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AMENDED
AGREEMENT OF PURCHASE
AND SALE OF ASSETS
By and Among
PROJECTAVISION, INC.,
PROJECTAVISION INTERNATIONAL
and
VIDIKRON INDUSTRIES, S.p.A.
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December 7, 1998
TABLE OF CONTENTS
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Page
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1. (a) Purchase and Sale of Assets.....................................2
(b) Assumed Liabilities.............................................6
(c) Excluded Assets. ..............................................8
(d) Consent of Third Parties........................................9
2. (a) Purchase Price.................................................10
(b) Purchase Price Prepayments.....................................10
(c) Purchase Price Adjustment......................................10
Prepayment.....................................................10
(d) Allocation of Purchase Price...................................10
(e) Acquisition by Affiliates......................................11
3. (a) Closing........................................................11
(b) Further Action.................................................11
4. (a) The Company's Delivery Obligations at the Closing;
Covenants; Further Assurances..................................13
(b) Billings.......................................................16
(c) Liability for Transfer Taxes...................................16
(d) Certificates of Tax Affidavits.................................17
(e) Use of Business Name...........................................17
(f) Further Assurances.............................................17
5. Purchaser's Delivery Obligations at the Closing.........................18
6. Representations and Warranties of the Company...........................19
(a) Organization, Standing and Qualification.......................19
(b) Subsidiaries...................................................20
(c) Transactions with Certain Persons..............................20
(d) Execution, Delivery and Performance of Agreement;
Authority......................................................21
(e) Capitalization; Ownership of Capital Stock.....................22
(f) [Intentionally Omitted]........................................22
(g) Financial Statements...........................................22
(h) Absence of Undisclosed Liabilities.............................23
(i) Taxes..........................................................23
(j) Absence of Changes or Events...................................24
(k) Litigation.....................................................27
(l) Compliance with Laws and Other Instruments.....................28
(m) Title to Properties............................................28
(n) Insurance......................................................28
(o) Territorial Restrictions.......................................29
(p) Intellectual Property..........................................29
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TABLE OF CONTENTS
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(continued)
Page
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(i) Title..............................................29
(ii) Transfer...........................................29
(iii) No Infringement....................................30
(iv) Licensing Arrangements.............................30
(v) No Intellectual Property Litigation................30
(vi) Due Registration, Etc..............................31
(vii) Use of Name and Mark...............................31
(q) Environmental Matters..........................................31
(r) No Guaranties..................................................31
(s) [Intentionally Deleted]........................................31
(t) Absence of Certain Business Practices..........................32
(u) Disclosure.....................................................32
(v) Labor Disputes.................................................32
(w) Customers and Accounts.........................................34
(x) Suppliers; Raw Materials.......................................34
(y) Unbilled Costs and Advance Billings............................35
(z) Contracts and Proposals........................................35
(aa) [Intentionally Deleted]........................................36
(bb) Directors and Officers.........................................36
(cc) Inventories....................................................36
(dd) Real Property..................................................37
(i) Leases.............................................37
(ii) No Proceedings.....................................38
(iii) Current Use........................................38
(ee) Warranties.....................................................38
(ff) Dealer and Distributor Arrangements............................38
(gg) Excluded Assets................................................39
(hh) Government Loan................................................39
7. Representations and Warranties by Purchaser.............................39
(a) Organization...................................................39
