ASSET PURCHASE AGREEMENT BY AND AMONG AVID TECHNOLOGY, INC., PINNACLE SYSTEMS, INC., AVID TECHNOLOGY GMBH, AVID DEVELOPMENT GMBH, AVID TECHNOLOGY INTERNATIONAL BV, AND PCTV CORP. Dated October 25, 2008
EXECUTION
VERSION
BY AND
AMONG
AVID
TECHNOLOGY, INC.,
PINNACLE
SYSTEMS, INC.,
AVID
TECHNOLOGY GMBH,
AVID
DEVELOPMENT GMBH,
AVID
TECHNOLOGY INTERNATIONAL BV,
AND
PCTV
CORP.
Dated
October 25, 2008
|
Disclosure
Schedule
Schedules:
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|
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Schedule
1.1(a)(i)
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Fixed
Assets
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|
Schedule
1.1(a)(ii)
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Assigned
Contracts
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Schedule
1.1(a)(iii)
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Seller
PCTV Intellectual Property
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Schedule
1.1(a)(vii)
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Permits
and Certifications
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Schedule
1.1(b)
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Excluded
Assets
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Schedule
1.1(c)
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Buyer
Liabilities
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Schedule
1.1(d)(v)
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Excluded
Liabilities
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|
Schedule
4.8
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Codecs
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Schedule
9.1
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Business
Employees
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Exhibits:
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|
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Exhibit
A –
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Form
of ▇▇▇▇ of Sale
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Exhibit
B –
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Buyer
Parent Guaranty
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Exhibit
C –
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Form
of Assumption Agreement
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Exhibit
D –
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Form
of Inventory Agreement
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|
Exhibit
E –
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Form
of License Agreement
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This
ASSET PURCHASE AGREEMENT (together with the Disclosure Schedules and the other
schedules and exhibits hereto, the “Agreement”) is
entered into as of October 25, 2008, by and among Avid Technology, Inc., a
Delaware corporation (the “Parent”), Pinnacle
Systems, Inc., a California corporation and a wholly owned subsidiary of the
Parent (“Pinnacle”), Avid
Technology GmbH, a limited liability company organized under the laws of
Germany, Avid Development GmbH, a limited liability company organized under the
laws of Germany, Avid Technology International BV (each a “Seller” and
collectively with Parent and Pinnacle, the “Sellers”), and PCTV
Corp., a Delaware corporation (the “Buyer”). The
Sellers and the Buyer are sometimes referred to collectively as the “Parties.”
RECITALS
A The
Sellers are engaged, among other matters, in the Business.
B. On
the terms and conditions hereinafter set forth, the Buyer desires to purchase
from the Sellers, and the Sellers desire to sell to the Buyer, certain assets of
the Sellers, and the Buyer desires to assume certain liabilities of the
Sellers.
C. Capitalized
terms used in this Agreement shall have the meanings ascribed to them in Article
XI.
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE
I
PURCHASE
AND SALE OF ASSETS; CLOSING
1.1 Purchase and Sale of Assets;
Assumption of Liabilities.
(a) Purchase and Sale of
Assets. On the terms and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing, the Sellers shall
sell, convey, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase and acquire from the Sellers, free and clear of all Security Interests,
all right, title and interest held by the Sellers in and to the following assets
and properties, as the same shall exist as of the Closing (the “Acquired
Assets”):
(i) the
computers, equipment, furniture, furnishings, fixtures, machinery, vehicles,
forklifts, tools and tooling, supplies, office equipment, racking, storage and
other tangible personal property in each case listed on Schedule 1.1(a)(i)
(and all replacements thereof) (the “Fixed Assets”) and
all warranties and guarantees, if any, express or implied, existing for the
benefit of a Seller in connection therewith;
(ii) the
Assigned Contracts, except as provided in Section
1.4;
(iii) the
Seller PCTV Intellectual Property;
(iv) technical
information, trade secrets, technology, know-how, specifications, designs,
drawings and processes and quality control data, and other confidential business
information, and for all software, an electronic copy of all source code and
object code, together with all reasonably available relevant, database schemas,
user interface specifications, logic flow diagrams, development documentation,
including developer notes and memoranda, in each case exclusively used in the
Business;
(v) copies of
the Sellers’ customer and vendor lists related to the Business;
(vi) the
Sellers’ customer and vendor lists exclusively related to the
Business;
(vii) the
Permits and Certifications, to the extent that such Permits and Certifications
are transferable under applicable law;
(viii) all
actions, claims, causes of action, rights of recovery and rights of set off to
the extent that such actions, claims, causes of action, rights of recovery and
rights of set off arising on and after the Closing exclusively relate to the
Acquired Assets, Business and/or the Buyer Liabilities;
(ix) the
Sellers’ goodwill with respect to the Business;
(x) rights to
insurance claims, related refunds and proceeds to the extent arising from or
related to the Fixed Assets; and
(xi) all
books (other than stock record books), records, accounts, ledgers, files,
documents, correspondence, studies, reports and other printed or written
materials, subject to any restrictions imposed by applicable law on the transfer
of employee files and other materials related to classified programs, in each
case exclusively used in the Business; provided, however that (A) the Sellers
shall be entitled to retain a copy of each of the foregoing and (B) the Sellers
shall use their commercially reasonable efforts to comply with any restrictions
imposed by applicable law to enable the Sellers to transfer any of the items set
forth in this Section
1.1(a)(xi) to Buyer.
(b) Excluded
Assets. Notwithstanding anything to the contrary in this
Agreement, the Acquired Assets shall not include any of the following assets and
properties (the “Excluded
Assets”):
(i) cash and
cash equivalents or similar investments, bank accounts, commercial paper,
certificates of deposit, Treasury bills and other marketable
securities;
(ii) assets,
properties or rights listed on, or arising under any Contracts that are not
Assigned Contracts;
(iii) rights to
insurance claims, related refunds and proceeds to the extent arising from or
related to the Excluded Assets and the Excluded Liabilities;
(iv) rights
which accrue or will accrue to the benefit of the Sellers under this Agreement
or the Ancillary Agreements;
(v) rights
relating to refunds or recoupment of Taxes of the Sellers, including rights
under any legal or administrative proceedings relating thereto, whether or not
yet commenced;
(vi) actions,
claims, causes of action, rights of recovery, choses in action and rights of
setoff of any kind arising before, on or after the Closing relating to the items
set forth above or to any Excluded Liabilities;
(vii) books,
records, accounts, ledgers, files, documents, correspondence, studies, reports
and other printed or written materials to the extent not related to the
Business, Acquired Assets or Buyer Liabilities;
(viii) Intellectual
Property of the Sellers or any of their respective Subsidiaries other than the
Seller PCTV Intellectual Property; and
(ix) assets,
properties and items listed on Schedule 1.1(b)
hereto.
(c) Buyer
Liabilities. The Buyer shall be responsible for paying,
performing and discharging, and, subject to the provisions of Article VI, shall
indemnify the Sellers and their Affiliates with respect to (and shall hold each
of them harmless against), all liabilities and obligations of every kind, nature
and description (whether in contract, tort or otherwise, fixed or contingent,
inchoate or otherwise) of the Buyer or any of its Affiliates that arise out of
or relate to (x) the Buyer’s or any of its Affiliates’ ownership, possession,
operation or uses of the Acquired Assets from and after the Closing, (y) the
Buyer’s or any of its Affiliates’ conduct of the Business as Conducted by the
Buyer from and after the Closing, or (z) any other action (or actionable
inaction) from and after the Closing of the Buyer or any of its Affiliates in
connection with the matters set forth in clauses (x) and (y) of this Section 1.1(c) (such
liabilities and obligations of the Buyer or any of its Affiliates, together with
the liabilities and obligations set forth in the next sentence and clauses (i)
through (v) of this Section 1.1(c) below, the “Buyer
Liabilities”). In addition, on the terms and subject to the
satisfaction or waiver of the conditions set forth in this Agreement, from and
after the Closing, the Buyer shall assume, pay, perform and discharge, as and
when due, only the following liabilities and obligations of the
Sellers:
(i) except to
the extent provided in Section 1.4 of this
Agreement, liabilities and obligations arising after the Closing under the
Assigned Contracts, except that the Buyer shall not assume, pay, perform or
discharge any liability or obligation (including any acceleration of any such
liability or obligation) to the extent that it results from, or relates to, or
arises out of any breach or violation of, or default under (in each case with or
without notice or lapse or time or both), or any failure to give a notice or to
obtain a consent or waiver required by any such Assigned Contract by any Seller
prior to the Closing;
(ii) liabilities
and obligations arising after the Closing under the Permits and Certifications
transferred pursuant to Section 1.1(a),
except that the Buyer shall not assume, pay, perform or discharge any liability
or obligation to the extent that it arises out of or relates to any
noncompliance with such Permits and Certifications prior to the
Closing;
(iii) liabilities
and obligations in connection with the matters set forth on Schedule 1.1(c);
and
(iv) the
Assumed Employee Liabilities;
(v) as and to
the extent provided in Section 10.7, the
Assumed Warranty Obligations.
Solely
for the avoidance of doubt, it is understood and agreed by the Parties that the
Buyer Liabilities do not include any of the Excluded Liabilities or any
liabilities or obligations for which Sellers are required to indemnify the
Indemnified Buyer Parties pursuant to Article
VI.
(d) Excluded
Liabilities. Except for the Buyer Liabilities, in no event
shall the Buyer be responsible for paying, performing or discharging, nor shall
the Buyer be obligated to indemnify the Sellers and their Affiliates with
respect to (or to hold the Sellers and their Affiliates harmless against) any
liability or obligation of any kind, nature or description (whether in contract,
tort or otherwise, fixed or contingent, inchoate or otherwise) under this
Agreement, including under this Section 1.1, or
otherwise, of any Seller or any Affiliate of any Seller or any predecessor of
any of the foregoing) of any kind, nature or description whatsoever, whether in
contract or tort, fixed or contingent, inchoate or otherwise (collectively, the
“Excluded
Liabilities”). For the avoidance of doubt, “Excluded
Liabilities” includes (i) all liabilities and obligations (other than
liabilities and obligations set forth in clauses (i) through (v) of Section
1.1(c)) that arise out of or relate to (x) the Sellers’ ownership, possession,
operation or uses of the Acquired Assets prior to the Closing, (y) the Sellers’
conduct of the Business prior to the Closing, or (z) any other action (or
actionable inaction) prior to the Closing of any Seller or any of their
respective Affiliates or any predecessor to any of them in connection with the
matters set forth in clauses (x) and (y) of this Section 1.1(d), and
(ii) all liabilities and obligations (except for the Assumed Employee
Liabilities) with respect to any and all employees of the Sellers or their
Affiliates that arise out of or relate to such employees’ employment
relationship with the Sellers or their Affiliates or the actual, deemed or
claimed termination, severance, separation or termination of such employment
relationship with the Sellers or their Affiliates. .
1.2 Purchase Price and Related
Matters.
(a) Purchase
Price. The cash purchase price payable by the Buyer to the
Sellers for the Acquired Assets shall be Five Million Dollars
($5,000,000).
(b) Allocation of Purchase
Price. The Tax Purchase Price shall be allocated among the
Acquired Assets and the covenant contained in Section 10.2 as
follows:
(i) the
Parent shall prepare and deliver to the Buyer, within thirty (30) days following
the Closing Date, a schedule setting forth a proposed allocation of the Tax
Purchase Price among the Acquired Assets. The Buyer shall deliver to
the Parent, within thirty (30) days after delivery of such allocation schedule,
either a notice indicating that the Buyer accepts such allocation schedule or a
statement detailing its objections to such allocation schedule. If
the Buyer delivers to the Parent a notice accepting the Parent’s allocation
schedule, or if the Buyer does not deliver a written objection within such
thirty (30)-day period, then, effective as of either the date of delivery of
such notice of acceptance or as of the close of business on such thirtieth
(30th) day,
such allocation schedule shall be deemed to be accepted by the
Buyer. If the Buyer timely objects to the Parent’s schedule and the
Buyer and the Parent cannot reach agreement on such allocation within fifteen
(15) days following the date that the Buyer notified the Parent of the
objection, then the Buyer and the Parent shall jointly engage the
Accountant. If the Accountant determines that the allocation schedule
provided by the Parent was reasonable, such allocation schedule shall be
final. If the Accountant determines that the allocation schedule
provided by the Parent was unreasonable, the Accountant shall prepare the
allocation schedule based upon its appraisal of the fair value of the Acquired
Assets and the covenant set forth in Section 10.2 among
which the Tax Purchase Price is to be allocated. The Buyer and the
Parent agree to provide to the Accountant such information as the Accountant may
reasonably request in connection with the preparation of such schedule and shall
request that the Accountant prepare and deliver to the Parent and the Buyer such
allocation schedule as promptly as practicable. If the Accountant
determines that the allocation schedule provided by the Parent was reasonable,
then the fees and expenses of the Accountant shall be borne by the Buyer and if
the Accountant determines that the allocation schedule provided by the Parent
was unreasonable, then the fees
and expenses of the Accountant shall be borne by the Sellers.
(ii) All Tax
Returns and reports filed by the Buyer and the Sellers shall be prepared
consistently with such allocation, unless otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Internal Revenue
Code. The parties shall make jointly the necessary elections and
execute and file, within the prescribed times therefor, the prescribed election
forms and any other documents required to give effect to the foregoing and also
prepare and file all of their respective Tax Returns in a manner consistent with
such elections. The resolution by the Accountant of the matters set
forth in this Section
1.2(b) shall be conclusive and binding upon the Buyer and the
Sellers. The Buyer and the Sellers agree that the procedure set forth
in this Section
1.2(b) for resolving disputes with respect to the allocation of the Tax
Purchase Price shall be the sole and exclusive method for resolving any such
disputes; provided,
however that this
provision shall not prohibit either Party from instituting litigation to enforce
any ruling of the Accountant.
1.3 The
Closing.
(a) Time and
Location. The Closing shall take place at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP in Palo Alto, California, as soon as
practicable following the satisfaction of the conditions set forth in Sections 5.1 and
5.2 hereof, or
at such place and on such date as may be mutually agreed to by the Parties in
writing. The date of the Closing is referred to in this Agreement as
the “Closing
Date.” The Closing will be deemed effective at 12:01 a.m. EST
on the Closing Date.
(b) Actions at the
Closing.
At the
Closing:
(i) the
Sellers shall deliver (or cause to be delivered) to the Buyer the various
certificates, instruments and documents required to be delivered under Section 5.1;
(ii) the Buyer
shall deliver (or cause to be delivered) to the Sellers the various
certificates, instruments and documents required to be delivered under Section 5.2;
(iii) the
Sellers shall execute and deliver a ▇▇▇▇ of Sale in substantially the form
attached hereto as Exhibit
A;
(iv) the
Sellers shall deliver to the Buyer the Business Financial
Statements;
(v) the
Sellers and the Buyer shall execute and deliver such other instruments of
conveyance as the Buyer may reasonably request in order to effect the sale,
transfer, conveyance and assignment to the Buyer of valid ownership of the
Acquired Assets owned by the Sellers;
(vi) the Buyer
and the relevant Seller shall execute and deliver the German Transfer Deed, in
form reasonably acceptable to the Buyer and the Sellers;
(vii) the Buyer
shall execute and deliver to each Seller an Assumption Agreement in
substantially the form attached hereto as Exhibit
C;
(viii) the Buyer
and the Sellers shall execute and deliver the Inventory Agreement in
substantially the form attached hereto as Exhibit
D;
(ix) the Buyer
and the Sellers shall execute and deliver the License Agreement in substantially
the form attached hereto as Exhibit
E;
(x) the Buyer and the Sellers shall
execute and deliver the Transition Services Agreement;
(xi) the Buyer
and the Sellers shall received the Codec License Agreement;
(xii) the Buyer
and the Sellers shall execute and deliver such other instruments as any Seller
may reasonably request in order to effect the assumption by the Buyer of the
Buyer Liabilities;
(xiii) the Buyer
shall pay to the Sellers the Purchase Price in cash by wire transfer of
immediately available funds into an account designated by the Sellers in writing
not less than two (2) Business Days before the Closing Date;
(xiv) the
Sellers shall deliver to the Buyer all of the Acquired Assets of a tangible
nature owned by the Sellers; and
(xv) the
Parties shall execute and deliver to each other a cross-receipt evidencing the
transactions referred to above.
