EXHIBIT 1
STOCK AND WARRANT PURCHASE AGREEMENT
dated July 26, 2000
by and between
SONY ELECTRONICS INC.
and
PANAVISION INC.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions.........................................................................1
1.2 Knowledge...........................................................................5
1.3 Interpretation......................................................................6
ARTICLE II
CLOSING; PURCHASE AND SALE
2.1 The Closing.........................................................................6
2.2 Issuance and Delivery of the Purchase Shares and Issuance of the Warrant............6
2.3 The Purchase Price..................................................................6
2.4 Delivery of Purchase Price..........................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1 Organization; Good Standing.........................................................7
3.2 Subsidiaries........................................................................7
3.3 Authority; Execution and Delivery; Enforceability...................................7
3.4 Non-Contravention...................................................................7
3.5 Corporate Documents.................................................................8
3.6 Capitalization; Options.............................................................8
3.7 Consents and Approvals..............................................................9
3.8 Title to Assets.....................................................................9
3.9 SEC Reports and Financial Statements................................................9
3.10 Intellectual Property Rights.......................................................10
3.11 Insurance..........................................................................11
3.12 Contracts..........................................................................11
3.13 Tax Matters........................................................................12
3.14 Absence of Certain Changes and Events..............................................12
3.15 Litigation and Claims..............................................................13
3.16 Governmental Permits; Compliance with Laws.........................................13
3.17 Environmental Matters..............................................................13
3.18 Employee Plans.....................................................................14
3.19 No Finder..........................................................................15
3.20 Section 203 of the DGCL............................................................15
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 Organization and Good Standing.....................................................15
4.2 Corporate Authority; Execution and Delivery; Enforceability........................15
4.3 Non-Contravention..................................................................15
4.4 Consents and Approvals.............................................................16
4.5 Litigation and Claims..............................................................16
4.6 No Finder..........................................................................16
4.7 Investment Representations.........................................................16
4.8 Accredited Investor................................................................16
4.9 Ownership of Common Stock..........................................................17
ARTICLE V
COVENANTS
5.1 Governmental Consents..............................................................17
5.2 Restrictive Legends................................................................17
5.3 Publicity..........................................................................17
ARTICLE VI
MISCELLANEOUS
6.1 Survival; Certain Other Matters....................................................18
6.2 Further Assurances.................................................................19
6.3 Expenses of the Transaction........................................................19
6.4 Notices............................................................................19
6.5 No Modification Except in Writing..................................................20
6.6 Entire Agreement...................................................................20
6.7 Severability.......................................................................20
6.8 Assignment.........................................................................21
6.9 Governing Law; Jurisdiction........................................................21
6.10 Captions...........................................................................21
6.11 Recovery of Attorney's Fees........................................................21
6.12 Counterparts.......................................................................21
Annex I: Seller Disclosure Schedule
Exhibit A: Warrant Certificate
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STOCK AND WARRANT PURCHASE AGREEMENT
STOCK AND WARRANT PURCHASE AGREEMENT ("Agreement"), made and entered
into this 26th day of July, 2000, by and between SONY ELECTRONICS INC., a
Delaware corporation (the "Buyer"), and PANAVISION INC., a Delaware corporation
(the "Seller").
W I T N E S S E T H:
WHEREAS, the Buyer desires to purchase and acquire from the Seller, and
the Seller desires to issue and deliver to the Buyer, 714,300 shares (the
"Purchase Shares") of the Seller's common stock, par value $0.01 ("Common
Stock"), free and clear of all liabilities, obligations, claims, liens, options,
charges and encumbrances of any kind other than restrictions on transfer as
provided under the Securities Act and comparable state securities laws, and a
warrant (the "Warrant") to purchase an additional 714,300 shares (the "Warrant
Shares") of Common Stock of the Seller, on the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement shall have the meanings ascribed to such terms in Article I of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants hereinafter contained, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
respective meanings ascribed to them below:
"Affiliate" means, with respect to any specified Person, (i)
any other Person 50% or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held with the power to vote by such specified
Person or (ii) any other Person directly or indirectly controlling, controlled
by or under direct or indirect common control with such specified Person. For
purposes of this definition, the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person by virtue of ownership of voting securities, by contract
or otherwise. For purposes of this Agreement, the Seller and its Affiliates
shall not be deemed to be an Affiliate of the Buyer or of any of the Buyer's
Affiliates or of Newco, and the Buyer and its Affiliates shall not be deemed to
be an Affiliate of the Seller or of any of the Seller's Affiliates or of Newco,
in any such case solely by reason of the existence of this Agreement, the
Transaction Documents or the Operating Agreement.
"Affiliated Group" or "Affiliated Groups" means any
affiliated, consolidated, combined, unitary or similar group (within the meaning
of Section 1504 of the Code, or any comparable provision of state, local or
foreign law, as the case may be) of which the Seller and/or any of its
Subsidiaries is or was a member but only for the periods during which the Seller
or any of its Subsidiaries, as the case may be, is or was a member.
"Agreement" has the meaning ascribed to such term in the
Preamble hereto.
"Business Day" means a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not authorized
or obligated by law to close.
"Buyer" has the meaning ascribed to such term in the Preamble
hereto.
"Closing" has the meaning ascribed to such term in Section
2.1.
"Closing Date" has the meaning ascribed to such term in
Section 2.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto and all regulations
promulgated thereunder.
"Common Stock" has the meaning ascribed to such term in the
Recitals hereto.
"Contracts" shall mean all contracts, agreements, indentures,
promissory notes, guarantees, arrangements, commitments and understandings of
any kind, whether written or oral, to which the Seller or any of its
Subsidiaries is a party or by which the Seller or any of its Subsidiaries or any
of the assets of the Seller or any of its Subsidiaries may be bound.
"Copyrights" has the meaning ascribed to such term in Section
3.10.
"Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
"Environmental Approvals" shall mean all permits, licenses,
consents and approvals necessary for conducting the business of the Seller and
its Subsidiaries which are required under Environmental Laws.
"Environmental Condition" shall mean the presence of Hazardous
Substances in the Environment at concentrations that may result in a claim for
property damage, personal injury or environmental remediation.
"Environmental Laws" shall mean all Governmental Rules
relating to protection of human health or the Environment, including, without
limitation, all Governmental Rules (i) pertaining to reporting, licensing,
permitting, investigation, remediation and removal of, emissions, discharges,
releases or threatened releases of Hazardous Substances or (ii) relating to the
treatment, storage, disposal, transport or handling of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute thereto and all
final or temporary regulations promulgated thereunder.