(b) Execution, Delivery and Performance of Agreement...............40
(c) Litigation.....................................................40
8. Employment Matters; Employment Contracts................................40
9. Indemnification.........................................................44
10. Survival of Representations, Warranties and Agreements..................46
11. Conduct of Business Prior to Closing....................................47
(i) Liabilities........................................47
(ii) Litigation.........................................47
ii
TABLE OF CONTENTS
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(continued)
Page
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(iii) Compliance with Laws..............................47
(iv) Continued Effectiveness of Representations
and Warranties....................................47
12. Access to Information and Documents....................................48
13. [Intentionally Deleted.]...............................................49
14. Conditions Precedent...................................................50
(a) Conditions to Obligations of Each Party.......................50
(b) Conditions to Obligations of the Purchaser....................50
(c) Conditions to Obligations of the Company......................51
15. Intentionally Deleted..................................................52
(a) ..............................................................52
(b) ..............................................................52
16. (a) Termination...................................................52
17. Right to Designate Director............................................52
18. Assumed Liabilities Escrow Account.....................................52
19. [Intentionally Deleted]................................................53
20. Notices................................................................53
21. Miscellaneous..........................................................55
EXHIBITS
SCHEDULES
Schedule 1(a) - Assets
Schedule 1(a)(x) - Consents
Schedule 1(a)(xv) - Government Loan
Schedule 1(b) - Assumed Liabilities
Schedule 1(b).1 - Agreed Upon Accounts Payable
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TABLE OF CONTENTS
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(continued)
Schedule 1(b).2 - Company's Bank Debt Documents
Schedule 1(c) - Excluded Assets
Schedule 2(c) - Allocation of Purchase Price
Schedule 4(a).1 - English Bill of Sale
Schedule 4(a).2 - Italian Bill of Sale
Schedule 4(a)(vi) - Opinion of Company's Counsel
Schedule 4(a)(vii) - Peralda Non-Competition Undertaking
Schedule 4(a)(viii) - Peralda Employment Agreement
Schedule 4(a)(ix) - Macario Employment Agreement
Schedule 4(a)(x) - Macario Non-Competition Undertaking
Schedule 4(a)(xi) - Lease Assignment
Schedule 4(a)(xii) - Personal Property Assignment
Schedule 4(a)(xiii) - Intellectual Property Assignment
Schedule 4(a) (xx) - Cozzi Employment Agreement
Schedule 4(a) (xxi) - Wellnitz Employment Agreement
Schedule 5(a)(iv) - Opinion of Purchaser's Counsel
Schedule 6(a) - States where the Company is Qualified to
do Business
Schedule 6(b) - Subsidiaries
Schedule 6(c) - Transactions with Certain Persons
Schedule 6(d) - Conflicts
Schedule 6(g).1 - Historical Financial Statements of the
Company and the Subsidiary
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TABLE OF CONTENTS
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(continued)
Schedule 6(g).2 - Company's 1997 Financial Statements
Schedule 6(h) - Undisclosed Liabilities
Schedule 6(i).1 - Unpaid Taxes
Schedule 6(i).2 - Company's Tax Returns for 1995 and 1996
Schedule 6(j) - Changes or Events
Schedule 6(k) - Litigation
Schedule 6(l) - Compliance with Laws and Other
Investments
Schedule 6(m) - Encumbered Assets
Schedule 6(n) - Insurance
Schedule 6(o) - Territorial Restrictions
Schedule 6(p)(i) - Intellectual Property
Schedule 6(p)(ii) - Non-Transferable Intellectual Property
Schedule 6(p)(iv) - Licensing Arrangements
Schedule 6(p)(v) - Intellectual Property Litigation
Schedule 6(p)(vii) - Restrictions on Use of Name and Mark
Schedule 6(r) - Guaranties
Schedule 6(t) - Certain Business Practices
Schedule 6(v).1 - List of Company's Employees
Schedule 6(v).2 - List of Company's Employees to be
Employed by Purchaser
Schedule 6(w) - Customers and Accounts
Schedule 6(x) - Suppliers; Raw Materials
v
TABLE OF CONTENTS
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(continued)
Schedule 6(y) - Unbilled Costs and Advance Billings
Schedule 6(z) - Contracts and Proposals
Schedule 6(z)(i) - Contracts and Proposals - Consents and
Italian Law
Schedule 6(z)(iv) - Powers of Attorney
Schedule 6(bb) - List of Directors and Officers of each
of the Company and Subsidiary
Schedule 6(cc) - Obsolete/Discontinued Inventory
Schedule 6(dd) - Real Property Leases
Schedule 6(ee) - Warranties
Schedule 6(ff) - Exclusive Dealer Arrangements
Schedule 8(a) - Employees
Schedule 8(b) - Employee Plans
Schedule 8(g) - Italian Employment Matters
Schedule 12(a) - Certain Distributors and Suppliers
Schedule 15(c) - Escrow Agreement
Schedule 16(b)(i) - Escrow Agreement
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AMENDED AGREEMENT OF PURCHASE AND SALE OF ASSETS