1.4 Consents to
Assignment. To the extent that any Seller’s rights under any
Contract, Permit or other Acquired Asset to be assigned to the Buyer hereunder
may not be assigned without the consent of another Person which has not been
obtained prior to the Closing, this Agreement shall not constitute an agreement
to assign such Acquired Asset if an attempted assignment would constitute a
breach or violation pursuant to, or under such Acquired Asset, or be
unlawful. The Sellers shall use their commercially reasonable efforts
to obtain any such required consent(s) as promptly as possible and all costs and
expenses of obtaining any such consent shall be the responsibility of the
Sellers (it being understood and agreed that nothing herein shall require any
Seller, in connection with any such required consent or arrangement, (i) to pay
or assume responsibility for any unreasonable cost or expense or (ii) to agree
to additional terms and conditions that are adverse to any Seller in any
material respect, in each case in connection with a Contract, Permit or other
Acquired Asset). If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's rights in
and to the Acquired Asset in question so that the Buyer would not in effect
acquire the material benefit of all such rights, each Seller, shall, at the
Buyer’s reasonable request, without charge to the Buyer, cooperate with the
Buyer in any other reasonable arrangement designed to provide such benefits to
the Buyer. The foregoing shall not be construed to limit or modify
any of the conditions precedent to the Buyer’s obligation to consummate the
transactions contemplated hereby pursuant to the provisions of Section 5.1
hereof.
1.5 Further Assurances; Post
Closing Assets; Transfer of Certain Assets.
(a) On and
after the Closing Date, (a) upon written request of the Buyer, each Seller shall
take or cause to be taken all such further actions and execute, acknowledge and
deliver all such further instruments and documents as may be reasonably
necessary or desirable to convey and transfer to the Buyer the Acquired Assets
intended to be assigned, transferred, conveyed and delivered pursuant to this
Agreement and the Ancillary Agreements and the related agreements and documents
executed in connection herewith, and (b) the Parties shall take all such further
actions and execute and deliver all such further instruments and documents as
may be necessary or appropriate to carry out the transactions contemplated by
this Agreement and the related Ancillary Agreements and related agreements and
documents executed in connection herewith.
(b) During
the six (6) month period following the Closing Date, the Sellers shall cooperate
in good faith with the Buyer (at the request of the Buyer) for the purpose of
assisting the Buyer in ascertaining and identifying any assets or properties of
the Business that constitute assets and properties used in the Business and that
are material and necessary for the operation of the Business and that are not
Excluded Assets (the “Post Closing
Assets”). If any Post Closing Assets are identified by the
Buyer (and agreed by the Sellers or, in the event of a dispute, determined by an
arbitrator or court of competent jurisdiction to constitute Post Closing
Assets), then (i) to the extent that such Post Closing Asset is owned by any
Seller or any Affiliate thereof, and is exclusively used in the
Business, the applicable Seller shall, and shall cause such Affiliate to,
without any further consideration, sell and deliver such Post Closing Asset to
the Buyer, (ii) to the extent that any such Post Closing Asset is owned by any
Seller or any Affiliate thereof, and used in the Business, the applicable Seller
shall, and shall cause such Affiliate to, grant a license to the Buyer to such
portion or component of such Post Closing Asset used in the Business (on terms
and conditions reasonably acceptable to the Buyer and the Seller, it being
acknowledged and agreed (i) that for purposes of this parenthetical phrase only,
the terms and conditions of the License Agreement are deemed reasonable, and
(ii) such arrangement shall be at no cost to the Buyer) and (iii) to the extent
that any such Post Closing Asset is not owned by the Sellers or any Affiliate
thereof and used in the Business, the applicable Seller shall, and shall cause
such Affiliate to, use its commercially reasonable efforts to assist the Buyer
in obtaining a license to such Post Closing Asset (on terms reasonably
acceptable to the Buyer and the Seller).
(c) With
respect to any Acquired Assets that are computer software or are otherwise
determined to constitute “prewritten programs” within the meaning of the
California Sales and Use Tax Regulations (collectively, the “Purchased Software”),
the Buyer and the Sellers shall (and, to the extent appropriate, the Sellers
shall cause their Affiliates to) take all steps reasonably necessary to ensure
that the transfer of the Purchased Software is not subject to California sales
or use Tax, including transferring the Purchased Software either (i) by remote
telecommunications (where the Buyer does not obtain possession of any tangible
personal property, such as storage media, in connection with the transfer) or
(ii) by the Sellers (and, to the extent appropriate, the Sellers’ Affiliates)
installing the Purchased Software on the Buyer’s computers without providing any
storage media to the Buyer in connection with the transfer.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE SELLERS
The
Sellers jointly and severally represent and warrant to the Buyer that the
statements contained in this Article II, as
supplemented and qualified by the Disclosure Schedule, are true and correct as
of the date hereof. The Disclosure Schedule is arranged in sections
and subsections corresponding to the numbered and lettered sections and
subsections contained in this Article
II. The disclosures in any section or subsection of the
Disclosure Schedule shall qualify other sections and subsections in this Article II to the
extent it is reasonably clear from a reading of the disclosure that such
disclosure is applicable to such other sections and subsections. The
inclusion of any information in the Disclosure Schedule (or any update thereto)
shall not be deemed to be an admission or acknowledgment, in and of itself, that
such information is required by the terms hereof to be disclosed, is material to
the Business, has resulted in or would result in a Business Material Adverse
Effect, or is outside the ordinary course of business.
2.1 Organization, Qualification
and Corporate Power. Each of the Sellers is a corporation duly
organized, validly existing and, where applicable, in good standing under the
laws of its respective jurisdiction of organization (Delaware with respect to
the Parent and California with respect to Pinnacle) and is duly qualified to
conduct business under the laws of each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities, in
each case as they relate exclusively to the Business, makes such qualification
necessary, except for any such failure to be qualified that does not in and of
itself result in a Business Material Adverse Effect. The copies of
the charter documents and bylaws of each Seller, as amended to date, which have
been delivered to the Buyer or its counsel, are true and complete copies of
those documents as in effect on the date hereof. Each Seller has all
requisite corporate power and authority to carry on the business in which it is
now engaged and to own and use the properties now owned and used by
it.
2.2 Authority. Each
Seller has all requisite corporate power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which it will be a party and to
perform its obligations hereunder and thereunder. The execution and
delivery by each Seller of this Agreement and such Ancillary Agreements and the
consummation by each Seller of the transactions contemplated hereby and thereby
have been duly and validly authorized by the Board of Directors of each Seller
and no other corporate action is required on the part of any
Seller. This Agreement has been, and such Ancillary Agreements will
be, validly executed and delivered by each Seller and, assuming this Agreement
and each such Ancillary Agreement constitute the valid and binding obligation of
the Buyer, constitutes or will constitute a valid and binding obligation of each
Seller, enforceable against each Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and by equitable principles, including those
limiting the availability of specific performance, injunctive relief and other
equitable remedies and those providing for equitable defenses.
2.3 Noncontravention. Neither
the execution and delivery by any Seller of this Agreement or the Ancillary
Agreements to which such Seller is, or will be, a party, nor the consummation by
any Seller of the transactions contemplated hereby or thereby,
will:
(a) conflict
with or violate any provision of the charter or bylaws of such
Seller;
(b) require
on the part of any Seller any filing with any Governmental Entity, or any
Permit, except for any filing or Permit which if not obtained or made would not
reasonably be expected to result in a Business Material Adverse
Effect;
(c) violate,
conflict with (with or without due notice or lapse of time or both), result in a
breach of, constitute a default under, result in the acceleration of obligations
under, create in any party the right to terminate or modify, or require any
notice, consent or waiver under, any Contract, lease, sublease, license,
sublicense, franchise, Permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness or Security Interest to which any Seller is a
party or by which any Seller is bound or to which any of their respective assets
is subject, except for (i) any conflict, breach, default, acceleration or right
to terminate or modify that does not in and of itself result in a Business
Material Adverse Effect or (ii) any notice, consent or waiver the absence of
which does not in and of itself result in a Business Material Adverse Effect;
or
(d) violate
any order, writ, injunction or Decree against or binding upon, or statute, rule
or regulation applicable to, any Seller or any of or their respective properties
or assets, except for any violation that does not in and of itself result in a
Business Material Adverse Effect.
2.4 Warranty
Claims. Section 2.4 of the
Disclosure Schedule sets forth a true and complete list of all warranty
claims for Business Products made against the Sellers and its Affiliates during
the period from January 1, 2007 to September 30, 2008. All Business
Products have a two (2) year warranty measured from the date of sale of such
Business Product.
2.5 Financial
Statements. (a) The Business Financial Statements when
delivered to the Buyer, (i) will be true, accurate and complete in all material
respects, (ii) will be in accordance with the books and records of the Sellers
with respect to the Business, (iii) will fairly present in all material respects
the financial position of the Business as conducted by the Sellers as of such
dates set forth therein and the results of operations and cash flows of the
Business as conducted by the Sellers for such periods for which information is
presented, and (iv) will be prepared in conformity with GAAP consistently
applied throughout the periods covered thereby. The Business
Financial Statements will be audited by BDO ▇▇▇▇▇▇▇, LLP, whose audit report
thereon will be included therein. Except as set forth in Section 2.5(a) of the
Disclosure Schedule, as of June 30, 2008, no Seller and no Affiliate of
any Seller has any liability, obligation or debt (contingent or absolute,
inchoate or otherwise), related to or arising from the Business or the Acquired
Assets, other than liabilities, obligations and debts required to be disclosed
in the balance sheet included in the Business Financial Statements or in the
footnotes to the Business Financial Statements, which in each case are so
included in such balance sheet or footnotes. Since June 30, 2008 and except as
set forth in Section
2.5(a) of the Disclosure Schedule, the liabilities and obligations of the
Sellers to be assumed by the Buyer under the Assigned Contracts, the Permits and
Certifications, the Open Customer Orders, the Open Vendor Orders and the Assumed
Warranty Obligations were incurred in the ordinary course of
business.
(b) Unaudited Financial
Information. The Unaudited Financial Information, (i) is true,
accurate and complete in all material respects as to the information presented,
(ii) are in accordance with the books and records of the Sellers with respect to
the Business, (iii) fairly present in all material respects the information
presented therein as of the dates set forth therein, and (iv) was prepared in
conformity with GAAP consistently applied throughout the periods covered
thereby.
2.6 Absence of Certain
Changes. Except as contemplated by this Agreement, between
June 30, 2008 and the date of this Agreement, (i) there has occurred no event or
development, which, individually or in the aggregate, has had, or will have in
and of itself a Business Material Adverse Effect, and (ii) to the Knowledge of
the Sellers, there is no event or development threatened that will have in and
of itself a Business Material Adverse Effect. Except as
contemplated by this Agreement, between June 30, 2008 and the date of this
Agreement, none of the Sellers or any of their respective Subsidiaries has taken
any of the following actions (or caused or permitted any of the following events
to occur) with respect to the Business:
(a) granted
or amended any rights to severance benefits, “stay pay” or termination pay
(other than as provided for in the social plan (Sozialplan) according to
Sections 111 et al of the German Works Council Constitution Act (Betriebsverfassungsgesetz),
currently being negotiated by the Sellers) to, or entered into any employment,
compensation or deferred compensation agreement (or any amendment to any such
existing agreement) with, any director, officer, consultant or employee of the
Business in the ordinary course of business, consistent with Past
Practices;
(b) materially
changed its accounting principles, methods or practices, except in each case to
conform to changes in GAAP or applicable local generally accepted accounting
principles;
(c) sold,
leased, disposed of, assigned any assets, properties or rights that but for such
sale, lease, disposition or assignment would have constituted Acquired Assets,
except in the ordinary course of business, consistent with Past
Practices;
(d) other
than this Agreement and the transactions contemplated hereby, entered into or
amended any material Contract or otherwise took any material action, or made any
material commitment, not in the ordinary course of business;
(e) mortgaged,
pledged or subjected to any Security Interest any of the Acquired Assets or
permitted any of the Acquired Assets to be subjected to any Security
Interest;
(f) acquired
(by merger, consolidation, acquisition of stock or assets or otherwise) any
Person or division thereof pursuant to which it acquired any of the Acquired
Assets; or
(g) entered
into any Contract with respect to any of the matters referred to in subsections
(a) through (g) of this Section 2.6.
2.7 Taxes. All
Taxes imposed by any taxing authority, which have or may become due or payable
by each Seller and its Affiliates, in each case arising from the Business, and
all interest and penalties thereon, whether disputed or not, have been paid in
full or adequately provided for by reserves shown in its books of account of the
Business and which will be reflected in the Business Financial
Statements. All deposits required by law to be made by each Seller or
with respect to estimated income, franchise and employees' withholding Taxes in
connection with the Business have been duly made. No sales or use
Taxes are required to be collected by or on behalf the Sellers in connection
with the Seller’s operation of the Business.
2.8 Tangible Personal
Property. The applicable Seller owns and has good title to all
of the Acquired Assets, free and clear of all Security Interests. No
person other than the Sellers owns any property or rights, tangible or
intangible, directly or indirectly, in the Acquired Assets.
2.9 Intellectual
Property. Section 2.9 of the
Disclosure Schedule sets forth a true and complete list and brief
description of each item of Seller PCTV Intellectual Property owned by each
Seller. Each item of Seller PCTV Intellectual Property owned by each
Seller immediately prior to the Closing in the Business will be owned or
available for use by the Buyer on substantially identical terms and conditions
with respect to the Business immediately subsequent to the
Closing. No Seller has received any written charge, complaint, claim,
demand, or notice alleging any such infringement, misappropriation, or violation
by Seller of Intellectual Property Rights of any Person with respect to the
Business. No Seller is aware of any infringement, misappropriation,
or violation by Seller of Intellectual Property Rights of any person with
respect to the Business, and believes in good faith that no Person has a
meritorious claim for the same. To the Knowledge of each Seller, no
Person has infringed upon, misappropriated, or otherwise violated any of the
Seller PCTV Intellectual Property owned by the Sellers with respect to the
Business. Except as set forth on Section 2.9 of the
Disclosure Schedule, no Seller (a) has exclusively licensed or
exclusively granted to any Person express rights to use any of the Seller PCTV
Intellectual Property that is owned by the Sellers and used exclusively in the
Business, (b) pays, and is not obligated to pay, royalties to any Person for use
of any Intellectual Property rights with respect to the operation of the
Business, (c) has licensed the Seller PCTV Intellectual Property that is owned
by the Sellers and used exclusively in the Business except for licenses provided
in the ordinary course of business with the sale of a product, and (d) is not
otherwise a party to, or bound by, any oral or written Contract under which a
Person has granted to the Sellers any express rights or licenses with respect to
any Seller PCTV Intellectual Property (the “Listed Intellectual Property
Agreements”). A true and complete copy of each of the written
Listed Intellectual Property Agreements has been delivered to the Buyer or its
counsel. Each applicable Seller has in all material respects
performed all obligations required to be performed by it to date under all of
the Listed Intellectual Property Agreements, is not in default in any material
respect under any of the Listed Intellectual Property Agreements and has
received no notice of any dispute, default or alleged default thereunder which
has not heretofore been cured or which notice has not heretofore been
withdrawn. To the Knowledge of each Seller, there is no default under
any of the Listed Intellectual Property Agreements by any other party thereto or
by any other Person bound thereunder. Except as set forth on Section 2.9 of the
Disclosure Schedule, each of the Listed Intellectual Property Agreements
is freely assignable to the Buyer.