"ERISA Affiliate" shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with the Seller and its
Subsidiaries, are treated as a single employer
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under any or all of Sections 414(b), (c), (m), or (o) of the Code on the date of
this Agreement or the Closing Date or at any time during the period of five
years ending on the Closing Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and all regulations promulgated thereunder.
"Facility" shall mean any real property or improvements
thereon which is now or has heretofore been owned or used in connection with the
business of the Seller and its Subsidiaries.
"Financial Statements" has the meaning ascribed to such term
in Section 3.9.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
"Governmental Authority" shall mean any federal, state,
municipal or other governmental authority, department, commission, board, agency
or other instrumentality.
"Governmental Permits" shall mean all licenses, franchises,
permits, privileges, immunities, approvals and other authorizations from a
Governmental Authority.
"Governmental Rules" shall mean all statutes, rules,
regulations, codes, ordinances, writs, orders or decrees of any Governmental
Authority.
"Hazardous Substances" shall mean any substance:
(i) the presence of which requires or may hereafter
require notification, investigation, or remediation under
Environmental Laws;
(ii) which is defined as "toxic", a "hazardous
waste", "hazardous material" or "hazardous substance" or
"pollutant" or "contaminant" under any Environmental Laws;
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous to human health or the Environment and is
regulated by any Governmental Authority as of the date hereof;
(iv) which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds;
(v) which contains polychlorinated byphenyls (PCBs)
or asbestos or urea formaldehyde foam insulation; or
(vi) which contains or emits radioactive particles,
waves or materials, including radon gas.
"Intellectual Property" has the meaning ascribed to such term
in Section 3.10.
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"Lien" shall mean all mortgages, pledges, liens, security
interests, conditional sale agreements, charges, encumbrances or restrictions of
any kind or nature.
"Newco" means DHD Ventures, LLC, a Delaware limited liability
company.
"Operating Agreement" shall mean the Operating Agreement of
Newco, dated as of the date hereof, by and between the Seller and the Buyer.
"Patents" has the meaning ascribed to such term in Section
3.10.
"Permitted Liens" shall mean any and all Liens (i) for any
current Taxes or assessments that (x) are not yet delinquent or (y) are being
contested in good faith and with respect to which reserves in conformity with
GAAP have been provided on the Financial Statements, or (ii) created by statute
of carriers, warehousemen, mechanics, laborers or materialmen incurred in the
ordinary course of business for sums not yet due.
"Person" shall mean any individual, corporation, partnership,
limited liability company, limited liability partnership, joint venture, estate,
trust, cooperative, foundation, union, syndicate, league, consortium, coalition,
committee, society, firm, company or other enterprise, association, organization
or other entity or Governmental Authority.
"Plan" has the meaning ascribed to such term in Section 3.18.
"Preferred Stock" has the meaning ascribed to such term in
Section 3.6.
"Purchase Price" has the meaning ascribed to such term in
Section 2.3.
"Purchase Shares" has the meaning ascribed to such term in the
Recitals hereto.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of the date hereof, by and between the Seller and the
Buyer.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" has the meaning ascribed to such term in Section
3.9.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and all regulations promulgated thereunder.
"Seller" has the meaning ascribed to such term in the Preamble
hereto.
"Seller Disclosure Schedule" shall mean that certain schedule
attached hereto as Annex I qualifying the representations and warranties
contained in Article III.
"Seller Instruments" has the meaning ascribed to such term in
Section 3.6.
"Seller Material Adverse Effect" shall mean a material adverse
effect on the business, results of operations or financial condition of the
Seller and its Subsidiaries, taken as a whole; provided, however, that any
effect or change attributable to or resulting from (1) events,
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conditions or trends in economic, business, or financial conditions which
affects the economy or business conditions in general or (2) any material change
in the financial, banking, currency or capital markets in general, shall be
excluded from the definition of "Seller Material Adverse Effect".
"Software" has the meaning ascribed to such term in Section
3.10.
"Stockholders Agreement" shall mean the Stockholders
Agreement, dated as of the date hereof, by and between the Seller and the Buyer.
"Subsidiary" shall mean, when used with respect to any Person,
any other Person, whether incorporated or unincorporated, of which (i) more than
fifty percent of the securities or other ownership interests or (ii) securities
or other interests having by their terms ordinary voting power to elect more
than fifty percent of the board of directors or others performing similar
functions with respect to such corporation or other organization, is directly
owned or controlled by such Person or by any one or more of its Subsidiaries.
For purposes of this Agreement, Newco shall not be deemed to be a Subsidiary of
Buyer or Seller or their respective Subsidiaries.
"Survival Period" has the meaning ascribed to such term in
Section 6.1.
"Tax" shall mean any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trademarks" has the meaning ascribed to such term in Section
3.10.
"Transaction Documents" shall mean (i) the Warrant, the
Registration Rights Agreement and the Stockholders Agreement and (ii) those
other agreements, certificates and documents entered into or delivered between
the Buyer and the Seller related to, ancillary to, or in connection with this
Agreement or the documents listed in clause (i) hereof.
"Warrant" has the meaning ascribed to such term in the
Recitals hereto.
"Warrant Shares" has the meaning ascribed to such term in the
Recitals hereto.
1.2 Knowledge. As used in the Agreement, "to the Seller's knowledge" or
"to the knowledge of the Seller" or words of similar import shall mean the
knowledge of the following officers of the Seller: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
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1.3 Interpretation.
(a) When a reference is made in this Agreement to a section, article,
paragraph, clause, annex or exhibit, such reference shall be to a reference to
this Agreement unless otherwise clearly indicated to the contrary. The
descriptive article and section headings herein are intended for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement.
The meaning assigned to each term used in this Agreement shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting either gender shall include both genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement and the Transaction Documents. Consequently, in the
event an ambiguity or question of intent or interpretation arises, this
Agreement and each of the Transaction Documents shall be construed as if drafted
jointly by the parties thereto, and no presumption or burden of proof shall
arise favoring or disfavoring either party by virtue of the authorship of any
provision of this Agreement or of any of the Transaction Documents.
ARTICLE II
CLOSING; PURCHASE AND SALE
2.1 The Closing. The closing (the "Closing") of the transactions set
forth in this Article II shall take place simultaneously with the execution and
delivery of this Agreement by the parties hereto (such date upon which the
Closing occurs is referred to as the "Closing Date").
2.2 Issuance and Delivery of the Purchase Shares and Issuance of the
Warrant. At the Closing, the Seller shall (i) issue and deliver to the Buyer
certificates for the Purchase Shares and the Buyer shall purchase the Purchase
Shares from the Seller and (ii) issue and deliver to the Buyer certificates
representing the Warrant, in substantially the form of Exhibit A hereto, and the
Buyer shall accept such certificates.