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AMENDED AGREEMENT (this "Agreement"), dated December 7, 1998, by and
among PROJECTAVISION, INC., a Delaware corporation having its principal office
at Two Penn Plaza, Suite 640, New York, New York 10121 (" Projectavision"),
PROJECTAVISION INTERNATIONAL s.r.l., an Italian corporation that is wholly owned
by Projectavision and its officers having an address at Via Dei Guasti 29,
Misinto("International") VIDIKRON INDUSTRIES, S.p.A., an Italian corporation
having its principal office at Via Dei Guasti, 29, 20020 Misinto (Milano), Italy
(the "Company"). Projectavision and International are hereinafter collectively
referred to as "Purchaser."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is engaged in the business, among others, of
designing, manufacturing, sourcing and distributing high-end video projection
systems for the consumer (the "Company's Video Business");
WHEREAS, the Company owns eighty five percent (85%) of all of the
issued and outstanding equity securities of Vidikron of America, Inc., a
Delaware corporation, having its principal executive offices at 150 Bay Street,
Jersey City, New Jersey (the "Subsidiary");
WHEREAS, the Company desires to sell to Purchaser, and Purchaser
desires to acquire from the Company, substantially all of the assets
constituting the Company's Video Business, and certain of the Company's
liabilities, on the terms and conditions set forth herein; and
WHEREAS, the Company and Purchaser previously entered into an Agreement
of Purchase and Sale of Assets dated January 20, 1998 (the "Purchase
Agreement"), which was subsequently amended by the parties pursuant to letter
agreements dated April 30, 1998, October 2, 1998, and October 23, 1998, November
19, 1998 and December 3, 1998(collectively, the "Letter Amendments"), and
pursuant to which the Company agreed to sell to Purchaser, and Purchaser agreed
to acquire from Seller, substantially all of the assets of the Company's Video
Business; and
WHEREAS, the Company and Purchaser wish to further amend the Purchase
Agreement, as amended by the Letter Amendments, in its entirety, by the
execution and delivery of this Agreement.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and in order to set forth the terms and conditions of the
purchase and sale of assets and the manner of carrying the same into effect, the
parties hereto hereby agree as follows:
1. (a) Purchase and Sale of Assets. Except as set forth on Schedule
1(c) annexed hereto, subject to and upon the terms and conditions set forth in
this Agreement, the Company agrees to sell, transfer, convey, assign and deliver
to Purchaser, and Purchaser agrees to purchase at the "Closing" (as defined in
Section 3 hereof), those certain assets and properties, and that certain
business, goodwill and rights of the business as a going concern, of every
nature, kind and description whatsoever, whether tangible and intangible,
wheresoever located and whether or not carried or reflected on the books and
records of the Company with respect to the Company's Video Business, all of
which shall be referred to in the form of Bill of Sale as set forth in Schedule
1(a) annexed hereto (hereinafter sometimes collectively called the "Assets"),
including, without limitation:
(i) subject to the provisions of Sections 6(p) and 6(o) below,
all right, title and interest in and to any and all United
States, Italian and other: (A) industrial designs, and
improvements thereto; (B) trademarks, service marks, trade
names (including, without limitation, any trade names acquired
by the Company in connection with its acquisition of the
business), trade dress, logos, business and product names,
slogans, and registrations and applications for registration
thereof; (C) copyrights (including software) and
registrations, if any, thereof; (D) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing,
engineering and technical drawings, product specifications and
confidential business information; (E) mask work and other
semiconductor chip rights and registrations, if any, thereof;
(F) intellectual property rights similar to any of the
foregoing; (G) copies and tangible embodiments thereof (in
whatever form or medium, including electronic media)
(collectively, "Intellectual Property");
(ii) the assets reflected on the Pro Forma Financial
Statements referred to in Section 6(g) hereof, with only such
disposition of such assets as shall have occurred in the
ordinary course of the
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Company's business between the date of the Pro Forma
Financial Statements and the Closing;
(iii) all machinery, equipment, fixtures, leasehold
improvements, trucks, vehicles, parts and other tangible
personal property (including, but not limited to, any of the
foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other party);
(iv) all inventory of equipment held for sale or lease, spare
parts, replacement and component parts, and office and other
supplies ("Inventories"), including Inventories held at any
location for the Company and Inventories previously purchased
and in transit to or from the Company;
(v) all rights in and to Inventories (including, but not
limited to, products hereafter returned or repossessed and