2.10 Contracts. (a)
The Sellers have delivered to the Buyer a complete and accurate copy of each
Assigned Contract. Each Assigned Contract is a valid and binding
obligation of the applicable Seller, as the case may be, and, to the Knowledge
of the Sellers, of each other party thereto, except for any such failure to be
valid and binding that in and of itself results in a Business Material Adverse
Effect. Each Seller and its Affiliates has in all material respects
performed all obligations required to be performed by it as of the date hereof
under all such Assigned Contracts, is not in default in any material respect
under any of the Assigned Contracts, and has received no notice of any dispute,
default or alleged default thereunder which has not heretofore been cured or
which notice has not heretofore been withdrawn. To each Seller’s
Knowledge, there is no default under any of the Assigned Contracts by any other
party thereto or by any other Person bound thereunder that will in and of itself
result in a Business Material Adverse Effect. Each of the Assigned Contracts are
freely assignable to the Buyer. Except for the Assigned Contracts,
Open Customer Orders and Open Vendor Orders, no Contracts to which any Seller or
Affiliate thereof is a party is required to own the Acquired Assets operate the
Business or assume the Buyer Liabilities by the Buyer in the ordinary course of
business consistent with Past Practice.
(b) Schedule 2.10(b)
attached hereto set forth the true, accurate and complete terms and conditions
of each Open Customer Order and each Open Vendor Order as well as the terms and
conditions of all Contracts with customers and vendors with respect to the
Business.
2.11 Litigation. There
is no Action relating to any Seller or any of the Acquired Assets or the
Business pending or, to the Knowledge of any Seller, threatened, or any Decree
outstanding, against any Seller or against or relating to any of the Acquired
Assets or the Business. To the Knowledge of each Seller, there exists
no basis for any such Action or Decree which will in and of itself, or is
reasonably expected to result in a Business Material Adverse
Effect. Section 2.11 of the
Disclosure Schedule sets forth for the current fiscal year and each of
the past two (2) fiscal years a statement describing each Action (excluding any
ordinary course warranty claims under each Seller’s product warranties) made by
a Person against each Seller in connection with the Business, whether or not
such claim was submitted to any Seller’s insurance carrier, including (i) the
name of the claimant; (ii) the amount and a description of the claim and (iii)
the resolution of the claim.
2.12 Backlog of Product.
Section 2.12 of the
Disclosure Schedule sets forth a true and complete description in all
material respects the backlog of the Sellers and their Affiliates of Business
Product as of the date hereof.
2.13 Operations
Information. Section 2.13 of the
Disclosure Schedule identifies (a) all customer Contracts subsisting as
of the date hereof between any of the Sellers and their Affiliates, on the one
hand, and any customer of the Business, on the other hand, (b) all Open Vendor
Orders subsisting as of the date hereof between any of the Sellers and their
Affiliates and any vendor to the Business, (c) all Open Customer Orders
subsisting as of the date hereof between any of the Sellers and their Affiliates
and any customer of the Business (in each case with confidential information
redacted), (d) Sellers’ current standard terms and conditions for vendor
purchase orders and customer purchase orders, and (e) Sellers’ currently
outstanding market development funds currently committed by Sellers to resellers
of products of the Business. To the Knowledge of Sellers, Sellers
have no binding Contracts with customers or vendors of the Business, other than
the obligations identified in Section 2.13 of the
Disclosure Schedule and other than obligations that would not reasonably
be expected to have a Business Material Adverse Effect.
2.14 Ownership and Condition of
Assets. Each Seller owns outright, and has good and marketable
title to, all of the Acquired Assets free and clear of all Security Interests
and each Seller has the right to grant the licenses set forth in the License
Agreement with respect to the Licensed Business Technology (as defined therein).
has good and valid rights to grant the licenses set forth in the License
Agreement with respect to the Licensed Business Technology. The
Acquired Assets constitute all assets necessary for, or used by the Sellers in,
the conduct of the Business as conducted on the date hereof. None of
the Acquired Assets are subject to any restriction with regard to
transferability. No Affiliate of any Seller owns any of the Acquired
Assets.
2.15 Suppliers. Section 2.15 of the
Disclosure Schedule lists the names and addresses of each of the five (5)
largest suppliers (measured by dollar amount of purchases by the Sellers and/or
their Affiliates from such suppliers) of the Business (the “Business Suppliers”)
for (i) the nine-month period ended September 30, 2008 and (ii) March 1, 2007 to
December 31, 2007, together with the approximate total dollar amount of
purchases by the Business from each such supplier during each such periods.
Since June 30, 2008, there has been no change in the business relationship of
any Seller or its Affiliates with any of the Business Suppliers that will in and
of itself have a Business Material Adverse Effect. No Seller has any
Knowledge that, after the Closing, any such Business Supplier or other
substantial Supplier to all Sellers will or may require the payment of
materially higher prices for its goods or services, or will be unable to
continue to supply goods or services to each Seller with respect to the Business
as supplied on the date hereof, or will or may cease to continue the
relationship, or otherwise materially modify the relationship with each Seller
or its Affiliates with respect to the Business that has existed prior to the
date hereof.
2.16 Customers. Section 2.16 of the
Disclosure Schedule lists the names and addresses of top twenty (20)
customers (by sales volume and unit sales) of the Business (the “Business Customers”)
for (i) the six-month period ended June 30, 2008 and (ii) the 2007 fiscal year,
together with the approximate amount for which each such Business Customer was
invoiced during each such year and period, and all amounts written off by each
Seller or its Affiliates with respect to each such Business Customer during each
such year and period. Between June 30, 2008 and the date hereof,
there has been no change in the business relationship of any Seller with any
Business Customer that will have in and of itself a Business Material Adverse
Effect. The Sellers have no Knowledge as of the date hereof, that any
Business Customer currently intends to materially modify its relationship with
the Business.
2.17 Permits;
Certifications.
(a) Section 2.17(a) of the
Disclosure Schedule sets forth a true and complete list of all material
Permits from all Governmental Entities held by each Seller and its Affiliates
and required to carry on the Business. The Sellers have all material
Permits of all Governmental Entities required to carry on the Business as
presently conducted. All such material Permits of Governmental
Entities are in full force and effect, and, to each Seller’s Knowledge, no
suspension or cancellation of any of such material Permits is
threatened. Each Seller is in material compliance with all material
requirements, standards and procedures of the Governmental Entities which have
issued such Permits.
(b) Section 2.17(b) of the
Disclosure Schedule attached hereto sets forth a true and complete list
of all Certifications held by each Seller. All such Certifications
are in full force and effect and, to each Seller’s Knowledge, no suspension or
cancellation of any such Certifications is threatened as of the date
hereof.
2.18 Solvency. Each
Seller is, and immediately after the Closing will be, (a) solvent, and (b) able
to pay its current and anticipated debts as such debts mature. Each
Seller is executing this Agreement in good faith, for fair value and without
intent to hinder, delay or to defraud its present and future
creditors.
2.19 Products Liability; Products
Liability Insurance.
(a) (i) There
is no notice, demand, claim, Action, suit, inquiry, hearing, proceeding, notice
of violation or investigation of a civil, criminal or administrative nature
before any Governmental Entity, against or involving any products manufactured,
produced, distributed or sold by or on behalf any Seller or its Affiliates
(including any parts or components) pursuant to the Business (collectively,
“Business
Products”), or class of claims or Actions involving the same which is
pending or, to the Knowledge of any Seller, threatened, resulting from an
alleged defect in design, manufacture, materials or workmanship of any Business
Product, or any alleged failure to warn, or from any breach of implied
warranties or representations; (ii) to the Knowledge of each Seller, there has
not been any Occurrence; and (iii) there has not been, nor is there under
consideration or investigation by any Seller or its Affiliates, any Business
Product rework or retrofit conducted by or on behalf of any Seller or its
Affiliates.
(b) Each
product liability insurance policy of the Sellers relating to the Business
Products (the “Product
Liability Policies”) is in full force and effect, except for any such
failure to be in full force and effect that will not in and of itself, and would
not reasonably be expected to, result in a Business Material Adverse Effect. To
the Knowledge of the Sellers, there is no material claim pending under any such
Product Liability Policy as to which coverage has been questioned, denied or
disputed by the underwriter of such policy and each Seller is otherwise in
compliance in all material respects with the terms of such Product Liability
Policies. No Seller nor any Affiliate thereof has received written
notice of any threatened termination of any such Product Liability
Policy.
2.20 Employment
Matters.
(a) Section 2.20 of the
Disclosure Schedule contains a list, as of the date of this Agreement, of
all Business Employees whose annual rate of compensation exceeds $40,000 per
year and along with the position of each such person. Each current
Business Employee has entered into a Nondisclosure, Work Results and
Intellectual Property Agreement with the applicable Seller, a copy or form of
which has previously been delivered or made available to the
Buyer. Section 2.20 of the
Disclosure Schedule contains a list of all Business Employees who are a
party to a non-competition agreement with any Seller; copies of such agreements
have previously been delivered to the Buyer.
(b) None of
the Sellers is a party to or bound by any collective bargaining agreement
relating to the Business, nor has any Seller, with respect to the Business,
experienced, since June 30, 2008, any material strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes.
(c) With
respect to each Business Benefit Plan that is maintained outside the
jurisdiction of the United States and exclusively covers the Business Employees
residing or working in Germany, (i) the Business Benefit Plan has been
established, maintained and administered in all material respects in compliance
with its terms and all applicable laws; and (ii) all contributions and
expenses that are required to be made have been made or properly
accrued.
(d) No Seller
maintains, or ever has maintained, or has been, or is required to maintain any
welfare, benefit, or similar plan (whether or not subject to ERISA) with respect
to the Business in the United States.
2.21 Environmental
Matters.
(a) To the
Knowledge of the Sellers, except as described or identified in the Disclosure
Schedule or in a document listed in the Disclosure Schedule:
(i) the
Business operations at the properties of the Business are in compliance with
applicable Environmental Laws, except for any failure to comply with
Environmental Laws that will not in and of itself, and would not reasonably be
expected to, result in a Business Material Adverse Effect;
(ii) there is
no pending civil or criminal litigation, written notice of violation or formal
administrative proceeding, investigation or claim relating to any Environmental
Law involving any of the properties of the Business or any property formerly
owned or operated by the Business, except for any such litigation, notice,
proceeding, investigation or claim that will not in and of itself, and would not
reasonably be expected to, result in a Business Material Adverse Effect;
and
(iii) the
applicable Seller has those Permits, licenses and approvals required under
Environmental Law to operate the properties of the Business as currently
operated by such Seller, as the case may be, except for any such Permits,
licenses or approvals the absence of which will not in and of itself, and would
not reasonably be expected to, result in a Business Material Adverse Effect;
and
(iv) no
Materials of Environmental Concern have been Released by the Business at any
property of the Business in violation of applicable Environmental Law, except
for any such Release that will not in and of itself, and would not reasonably be
expected to, result in a Business Material Adverse Effect.
(b) The
Parties agree that the only representations and warranties of the Sellers herein
as to any Environmental Matters or any other obligation or liability with
respect to Matters of Environmental Concern are those contained in this Section 2.21. Without
limiting the generality of the foregoing, the Buyer specifically acknowledges
that the representations and warranties contained in Sections 2.20 and
2.22 do not relate to Environmental Matters.
2.22 Legal
Compliance. With respect to the Business, each Seller and its
Affiliates is in compliance with all applicable laws (including rules and
regulations thereunder) and Decrees of any federal, state or foreign government,
or any Governmental Entity, currently in effect with respect to the Business,
except where the failure to comply therewith will not in and of itself, and
would not reasonably be expected to, result in a Business Material Adverse
Effect. None of the Sellers or their Affiliates have received written
notice of any pending action, suit, proceeding, hearing, investigation, claim,
demand or notice relating to the Business alleging any failure to so comply,
except for any that will not in and of itself, and would not reasonably be
expected to, result in a Business Material Adverse Effect.
2.23 Business Relationships with
Affiliates. There are no Contracts with respect to the
Business whereby any “affiliate” (as defined in Rule 12b-2 of the Securities Act
of 1934) (or spouse or relative thereof) of any Seller directly or
indirectly (i) owns any property or right, tangible or intangible, which is used
in the Business, (ii) has any claim or cause of action against the Business,
(iii) owes any money to, or is owed any money by, the Business or (iv) has any
material ownership interest in any supplier or customer of the
Business.
2.24 Brokers’
Fees. None of the Sellers has any liability or obligation to
pay any fees or commissions to any Person to act as a broker, finder, investment
bank, financial advisor or agent or the like with respect to the transactions
contemplated by this Agreement or any Ancillary Agreement that would constitute
a Buyer Liability.
2.25 Warranties. Section 2.25 of the
Disclosure Schedule contains the standard forms of product warranty
offered by the Sellers or its Affiliates to end customers for Business
Products. No Seller nor any Affiliate has granted any warranty other
than such standard warranty with respect to Business Products.
2.26 Consents. Section 2.26 of the Disclosure
Schedule sets forth a true and complete list of all material consents of
Governmental Entities, and of other Persons required to be received by or on the
part of any Seller or its Affiliates required to enter into and consummate the
transactions contemplated by this Agreement and the Ancillary
Agreements. All such consents have been obtained or will be obtained
on or prior to Closing.
2.27 Joint and Several
Obligations of the Sellers. All representations, warranties,
covenants and agreements made by each Seller in this Agreement and/or in any
Ancillary Agreements shall be, and hereby are, deemed to be made jointly and
severally by the Sellers and to be subject to the terms hereof.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The Buyer
represents and warrants to each Seller that the statements contained in this
Article III are
true and correct as of the date hereof.
3.1 Organization. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware.
3.2 Authority. The
Buyer has all requisite corporate power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which it will be a party and to
perform its obligations hereunder and thereunder. The execution and
delivery by the Buyer of this Agreement and such Ancillary Agreements and the
consummation by the Buyer of the transactions contemplated hereby and thereby
have been validly authorized by all necessary corporate action on the part of
the Buyer. This Agreement has been, and such Ancillary Agreements
will be, validly executed and delivered by the Buyer and, assuming this
Agreement and each such Ancillary Agreement constitute the valid and binding
obligation of the Sellers, constitutes or will constitute a valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws relating
to or affecting the rights of creditors generally and by equitable principles,
including those limiting the availability of specific performance, injunctive
relief and other equitable remedies and those providing for equitable
defenses.
3.3 Noncontravention. Neither
the execution and delivery by the Buyer of this Agreement or the Ancillary
Agreements to which the Buyer will be a party, nor the consummation by the Buyer
of the transactions contemplated hereby or thereby, will:
(a) conflict
with or violate any provision of the charter or bylaws of the
Buyer;
(b) require
on the part of the Buyer any filing with, or Permit, authorization, consent or
approval of, any Governmental Entity, except for any filing, Permit,
authorization, consent or approval which if not obtained or made would not
reasonably be expected to result in a Buyer Material Adverse
Effect;
(c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party any right to terminate or modify, or require any notice,
consent or waiver under, any Contract to which the Buyer is a party or by which
the Buyer is bound, except for (i) any conflict, breach, default, acceleration
or right to terminate or modify that would not reasonably be expected to result
in a Buyer Material Adverse Effect or (ii) any notice, consent or waiver the
absence of which would not reasonably be expected to result in a Buyer Material
Adverse Effect; or
(d) violate
any order, writ, injunction or Decree specifically naming, or statute, rule or
regulation applicable to, the Buyer or any of its properties or assets, except
for any violation that would not reasonably be expected to result in a Buyer
Material Adverse Effect.
3.4 Litigation. There
are no actions, suits, claims or legal, administrative or arbitration
proceedings pending against, or, to the Buyer’s Knowledge, threatened against,
the Buyer which would adversely affect the Buyer’s performance under this
Agreement or the consummation of the transactions contemplated by this
Agreement.