2.3 The Purchase Price. The Buyer shall purchase the Purchase Shares
and the Warrant for an aggregate amount equal to Ten Million Dollars
($10,000,000) (the "Purchase Price").
2.4 Delivery of Purchase Price. At the Closing, the Purchase Price
shall be paid by the Buyer to the Seller by wire transfer of immediately
available funds to an account designated in writing by the Seller at least two
Business Days prior to the Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as of the date hereof
as follows:
3.1 Organization; Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Seller has the corporate power and authority to conduct its
business as now being conducted and is duly licensed or qualified to do business
and is in good standing as a foreign corporation in all jurisdictions in which
the nature of the business conducted by it, and/or the character of the assets
owned or leased by it, makes such qualification or licensure necessary, except
for those jurisdictions in which the failure to be so qualified or licensed or
to be in good standing would not, individually or in the aggregate, limit the
Seller's ability to consummate the transactions hereby contemplated or have a
Seller Material Adverse Effect.
3.2 Subsidiaries. Except as set forth in the Seller Disclosure Schedule
or except as disclosed in the SEC Reports or any exhibit thereto, all of the
outstanding shares of the capital stock of each Subsidiary of the Seller are
owned by the Seller free and clear of all Liens. Each of the Seller's
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the Seller's Subsidiaries has the power and authority to
conduct its business as now being conducted and is duly licensed or qualified to
do business and is in good standing as a foreign corporation or other legal
entity in all jurisdictions in which the nature of the business conducted by it,
and/or the character of the assets owned or leased by it, makes such
qualification or licensure necessary, except for those jurisdictions in which
the failure to be so qualified or licensed or to be in good standing would not,
individually or in the aggregate, limit the Seller's ability to consummate the
transactions hereby contemplated or have a Seller Material Adverse Effect.
3.3 Authority; Execution and Delivery; Enforceability. The Seller has
the corporate power and authority to execute and deliver this Agreement and the
Transaction Documents and to consummate the transactions hereby and thereby
contemplated. The execution and delivery by the Seller of this Agreement and the
Transaction Documents and the consummation by the Seller of the transactions
hereby and thereby contemplated have been authorized by all necessary corporate
action of the Seller. The Seller has duly executed and delivered this Agreement
and the Transaction Documents, and, assuming the due execution and delivery of
this Agreement and the Transaction Documents by each party thereto (other than
the Seller and other than PX Holding Corporation), this Agreement and the
Transaction Documents constitute valid and binding obligations of the Seller and
are enforceable against the Seller in accordance with its and their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or general equitable principles
(whether considered in a proceeding at equity or in law).
3.4 Non-Contravention. Except as set forth in the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement and the
Transaction Documents by the Seller, nor the consummation of the transactions
hereby and thereby contemplated by the Seller, will:
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(i) constitute any violation or breach of the certificate of
incorporation or the by-laws (or comparable organizational documents in
the case of Subsidiaries of the Seller which are not corporations) of
the Seller or any of its Subsidiaries;
(ii) constitute a default under or a violation or breach of,
or result in the acceleration of any obligation under, any provision of
any Contract to which the Seller or any of its Subsidiaries is a party
or by which any of the assets of the Seller or any of its Subsidiaries
or the Purchase Shares, the Warrant or the Warrant Shares may be
affected or secured;
(iii) assuming the consents and approvals described in Section
3.7 have been received, violate any judgment, order, writ, injunction
or decree, or any statute, rule or regulation affecting the Seller or
any of its Subsidiaries;
(iv) result in the creation of any Lien on any of the assets
of the Seller or any of its Subsidiaries; or
(v) result in the termination of any license, franchise, lease
or permit to which the Seller or any of its Subsidiaries is a party or
by which it is bound;
other than, in the case of foregoing clauses (ii), (iii), (iv) and (v), those
defaults, violations, breaches, accelerations, Liens and terminations which,
individually or in the aggregate, would not have a Seller Material Adverse
Effect.
3.5 Corporate Documents. The Seller has filed as exhibits to its SEC
Reports true and complete copies of the Amended and Restated Certificate of
Incorporation and By-Laws of the Seller.
3.6 Capitalization; Options.
(a) The Seller is authorized to issue 50,000,000 shares of Common
Stock, 8,055,619 of which are issued and outstanding as of the date hereof
(prior to giving effect to the transactions contemplated by this Agreement), and
2,000,000 shares of preferred stock, par value $0.01 ("Preferred Stock"), of
which none are issued and outstanding as of the date hereof.
(b) All of the Purchase Shares when issued to Buyer in accordance with
the terms of this Agreement shall be legally and validly issued, fully paid and
non-assessable, free and clear of all Liens other than transfer restrictions
provided under the Securities Act and comparable state securities laws. The
Warrant when issued to Buyer in accordance with the terms of this Agreement
shall be legally and validly issued, free and clear of all Liens other than
transfer restrictions provided under the Securities Act and comparable state
securities laws and other than as provided by the terms of the Warrant. The
Warrant Shares when issued upon exercise of the Warrant, in accordance with the
terms of the Warrant, shall be legally and validly issued, fully paid and
nonassessable, free and clear of all Liens other than as provided under the
Securities Act and comparable state securities laws. The Seller has reserved for
issuance the Warrant Shares on the Seller's books and records upon exercise of
the Warrant in accordance with their terms.
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(c) Other than the Common Stock and the Preferred Stock, there are no
other series or classes of capital stock of the Seller authorized or issued and
outstanding. Except as disclosed in the Seller Disclosure Schedule or except as
disclosed in the SEC Reports or any exhibit thereto, there are no outstanding
warrants, options, contracts, rights (preemptive or otherwise), calls,
commitments or other instruments convertible into or exchangeable for shares of
capital stock of the Seller or any of the Seller's Subsidiaries, in each such
case, to which the Seller or any of Seller's Subsidiaries is a party and which
relates to the sale or issuance of shares of capital stock of the Seller or of
any of Seller's Subsidiaries (collectively, the "Seller Instruments"). As of the
date hereof, there are 1,500,000 shares of Common Stock reserved on the Seller's
books and records for issuance pursuant to the Seller's 1999 Stock Option Plan
(included as an exhibit to the Seller's Definitive Proxy Statement dated March
31, 1999). Except as set forth on the Seller Disclosure Schedule, as disclosed
in the SEC Reports or any exhibit thereto or as contemplated by this Agreement
and the Transaction Documents, (i) the Seller has not agreed to register any
shares of its capital stock under the Securities Act or granted registration
rights with respect to shares of its capital stock to any Person and (ii) there
are no voting trusts, stockholders agreements, proxies or other agreements or
understandings in effect to which the Seller is a party with respect to the
voting or transfer of any shares of Common Stock. Except as set forth on the
Seller Disclosure Schedule or as disclosed in the SEC Reports or any exhibit
thereto, to the extent any such Seller Instruments are outstanding as of the
date hereof, neither the issuance and sale of the Purchase Shares or the Warrant
nor the issuance of any Warrant Shares upon the exercise of the Warrant in
accordance with their terms will result in an adjustment of the exercise or
conversion price of, or number of shares issuable upon the exercise or
conversion of any such, Seller Instruments.
