Market Price at the close of
business on the date fixed for such determination and (ii) the
denominator shall be such Current Market Price less the then fair
market value of the portion of the assets or evidences of indebtedness
so distributed applicable to one share of Common Stock, such
adjustment to become effective immediately prior to the opening of
business on the next Business Day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(e) In case of any reclassification, recapitalization or other change in
the outstanding securities of any class issuable upon exercise of the
Incentive Warrants thereafter issuable hereunder (including any such
reclassification, recapitalization or other change upon a
consolidation or merger in which SeaChange is the continuing
corporation, but not including any transactions for which an
adjustment is provided in subsection (c), (d) or (f) of this Section
22.3), the provisions of this Section 22 shall be immediately and
automatically amended, without any further action on the part of
SeaChange, Comcast or the Holder, to the extent necessary to provide
that any Incentive Warrant issued thereafter shall entitle the Holder
to exercise such Incentive Warrant into the kind and amount (if any)
of securities, cash and other property receivable upon such
reclassification, recapitalization or other change by a holder of the
number of shares of Common Stock that would have otherwise been
issuable upon exercise of such Incentive Warrant had it been issued
and exercised immediately prior to such reclassification,
recapitalization or other change, subject to any further adjustment as
provided herein, at an exercise price equal to the fair market value
of such securities, cash and other property on the date such Incentive
Warrant is actually issued (calculated as described in Section 22.1
above). The above provisions of this subsection (e) shall similarly
apply to successive reclassifications, recapitalizations and other
changes in the outstanding securities of the class issuable upon
exercise of the Incentive Warrants thereafter issuable hereunder.
(f) In case of any consolidation of SeaChange with, or merger of SeaChange
into, any other person, any merger of another person into SeaChange
(other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of the
Common Stock) or any sale or transfer of all or substantially all of
the assets of SeaChange, in each case in which this Agreement remains
in full force and effect, the provisions of this Section 22.3 shall be
immediately
and automatically amended, without any further action on the part of
SeaChange, Comcast or the Holder, to the extent necessary to provide
that any Incentive Warrant issued thereafter shall entitle the Holder
to exercise such Incentive Warrant into the kind and amount (if any)
of securities, cash and other property receivable upon such
consolidation, merger, sale of transfer by a holder of the number of
shares of Common Stock that would have otherwise been issuable upon
exercise of such Incentive Warrant had it been issued and exercised
immediately prior to such consolidation, merger, sale or transfer,
subject to any further adjustment as provided herein, at an exercise
price equal to the fair market value of such securities, cash and
other property on the date such Incentive Warrant is actually issued
(calculated as described in Section 22.1 above). If the holders of the
Common Stock may elect from choices the kind or amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer, then for the purpose of this Section 22.3 the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer shall be deemed to be the
choice specified by the Holder, which specification shall be made by
the Holder by the later of (i) ten Business Days after the Holder is
provided with a final version of all information required by law or
regulation to be furnished to holders of Common Stock concerning such
choice, or, if no such information is required, ten Business Days
after the Holder is provided with a final version of all information
that was otherwise furnished to the holders of Common Stock concerning
such choice, and (ii) the last time at which holders of Common Stock
are permitted to make their specification known to SeaChange. If the
Holder fails to make any specification, the Holder's choice shall be
deemed to be whatever choice is made by a plurality of holders of
Common Stock not affiliated with SeaChange or the other person to the
merger or consolidation. The above provisions of this subsection (f)
shall similarly apply to successive consolidations, mergers, sales or
transfers.
(g) All calculations under this Section 22.3 shall be made to the fifth
decimal place, and no adjustment to any Warrant Factor shall be
required unless such adjustment (plus any adjustments not previously
made by reason of this subsection (g)) would require an adjustment of
at least 0.00001 to such Warrant Factor; provided, however, that any
adjustments that by reason of this subsection (g) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment.
(h) Whenever the Warrant Factors are adjusted as herein provided,
SeaChange shall (i) compute the adjusted Warrant Factors in accordance
with the provisions of this Section 22.3, and (ii) mail to Comcast a
notice stating that the Warrant Factors have been adjusted and setting
forth the adjusted Warrant Factors.