3.5 Cash on
Hand. The Buyer has, and at the Closing will have, sufficient
cash on hand to consummate the transactions contemplated by the Agreement and to
fulfill its obligations hereunder, including without limitation payment to the
Sellers of the Purchase Price at the Closing.
3.6 Subsidiary. The
Buyer is a wholly-owned Subsidiary of Hauppauge Digital, Inc.
3.7 No Other Representations or
Warranties. The representations and warranties by the Sellers
contained herein and in the Ancillary Agreements constitute the sole and
exclusive representations and warranties of the Sellers to the Buyer in
connection with the transactions contemplated hereby, and the Buyer acknowledges
and agrees that the Sellers are not making any representation or warranty
whatsoever, express or implied, beyond those expressly given in Article II and in the
Ancillary Agreements. The Buyer further acknowledges and agrees that
any cost estimates, projections or other predictions that may have been provided
to the Buyer or any of its employees, agents or representatives are not
representations or warranties of the Sellers or any of their Affiliates, except
as specifically set forth herein.
ARTICLE
IV
PRE-CLOSING
COVENANTS
4.1 Operation of
Business.
(a) Except as
contemplated by this Agreement, during the period from the date of this
Agreement until the earlier of the Closing Date or a termination of this
Agreement in accordance with Article VIII, each
Seller shall conduct the operations of the Business in the ordinary course
consistent with Past Practice. Without limiting the generality of the
foregoing, during the period from the date of this Agreement until the earlier
of the Closing Date or a termination of this Agreement in accordance with Article VIII, with
respect to the Business, the Sellers shall not, without the written consent of
the Buyer:
(i) sell,
lease, dispose of, assign or transfer any portion of the Acquired Assets in a
single transaction or series of related transactions, except for sales in the
ordinary course of business consistent with Past Practice;
(ii) mortgage,
pledge or subject to any Security Interest any of the Acquired Assets or permit
any such Acquired Assets to be subjected to any Security Interest;
(iii) increase
the compensation or other benefits payable, or make any bonuses to, or
materially modify the compensation arrangement with, any Business Employee,
except (A) in the ordinary course of business consistent with Past Practice, (B)
in connection with the negotiation, execution and implementation of the social
plan (Sozialplan) in
accordance with sections 111 et all of the German Works Council Constitution Act
(Betriebsverfassungsgesetz),
currently being negotiated (the “Social Plan”) in
connection with the Business Employees; provided, however for purposes of
clause (B), Seller shall obtain the written consent of Buyer (which shall not be
unreasonably withheld or delayed) and (C) approval of the payment of bonuses to
Continuing Employees (which payment will be paid by the Sellers) pursuant to the
Social Plan which payment will be due and payable on the first anniversary of
such Continuing Employees’ and severance payments to be paid;
(iv) enter
into any employment, compensation or deferred compensation agreement (or any
amendment to any such existing agreement) with any Business Employee, except (A)
in the ordinary course of business consistent with Past Practice or (B) in
connection with the negotiation, execution and implementation of the Social Plan
currently being negotiated in connection with the Business Employees; provided, however for purposes of
clause (B), Seller shall obtain the written consent of Buyer (which shall not be
unreasonably withheld or delayed);
(v) materially
amend the terms of any existing Business Benefit Plan, except as required by
law;
(vi) materially
change its accounting principles, methods or practices insofar as they relate to
the Acquired Assets or the Business, except in each case to conform to changes
in GAAP;
(vii) enter
into any Contract relating exclusively to the Business outside the ordinary
course of business consistent with Past Practice;
(viii) incur any
liability in connection with the Business except for liabilities incurred in the
ordinary course of business consistent with Past Practice; or
(ix) enter
into or amend any Contract with respect to any of the foregoing.
(b) Until the
earlier of the Closing or the termination of this Agreement pursuant to Article VIII, each
Seller shall use its commercially reasonable efforts to preserve the Business
intact, keep available the services of the Business Employees and preserve the
goodwill of the Business.
4.2 Access. Until
the earlier of the Closing or the termination of this Agreement pursuant to
Article VIII,
each Seller shall afford to the Buyer and its directors, officers, employees,
accountants, attorneys, bankers, business advisers, consultants, agents and
representatives reasonable access, at reasonable times, during regular business
hours and upon reasonable prior notice and in a manner so as not to interfere
with the normal business operations of the Business, to the books, records,
personnel (with a representative of the Sellers present) and properties
exclusively related to the Business so that the Buyer, at its own expense, may
have an opportunity to make such review, examination and investigation of the
Acquired Assets and the Business. Each Seller will cause the
employees, accountants, attorneys and other agents and representatives of the
Business to reasonably cooperate with said review, examination and
investigation. Notwithstanding the foregoing, none of the Sellers
shall be obligated (i) to provide any information or documents that are the
subject of confidentiality agreements in existence on the date hereof, or (ii)
to provide any information, documents or access that would (A) violate the
provisions of any applicable laws or regulations (including without limitation
those relating to security clearance or export controls) or any confidentiality
agreement to which it is a party or (B) cause the loss of the attorney-client
privilege with respect thereto; provided, however in each case that the
Sellers shall use commercially reasonable efforts to provide such information in
a manner that does not violate the provisions of applicable law or the
confidentiality provisions set forth in the applicable agreement or cause the
loss of attorney-client privilege. The Buyer and the Sellers
acknowledge and agree that the Confidentiality Agreement remains in full force
and effect and that information provided by any Seller or any of such Seller’s
Affiliates to the Buyer pursuant to this Agreement prior to the Closing shall be
treated in accordance with the Confidentiality Agreement.
4.3 Satisfaction of
Conditions. Until the earlier of the Closing or the
termination of this Agreement pursuant to Article VIII, each
Seller and the Buyer will use their respective commercially reasonable efforts
to ensure that the Sellers’ conditions (to be performed by Sellers) set forth in
Section 5.1 the
Buyer’s conditions (to be performed by Buyer) set forth in Section 5.2 are
satisfied.
4.4 Consents. Promptly
following the execution of this Agreement, the Buyer and each Seller will use
their commercially reasonable efforts to obtain consents of any and all Persons
(including Governmental Entities) necessary for the consummation of the
transactions contemplated by this Agreement, including the approvals, consents
and licenses required by Section 5.1(m) and Section 5.2(k) (as
applicable).
4.5 No
Negotiations. Until the earlier of the Closing or the
termination of this Agreement pursuant to Article VIII, no
Seller shall, directly or indirectly, (i) solicit or initiate discussions,
engage in negotiations, or continue any discussions or negotiations that
heretofore commenced, with any Person (“Potential Offeror”)
(whether such negotiations are initiated by it or otherwise), other than the
Buyer, with respect to the possible acquisition of the Sellers (except to the
extent that such possible acquisition excludes the Acquired Assets and
Business), Business, the Acquired Assets or any portion thereof, whether by way
of merger, acquisition of assets, acquisition of stock or other equity interest
or otherwise (a “Potential
Transaction”), (ii) provide any information with respect to Sellers
(except to the extent excluding the Acquired Assets and Business), the Business
or the Acquired Assets to any Person, other than the Buyer, in connection with a
Potential Transaction, or (iii) enter into any Contract with any Person, other
than the Buyer, concerning or relating to a Potential
Transaction. If, after the date hereof until the earlier of the
Closing or the termination of this Agreement pursuant to Article VIII, any
Seller or any of its officers, directors, employees, representatives or agents
receives any unsolicited offer or proposal to enter into negotiations relating
to a Potential Transaction, it shall promptly notify the Buyer of such fact and
shall return any such written offer to such Potential Offeror.
4.6 Business Financial
Statements. Until the earlier of the Closing or the
termination of this Agreement pursuant to Article VIII, each
Seller shall use its commercially reasonable efforts to cause the audit of the
Business Financial Statements to be completed within thirty (30) days after the
date of this Agreement.
4.7 Business
Employees. Notwithstanding the Notice delivered to the
Business Employees pursuant Section 9.1 hereof
and Section 613a para. 5 German Civil Code, promptly following the execution and
delivery of this Agreement, and in any event no later than five (5) calendar
days after Sellers advise Buyer in writing of the adoption of the Social Plan by
the Works Council, the Buyer shall deliver, in writing, an offer of employment
(a copy of each such offer to be provided to the Sellers prior to delivery to
the employees) to each of the Business Employees, such employment to commence on
the day immediately following the Closing (the Business Employees accepting
offers of employment with the Buyer or any of its Affiliates commencing on the
day immediately following the Closing or within sixty (60) days thereafter, the
“Continuing
Employees”). The terms offered to each such Business Employee
will be on terms substantially similar to the terms applicable to such employee
immediately prior to the date hereof. The Buyer shall provide to the
Sellers upon the request of Sellers on the status of acceptance and rejection of
such offers of employment to the Business Employees and shall deliver to the
Sellers a preliminary schedule of the names of the Continuing Employees, to the
extent then known by the Buyer, no later than three (3) calendar days prior to
the Closing, and a revised final schedule of the names of the Continuing
Employees on the Closing Date. The Buyer and the Sellers shall use
their respective commercially reasonable efforts to cause the applicable
Business Employees to accept such offers. The Sellers hereby consent
to the hiring by the Buyer or an Affiliate of the Buyer of the Continuing
Employees. Each Seller shall use its commercially reasonable efforts
to assist the Buyer in complying with its obligations pursuant this Section
4.7.
4.8 Codecs. Until
the earlier of the Closing or the termination of this Agreement pursuant to
Article VIII,
each Seller shall use its commercially reasonable efforts to ensure, at Seller’s
own cost that, effective as of the Closing, dicas digital image coding GmbH
grants a non-exclusive license to Buyer (the “Codec License”) for
the use of the codecs set forth on Schedule 4.8 with a
rights substantially similar to the rights that Seller has with respect to such
codecs as of the date hereof.
ARTICLE
V
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions to Obligations of
the Buyer. The obligation of the Buyer to consummate the
transactions to be consummated at the Closing is subject to the satisfaction (or
waiver by the Buyer) of the following conditions:
(a) the
representations and warranties of the Sellers set forth in Article II shall
be true and correct as of the Closing Date as if made as of the Closing Date,
except (i) for changes contemplated or permitted by this Agreement,
(ii) for those representations and warranties that address matters only as
of a particular date (which shall be true and correct as of such date, subject
to clause (iii) below), and (iii) where the failure of the representations
and warranties to be true and correct would not reasonably be expected to
result, in the aggregate, in a Business Material Adverse Effect (it being agreed
that any materiality or Business Material Adverse Effect qualification in a
representation and warranty shall be disregarded in determining whether any such
failure would reasonably be expected to, result in a Business Material Adverse
Effect for purposes of this clause (iii));
(b) each
Seller shall have performed or complied with the agreements and covenants
required to be performed or complied with in all material respects by it under
this Agreement as of or prior to the Closing;
(c) no
Action, suit or proceeding shall have been instituted and continuing or be
pending, by or before any Governmental Entity or shall have been threatened in
writing and be unresolved, seeking to prevent, restrain, or obtain any material
amount of damages from the Buyer in respect of, the consummation of the
transactions contemplated by this Agreement and/or the Ancillary Agreements or
which would reasonably be expected to adversely affect in any material respect
the right of the Buyer to own the Acquired Assets or operate the Acquired Assets
and the Business following the Closing Date, or which would reasonably be
expected to have a material adverse effect thereon and no judgment, order,
decree, stipulation or injunction enjoining or preventing the consummation of
the transactions contemplated by this Agreement shall be in effect;
(d) the
Parent shall have delivered to the Buyer the Parent Certificate;
(e) certain
of the Business Employees as set forth on Schedule 9.1 shall
have accepted offers of employment with the Buyer or a Subsidiary of the Buyer
(or not objected to the Transfer) with such employment to commence following the
Closing;
(f) the
Sellers shall have executed and delivered to the Buyer the Inventory Agreement,
in substantially the form of Exhibit D, and such
Inventory Agreement shall be in full force and effect;
(g) the
Sellers shall have executed and delivered to the Buyer the Transition Services
Agreement and such Transition Services Agreement shall be in full force and
effect;
(h) the
Sellers shall have executed and delivered to the Buyer the License Agreement, in
substantially the form of Exhibit E, and such
License Agreement shall be in full force and effect;
(i) the
Escrow Agreement contemplated by Section 6.3(b)(ii)
shall have been executed and delivered to the Buyer, in form reasonably
acceptable to the Buyer, and shall be in full force and effect;
(j) the Codec
License contemplated by Section 4.8 shall
have been executed and delivered to the Buyer and shall be in full force and
effect;
(k) the Buyer
shall have received a certificate, dated the Closing Date, signed by an officer
of the Parent (the “Order Certificate”),
that sets forth, in reasonable detail, the Open Customer Orders and Open Vendor
Orders of the Sellers as of the Closing Date, which certificate is certified by
an officer of the Parent to be true and complete in all material
respects;
(l) the
Sellers shall have delivered to the Buyer the Business Financial
Statements;
(m) the
Sellers and the Buyer shall have obtained all approvals, consents, licenses and
Permits of third parties, including Governmental Entities, necessary for the
performance by the Sellers and the Buyer of all of their respective material
obligations under this Agreement, including the transfer by the Sellers of the
Acquired Assets to the Buyer as contemplated hereby;
(n) no
Business Material Adverse Effect shall have occurred, and no event shall have
occurred that would reasonably be expected to result in a Business Material
Adverse Effect; and
(o) the Buyer
shall have received such other customary certificates (including certificates of
good standing of the Sellers in their jurisdictions of organization (to the
extent available in such jurisdictions) and certificates as to the incumbency of
officers and the adoption of authorizing resolutions) as it shall reasonably
request in connection with the Closing.
5.2 Conditions to Obligations of
the Sellers. The obligation of the Sellers to consummate the transactions
to be consummated at the Closing is subject to the satisfaction (or waiver by
the Sellers) of the following conditions:
(a) the
representations and warranties of the Buyer set forth in Article III
shall be true and correct as of the Closing Date as if made as of the Closing
Date, except (i) for changes contemplated or permitted by this Agreement,
(ii) for those representations and warranties that address matters only as
of a particular date (which shall be true and correct as of such date, subject
to clause (iii) below), and (iii) where the failure of the representations
and warranties to be true and correct would not reasonably be expected to
result, in the aggregate, in a Buyer Material Adverse Effect (it being agreed
that any materiality or Buyer Material Adverse Effect qualification in a
representation and warranty shall be disregarded in determining whether any such
failure would reasonably be expected to result in a Buyer Material Adverse
Effect for purposes of this clause (iii));
(b) the Buyer
shall have performed or complied with its agreements and covenants required to
be performed or complied with in all material respects by it under
this Agreement as of or prior to the Closing;
(c) no
Action, suit or proceeding shall be pending by or before any Governmental Entity
or shall have been threatened in writing and be unresolved, seeking to prevent,
restrain, or obtain any material amount of damages from the Sellers in respect
of, the consummation of the transactions contemplated by this Agreement and/or
any Ancillary Agreement, and no judgment, order, decree, stipulation or
injunction enjoining or preventing consummation of the transactions contemplated
by this Agreement shall be in effect;
(d) the Buyer
shall have delivered to the Parent the Buyer Certificate;
(e) the Buyer
shall have entered into the Inventory Agreement, in substantially the form of
Exhibit D, and
such Inventory Agreement shall be in full force and effect;
(f) the Buyer
shall have executed and delivered the Transition Services Agreement and such
Transition Services Agreement shall be in full force and effect;
(g) the Buyer
shall have executed and delivered the License Agreement, in substantially the
form of Exhibit
E, and such License Agreement shall be in full force and
effect;
(h) the Buyer
Parent Guaranty shall be in full force and effect;
(i) the
Escrow Agreement contemplated by Section 6.3(b)(ii)
shall have executed and delivered to the Sellers, in form reasonably
acceptable to the Sellers, shall be in full force and effect;
(j) all
approvals of Governmental Entities required to be obtained by the Sellers for
the consummation of the transactions contemplated by this Agreement shall have
been obtained;
(k) the
Sellers and the Buyer shall have obtained all approvals, consents, licenses and
Permits of third parties, including Governmental Entities, necessary for the
performance by the Sellers and the Buyer of all of their respective material
obligations under this Agreement, including the transfer by the Sellers of the
Acquired Assets to the Buyer as contemplated hereby; and
(l) the
Parent shall have received such other customary certificates (such as a
certificate of good standing of the Buyer in its jurisdiction of incorporation
and certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with the
Closing.