3.7 Consents and Approvals. Except as set forth in the Seller
Disclosure Schedule, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority or third party is
required on behalf of the Seller or any of its Subsidiaries in connection with
the execution, delivery or performance of this Agreement and the Transaction
Documents or the consummation of the transactions contemplated hereby and
thereby, other than such consents, approvals and authorizations of, and
declarations, filings and registrations with, third parties (other than
Governmental Authorities) the failure of which to obtain, make or otherwise
effect which would not, individually or in the aggregate, result in a Seller
Material Adverse Effect. The Purchase Shares and the Warrant Shares have been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance.
3.8 Title to Assets. Except as set forth on the Seller Disclosure
Schedule, each of the Seller and its Subsidiaries has good title, free and clear
of all Liens (other than Permitted Liens), to all of its assets, other than such
failures to have good title which would not, individually or in the aggregate,
have a Seller Material Adverse Effect.
3.9 SEC Reports and Financial Statements.
(a) The Seller has filed all forms, reports and documents required to
be filed by it with the SEC since December 31, 1998 (collectively, the "SEC
Reports"). The SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or
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necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. None of the Seller's
Subsidiaries is required to file any form, report or other document with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports (the "Financial
Statements") (i) was prepared from the books of account and other financial
records of the Seller and its Subsidiaries, (ii) was prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and (iii) presented fairly in all
material respects the consolidated financial position of the Seller and its
consolidated Subsidiaries as at the respective dates thereof and the results of
their operations and their cash flows for the respective periods indicated
therein except as otherwise noted therein (subject, in the case of unaudited
statements, to the omission of footnotes and normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Seller Material Adverse Effect).
(c) Except for liabilities and obligations reflected on the March 31,
2000 consolidated balance sheet of the Seller included in the SEC Reports
(including the notes thereto), liabilities and obligations disclosed in the SEC
Reports (including exhibits thereto) filed prior to the date of this Agreement
and other liabilities and obligations incurred in the ordinary course of
business since March 31, 2000, neither the Seller nor any of the Seller's
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which, individually or in the aggregate,
would cause a Seller Material Adverse Effect.
3.10 Intellectual Property Rights.
(a) "Intellectual Property" means any United States, foreign,
international and state: patents and patent applications, industrial design
registrations, certificates of invention and utility models (collectively,
"Patents"); trademarks, service marks, and trademark or service ▇▇▇▇
registrations and applications, and trade names (collectively, "Trademarks");
Internet domain names; copyrights, copyright registrations, renewals and
applications for copyrights including, but not limited to, copyrights in the
Software (as defined below in this Section 3.10) (collectively, "Copyrights");
Software, technology and trade secrets; and all license agreements relating to
any of the foregoing. "Software" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code form and (ii) databases,
compilations, and any other electronic data files.
(b) Except as set forth in the Seller Disclosure Schedule or except as
would not have a Seller Material Adverse Effect:
(i) Each of the Seller and its Subsidiaries owns or has the
valid right to use all Intellectual Property, as currently used in
connection with the business of the Seller and its Subsidiaries,
including, without limitation, all license agreements and other
agreements granting rights relating to any Intellectual Property to
which the Seller or any of its Subsidiaries is a party or is otherwise
bound.
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(ii) The Intellectual Property owned by the Seller or its
Subsidiaries is solely and exclusively owned by the Seller or its
Subsidiaries free and clear of all Liens, and the Seller or one of its
Subsidiaries is listed in the records of the appropriate United States,
state, private (with respect to Internet domain names) or foreign
agency as the sole owner or assignee of record for each registration
and application for any Patent, Trademark, Internet domain name and
registered Copyright that it owns, whenever such recordation is
required. To the knowledge of Seller, all of the Intellectual Property
items owned or used by the Seller or one of its Subsidiaries are valid
and subsisting, in full force and effect, and have not been cancelled,
expired, or abandoned or are used by the Seller or its Subsidiaries
pursuant to a valid license which is in full force and effect. There is
no pending or, to the knowledge of the Seller, threatened opposition,
interference or cancellation proceeding before any court or
registration authority in any jurisdiction against the Intellectual
Property items owned by the Seller or one of its Subsidiaries or, to
the knowledge of the Seller, against any Intellectual Property used but
not owned by the Seller or any of its Subsidiaries.
(iii) To the knowledge of the Seller, the conduct of the
business of the Seller and its Subsidiaries as currently conducted or
as presently contemplated to be conducted does not and will not
infringe upon any Intellectual Property owned or controlled by any
third party (either directly or indirectly, such as through
contributory infringement or inducement to infringe). There are no
claims or suits pending or, to the knowledge of the Seller, threatened,
and the Seller has not received any written notice of a third party
claim or suit that remains unresolved, (i) alleging that the activities
of the Seller or its Subsidiaries or the conduct of the business of the
Seller or its Subsidiaries infringes upon or constitutes the
unauthorized use of the Intellectual Property rights of any third party
or (ii) challenging the ownership, use or validity of any Intellectual
Property owned by the Seller and its Subsidiaries.
(iv) To the knowledge of the Seller, no third party is
misappropriating, infringing, diluting, or otherwise violating any
Intellectual Property owned or used by the Seller or any of its
Subsidiaries and no such claims are pending against a third party by
the Seller or any of its Subsidiaries.
(v) To the knowledge of the Seller, the Seller and its
Subsidiaries have taken all reasonably necessary steps to maintain and
protect the Intellectual Property owned by them.
(vi) The Seller does not have knowledge of any facts or
circumstances that it knows would reasonably be likely to render any of
the Intellectual Property owned or used by the Seller or any of its
Subsidiaries invalid or unenforceable.
3.11 Insurance. The Seller Disclosure Schedule sets forth a true and
complete list of all material, in-force policies which provide coverage for
Seller and its Subsidiaries and their assets.
3.12 Contracts. Except as set forth in the Seller Disclosure Schedule,
each of the Seller and its Subsidiaries has, with respect to all Contracts
listed as exhibits to the Seller's filing on
11
Form 10-K for the year ending December 31, 1999, performed all obligations
required to be performed by it, and is not in default under any such Contract,
and no event has occurred which, with the lapse of time or the giving of notice
or both, would constitute a default by the Seller or any of its Subsidiaries,
or, to the knowledge of the Seller, by any other party to any such Contract,
other than such failures to perform obligations, defaults or events which would
not, individually or in the aggregate, result in a Seller Material Adverse
Effect.