22.4 SeaChange shall not, by amendment of its Certificate of Incorporation,
through reorganization, consolidation, merger, dissolution or sale of
assets, or any other voluntary act, avoid or seek to avoid the observance
or performance of any of its obligations under this Section 22.
22.5 Once per 12 month period, SeaChange may, upon reasonable notice to
Comcast, instruct an external independent auditor to audit the relevant
books and records of Comcast to ensure the accuracy of the number of
Committed Subscribers set forth in the certifications provided by Comcast
pursuant to Section 22.2. In the event that any such Comcast certification
is found to be incorrect as of the date with respect to which it was made,
such that warrants covering a greater number of Warrant Shares were issued
to Comcast than were actually earned, Comcast agrees to (i) pay the
reasonable expenses of the independent auditor, and, at SeaChange's option,
(ii) return to SeaChange for cancellation any such warrants to the extent
of any unearned Warrant Shares, and, to the extent such warrants have been
exercised with respect to such unearned Warrant Shares, sell to SeaChange
at the exercise price, adjusted for any stock dividends or other
distribution on the Common Stock of SeaChange, the number of Warrant Shares
received by Comcast, adjusted for any such stock dividends or other
distribution on the Common Stock of SeaChange and including any rights,
options or warrants issued in respect thereof, as a result of the exercise
of such warrants with respect to such unearned Warrant Shares.
22.6 In addition, at Comcast's option and to the extent that Comcast has not
earned the maximum number of Warrant Shares underlying all Incentive
Warrants issuable hereunder, Comcast may elect to (a) place on or before
January 31, 2004 one or more noncancelable Orders for Equipment to be
deployed (or in the process of being deployed) by it on or before June 30,
2004, (b) make a nonrefundable payment of 100% of the amount payable with
respect to such Order(s) on or before January 31, 2004 and (c) submit to
SeaChange on or before January 31, 2004 a good faith estimate of the number
of Committed Subscribers with respect to which such Equipment so ordered
will be deployed (or in the process of being deployed) on or before June
30, 2004, in which event SeaChange shall promptly, but in no event more
than five Business Days after January 31, 2004, issue to the Holder an
additional Incentive Warrant to purchase a number of Warrant Shares equal
to the Warrant Number calculated in the manner described in the succeeding
sentence, which additional Incentive Warrant shall have a per share
exercise price equal to the average of the Current Market Prices of the
Common Stock for the fifteen consecutive Trading Days ending on January 31,
2004, or, if such date is not a Trading Day, then ending on the last
Trading Day immediately prior to such date. For purposes of this Section
22.6, the Warrant Number shall be calculated assuming that December 31,
2003 is the applicable Determination Date and the number of Committed
Subscribers as of such Determination Date shall include the number of
Committed Subscribers estimated in good faith by Comcast with respect to
which the Equipment so ordered will be deployed (or in the process of being
deployed).
22.7 For the purpose of this Section 22, the following terms shall have the
following meanings:
(a) "Business Day" shall mean any day except a Saturday, Sunday or any day
on which banking institutions are authorized or required to close in
the city of New York, New York.
(b) "Committed Subscriber" shall mean a basic Comcast subscriber served by
a two-way digital headend on which SeaChange's VOD Equipment is
deployed, including any such subscriber who was served by a two-way
digital headend on which SeaChange's VOD Equipment was deployed by
Comcast as of the date on which such headend (and, therefore, such
subscriber) was sold, traded or otherwise transferred by Comcast to
another entity, but excluding any such subscriber who was served by a
two-way digital headend on which SeaChange's VOD Equipment was
deployed by another entity as of the date on which such headend (and,
therefore, such subscriber) was sold, traded or otherwise transferred
by such other entity to Comcast. "First Tier Committed Subscriber"
shall mean each Committed Subscriber in excess of 1,000,000 but less
than 2,000,001. "Second Tier Committed Subscriber" shall mean each
Committed Subscriber in excess of 2,000,000 but less than 3,000,001.