ARTICLE
VI
INDEMNIFICATION
6.1 Indemnification by the
Sellers. On the terms and subject to the conditions of this
Article VI,
from and after the Closing, the Sellers, jointly and severally, shall reimburse,
indemnify and hold harmless the Buyer and its directors, officers, employees and
stockholders and their respective successors and assigns (each, an “Indemnified Buyer
Party”) in respect of and against, any and all Damages incurred or
suffered by the Indemnified Buyer Parties that result from or arise out
of:
(a) any
misrepresentation or breach of a representation or warranty of the
Sellers contained in (i) this Agreement, (ii) any of the Ancillary Agreements or
(iii) any of the certificates or instruments delivered by the Sellers in
connection with this Agreement and/or the Ancillary Agreements, in each case
either made as of the date of this Agreement or as of the Closing;
(b) any
failure by any Seller to perform, and any non-fulfillment by any Seller of, any
covenant or agreement of any Seller contained in this Agreement or any Ancillary
Agreement;
(c) except
with respect to Continuing Employees, any claims by any employee of Sellers or
their Affiliates that such employee has a right to employment or continuing
employment with Buyer or any of its Affiliates after the Closing Date;
and
(d) any of
the Excluded Liabilities.
6.2 Indemnification by the
Buyer. On the terms and subject to the conditions of this
Article VI,
from and after the Closing, the Buyer shall reimburse, indemnify and hold
harmless each Seller and its directors, officers, employees and stockholders and
their respective successors and assigns (each, an “Indemnified Seller
Party”) in respect of and against, any and all Damages incurred or
suffered by any Indemnified Seller Party that result from or arise
out:
(a) any
misrepresentation or breach of a representation or warranty of the
Buyer contained in (i) this Agreement, (ii) any of the Ancillary Agreements or
(iii) any of the certificates or instruments delivered by the Buyer in
connection with this Agreement and/or the Ancillary Agreements, in each case
either made as of the date of this Agreement or as of the Closing;
(b) any
failure by the Buyer to perform, and any non-fulfillment by the Buyer of, any
covenant or agreement of the Buyer contained in this Agreement or any Ancillary
Agreement; and
(c) any of
the Buyer Liabilities.
6.3 Claims for
Indemnification.
(a) Third-Party
Claims. All Claims for indemnification made under this
Agreement resulting from, related to or arising out of a Claim by a third-party
against an Indemnified Party shall be made in accordance with the following
procedures. An Indemnified Party shall give prompt written
notification to the Indemnifying Party of the commencement of any action, suit
or proceeding relating to a third-party Claim for which indemnification may be
sought or, if earlier, upon the assertion of any such claim by a third
party. Such notification shall include a description in reasonable
detail (to the extent known by the Indemnified Party) of the facts constituting
the basis for such third-party Claim, and the amount or estimated amount of the
Damages claimed to the extent then feasible (which estimate shall not be
conclusive of the final amount of the Claim). Upon written notice
thereof to the Indemnified Party, the Indemnifying Party assume control of the
defense of such action, suit, proceeding or Claim with counsel selected by the
Indemnifying Party and reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party does not assume control of such
defense, the Indemnified Party shall control such defense; provided, however that the Indemnifying
Party may not control such defense of any Claim that, if determined adversely to
the Indemnified Party, would reasonably be expected to have a material adverse
effect on the business, operation, assets or properties of the Indemnified
Party. The Party not controlling such defense may participate therein
at its own expense; provided,
however that if the Indemnifying Party assumes control of such defense
and the Indemnified Party reasonably concludes, based on advice from counsel,
that the Indemnifying Party and the Indemnified Party have conflicting interests
with respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party solely in connection therewith
shall be considered “Damages” for purposes of this Agreement; provided, further, that
except as provided above in no event shall the Indemnifying Party be responsible
for the fees and expenses of more than one (1) counsel for all Indemnified
Parties. The Party controlling such defense shall keep the other
Party advised of the status of such action, suit, proceeding or claim and the
defense thereof and shall consider recommendations made by the other Party with
respect thereto. The Indemnified Party shall not agree to any
settlement of such action, suit, proceeding or Claim without the prior written
consent of the Indemnifying Party which shall not be unreasonably withheld or
delayed. The Indemnifying Party shall not consent to the entry of any
judgment against the Indemnified Party or agree to any settlement or compromise
that does not include a complete release of the Indemnified Party from all
liability with respect thereto or that imposes any liability or obligation on
the Indemnified Party without the prior written consent of the Indemnified
Party. The failure to timely give a timely notice as contemplated
hereby shall not relieve any Seller of its obligations hereunder, except and
only to the extent that such failure shall result in any material prejudice to
such Seller in defense of the Claim.
(b) Procedure for
Claims. An Indemnified Party wishing to assert a claim for
indemnification under this Article VI shall
deliver to the Indemnifying Party a Claim Notice. Within thirty (30)
days after delivery of a Claim Notice, the Indemnifying Party shall deliver to
the Indemnified Party a written response in which the Indemnifying Party shall:
(i) agree that the Indemnified Party is entitled to receive all of the
Claimed Amount (in which case such response shall be accompanied by a payment by
the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check
or by wire transfer), or (ii) contest that the Indemnified Party is
entitled to receive any of the Claimed Amount. If the Indemnifying
Party in such response contests the payment of all or part of the Claimed
Amount, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve such dispute. If such dispute is not resolved
within sixty (60) days following the delivery by the Indemnifying Party of such
response or if the Indemnifying Party does not timely deliver a written response
pursuant the second sentence of this Section 6.3(b), then
the Indemnifying Party and the Indemnified Party shall each have the right to
submit such dispute to a court of competent jurisdiction in accordance with the
provisions of Section
12.12.
(ii) Upon
the final determination of an indemnifiable Claim under this Article VI, the
Indemnifying Party shall pay to the Indemnified Party, within ten (10) days
after such final determination, the amount of the indemnifiable Damages (as
finally determined). Further, pending the final determination of an
indemnifiable Claim in accordance with the provisions of this Article VI, and
provided that the escrow agreement contemplated by the last sentence of this
Section 6.3
shall be in effect, the Buyer may deduct from any amounts due to the Sellers
pursuant to the Inventory Agreement (and the Buyer shall forthwith deposit into
the escrow account contemplated by this Section 6.3) an
amount equal to such indemnifiable Claim (such amount not to exceed Five Hundred
Thousand Dollars ($500,000) in the aggregate for all such indemnifiable Claims)
(the “Escrowed
Amount”). The Escrowed Amount shall be placed into an escrow
account pursuant to a customary escrow agreement, which the Buyer and the
Sellers shall negotiate in good faith and execute and deliver prior to the
Closing, with terms and conditions, and with an escrow agent, reasonably
satisfactory to the Parties.
6.4 Survival.
(a) The
representations and warranties of the Sellers and the Buyer set forth in this
Agreement, the Parent Certificate and the Buyer Certificate shall survive the
Closing and the consummation of the transactions contemplated hereby and
continue until the day which is eighteen (18) months following the Closing Date,
at which time they shall expire. Notwithstanding the foregoing, the
representations and warranties of the Sellers contained in Sections 2.1 and
2.2 and of the
Buyer contained in Sections 3.1 and
3.2 shall
survive the Closing and the consummation of the transactions contemplated hereby
until the expiration of the last statute of limitations applicable to claims
with respect to the matters covered thereby.
(b) If an
indemnification Claim with respect to a breach of representation or warranty is
properly asserted in writing pursuant to Section 6.3 prior to
the expiration as provided in Section 6.4(a) of the
representation or warranty that is the basis for such Claim, then such
representation or warranty shall survive until, but only for the purpose of, the
resolution of such Claim.
(c) For
avoidance of doubt, the provisions of, and limitations set forth in, Sections 6.4(a) and
6.4(b) only
apply to representations and warranties made under this Agreement, and only
apply to the extent provided therein. Except as set forth herein, the
provisions of, and limitations set forth in, Sections 6.4(a) and
6.4(b) do not
apply to any other provision or section hereto.
6.5 Limitations.
(a) Notwithstanding
anything to the contrary contained in this Agreement, the following limitations
shall apply to indemnification Claims under this Agreement arising out of
breaches of representations and warranties:
(i) no Party
may make any Claim for indemnification under this Article VI unless and
until the aggregate indemnifiable Damages paid, incurred or resulting from such
otherwise indemnifiable matter exceed Fifty Thousand Dollars ($50,000) in the
aggregate (the “Indemnification
Threshold”) (at which time Claims may be made and indemnifiable Damages
will be determined for amounts only in excess of the Indemnification
Threshold);
(ii) the
aggregate liability of the Sellers for all Damages under this Article VI shall not
exceed the Purchase Price; and
(iii) the
aggregate liability of the Buyer for all Damages under this Article VI shall not
exceed the Purchase Price.
For the
avoidance of doubt, it is understood and agreed by the Parties that the
limitations set forth in clauses (i), (ii) and (iii) of this Section 6.5(a) shall
not be applicable to Claims for indemnification by an Indemnified Buyer Party
under Section 6.1(b),
(c) or (d) or by an Indemnified Seller Party under Section 6.2(b) or
(c).
(b) In no
event shall any Indemnifying Party be responsible or liable for any Damages or
other amounts under this Article VI that are
consequential, special or punitive or otherwise not actual damages or that are
in the nature of lost profits. Each Party shall (and shall cause its
Affiliates to) use commercially reasonable efforts to mitigate and minimize the
Damages incurred or sustained as a result of breaches of or inaccuracies in
representations or warranties or breaches of covenants or
agreements.
(c) To the
extent that Buyer shall be entitled to indemnification in respect of any
inaccuracy in any representation or warranty of the Sellers, the Buyer shall be
entitled to such indemnification notwithstanding that the Buyer (i) has actual
knowledge on the date of this Agreement that such representation or warranty is
inaccurate as of the date of this Agreement or (ii) has actual knowledge as of
the Closing Date that such representation or warranty is inaccurate as of the
Closing Date.
(d) The
amount of Damages recoverable by an Indemnified Party under this Article VI with
respect to an indemnity claim shall be reduced by eighty percent (80%) of the
amount of any payment received by such Indemnified Party (or an Affiliate
thereof), with respect to the Damages to which such indemnity claim relates,
from an insurance carrier. An Indemnified Party shall use
commercially reasonable efforts to pursue, and to cause its Affiliates to
pursue, all insurance claims to which it may be entitled in connection with any
Damages it incurs, and the Parties shall cooperate with each other in pursuing
insurance claims with respect to any Damages or any indemnification obligations
with respect to Damages.
(e) Notwithstanding
any other provision of Article I and Article VI, as
between the Sellers and the Buyer, with respect to all Damages arising from or
related to third-party claims relating to the Consigned Inventory (the “Consigned Inventory
Damages”), the Indemnified Buyer Parties collectively shall be
responsible for fifty percent (50%) of such Consigned Inventory Damages (the
“Buyer Share”)
and the Indemnified Seller Parties collectively shall be responsible for fifty
percent (50%) of such Consigned Inventory Damages (the “Sellers
Share”). To the extent that the Indemnified Buyer Parties
collectively have paid more than fifty percent (50%) of such Consigned Inventory
Damages (the amount by which such payments exceed the Buyer Share, the “Excess Buyer
Amount”), the Sellers shall pay the Excess Buyer Amount to the Buyer, and
to the extent that the Indemnified Seller Parties collectively have paid more
than fifty percent (50%) of such Consigned Inventory Damages (the amount by
which such payments exceed the Sellers Share, the “Excess Seller
Amount”), the Buyer shall pay the Excess Seller Amount to the
Sellers. Any amounts due from the Seller to the Buyer or form the
Buyer to the Sellers pursuant to this Section 6.5(e) shall
be paid promptly upon written notice and delivery of documentation reasonably
evidencing the payment of such amounts.
(f) Except
with respect to Claims for non-monetary equitable relief (including specific
performance), fraud or willful breach, and the rights and obligations pursuant
to Section
1.5(b) hereof, the rights of the Indemnified Parties under this Article VI shall
be the sole and exclusive remedies of the Indemnified Parties and their
respective Affiliates with respect to Claims covered by Section 6.1 or Section 6.2 or
otherwise relating to the transactions that are the subject of this
Agreement.
(g) In no
event shall any Indemnified Party be entitled to be indemnified for, or
otherwise recover, any Damages in excess of the actual amount of such Damages,
and in no event shall any Indemnified Party be entitled to double or multiple
recovery for items that constitute both an Buyer Liability or Excluded
Liability, on the one hand, and a breach of inaccuracy in any representation or
warranty or a breach of covenant or agreement, on the other hand.
6.6 Treatment of Indemnification
Payments. All indemnification payments made under this
Agreement shall be treated by the Parties as an adjustment to the Purchase
Price.
ARTICLE
VII
TAX
MATTERS
7.1 Tax
Matters.
(a) The Buyer
shall be responsible for the payment of any transfer, sales, use, stamp,
conveyance, value added, recording, registration, documentary, filing and other
non-income Taxes and administrative fees (including, without limitation, notary
fees) arising in connection with the consummation of the transactions
contemplated by this Agreement. The Parties shall cooperate
reasonably and in good faith in timely making all filings, returns, reports and
forms as may be required to comply with the provisions of applicable law in
connection with the payment of any such Taxes described in the immediately
preceding sentence, and in providing each other with appropriate resale
exemption certification and other similar Tax and fee documentation (if any) to
the extent applicable.
(b) The Buyer
shall be solely responsible for the payment of any and all Taxes attributable to
the acts or omissions of the Buyer or the Buyer’s Affiliates occurring after the
Closing. The Sellers shall be solely responsible for the payment of
any and all Taxes attributable to the acts or omissions of the Sellers or the
Seller’s Affiliates occurring prior to, on or after the Closing.
ARTICLE
VIII
TERMINATION
8.1 Termination of
Agreement. The Parties may terminate this Agreement prior to
the Closing as provided below:
(a) the
Parties may terminate this Agreement by mutual written consent;
(b) the Buyer
may terminate this Agreement by giving written notice to the Parent if the
Closing shall not have occurred on or before March 31, 2009 by reason of the
nonsatisfaction and nonwaiver of any condition precedent under Section 5.1;
and
(c) the
Parent may terminate this Agreement on behalf of the Sellers by giving written
notice to the Buyer if the Closing shall not have occurred on or before March
31, 2009 by reason of the nonsatisfaction and nonwaiver of any condition
precedent under Section 5.2.
8.2 Effect of
Termination. If any Party terminates this Agreement pursuant
to Section 8.1,
all obligations of the Parties hereunder shall terminate without any liability
of any Party to the other Parties. Notwithstanding the foregoing,
termination of this Agreement shall not relieve any Party for any breach by such
Party, prior to the termination of this Agreement, of any covenant, agreement,
representation or warranty contained in this Agreement or impair the right of
any Party to obtain such remedies as may be available to it in law or equity
with respect to such a breach by any other Party.