3.13 Tax Matters.
(a) Except as set forth in the Seller Disclosure Schedule: (i) the
Seller and the Seller's Subsidiaries have filed (or there have been filed on
their behalf) all Tax Returns that are required to have been filed, and all such
Tax Returns were correct and complete, except to the extent that any failure to
file or any incorrect or incomplete Tax Return would not have a Seller Material
Adverse Effect; and (ii) all Taxes owed by the Seller and the Seller's
Subsidiaries (whether or not shown on any Tax Return) have been paid except to
the extent that any failure to pay would not have a Seller Material Adverse
Effect.
(b) Neither the Internal Revenue Service nor any other Tax authority is
now asserting in writing, or, to the knowledge of the Seller, has proposed in
writing to assert (which assertion is continuing as of the date hereof), any
deficiency or claim for additional Taxes that could have a Seller Material
Adverse Effect.
(c) Neither the Seller nor any of its Subsidiaries are "United States
real property holding corporations" within the meaning of Section 897 of the
Code.
(d) Each of the Seller and its Subsidiaries do not have any liability
for Taxes of any other person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law). To the knowledge of Seller,
neither the Seller nor any of its Subsidiaries has filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f) (2) of the Code
apply to any disposition of a "subsection (f) asset" (as such term is defined in
Section 341(f) (4) of the Code) owned by the Seller or any of its Subsidiaries.
Except for the Tax sharing agreement relating to the Affiliated Group of which
Seller and its Subsidiaries are presently members, to the knowledge of Seller,
neither the Seller nor any of its Subsidiaries are, or have ever been, a party
to any Tax sharing or similar agreement or arrangement, or have potential
liability or obligation as a result of or pursuant to such an agreement or
arrangement.
3.14 Absence of Certain Changes and Events. Since March 31, 2000,
except as set forth in the Seller Disclosure Schedule or as disclosed in the SEC
Reports or any exhibit thereto:
(a) each of the Seller and its Subsidiaries has conducted its business
in the ordinary course thereof in a manner consistent with past practice;
(b) there has been no material adverse change in the operations or in
the condition, financial or otherwise, of the Seller and its Subsidiaries (taken
as a whole) or any damage, destruction or loss, whether or not covered by
insurance, with respect to the properties or assets of the Seller, which in any
such case has resulted in a Seller Material Adverse Effect;
12
(c) the Seller has not split, combined or reclassified any shares of
its capital stock, and has not declared, set aside for payment or paid any
dividend or other distribution (whether in cash, stock or other property) in
respect of its capital stock, or directly or indirectly retired, redeemed,
purchased or otherwise acquired any shares of its capital stock; and
(d) none of the Seller or any of its Subsidiaries has agreed, whether
in writing or otherwise, to take any action described in Section 3.14(a) or
3.14(b) hereof; and, the Seller has not agreed, whether in writing or otherwise,
to take any action described in Section 3.14(c) hereof.
3.15 Litigation and Claims. Except as set forth in the Seller
Disclosure Schedule or as disclosed in the SEC Reports or any exhibit thereto,
(i) there is no action, suit, claim, proceeding, arbitration or investigation
pending or, to the knowledge of the Seller, threatened against or affecting the
Seller or any of its Subsidiaries and (ii) neither the Seller nor any of its
Subsidiaries is subject to or in default under any judgment, order, writ,
agreement, injunction or decree of any court or Governmental Authority which, in
the case of either clause (i) and (ii), is reasonably likely to result in a
Seller Material Adverse Effect.
3.16 Governmental Permits; Compliance with Laws.
(a) Each of the Seller and its Subsidiaries owns, holds or possesses
all Governmental Permits which are necessary to entitle it to own or lease,
operate and use its assets and to carry on and conduct its business as currently
conducted, except for those Governmental Permits the absence of which,
individually or in the aggregate, would not have a Seller Material Adverse
Effect.
(b) Except as set forth in the Seller Disclosure Schedule, each of the
Seller and its Subsidiaries has fulfilled and performed in all respects their
obligations under each of their respective Governmental Permits, other than such
failures to fulfill or perform their obligations which would not have a Seller
Material Adverse Effect. No written notice of cancellation, of default or of any
dispute concerning any Governmental Permit has been received by the Seller or
any of its Subsidiaries, except for such cancellations, defaults or disputes
which would not have a Seller Material Adverse Effect.
(c) Each of the Seller and its Subsidiaries is in compliance in all
respects with all Governmental Rules which are applicable to its business, other
than any failures to comply which would not have a Seller Material Adverse
Effect.
3.17 Environmental Matters.
(a) Except as would not, individually or in the aggregate, have a
Seller Material Adverse Effect:
(i) Each of the Seller and its Subsidiaries has obtained and
continues to maintain Environmental Approvals. Neither the Seller nor
any of its Subsidiaries has operated the business of the Seller and its
Subsidiaries in violation of any applicable Environmental Law or the
terms of any Environmental Approval.
13
(ii) Neither the Seller nor any of its Subsidiaries has used,
stored, generated, discharged, emitted, transported, disposed of or
treated Hazardous Substances except using, storing, generating,
discharging, emitting, transporting, disposing and treating those
Hazardous Substances normally used, stored, generated, discharged,
emitted, transported, disposed of or treated in the course of its
business and only in a manner which complies with applicable
Environmental Laws.
(iii) To the knowledge of the Seller, there are not any
Environmental Conditions or releases, or threats of releases (as those
terms are defined by Environmental Laws) of Hazardous Substances at,
on, or from any Facility.
(iv) Neither the Seller nor any of its Subsidiaries has
received written notice of any pending or threatened investigation,
claims, enforcement proceedings, cleanup orders, citizen suits or other
actions instituted by any private party or Governmental Authority
arising out of the conduct or the operations of the business of the
Seller and its Subsidiaries, in connection with any applicable
Environmental Laws or as a result of any Environmental Conditions at
any Facility.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the representations and warranties set forth in this Section 3.17 are
the sole and exclusive representations and warranties of Seller in this
Agreement with respect to environmental matters.