"Third Tier Committed Subscriber" shall mean each Committed Subscriber
in excess of 3,000,000 but less than 4,000,001.
(c) "Current Market Price" shall mean the closing price per share of
Common Stock on the earlier of the day in question or the Ex Date (as
defined below) with respect to the issuance, payment or distribution,
where the closing price for each day shall be the reported last sale
price regular way or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange or, if the
Common Stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Stock
is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the Nasdaq National
Market System or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq
National Market System, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by
the Board of Directors of SeaChange for that purpose.
(d) The "Determination Dates" shall be June 30, 2001, December 31, 2001,
June 30, 2002, December 31, 2002, June 30, 2003 and December 31, 2003.
(e) "Ex Date" shall mean, with respect to any issuance or distribution,
the first date on which the Common Stock trades regular way on the
applicable
securities exchange or in the applicable securities market without the
right to receive such issuance or distribution.
(f) "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday other than any day on which the Common Stock is not traded on
the applicable securities exchange or in the applicable securities
market.
(g) "Warrant Factors" shall mean the First Tier Warrant Factor, the Second
Tier Warrant Factor and the Third Tier Warrant Factor. The "First
Tier Warrant Factor" shall equal 0.1, the "Second Tier Warrant Factor"
shall equal 0.15 and the "Third Tier Warrant Factor" shall equal 0.2,
each subject to adjustment as described in Section 22.3.
(h) The "Warrant Number" for each Determination Date shall equal the sum
of (i) the product obtained by multiplying the First Tier Warrant
Factor by the difference between (A) the total number of First Tier
Committed Subscribers as of such Determination Date minus (B) the
highest number (as adjusted based upon the results of any audit
conducted pursuant to Section 22.5) of First Tier Committed
Subscribers counted on any previous Determination Date (provided that
in no event shall the difference between (A) and (B) be less than
zero), plus (ii) the product obtained by multiplying the Second Tier
Warrant Factor by the difference between (A) the total number of
Second Tier Committed Subscribers as of such Determination Date minus
(B) the highest number (as adjusted based upon the results of any
audit conducted pursuant to Section 22.5) of Second Tier Committed
Subscribers counted on any previous Determination Date (provided that
in no event shall the difference between (A) and (B) be less than
zero), plus (iii) the product obtained by multiplying the Third Tier
Warrant Factor by the difference between (A) the total number of Third
Tier Committed Subscribers as of such Determination Date minus (B) the
highest number (as adjusted based upon the results of any audit
conducted pursuant to Section 22.5) of Third Tier Committed
Subscribers counted on any previous Determination Date (provided that
in no event shall the difference between (A) and (B) be less than
zero); provided, however, that in the event that the Warrant Number
for any Determination Date (other than the last Determination Date)
would not be a whole number, the Warrant Number shall be rounded down
to the nearest whole number and the number of Committed Subscribers,
or portions thereof, not counted towards the Warrant Number as a
result of such rounding shall be counted on the next Determination
Date. Applying the foregoing formula and based upon the initial
Warrant Factors, which are subject to adjustment as described in
Section 22.3, the maximum number of Warrant Shares underlying all
Incentive Warrants issuable hereunder is 450,000 shares (100,000
shares with respect to the First Tier Committed Subscribers, 150,000
shares with respect to the Second Tier
Committed Subscribers and 200,000 shares with respect to the Third
Tier Committed Subscribers).
23. PUBLIC ANNOUNCEMENT
SeaChange and Comcast shall agree on the form and content of any public
announcement that shall be made concerning this Agreement and the
transactions contemplated hereby, and neither SeaChange nor Comcast shall
make any such public announcement without the consent of the other, except
as required by law.
24. GENERAL
24.1 Force Majeure. Neither party shall be liable for delays in performance
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arising out of or resulting from causes beyond such party's control. Such
causes include, but are not restricted to, acts of God, any government
authority, or the public enemy, fires, floods, epidemics, quarantine
restrictions, strike, freight embargoes, shortages of materials, unusually
severe weather, and default or delay of suppliers. In the event of such
delay, the shipping date shall be extended for a period equal to the time
lost by reason of the delay.