8.3 Waiver. Any
condition to the performance of the Parties which legally may be waived on or
prior to the Closing Date may be waived at any time by the Party entitled to the
benefit thereof by an instrument in writing executed by the relevant Party or
Parties. The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by any Party of
the breach of any term, covenant, representation or warranty contained in this
Agreement as a condition to such Party's obligations hereunder shall release or
affect any liability resulting from such breach, and no waiver of any nature,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be or construed as a further or continuing waiver of any such condition or of
any breach of any other term, covenant, representation or warranty of this
Agreement.
ARTICLE
IX
EMPLOYEE
MATTERS
9.1 Business
Employees
(a) The
Parties understand and agree that the transactions contemplated by this
Agreement constitute a transfer of undertaking within the meaning of Section
613a German Civil Code (Betriebsübergang) resulting
in the transfer, by operation of law, of the employment relationships of the
Business Employees, and all rights and duties therein, to the Buyer (the “Transfer”).
(b) The
Business Employees will be informed by Buyer and Seller by means of a joint
written notice (the “Notice”) pursuant to
Section 613a para. 5 German Civil Code, about the date or the contemplated date
of the transfer of undertaking, the reason for the transfer of undertaking, the
legal, economic and social effects on the Business Employees and actions, if
any, considered to be taken with respect to the Business Employees. The Notice
shall be delivered to the Business Employees by Buyer and Seller on or about
October 31, 2008. The Parties acknowledge that, as a matter of German statutory
law, each Business Employee may, within one (1) month following receipt of the
Notice, veto the Transfer (Section 613a para. 6 German Civil Code).
ARTICLE
X
OTHER
POST-CLOSING COVENANTS
10.1 Access to Information;
Record Retention; Cooperation.
(a) Access to
Information. Subject to compliance with contractual
obligations and applicable laws and regulations regarding classified information
following the Closing, each Party shall afford to each other Party and to such
Party’s authorized accountants, counsel and other designated representatives
during normal business hours in a manner so as to not unreasonably interfere
with the conduct of business (i) reasonable access and duplicating rights to all
Information related to the Business or otherwise to the transactions
contemplated by this Agreement that is within the possession or control of such
Party and (ii) reasonable access to the personnel of such
Party. Requests may be made under this Section 10.1(a) for
financial reporting and accounting matters, preparing financial statements,
preparing and filing of any Tax Returns, prosecuting any claims for refund,
defending any Tax claims or assessment, preparing securities law or securities
exchange filings, prosecuting, defending or settling any litigation,
Environmental Matter or insurance claim, performing obligations under this
Agreement and the Ancillary Agreements, and all other proper business
purposes.
(b) Reimbursement. A
Party making Information or personnel available to another Party under this
Section 10.1
shall be entitled to receive from such other Party, upon the presentation of
invoices therefor, payments for such amounts relating to supplies, disbursements
and other out-of-pocket expenses, as may reasonably be incurred in making such
Information or personnel available; provided, however, that no
such reimbursements shall be required for the salary or cost of fringe benefits
or similar expenses pertaining to employees of the providing Party.
(c) Retention of
Records. Except as may otherwise be required by law or agreed
to in writing by the Parties, each Party shall use reasonable commercial efforts
to preserve, until six (6) years after the Closing Date, all Information in its
possession or control pertaining to the Business or otherwise to the
transactions contemplated by this Agreement. Notwithstanding the
foregoing, in lieu of retaining any specific Information, any Party may offer in
writing to the other Party or Parties to deliver such Information to the other
Party or Parties, and if such offer is not accepted within ninety (90) days, the
offered Information may be disposed of at any time.
(d) Confidentiality. Each
Party shall hold, and shall use reasonable commercial efforts to cause their
respective Affiliates, consultants and advisors to hold, in strict confidence
all Information concerning the other Party or Parties furnished to it by such
other Party or Parties or their representatives pursuant to this Section 10.1
(except to the extent that such Information (i) is or becomes generally
available to the public other than as a result of any action or inaction by the
receiving Party, (ii) was within the possession of the Buyer prior to it being
furnished to the Buyer, or (iii) is or becomes available on a non-confidential
basis to the receiving Party from a source other than the disclosing Party;
provided, that the
source of such Information was not bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to any
person or entity with respect to such Information); and each Party shall not
release or disclose such Information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors,
unless compelled to disclose such Information by judicial or administrative
process or by other requirements of law or so as not to violate the rules of any
stock exchange; provided,
however, that in the case of disclosure compelled by judicial or
administrative process, the receiving Party shall (to the extent permitted by
applicable law) notify the disclosing Party promptly of the request and the
documents requested thereby so that the disclosing Party may seek an appropriate
protective order or other appropriate remedy. If, in the absence of a
protective order or other remedy or the receipt of a waiver hereunder, a Party
is, in the written opinion of its counsel, compelled to disclose any Information
to any tribunal or other entity or else stand liable for contempt or suffer
other censure or penalty, such Party may so disclose the Information without
liability hereunder; provided,
however, that, such Party gives written notice to the other Party or
Parties of the Information to be disclosed (including copies of the relevant
portions of the relevant documents) as far in advance of its disclosure as is
practicable, uses all reasonable efforts to limit any such disclosure to the
precise terms of such requirement and cooperates with the disclosing Party to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded to such Information by the tribunal or
other entity. Neither Party shall use any Information of the other
Party or Parties in any way that would reasonably be expected to have a material
adverse effect on such other Party or Parties, its or their respective
Affiliates, or its or their respective businesses, assets, liabilities,
financial condition and/or results of operations. The restrictions on
the Buyer set forth in this Section 10.1(d) with
respect to Information related to the Acquired Assets or exclusively related to
the Business shall lapse as of the Closing and from and after the Closing shall
be of no further force or effect.
10.2 Covenant Not to
Compete. In order to induce the Buyer to consummate the
transactions contemplated by this Agreement, each Noncompetition Party, jointly
and severally, hereby covenants and agrees with the Buyer as follows:
(a) no
Noncompetition Party (nor any of its respective subsidiaries or Affiliates)
will, and no Noncompetition Party will cause or permit any of its respective
subsidiaries or Affiliates to, at any time during the Noncompetition Period,
without the prior written consent of the Buyer, directly or indirectly, whether
individually or as a principal, partner, shareholder, joint venturer, member,
manager, agent or representative of, or consultant or independent contractor to,
any person or entity, or in any other capacity:
(i) except as
provided in Section
10.2(b), engage anywhere throughout the world, in the Restricted Business
and shall not make any investments in any entity engaged in the Restricted
Business, provided,
however that the
foregoing shall not (i) restrict any Noncompetition Party or any of its
respective subsidiaries or Affiliates from acquiring or otherwise holding or
beneficially owning up to five percent (5%), in the aggregate, of the
outstanding voting stock of any such entity engaged in the Restricted Business
whose securities are listed on a United States or foreign national stock
exchange or (ii) restrict any Noncompetition Party or any of its respective
subsidiaries or Affiliates from engaging in the activities (the “Parent Activities”)
comprising the description of the Parent’s business set forth in the Parent’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed
with the Securities and Exchange Commission, excluding all of the Parent
Activities that constituted a part of and/or comprised the
Business;
(ii) license
the “Pinnacle” name to any person or entity for use anywhere in the world in the
Restricted Business;
(iii) intentionally
cause or seek to persuade any customer, distributor, reseller, retailer, agent,
representative or supplier of any Noncompetition Party or any of its respective
subsidiaries or controlled Affiliates in connection with the Business prior to
the Closing Date (the foregoing collectively being referred to as “Business Associates”)
to discontinue or materially modify the status or relationship of such person or
entity with the Buyer as a Business Associate following the Closing Date;
or
(iv) intentionally
cause or seek to dissuade any person or entity known to any Noncompetition Party
to be considering a potential Business Associate relationship with the Buyer
from entering into a Business Associate relationship with the
Buyer.
(b) Notwithstanding
anything to the contrary set forth in this Section 10.2, and
subject in all respects to the restrictions set forth in the proviso that
follows below in this paragraph (ii), no Noncompetition Party (nor any of its
respective subsidiaries or Affiliates) will be prohibited from acquiring (a
“Limited
Acquisition”) any entity (an “Acquired Entity”)
which is engaged in the Restricted Business if the operations of the Acquired
Entity that engage in the Business are sold or terminated within nine (9) months
of the closing date of such Limited Acquisition.
10.3 Use of Name for Transition
Period.
(a) Following
the Closing, except as otherwise provided herein and in the Ancillary
Agreements, the Buyer shall have no rights to use any Retained Marks and will
not hold itself out as having any affiliations with any Seller.
(b) Notwithstanding
the provisions of Section 10.2(a), the
Buyer may:
(i) continue
to use the Retained Marks for a period of eighteen (18) months following the
Closing Date on Business Products that are (i) in process as of the Closing,
(ii) in production as of the Closing or (iii) assembled and completed as of the
Closing, (iii) subject to outstanding Open Customer Orders are placed on or
before the Closing Date, provided in each case such Business Products are not
modified or enhanced in any manner, or (iv) that are ordered from the vendors of
the Business on or before the ninetieth (90th) day
following the Closing Date provided the number of units of Business Product do
not exceed the number of units of Business Products to be sold between January
1, 2009 and March 31, 2009 in the ordinary course of business; and
(ii) disclose
to its customers and potential customers that it is conducting the Business as a
successor to the Sellers from and after the Closing Date.
(c) The
licenses to use the Retained Marks set forth in this Section 10.3 shall
not prohibit the Parent or any of its Affiliates from using the Retained Marks
(or any similar name or logo) during the term of the respective license or
thereafter in any manner; provided, however, that the Parent and its Affiliates
shall not license or otherwise permit use of the Retained Marks by any entity
which is engaged in the Business during the Noncompetition
Period. The Buyer agrees that its use of the Retained Marks shall be
consistent in all material respects with the past practices of the Sellers and
their respective direct and indirect Subsidiaries in connection with their
conduct of the Business prior to the Closing Date and, with respect to such use,
the Buyer shall adhere to substantially similar quality standards to which the
Sellers and their direct and indirect Subsidiaries adhered immediately prior to
the Closing.
10.4 Solicitation and
Hiring.
(a) For a
period of one (1) year after the Closing Date, the Buyer shall not, either
directly or indirectly (including through any Affiliate), hire any officer,
director or employee of the Sellers or any Subsidiary of the Sellers; provided, however, that
the restrictions set forth in this Section 10.4(a) shall
not be applicable with respect to the hiring of any employee of the Sellers or
any Subsidiary of the Sellers (i) contemplated to be employed by the Buyer or
any Subsidiary or Affiliate of the Buyer pursuant to the terms of this
Agreement, and/or (ii) who has been employed in connection with, or engaged in,
the Business prior to the Closing Date.
(b) For a
period of one (1) year after the Closing Date, the Sellers shall not, either
directly or indirectly (including through any Affiliate), hire any officer,
director or employee of the Buyer or any Subsidiary of the Buyer.
10.5 Use of Retained Marks in
Transferred Technology. The Sellers and the Buyer will
cooperate and use reasonable commercial efforts to provide to the Buyer for
inclusion in Buyer’s web site, as promptly as practicable following the Closing,
all text, images and other content contained in all web sites relating
exclusively to the Business maintained by the Sellers (or their Affiliates)
substantially in the form existing as of the date hereof or the Closing
Date. Subject to the provisions of Section 10.3, prior
to including any such text, images or other content in its web site, the Buyer
shall remove all references to the Retained Marks from any such text, images or
other content. The Sellers (or their Affiliates) shall retain
ownership of all domain names employing the name “Pinnacle”, “Pinnacle Systems”
and “Pinnaclesys” and neither the Buyer nor any of its Affiliates shall have any
right or license to any such domain name. To the extent the Business
utilized any internet protocol address space allocated to the Sellers, such
internet protocol address space shall remain the property of the Sellers, and no
rights or licenses are granted to the Buyer with respect thereto.
10.6 Payment of
Liabilities.
(a) In the
event that any Seller (or an Affiliate thereof) inadvertently pays or
discharges, after the Closing, any Buyer Liabilities, the Buyer shall reimburse
such Seller or Affiliate for the amount so paid or discharged within thirty (30)
days of being presented with written evidence of such payment or
discharge.
(b) In the
event that the Buyer (or an Affiliate thereof) inadvertently pays or discharges,
after the Closing, any Excluded Liabilities, the Sellers shall reimburse the
Buyer or its Affiliate for the amount so paid or discharged within thirty (30)
days of being presented with written evidence of such payment or
discharge.
(c) In the
event that the Buyer receives any payment from an account debtor of any Seller
relative to accounts receivable of such Seller subsequent to the Closing Date
with respect to any such account, the Buyer shall deliver same to such Seller
not later than ten (10) Business Days after the Buyer’s receipt
thereof.
(d) In
the event that any Seller receives any payment from an account debtor of the
Buyer relative to accounts receivable of the Buyer subsequent to the Closing
Date with respect to any such account, such Seller shall deliver same to the
Buyer not later than ten (10) Business Days after such Seller’s receipt
thereof.
10.7 Warranty
Obligations. The Buyer shall assume all after-sales service
and warranty obligations with respect to products manufactured and sold by the
Sellers on or prior to the Closing Date (the “Assumed Warranty
Obligations”). The Sellers shall pay to the Buyer an amount
equal to the Buyer’s standard charges for parts and labor (which are consistent
with the charges imposed on the Buyer’s customers) in satisfying the Assumed
Warranty Obligations. The Buyer shall invoice the Sellers monthly for
all charges for parts and labor, and the Sellers shall pay such invoice within
thirty (30) days after receipt. The provisions of this Section 10.7 shall
not relieve Buyer or any Seller of its indemnity obligations pursuant to Article VI, if any,
relating to or arising out of product liability claims with respect to Business
Products manufactured and sold by the Sellers or an Affiliate thereof on or
prior to the Closing Date.
10.8 Test
Data. Within ten (10) days after the Closing, the Sellers
shall deliver to Buyer a copy of all test data and other information reasonably
required for the FCC and CE self certifications related to the Business
Products.
10.9 Product Liability
Insurance. For a period of two (2) years following the Closing
Date, each Seller shall, at its own expense, name Buyer as an additional named
insured on its product liability insurance policies maintained by Seller (as of
the date hereof) in connection with the Business (the “Insurance
Policies”). Each Seller shall from time to time after the date
hereof, upon request of the Buyer, provide to Buyer an insurance endorsement
confirming that such Insurance Policies are in effect. Unless
prohibited by the terms of the Insurance Policies or the rules and regulations
of the underwriter of the Insurance Policies, a copy of renewals, replacements
or endorsements thereto shall also be delivered to Buyer in a timely manner, and
promptly upon the request therefore by Buyer.
ARTICLE
XI
DEFINITIONS
For
purposes of this Agreement, each of the following terms shall have the meaning
set forth below.
“Accountant” shall
mean a nationally recognized independent accounting firm who is not the
independent accounting firm of either the Buyer or the Sellers.
“Acquired Assets”
shall have the meaning set forth in Section
1.1(a).
“Acquired Entity”
shall have the meaning set forth in Section
10.2(b).
“Action” shall mean
any action, suit, proceeding, arbitration, claim or investigation by a
Governmental Entity.
“Affiliate” shall have
the meaning assigned to it in Rule 12b-2 under the Securities and Exchange Act
of 1934; provided, that where
such term is used in relation to the Parent, “Affiliate” shall only mean
Affiliates that are controlled by the Parent and shall not include persons or
entities that control, or are under common control with, the
Parent.
“Agreement” shall have
the meaning set forth in the forepart of this Agreement.
“Ancillary Agreements”
shall mean the agreements and instruments referred to in clauses (iii), (vii),
(viii), (ix), (x), and (xi) of Section
1.3(b).
“Assigned Contracts”
shall mean the rights under the contracts or agreements to which any Seller is
party listed on Schedule
1.1(a)(ii).
“Assumed Employee
Liabilities” shall mean all liabilities and obligations of the Sellers
and their Affiliates for sick days, vacation days and severance payments accrued
for all periods of employment ended or ending prior to or as of the Closing with
respect to each Continuing Employee who is employed by the Buyer at, or within
sixty (60) days following, the Closing.