3.18 Employee Plans. Except as would not have a Seller Material Adverse
Effect:
(a) Each of the Seller and its Subsidiaries has, with respect to each
Plan (as defined below), complied and each Plan has been administered with all
applicable provisions of ERISA and the Code and in compliance with all of the
provisions of each plan, program, arrangement, agreement or commitment sponsored
or maintained by or on behalf of the Seller, any of its Subsidiaries or any
ERISA Affiliate, which is a pension, profit sharing, savings, thrift or other
retirement plan, deferred compensation, stock purchase, stock option,
performance share, bonus or other incentive plan, severance pay plan, policy or
procedure, life, health, disability or accident insurance plan (including,
without limitation, each "employee benefit plan" as defined in Section 3(3) of
ERISA or any other employee benefit plan, program, arrangement, agreement or
commitment, whether or not written) and which provides benefits to employees of
the Seller or any of its Subsidiaries (all of the foregoing being hereinafter
referred to individually as a "Plan" and collectively as the "Plans"). The
Seller, each of its Subsidiaries and each ERISA Affiliate has made all required
contributions to each such plan.
(b) No such Plan is or has at any time been subject to Title IV of
ERISA and no such Plan is or has at any time been a "multiemployer plan" with
the meaning of section 3(37) of ERISA or section 4001(a)(3) of ERISA.
(c) Each Plan which is an "employee welfare benefit plan" within the
meaning of Section 3(l) of ERISA and which is a group health plan within the
meaning of Section 4980B of the Code is and at all times has been in compliance
with the applicable requirements of Section 4980B of the Code and Sections 601
through 608 of ▇▇▇▇▇.
▇▇
(▇) ▇▇▇▇ of the Plans has been notified in writing that it is under
investigation or audit (which investigation or audit is continuing as of the
date hereof) by either the United States Department of Labor or the Internal
Revenue Service.
(e) Each Plan which is intended to qualify under Section 401 of the
Code has received a favorable determination letter from the Internal Revenue
Service with respect to such qualification or is entitled to rely on such a
letter under the provisions of a Standardized Adoption Agreement with respect to
such Plan, and, to the knowledge of the Seller, nothing has occurred that has
or, the Seller believes, is likely to affect adversely such qualification or
exemption.
3.19 No Finder. Neither the Seller, nor any of its Subsidiaries, nor
any party acting on their behalf, has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated hereby.
3.20 Section 203 of the DGCL. The Board of Directors of the Company has
taken all appropriate and necessary actions to ensure that the restrictions on
business combinations in Section 203 of the Delaware General Corporation Law
will not be applicable to the Buyer as the result of the issuance to the Buyer
of the Purchase Shares and, upon exercise of the Warrant, the Warrant Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as of the date hereof
as follows:
4.1 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Corporate Authority; Execution and Delivery; Enforceability. The
Buyer has the corporate power and authority to execute and deliver this
Agreement and the Transaction Documents and to consummate the transactions
hereby and thereby contemplated. The execution and delivery by the Buyer of this
Agreement and the Transaction Documents and the consummation by the Buyer of the
transactions hereby and thereby contemplated have been authorized by all
necessary corporate action. The Buyer has duly executed and delivered this
Agreement and the Transaction Documents, and, assuming the due execution and
delivery of this Agreement and the Transaction Documents by each party thereto
(other than the Buyer), this Agreement and the Transaction Documents constitute
valid and binding obligations of the Buyer and are enforceable against the Buyer
in accordance with its and their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or general equitable principles (whether considered in a proceeding at
equity or in law).
4.3 Non-Contravention. Neither the execution and delivery of this
Agreement or the Transaction Documents by the Buyer, nor the consummation of the
transactions hereby or thereby contemplated by the Buyer, will:
15
(i) constitute any violation or breach of the Certificate of
Incorporation or By-laws of the Buyer; or
(ii) violate any judgement, order, writ, injunction or decree,
statute, rule or regulation affecting the Buyer, other than any such
violations which, individually or in the aggregate, would not prevent
the Buyer from consummating the transactions contemplated by this
Agreement and the Transaction Documents.
4.4 Consents and Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, any Governmental Authority or third
party is required on behalf of the Buyer in connection with the execution,
delivery or performance of this Agreement or the Transaction Documents and all
documents contemplated hereby or thereby or the transactions contemplated hereby
and thereby, other than such consents, approvals and authorizations of, and
declarations, filings and registrations with, third parties the failure of which
to obtain, make or otherwise effect which would not, individually or in the
aggregate, prevent the Buyer from consummating the transactions contemplated by
this Agreement and the Transaction Documents; provided, however, that, in
connection with the exercise of the Warrants and the issuance of Warrant Shares
therefor, the Buyer may be required to make certain filings with, and to seek
approvals from, certain Governmental Authorities pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.
4.5 Litigation and Claims. There is no action, suit, claim, proceeding,
arbitration or investigation pending or, to the knowledge of the Buyer,
threatened against or affecting the Buyer with respect to the propriety or
validity of the transactions contemplated hereby.
4.6 No Finder. Neither the Buyer nor any party acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated hereby.
4.7 Investment Representations. The Buyer hereby acknowledges and
agrees that the Purchase Shares, the Warrant, and, if and when issued, the
Warrant Shares will not be registered under the Securities Act or any state
securities laws and may not be offered or sold except pursuant to registration
or an exemption from the registration requirements of the Securities Act and all
applicable state securities laws. In this connection, the Buyer understands Rule
144 promulgated under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
4.8 Accredited Investor. The Buyer represents that: (i) the Buyer is an
"accredited investor" (as such term is defined in Regulation D under the
Securities Act) and is acquiring the Purchase Shares and the Warrant (and, upon
exercise of the Warrant, the Warrant Shares) for its own account, for investment
purposes only, and not with a view to the resale or offer for sale thereof or
with any present intention of distributing or selling or offering for sale any
of such securities; and (ii) the Buyer is capable of bearing the economic risk
of such investment, including a complete loss of the investment in the Purchase
Shares, the Warrant and the Warrant Shares.
16
4.9 Ownership of Common Stock. The Buyer and its Affiliates do not own,
either individually or in the aggregate, five percent or greater of the
outstanding shares of Common Stock as of the date of this Agreement (prior to
giving effect to the transactions contemplated by this Agreement).
ARTICLE V
COVENANTS
5.1 Governmental Consents. If and to the extent that any applications,
documents, filings or submissions for the consent of any Governmental Authority
are required by any Governmental Authority (including, without limitation,
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended) in connection with the Buyer's exercise, in whole or in part, of the
Warrant, the Buyer and the Seller shall as promptly as possible file such
applications, documents, filings or submissions and each such party shall
furnish to the other such necessary information and reasonable assistance as the
other may request in connection with its preparation of any such applications,
documents, filings or submissions. Each such party shall keep the other apprised
of the status of any communications with, and any inquiries or requests for
additional information from such Governmental Authorities and shall comply
promptly with any such inquiry or request. Each such party shall use its
reasonable efforts to obtain any clearance required from such Governmental
Authorities for the exercise, in whole or in part, of the Warrant.