24.2 Governing Law. This Agreement shall be governed by the laws of the
-------------
Commonwealth of Massachusetts, without regard to its conflict of laws
rules, except that the United Nations Convention on the International Sale
of Goods shall not apply to this Agreement.
24.3 Survival. In addition to any provision of this Agreement which by its
--------
nature is intended to survive expiration or termination of this Agreement,
Sections 4, 5, 9, 10, 11, 12, 13, 14 and 15 shall survive the termination
or expiration of this Agreement.
24.4 Assignment. This Agreement and the rights, duties and obligations under
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this Agreement may not be assigned in whole or in part without the prior
written consent of the other party, which shall not be unreasonably
withheld, provided, however, that either party may assign, without the
written consent of the other party, all or any part of this Agreement to
any subsidiary or affiliate of such party or a purchaser of substantially
all of the assets of the such party and such subsidiary, affiliate or
purchaser agrees in writing to be bound by all the terms and provisions of
this Agreement. Any attempted assignments of any rights, duties or
obligations under this Agreement without such required consent shall be
null and void. This Agreement shall be binding on each party's respective
successors and permitted assigns.
24.5 Independent Contractors. Comcast and SeaChange are independent
-----------------------
contractors and have no power, right or authority to bind the other party
or to assume or to create an obligation or responsibility, express or
implied, on behalf of the other party. Nothing in this Agreement shall be
construed as creating a partnership relationship between Comcast and
SeaChange or as creating the relationships of
employer and employee, master and servant, or principal and agent between
the parties hereto.
24.6 Waiver and Severability.. Any failure or delay by either party in
-----------------------
exercising any right or remedy provided by or relating to this Agreement in
one or many instances does not constitute a waiver and shall not prohibit
that party from exercising such right or remedy at a later time within
applicable statute of limitations or from exercising any right or remedy
otherwise available. If any provision of this Agreement is deemed invalid
by a court of competent jurisdiction, it shall, to that extent only, be
deemed omitted from this Agreement.
24.7 Notice. Any notice required or permitted by this Agreement shall be in
------
writing and shall be hand delivered, or sent by prepaid registered or
certified mail, return receipt requested (if available), or sent by pre-
paid courier service, in each case addressed to the other party at the
address shown at the beginning of this Agreement or at such address for
which such party gives notice hereunder. Copies of all notices to Comcast
shall be sent to the attention of Comcast's General Counsel at the same
address. Delivery shall be deemed completed upon receipt or refusal to
accept such notice.
24.8 Entire Agreement. This Agreement, including all of its referenced
----------------
Attachments, constitutes the entire agreement between the parties with
respect to its subject matter. It supersedes any terms or conditions
contained on Comcast's purchase order, sales acknowledgment or invoice. It
also supersedes all previous oral or written communications between the
parties regarding the sale or license of the Products. Except as otherwise
provided herein, this Agreement may not be modified except by a written
document signed by an authorized representative of the party against whom
enforcement is sought.
For SeaChange International, Inc.: For Comcast Cable Communications
of Pennsylvania, Inc.:
Signature: /s/ Xxxxxxx X. Xxxxxxx Signature: /s/ Xxxx X. Xxxx
-------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxx X. Xxxx
------------------------------- --------------------------------
Title: Vice President Title: Vice President of Digital
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Television
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The following exhibits and schedules thereto have been omitted in accordance
with Rule 601(B)(2) of Regulation S-K:
Attachment A: SeaChange's List Price
Attachment B: Standard Installation and Testing Procedures
Attachment C: Standard Maintenance Agreement
Attachment D: Functional Specifications of SeaChange VOD System
Attachment E: Form of Incentive Warrant
Attachment F: Registration Rights Agreement, dated as of December 1, 2000, by
and among SeaChange, Comcast SC Investment, Inc. and Comcast
Cable SC Investment, Inc.
The Company will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission (the "Commission") upon the
Commission's request; provided, however that the Company may request
confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended, for any schedule or exhibit so furnished.