“Assumed Warranty
Obligations” shall have the meaning set forth in Section
10.7.
“Business” shall mean
the development, manufacture and sale of (i) personal devices containing a
television tuner for receiving over-the-air, satellite and/or cable television
signals that are used in conjunction with personal computers for personal
television viewing or (ii) the application software designed to operate directly
with such personal devices for device management, playback and programming
received through such personal devices, in each case as heretofore conducted by
the Sellers.
“Business Associates”
shall have the meaning set forth in Section
10.2(a)(iii).
“Business as Conducted by the
Buyer” shall mean:
(a) the
sale and distribution of the Consigned Inventory; and
(b) the
manufacture, sale and development by the Buyer after the Closing of (i) personal
devices containing a television tuner for receiving over-the-air, satellite
and/or cable television signals that are used in conjunction with personal
computers for personal television viewing, but only to the extent that such
devices were heretofore developed or designed by the Sellers (and are sold and
transferred to the Buyer by the Sellers pursuant to this Agreement) or (ii) the
application software designed to operate directly with such personal devices for
device management, playback and programming received through such personal
devices, but only to the extent that such software was heretofore developed by
the Sellers (and sold, assigned or licensed to the Buyer by the Sellers pursuant
to this Agreement).
“Business Benefit
Plans” shall mean any Employee Benefit Plan maintained, or contributed
to, by any Seller for the benefit of Business Employees (and their
beneficiaries) that are material to the Business.
“Business Customers”
shall have the meaning set forth in Section
2.16.
“Business Day” shall
mean any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions located in New York, New York are permitted or
required by law, executive order or governmental decree to remain
closed.
“Business Employees”
shall mean the employees of any Seller or any Subsidiary of any Seller located
in Braunschweig, Germany and listed on Schedule
9.1.
“Business Financial
Statements” shall mean the audited consolidated balance sheets and
consolidated statements of operations and cash flows of the Business as of and
for such fiscal periods as required by Form 8-K under the Securities Exchange
Act of 1934, as amended, contemplated to be filed by the Buyer in connection
with the transactions contemplated this Agreement.
“Business Material Adverse
Effect” shall mean any change, effect or circumstance that (a) is
materially adverse to the business, financial condition or results of operations
of the Business as a whole, or (b) materially impairs the ability of the
Sellers to consummate the transactions contemplated by this Agreement; provided, however, that none of the
following shall constitute a “Business Material Adverse Effect” and none of the
following shall be considered in determining whether a “Business Material
Adverse Effect” exists or a matter would have or result in (or be expected to
have or result in) a “Business Material Adverse Effect”: (i) any adverse change,
effect or circumstance, including employee departures, losses or reductions of
customer orders, supplier products or contract manufacturer capacity (or changes
in the terms offered by customers, suppliers or contract manufacturers), that is
directly attributable to the identity of the Buyer or otherwise to the pendency
or performance of this Agreement or the Ancillary Agreements or the pendency or
consummation of the transactions contemplated hereby or thereby; (ii) any
adverse change, effect or circumstance resulting from changes in worldwide,
regional or national economic conditions affecting any of the countries where
the Business is conducted by the Sellers; (iii) any adverse change, effect or
circumstance resulting from changes in the industry of the Business generally
(except to the extent that the Business as conducted by the Sellers is
disproportionately adversely affected thereby); or (iv) any adverse change,
effect or circumstances resulting from action taken by the Buyer, any action
required to be taken by the Sellers by this Agreement or the Ancillary
Agreements, or any action taken by the Sellers at the direction or request of
the Buyer.
“Business Product”
shall have the meaning set forth in Section
2.19.
“Business Suppliers”
shall have the meaning set forth in Section
2.15.
“Buyer” shall have the
meaning set forth in the first paragraph of this Agreement.
“Buyer Certificate”
shall mean a certificate to the effect that each of the conditions specified in
clauses (a) through (c) (insofar as clause (c) relates to an action, suit or
proceeding involving, or a judgment, order, decree, stipulation or injection
against, the Buyer) of Section 5.2 is
satisfied.
“Buyer Liabilities”
shall have the meaning set forth in Section
1.1(c).
“Buyer Material Adverse
Effect” shall mean a material adverse effect on the ability of the Buyer
to consummate the transactions contemplated by this Agreement.
“Buyer Parent
Guaranty” shall mean the Buyer Parent Guaranty, dated as of the date
hereof, by and between the Sellers and Hauppauge Digital, Inc., in substantially
the form attached hereto as Exhibit B.
“Buyer Share” shall
have the meaning set forth in Section
6.5(e).
“Certification” shall
mean all product certifications and ratings of Governmental Entities for the
Business Products.
“Claim” shall mean any
Action, claim or demand.
“Claim Notice” shall
mean a written notice which contains (i) a description and the claimed amount of
any Damages incurred by the Indemnified Party, (ii) a statement that the
Indemnified Party is entitled to indemnification under Article VI and a
reasonable explanation of the basis therefor, and (iii) a demand for payment in
the amount of such Damages.
“Claimed Amount” shall
mean the amount of any Damages claimed by an Indemnified Party.
“Closing” shall mean
the closing of the transactions contemplated by this Agreement.
“Closing Date” shall
have the meaning set forth in Section
1.3(a).
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Codec License” shall
have the meaning set forth in Schedule
4.8.
“Confidentiality
Agreement” shall mean the Mutual Nondisclosure Agreement, dated
2008, between the Buyer and the Parent.
“Consigned Inventory”
means all inventory of the Sellers and their respective Subsidiaries consigned
to the Buyer pursuant to the Inventory Agreement.
“Consigned Inventory
Damages” shall have the meaning set forth in Section
6.5(e).
“Continuing Employees”
has the meaning set forth in Section
4.7.
“Contract” shall mean
any binding written or oral contract, agreement, lease, purchase order,
arrangement, commitment, understanding or obligation.
“Damages” shall mean
any and all liabilities, monetary damages, fines, fees, penalties, losses,
deficiencies, assessments, out-of-pocket costs and expenses (including, but not
limited to court costs, costs and expenses of investigation and reasonable
attorneys’ fees and expenses).
“Decree” shall mean
any order, injunction, judgment, award or decree.
“Disclosure Schedule”
shall mean the disclosure schedule provided by the Sellers to the Buyer on the
date hereof.
“Employee Benefit
Plan” shall mean (i) any “employee pension benefit plan” (as defined in
Section 3(2) of ERISA) other than a Multiemployer Plan, (ii) any
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and
(iii) to the extent applicable to more than one employee, any other written or
oral plan, agreement or arrangement involving compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation, or fringe benefits, but excluding any Employee Benefit Plan
required to be maintained or contributed to under foreign law.
“Environment” shall
mean any surface water, ground water, drinking water supply, land surface or
subsurface strata, or ambient air.
“Environmental Law”
shall mean any foreign, federal, state, provincial, or municipal statute, rule
or regulation as in effect on the Closing Date relating to the protection of the
Environment or occupational health and safety, including, without limitation,
any statute or regulation pertaining to (i) the presence, manufacture,
processing, use, treatment, storage, disposal, transportation, handling or
generation of Materials of Environmental Concern; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; or (iv) the Release or
threatened Release of Materials of Environmental Concern to the
Environment.
“Environmental
Matters” shall mean any legal obligation or liability arising under
Environmental Law.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
shall mean any entity which is a member of (i) a controlled group of
corporations (as defined in Section 414(b) of the Code), (ii) a group
of trades or businesses under common control (as defined in Section 414(c)
of the Code), or (iii) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of
the Code), any of which includes any Seller.
“Excess Buyer Amount”
shall have the meaning set forth in Section
6.5(e).
“Excess Seller Amount”
shall have the meaning set forth in Section
6.5(e).
“Excluded Assets”
shall have the meaning set forth in Section
1.1(b).
“Excluded Liabilities”
shall have the meaning set forth in Section
1.1(d).
“GAAP” shall mean
United States generally accepted accounting principles.
“German Transfer Deed”
shall mean the deed of transfer for the Acquired Assets located in Germany, in
form reasonably acceptable to the Buyer and the Sellers.
“Governmental Entity”
shall mean any federal, state, local and foreign court, arbitrational tribunal,
administrative agency or commission, bureau, instrumentality or other
governmental or regulatory authority or agency.
“Income Taxes” shall
mean any taxes imposed upon or measured by net income.
“Indemnification
Threshold” shall have the meaning set forth in Section
6.5(a)(i).
“Indemnified Buyer
Party” shall have the meaning set forth in Section
6.1.
“Indemnified Party”
shall mean an Indemnified Buyer Party or an Indemnified Seller Party (as the
case may be).
“Indemnified Seller
Party” shall have the meaning set forth in Section
6.2.
“Indemnifying Party”
shall mean the party from whom indemnification is sought by the Indemnified
Party.
“Information” shall
mean all information, records, books, Contracts, instruments, documents,
correspondence, computer data and other data and information in whatever
form.
“Insurance Policies”
shall have the meaning set forth in Section
10.9.
“Intellectual
Property” shall mean the following subsisting throughout the world: (i)
Patent Rights; (ii) Trademarks and all goodwill in the Trademarks; (iii)
copyrights, designs, data and database rights and registrations and applications
for registration thereof, including moral rights of authors; (iv) mask works and
registrations and applications for registration thereof and any other rights in
semiconductor topologies under the laws of any jurisdiction; (v) inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
nonpatentable, whether copyrightable or noncopyrightable and whether or not
reduced to practice; and (vi) other proprietary rights relating to any of the
foregoing (including remedies against infringement thereof and rights of
protection of interest therein under the laws of all
jurisdictions).
“Inventory Agreement”
shall mean the Inventory and Product Return Agreement, dated as of the Closing
Date, by and between the Parent and certain of the Sellers, on the one hand, and
the Buyer, on the other hand, in substantially the form attached hereto as Exhibit
D.
“Knowledge” shall
mean, (i) with respect to the Buyer, the actual knowledge of the Chief Executive
Officer and Chief Financial Officer of Hauppauge Digital, Inc. and such
knowledge as such Persons should have after a reasonable inquiry and (ii) with
respect to the Sellers, the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇ - Director
Corporate Development, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Consumer Division CFO, ▇▇▇▇▇ ▇▇▇▇▇
- Vice President WW Consumer Engineering, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ - Vice President
Consumer Marketing & Customer Support, ▇▇▇▇▇ ▇▇▇▇▇▇▇ - Vice President North
American Sales, ▇▇▇▇▇ ▇▇▇▇▇▇ - Vice President EMEA Sales, ▇▇▇▇ ▇▇▇▇▇ - Director
of Operations, ▇▇▇▇▇ ▇▇▇▇▇▇ - WW Director TV Viewing Product Management,
▇▇▇▇▇▇▇▇▇ ▇▇▇ - Director Engineering Braunschweig, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Director
Pinnacle Legal Services, and such knowledge as such Persons should have after a
reasonable inquiry.
“Letter of Intent”
shall have the meaning set forth in Section
12.4.
“License
Agreement” shall mean the Intellectual Property License Agreement,
dated as of the Closing Date, by and between Parent and certain of the Sellers,
on the one hand, and the Buyer, on the other hand, in substantially the form
attached hereto as Exhibit
E.
“Limited Acquisition”
shall have the meaning set forth in Section
10.2(b).
“Listed Intellectual Property
Agreements” shall have the meaning set forth in Section
2.9.
“Materials of Environmental
Concern” shall mean any hazardous substance, pollutant or contaminant, as
those terms are defined under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, solid waste and hazardous
waste, as those terms are defined in the Federal Resource Conservation and
Recovery Act (as in effect on the date of this Agreement) and oil, petroleum and
petroleum products.
“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA.
“Noncompetition Party”
shall mean the Parent (its officers and directors) and all Affiliates
thereof.
“Noncompetition
Period” shall mean the period commencing on the Closing Date and
continuing until the fifth (5th) anniversary of the Closing Date.
“Notice” shall have
the meaning set forth in Section
9.1(b).
“Occurrence” shall
mean any accident, happening or event which takes place at any time which is
caused or allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship including any alleged failure to
warn or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving, in
each case any Business Product that is reasonably likely to result in a claim or
loss.
“Open Customer Orders”
shall mean all orders from customers of the Business that have not been shipped
that were incurred in the ordinary course of business consistent with Past
Practice.
“Open Vendor Orders”
shall mean all orders from suppliers and vendors of the Business that have
issued by any Seller but with respect to which, and to the extent, the
underlying goods have not been received that were incurred in the ordinary
course of business consistent with Past Practice.
“Order Certificate”
shall have the meaning set forth in Section
5.1(k).
“Parent” shall have
the meaning set forth in the first paragraph of this Agreement.
“Parent Activities”
shall have the meaning set forth in Section
10.2(a)(i).
“Parent Certificate”
shall mean a certificate to the effect that each of the conditions specified in
clauses (a) through (c) of Section 5.1 is
satisfied.
“Parties” shall mean
the Sellers and the Buyer collectively.
“Past Practice” shall
mean the past practice of the applicable Seller, with such exceptions as will
not result in a Business Material Adverse Effect and such exceptions as are
disclosed in the Disclosure Schedule.
“Patent Rights” shall
mean all patents, patent applications, utility models, design registrations and
certificates of invention and other governmental grants for the protection of
inventions or industrial designs (including all related continuations,
continuations-in-part, divisionals, reissues and reexaminations).
“Permits” shall mean
all permits, licenses, franchises or authorizations from any Governmental Entity
relating to the Business and listed on Schedule 1.1(a)(vii),
the absence of which will not in and of itself result in a Business Material
Adverse Effect.
“Person” shall mean
any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization or
other equity, including any agency, division, subdivision, audit group or
procuring office of a Governmental Entity, whether domestic or foreign,
national, state or local.
“Post Closing Assets”
shall have the meaning set forth in Section
1.5(b).
“Potential Offeror”
shall have the meaning set forth in Section
4.5.
“Potential
Transaction” shall have the meaning set forth in Section
4.5.
“Product Liability
Policies” shall have the meaning set forth in Section
2.19(b).
“Public and Private Plan
Liability” shall mean any and all liabilities and obligations under or in
connection with any benefit, welfare, social compensation or pension program,
fund, plan, agreement or arrangement (whether public or private) with respect to
any Seller Personnel, including any written or oral program, fund, plan,
agreement or arrangement involving payment or compensation, including insurance
coverage, remuneration payments, severance benefits, disability benefits,
deferred compensation, bonuses, stock options, stock purchase, phantom stock,
stock appreciation or any and all other forms of social compensation, incentive
compensation or post-retirement compensation or fringe benefits.
“Purchase Price” shall
mean Five Million Dollars (U.S. $5,000,000).
“Purchased Software”
shall have the meaning set forth in Section
1.5(c).
“Rebates” shall mean
rebates, credits and allowances for Business Products.
“Release” shall mean
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the Environment
(including the abandonment or discarding of barrels, containers, and other
closed receptacles containing any Materials of Environmental
Concern).
“Restricted Business”
shall mean the development, manufacture and sale of (i) personal devices
containing a television tuner for receiving over-the-air, satellite and/or cable
television signals that are used in conjunction with personal computers for
personal television viewing or (ii) the application software designed to operate
directly with such personal devices for device management, playback and
programming received through such personal devices.
“Retained Marks” shall
mean any Trademarks, tradenames, logos or any contraction, abbreviation or
simulation of any Seller.