5.2 Restrictive Legends. None of the Purchase Shares, the Warrant or
the Warrant Shares may be transferred without registration under the Securities
Act and applicable state securities laws unless counsel to the Buyer (which is
reasonably acceptable to the Seller) shall advise the Seller in writing that
such transfer may be effected without such registration. Each certificate
representing any of the foregoing shall bear legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY JURISDICTION.
SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT PURSUANT
TO (I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS
EFFECTIVE UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAW, OR (II)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT, AND APPLICABLE STATE
SECURITIES LAW, RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING
RULE 144.
The Seller shall remove or cause its registrar and transfer agent to
remove such legend at the time such Purchase Shares or Warrant Shares are
transferred pursuant to an effective registration statement under the Securities
Act or pursuant to Rule 144 under the Securities Act.
5.3 Publicity. No public release or announcement concerning the
transactions contemplated by this Agreement or the Transaction Documents shall
be issued by either party
17
without the prior consent of the other party (which consent shall not be
unreasonably withheld or delayed), except as such release or announcement may be
required by law or the rules or regulations of any United States or foreign
securities exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance, and in which case the other
party also shall have the right to issue a press release or announcement
concerning the transactions contemplated hereby, provided that it shall allow
the party required to make the release or announcement reasonable time to
comment on such other party's release or announcement in advance of the issuance
thereof.
ARTICLE VI
MISCELLANEOUS
6.1 Survival; Certain Other Matters.
(a) The representations and warranties of the parties contained in this
Agreement shall survive the Closing and shall continue in full force and effect
until the first anniversary of the date hereof, after which time such
representations and warranties shall terminate and have no further force or
effect; provided, however, that the representations and warranties contained in
Sections 3.6(b), 3.13, 3.17, 4.7 and 4.8 hereof shall survive the Closing and
remain in full force and effect until the expiration of the applicable statute
of limitations relating to any issue thereunder, after which time such
representations and warranties shall terminate and have no further force or
effect. The period during which any such representation or warranty survives is
the "Survival Period" for such representation or warranty. Notwithstanding the
foregoing but subject to Section 6.1(b) below, any representation or warranty
that would otherwise terminate shall survive with respect to, and only with
respect to, any matter of which notice is given to Seller or Buyer, as the case
may be, in writing pursuant to this Agreement prior to the end of the applicable
Survival Period until such matter is resolved, after which time such
representation and warranty shall terminate and have no further force or effect.
(b) The Seller and its Affiliates and their respective directors,
officers, employees, Affiliates, shareholders, controlling persons, agents and
representatives aggregate responsibility or liability to any and all of the
Buyer and its Affiliates and their respective directors, officers, employees,
Affiliates, shareholders, controlling persons, agents and representatives with
respect to breaches of the representations and warranties of the Seller set
forth in Article III of this Agreement shall not exceed ten million dollars
($10,000,000).
(c) The Buyer and its Affiliates and their respective directors,
officers, employees, Affiliates, shareholders, controlling persons, agents and
representatives aggregate responsibility or liability to any and all of the
Seller and its Affiliates and their respective directors, officers, employees,
Affiliates, shareholders, controlling persons, agents and representatives with
respect to breaches of the representations and warranties of the Buyer set forth
in Article IV of this Agreement shall not exceed ten million dollars
($10,000,000).
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(d) The covenants and agreements of the parties contained in this
Agreement shall survive the Closing indefinitely; provided, however, that the
covenants and agreements contained in Section 5.3 hereof shall not survive the
Closing.
(e) Each party hereto may assert a claim or cause of action under this
Agreement with respect to (i) any breach of one or more of the representations
and warranties contained in Articles III and IV hereof, as the case may be,
provided that such claim or cause of action is asserted within the applicable
time period specified in Section 6.1(a) hereof and such claim or cause of action
is subject to the limitations contained in Sections 6.1(b) and 6.1(c) hereof, as
the case may be, and (ii) subject to Section 6.1(d) hereof, a breach of any one
or more of the covenants or agreements contained in this Agreement. Except as
provided for in the immediately preceding sentence, the parties to this
Agreement agree that no claims or causes of action on any basis (including in
contract or tort, under federal or state securities laws or otherwise), other
than for fraud, may be brought against the Seller or the Buyer or any of their
respective directors, officers, employees, Affiliates, shareholders, successors,
permitted assigns, agents, or representatives based upon, directly or
indirectly, any of the representations or warranties contained in Articles III
and IV of this Agreement or any misstatement or failure to state any fact made
by Seller in connection with the Buyer's purchase of the Purchase Shares, the
Warrant and the Warrant Shares. None of the limitations set forth in this
Section 6.1(e) shall amend or modify any rights a holder of the Warrant may have
pursuant to the terms and provisions of the Warrant.
6.2 Further Assurances. From and after the Closing Date, each party
shall, at any time and from time to time, make, execute and deliver, or cause to
be made, executed and delivered, such instruments and agreements, and take or
cause to be taken all such actions as counsel for the other party may reasonably
request for the effectual consummation of this Agreement and the transactions
hereby contemplated.
6.3 Expenses of the Transaction. Each of the parties hereto agrees to
pay such party's own fees and expenses in connection with this Agreement and the
transactions hereby contemplated including, without limitation, legal and
accounting fees and expenses.
6.4 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered (i) when
delivered personally or by private courier, (ii) when actually delivered by
registered or certified United States mail, return receipt requested, or (iii)
when sent by telecopy (provided that it is confirmed by a means specified in
clause (i) or (ii)), addressed as follows:
If to the Buyer, to:
Sony Electronics Inc.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel, Legal Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
19
With a copy to:
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller to:
Panavision Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
6.5 No Modification Except in Writing. This Agreement shall not be
changed, modified, or amended except by a writing signed by the party to be
affected by such change, modification or amendment, and this Agreement may not
be discharged except by performance in accordance with its terms or by a writing
signed by the party to which performance is to be rendered.
6.6 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, sets forth the entire agreement and understanding among the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature among them.
6.7 Severability. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected unless the provision held invalid
shall substantially impair the benefits of the remaining portions of this
Agreement.
20
6.8 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. This Agreement may not be
assigned by either party hereto, except with the prior written consent of the
other party hereto; provided, however, that each party may assign its rights,
but not its obligations, under this Agreement to any Affiliate of such party.
6.9 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts made and to be
performed wholly within said State, without giving effect to the conflict of
laws principles thereof.
(b) Neither party shall commence any legal proceeding or action against
the other party under this Agreement unless and until the parties have attempted
in good faith to settle the underlying dispute through negotiation or mediation
for a period of not less than 30 days. Each of the parties hereto irrevocably
and unconditionally submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York or, if such court will not
accept jurisdiction, the Supreme Court of the State of New York, New York County
or any court of competent civil jurisdiction sitting in New York County, New
York. In any action, suit or other proceeding, each of the parties hereto
irrevocably and unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above courts, that such action or suit is brought in an
inconvenient forum or that the venue of such action, suit or other proceeding is
improper. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in connection with any action, suit or other
proceeding shall be conclusive and binding on such party and that such award or
judgment may be enforced in any court of competent jurisdiction, either within
or outside of the United States. A certified or exemplified copy of such award
or judgment shall be conclusive evidence of the fact and amount of such award or
judgment.
(c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO A JURY
TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE
ENFORCEMENT OF ANY PROVISION OF THIS AGREEMENT.
6.10 Captions. The captions appearing in this Agreement are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope and intent of this Agreement or any of the provisions hereof.
6.11 Recovery of Attorney's Fees. Should either party hereto bring an
action in connection with a breach of, or failure to perform, any of the terms
of this Agreement then, if the Buyer prevails in such action it shall be
entitled to recovery of its attorney's fees from the Seller, and if the Seller
prevails in such action it shall be entitled to recovery of its attorney's fees
from the Buyer.
6.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single agreement.
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[Signature page follows]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Stock
and Warrant Purchase Agreement on the day and year first above written.
SONY ELECTRONICS INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Deputy President
PANAVISION INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
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ANNEX I
SELLER DISCLOSURE SCHEDULE
This document is the Seller Disclosure Schedule to the Stock and Warrant
Purchase Agreement (the "Agreement"), dated July 26, 2000, by and between Sony
Electronics Inc. and Panavision Inc.
Any disclosure in any Section of the Seller Disclosure Schedule of any contract,
document, liability, default, breach, violation, limitation, impediment or other
matter, although the provision for such disclosure may require such disclosure
only if such contract, document, liability, default, breach, violation,
limitation, impediment or other matter be "material," shall not be construed
against any party to the Agreement, as an assertion by such party, that any such
contract, document, liability, default, breach, violation, limitation,
impediment or other matter is, in fact, material.
Section 3.2
Subsidiaries
1. All of the outstanding shares of capital stock of each Subsidiary of
the Seller are pledged to secure indebtedness of the Seller and its
Subsidiaries under the Credit Agreement (the "Credit Agreement"), dated
as of May 28, 1998, among Seller, the several banks and other financial
institutions or entities parties thereto from time to time, Chase
Securities Inc., Credit Suisse First Boston and The Chase Manhattan
Bank, as amended.
2
Section 3.4
Non-Contravention
1. The Seller's interests in the joint venture between Seller and Buyer
shall be subject to Liens as a result of such interests being pledged
in connection with the Credit Agreement.
3
Section 3.6
Capitalization; Options
1. Panavision Canada Holdings Inc., a Subsidiary of Seller, has granted
three of its employees options to purchase approximately 15% of the
outstanding capital stock of such entity.
2. The Seller has granted PX Holding Corporation certain registration
rights under a Registration Rights Agreement, dated as of June 5, 1998,
between the Seller and PX Holding Corporation.
4
Section 3.7
Consents and Approvals
1. In connection with the exercise of the Warrants and the issuance of
Warrant Shares therefor, the parties may be required to make certain
filings with, and to seek approvals from, certain Governmental
Authorities pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
5
Section 3.8
Title to Assets
1. All of the assets of Seller and its domestic Subsidiaries are pledged
to secure indebtedness of the Seller and its Subsidiaries under the
Credit Agreement.
6
Section 3.10
Intellectual Property Rights
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Mantis Wildlife Films Pty Limited and Panavision,
Inc. v. Cine Magic International and ▇▇▇▇▇▇▇▇▇ Camera, Inc., Civ.
Action No. CV99-09966 (U.S. Dist. Ct., C.D. Calif.) (patent
infringement).
2. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Mantis Wildlife Films Pty Limited and Panavision,
Inc. ▇. ▇▇▇▇▇▇▇▇ Cine Photo Tech, Inc., ▇▇▇▇▇▇▇ CPT Rentals Inc., and
P+S Technik GmbH Feinmechanik, Civ. Action No. CV-99-10425 (U.S. Dist.
Ct., C.D. Calif.) (patent infringement.
3. Panavision Inc. v. Thanks Mfg. Inc. and Happy Eyes Optical Co., Civ.
Action No. CV-00-02692 (U.S. Dist. Ct., C.D. Calif.) (trademark
infringement).
4. Panavision Inc. and Panavision International, L.P. v. Paravision
International Inc., Civ. Action No. CV-00-06538 (U.S. Dist. Ct., C.D.
Calif.) (trademark infringement).
5. All of the Intellectual Property of Seller and its Subsidiaries is
pledged to secure indebtedness of the Seller and its Subsidiaries under
the Credit Agreement.
7
Section 3.11
Insurance
1. See the attached schedule of insurance policies which is incorporated
into this Section 3.11 by reference.
8
Section 3.12
Contracts
1. Items 1, 2, 3 and 4 of Section 3.10 of the Seller Disclosure Schedule
are incorporated by reference into this Section 3.12.
9
Section 3.14
Absence of Certain Changes and Events
1. Items 1, 2, 3, and 4 of Section 3.10 of the Seller Disclosure Schedule
are incorporated by reference into this Section 3.14.
10
Section 3.15
Litigation and Claims
1. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Mantis Wildlife Films Pty Limited and Panavision,
Inc. v. Cine Magic International and ▇▇▇▇▇▇▇▇▇ Camera, Inc., Civ.
Action No. CV-99-09966 (U.S. Dist. Ct., C.D. Calif.) (patent
infringement).
2. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Mantis Wildlife Films Pty Limited and Panavision,
Inc. ▇. ▇▇▇▇▇▇▇▇ Cine Photo Tech, Inc., ▇▇▇▇▇▇▇ CPT Rentals Inc., and
P+S Technik GmbH Feimnechanik, Civ. Action No. CV-99-10425 (U.S. Dist.
Ct., C.D. Calif.) (patent infringement).
3. Panavision Inc. v. Thanks Mfg. Inc. and Happy Eyes Optical Co., Civ.
Action No. CV-00-02692 (U.S. Dist. Ct., C.D. Calif.) (trademark
infringement).
4. Panavision Inc. and Panavision International, L.P. v. Paravision
International Inc., Civ. Action No. CV-00-06538 (U.S. Dist. Ct., C.D.
Calif.) (trademark infringement).
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Section 3.18
Employee Plans
1. Panavision's 401(K) plan is currently under audit by the Internal
Revenue Service.
12