“Security Interest”
shall mean any mortgage, pledge, security interest, encumbrance, charge or other
lien (whether arising by contract or by operation of law), other than
(i) mechanic’s, materialmen’s, landlord’s and similar liens in the ordinary
course of business in amounts not delinquent, (ii) liens arising under
worker’s compensation, unemployment insurance, social security, retirement and
similar legislation, exclusive of borrowed money (iii) liens on goods in
transit incurred pursuant to documentary letters of credit, in each case arising
in the ordinary course of business, (iv) liens for Taxes not yet due and
payable which are not yet delinquent or which are being contested in good faith,
(v) liens for Taxes which are being contested in good faith and by
appropriate proceedings, (vi) liens arising solely by action of the Buyer,
and (vii) liens which do not materially and adversely impair the use or value of
the Acquired Assets.
“Seller PCTV Intellectual
Property” shall mean the Intellectual Property set forth on Schedule
1.1(a)(iii).
“Sellers” shall have
the meaning set forth in the first paragraph of this Agreement.
“Sellers Share” shall
have the meaning set forth in Section
6.5(e).
“Social Plan” shall
have the meaning set forth in Section
4.1(a)(iii).
“Subsidiary” shall
mean any corporation, partnership, trust, limited liability company or other
non-corporate business enterprise in which the Parent (or another Subsidiary)
holds stock or other ownership interests representing more than fifty percent
(50%) of the voting power of all outstanding stock or ownership interests of
such entity.
“Tax Audit” shall mean
any audit or examination of Taxes by any Taxing Authority.
“Taxes” shall mean all
taxes, including without limitation income, gross receipts, ad valorem,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, social security charges and franchise taxes imposed by
the United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof.
“Taxing Authority”
shall mean any applicable governmental authority responsible for the imposition
of Taxes.
“Tax Purchase Price”
shall mean the amount of the Purchase Price and the Buyer
Liabilities.
“Tax Returns” shall
mean all reports, returns, declarations, statements, forms or other information
required to be supplied to a Taxing Authority in connection with
Taxes.
“Trademarks” shall
mean all registered trademarks and service marks, logos, Internet domain names,
corporate names and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress.
“Transfer” shall have
the meaning set forth in Section
9.1(a).
“Transition Services
Agreement” shall mean a transition services agreement in such form as is
agreed among the Parties prior to Closing with such terms and conditions as are
acceptable to the Buyer and the Sellers in their respective sole discretion,
which shall, with regard to each, by final, conclusive and
binding. The Parties contemplate, but it shall not be required, that
the Transition Services Agreement shall include, among other matters, an
economic allocation of credits, discounts, volume rebates, market development
funds and other promotional and pricing items such that credits and debits are
allocated proportionately to the Buyer and the Sellers based on dollar volume of
relevant sales.
“Unaudited Financial
Information” shall mean the statement of revenue, cost of goods sold,
gross margin and other information set forth on Schedule
2.5(b).
ARTICLE
XII
MISCELLANEOUS
12.1 Press Releases and
Announcements. Immediately after the execution and delivery of
this Agreement, the Parties will issue a joint press release announcing the
execution and delivery of this Agreement, the form reasonable acceptable to the
Parties. No Party shall issue (and each Party shall cause its
Affiliates not to issue) any other press release or public disclosure relating
to the subject matter of this Agreement without the prior written approval of
the other Party or Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
law, regulation or stock exchange rule (in which case the disclosing Party shall
advise the other Party or Parties and the other Party or Parties shall, if
practicable, have the right to review such press release or announcement prior
to its publication). Unless specifically required by the Securities
and Exchanged Commission, neither Party shall file or publicly disclose, either
in whole or in part, any schedule to this agreement, including the Disclosure
Schedule.
12.2 No Third Party
Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors
and permitted assigns and, to the extent specified herein, their respective
Affiliates.
12.3 Action to be Taken by
Affiliates. The Parties shall cause their respective
Affiliates to comply with all of the obligations specified in this Agreement to
be performed by such Affiliates.
12.4 Entire
Agreement. This Agreement (including the documents referred to
herein) and the Confidentiality Agreement constitute the entire agreement among
the Buyer, on the one hand, and the Sellers, on the other hand. The
representations, warranties, covenants and agreements set forth in this
Agreement and in the financial statements, schedules or exhibits delivered
pursuant hereto constitute all the representations, warranties, covenants and
agreements of the Parties and upon which the Parties have relied, and shall not
be deemed waived or otherwise affected by any investigation made by any Party
hereto. This Agreement supersedes any prior agreements or
understandings among the Buyer, on the one hand, and the Sellers, on the other
hand, and any representations or statements made by or on behalf of any Seller
or any of their respective Affiliates to the Buyer, whether written or oral,
with respect to the subject matter hereof, other than the Confidentiality
Agreement, and the parties hereto specifically disclaim reliance on any such
prior representations or statements to the extent not embodied in this
Agreement. The Confidentiality Agreement, insofar as it covers
information relating exclusively or primarily to the Business, shall terminate
effective as of the Closing, but shall remain in effect insofar as it covers
other information disclosed thereunder. The Buyer and the Parent
hereby agree that from and after the date hereof, that certain letter agreement between them
dated September 29, 2008 (together with Exhibits A and B thereto, the “Letter of Intent”)
shall be of no further force or effect, other than the provisions of Paragraphs
5(a), 5(b), 5(c), 5(d), 10, 11 and 12 thereof, which shall continue in full
force and effect in accordance with their terms.
12.5 Succession and
Assignment. No Party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the Parent (in the case of an assignment by the Buyer) or the Buyer
(in the case of an assignment by any Seller), which written approval shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing,
this Agreement, and all rights, interests and obligations hereunder, may be
assigned, without such consent, to (i) any entity that acquires all or
substantially all of a Party's business or assets, (ii) by the Buyer to one or
more Affiliates or the Sellers to its Subsidiaries. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.
12.6 Notices. All
notices, requests, demands, claims and other communications hereunder shall be
in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly delivered four (4) Business Days after it is sent
by registered or certified mail, return receipt requested, postage prepaid, or
one (1) Business Day after it is sent for next Business Day delivery via a
reputable nationwide overnight courier service, in each case to the intended
recipient as set forth below:
|
If to the Buyer:
Hauppauge
Digital, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention:▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
Copy to:
Certilman
Balin ▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
|
|
If to any Seller:
Avid
Technology, Inc.
Avid
Technology Park
▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇ ▇▇▇ ▇▇▇▇
Attention:
Legal Department
|
Copies to:
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇
▇▇▇ ▇▇▇▇
Attention:
▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
|
Any Party
may give any notice, request, demand, claim, or other communication hereunder
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the Party for whom
it is intended. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other Parties notice in the manner herein set forth.
12.7 Amendments and
Waivers. The Parties may mutually amend or waive any provision
of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Party to be charged therewith. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
12.8 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
12.9 Expenses. Except
as otherwise specifically provided to the contrary in this Agreement, each of
the Parties shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
12.10 Specific
Performance. Each Party acknowledges and agrees that the other
Party or Parties would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees that the other
Party or Parties may be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement including Section 10.2 and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter.
12.11 Governing
Law. This Agreement and any disputes hereunder shall be
governed by and construed in accordance with the internal laws of the State of
New York without giving effect to any choice or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than those of the State
of New York.
12.12 Submission to
Jurisdiction. Each Party (a) submits to the exclusive
jurisdiction of any state or federal court sitting in New York, New York in any
action or proceeding arising out of or relating to this Agreement, (b) agrees
that all claims in respect of such action or proceeding may be heard and
determined only in any such court, (c) waives any claim of inconvenient forum or
other challenge to venue in such court, and (d) agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other
court. Each Party agrees to accept service of any summons, complaint
or other initial pleading made in the manner provided for the giving of notices
in Section
12.6. Nothing in this Section 12.12
however, shall affect the right of any Party to serve such summons, complaint or
initial pleading in any other manner permitted by law.
12.13 Bulk Transfer
Laws. The Buyer acknowledges that the Sellers will not comply
with the provisions of the bulk transfer laws of any jurisdiction in connection
with the transactions contemplated by this Agreement.
12.14 Construction.
(a) The
language used in this Agreement shall be deemed to be the language chosen by the
Parties to express their mutual intent, and no rule of strict construction shall
be applied against any Party.
(b) Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
(c) The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) Any
reference herein to an Article, section or clause shall be deemed to refer to an
Article, section or clause of this Agreement, unless the context clearly
indicates otherwise.
(e) As used
in this Agreement, the word “including” and its variants shall mean “including,
without limitation,” the masculine gender shall include the feminine and the
neuter, and the singular number shall include the plural, and vice
versa.
(f) All
references to “$”, “Dollars” or “US$” refer to currency of the United States of
America.
12.15 Foreign Exchange
Conversions. If any amount to be paid, transferred, allocated,
indemnified, reimbursed or calculated pursuant to, or in accordance with, the
terms of this Agreement or any Exhibit or Schedule (including the Disclosure
Schedule) referred to herein (including without limitation the calculation,
payment or reimbursement of Damages under Article VI ) is
originally stated or expressed in a currency other than United States Dollars,
then, for the purpose of determining the amount to be so paid, transferred,
allocated, indemnified, reimbursed or calculated, such amount shall be converted
into United States Dollars at the exchange rate between those two currencies
most recently quoted in The Wall Street
Journal in New York as of the Business Day immediately prior to (or, if
no such quote exists on such Business Day, on the closest Business Day prior to)
the day on which the Party required to make such payment, transfer,
indemnification, reimbursement or calculation first becomes obligated to do so
hereunder (or, in the case of Article VI, would
have first become obligated to do so but for the operation of Section 6.5(a));
provided, however, that nothing in this
Section 12.15
shall be deemed to require any Party to make any foreign currency conversion or
other similar calculation that violates or conflicts with, or otherwise causes a
Party to violate, applicable law or GAAP.
12.16 Action or Consent by the
Sellers. For purposes of this Agreement and the Ancillary
Agreements (including any notice or consent to be given or action to be taken
hereunder or thereafter or in connection herewith or therewith) and the
transactions contemplated hereunder, the consent of any Seller shall constitute
the consent of all Sellers.
12.17 Incorporation of Exhibits
and Schedules. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
12.18 Counterparts and Facsimile
Signature. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
12.19 Action or Consent by the
Sellers. For purposes of this Agreement and the Ancillary
Agreements (including any notice or consent to be given or action to be taken
hereunder or thereafter or in connection herewith or therewith) and the
transactions contemplated hereunder, the act or consent of any Seller shall
constitute the act or consent of all Sellers.
12.20 Joint and Several
Obligations of the Sellers. All representations, warranties,
covenants and agreements made by each Seller, and/or any Affiliate of any of the
foregoing in this Agreement and/or in any Transaction Document shall be, and
hereby are, deemed to be made jointly and severally by all Sellers and to be
subject to the terms hereof.
IN
WITNESS WHEREOF, the Buyer and the Sellers have caused this instrument to be
duly executed under seal as of and on the date first above written.
THE
BUYER:
PCTV
Corp.
/s/
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇
Chief
Executive Officer
THE
SELLERS:
Avid
Technology, Inc.
/s/
▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇
Executive
Vice President, Chief
Administrative
Officer and Chief Financial
Officer
THE
SELLERS:
Pinnacle
Systems, Inc.
/s/
▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇
President
THE
SELLERS:
Avid
Technology International BV
/s/
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
Director
THE
SELLERS:
Avid
Development GmbH
/s/
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
Managing
Director
THE
SELLERS:
Avid
Technology GmbH
/s/
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
Procura
EXHIBIT
A — FORM OF ▇▇▇▇ OF SALE
This ▇▇▇▇ of Sale dated as of
_________________, 200_ is executed and delivered by
__________________________________ [Insert name of each Seller] ( which are
collectively referred to herein as the “Sellers”), to
_____________, a __________ corporation (the “Buyer”). All
capitalized terms used in this ▇▇▇▇ of Sale and not otherwise defined herein
shall have the respective meanings ascribed to them in the Purchase and Sale
Agreement dated as of _________, 200_ among, inter alia, [the Parent], a
_____________ corporation, the Buyer and the Sellers (the “Agreement”).
WHEREAS,
pursuant to the Agreement, each Seller has agreed to sell, convey, assign,
transfer and deliver to the Buyer, and the Buyer has agreed to purchase and
acquire, all of such Seller’s right, title and interest in and to the assets,
properties and rights of the Seller described in the Agreement;
NOW, THEREFORE, in consideration of the
mutual promises set forth in the Agreement and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Sellers hereby
agree as follows:
1. The
Sellers hereby sell, convey, assign, transfer and deliver to the Buyer, its
successors and assigns, all of the Acquired Assets.
2. This
sale, conveyance, assignment and transfer has been executed and delivered by the
Sellers in accordance with the Agreement and is expressly made subject to those
liabilities, obligations and commitments which the Buyer has expressly assumed
and agreed to perform, pay and discharge pursuant to the Assumption Agreement
executed by the Buyer of even date herewith.
3. Each
Seller, by its execution of this ▇▇▇▇ of Sale, and the Buyer, by its acceptance
of this ▇▇▇▇ of Sale, hereby acknowledges and agrees that neither the
representations and warranties nor the rights and remedies of the Parties under
the Agreement shall be deemed to be enlarged, diminished, modified or altered in
any way by this instrument.
4. This ▇▇▇▇
of Sale shall be governed by and construed in accordance with the internal laws
of the State of New York without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than those of
the State of New York.
IN
WITNESS WHEREOF, the Sellers and the Buyer have caused this instrument to be
duly executed under seal as of and on the date first above written.
[The
Sellers]
By:________________________________
Name:_____________________________
Title:______________________________
By:________________________________
Name:_____________________________
Title:______________________________
SIGNATURE
PAGE TO ASSET PURCHASE AGREEMENT
ACCEPTED:
__________________________
By:________________________________
Title:______________________________
SIGNATURE
PAGE TO ASSET PURCHASE AGREEMENT
EXHIBIT
B — BUYER PARENT GUARANTY
E-
EXHIBIT
C — FORM OF ASSUMPTION AGREEMENT
This
Assumption Agreement dated as of ________________, 200_, is made by __________,
a ___________ corporation ( the “Buyer”), in favor
of _____________________ [Insert name of each Seller] (which are each
individually referred to herein as an “Seller” and are
collectively referred to herein as “Sellers”). All
capitalized terms used in this Assumption Agreement and not otherwise defined
herein shall have the respective meanings ascribed to them in the Purchase and
Sale Agreement dated as of ____________, 200_ among, inter alia, ___________
[Parent], a __________ corporation, the Buyer and the Sellers (the “Agreement”).
WHEREAS, pursuant to the Agreement,
each Seller has agreed to sell, convey, assign, transfer and deliver to the
Buyer, and the Buyer has agreed to purchase and acquire, all of such Seller’s
right, title and interest in and to the assets, properties and rights of the
Seller described in the Agreement; and
WHEREAS, in partial consideration
therefor, the Agreement requires the Buyer to assume certain of the liabilities
of the Sellers relating to the Business;
NOW, THEREFORE, in consideration of the
mutual promises set forth in the Agreement and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Buyer hereby
agrees as follows:
1. The Buyer
hereby assumes and agrees to pay, perform and discharge when due all of the
Buyer Liabilities.
2. The
Buyer, by its execution of this Assumption Agreement, and each Seller, by its
acceptance of this Assumption Agreement, hereby acknowledges and agrees that
neither the representations and warranties nor the rights and remedies of the
Parties under the Agreement shall be deemed to be enlarged, diminished, modified
or altered in any way by this instrument.
3. The
Assumption Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of laws of any jurisdiction other
than those of the State of New York.
IN
WITNESS WHEREOF, the Buyer and the Sellers have caused this instrument to be
duly executed under seal as of and on the date first above written.
E
[The
Buyer]
By:________________________________
Name:_____________________________
Title:______________________________
[The
Sellers]
By:________________________________
Name:_____________________________
Title:______________________________
By:________________________________
Name:_____________________________
Title: ______________________________
F-
EXHIBIT
D — FORM OF INVENTORY AGREEMENT
F-
EXHIBIT
E — FORM OF LICENSE AGREEMENT