unpaid, Company's rights of rescission, replevin, reclamation
and rights to stoppage in transit);
(vi) all rights (including, but not limited to, any and all
Intellectual Property rights) in and to the products and
services sold, rented or leased and in and to any products and
services sold, rented or leased and in and to any products or
other Intellectual Property rights under research or
development prior to or on the Closing Date;
(vii) all of the rights of the Company under all Contracts (as
defined in Section 6(z) hereof) and, including, without
limitation, any right to receive payment for products sold or
services rendered (exclusive, however, of the "Accounts
Receivables" that the Company shall retain upon the Closing of
this Agreement in accordance with the provisions of, and as
such term is defined in, Section 1(c) below), and to receive
goods and services, pursuant to such Contracts and to assert
claims and take other rightful actions in respect of breaches,
defaults and other violations of such Contracts;
(viii) all credits (exclusive of the Accounts Receivables that
the Company shall retain in accordance with the provisions of
Section 1(c) below), and, if any, prepaid expenses, deferred
charges, return
3
allowances, advance payments, security deposits and
prepaid items;
(ix) only to the extent that they relate solely to the
Company's Video Business, and are discrete with respect
thereto, all books, records, manuals and other materials (in
any form or medium whether now known or hereafter devised),
including, without limitation, all records and materials
maintained by the Company, advertising matter, catalogues,
consumer manuals, price lists, correspondence, mailing lists,
lists of customers, distribution lists, photographs,
production data, sales and promotional materials and records,
purchasing materials and records, manufacturing and quality
control records and procedures, blueprints, research and
development files, records, data and laboratory books,
Intellectual Property disclosures, media materials and plates,
accounting records, and sales order files; provided, however,
that it is expressly understood that in the event that any of
the foregoing also sets forth information relative to the
Company in connection with matters unrelated, in whole and in
part, to the Company's Video Business, then notwithstanding
the foregoing, all such books and records shall remain the
property of the Company, and will not be deemed to be an asset
transferred hereunder but rather, will be deemed to be an
"Excluded Asset" (as that term is defined in Section 1(c)
below), and consequently, shall be retained by the Company in
accordance with the provisions of Section 12(c) below;
(x) to the extent their transfer is permitted by law, all
consents, approvals, authorizations, waivers, permits, grants,
franchises, concessions, agreements, licenses, exemptions or
orders of regulation, certificate, declaration or filing with,
or report or notice to any entity issued, executed, delivered
or otherwise made to or for the benefit of the Assets or any
assets of the Subsidiary, including all applications thereof
(collectively, the "Consents"), all of which Consents are set
forth on Schedule 1(a)(x) hereof, including, but not limited
to, the Consent (the "Governmental Approval") of any nation,
or government, any state or other political subdivision
thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any
government authority, agency, department, board,
4
commission or instrumentality of the United States or Italy,
any state of the United States or any municipality thereof,
any region or province of Italy or any municipality thereof,
and any tribunal or arbitrator(s) of competent jurisdiction,
and any self-regulatory organization of the United States or
Italy (collectively, the "Governmental Authority" or
"Governmental Authorities);
(xi) except with respect to the Accounts Receivables to be
retained by the Company in accordance with the provisions of
Section 1(c) below, all rights to choses in action, causes of
action, claims and rights of recovery or setoff, lawsuits,
judgments, claims and demands of any nature available to or
being pursued by the Company with respect to the Company's
business or the ownership, use, function or value of any of
the Assets whether arising by way of counterclaim or
otherwise;
(xii) all guarantees, warranties, indemnities and similar
rights in favor of the Company with respect to any of the
Assets or the Company's Video Business;
(xiii) accrued sales (in respect of outstanding proposals or
work-in-process), commitments, proposals, Contracts,
understandings or commitments, whether oral or written, to
perform services, advanced billings and unbilled costs (as set
forth on Schedule 6(y) annexed hereto);
(xiv) the tangible assets (the "Tangible Assets") that are
part of Schedule 1(a) annexed hereto and as provided on the
Balance Sheet; and
,
(xv) all shares of stock of the Subsidiary owned by Company
and any other equity ownership interests and rights to acquire
equity ownership interests in the Subsidiary (it being
expressly understood and agreed that Purchaser shall have no
obligation whatsoever to enter into any agreements of any kind
with those shareholders of the Subsidiary other than the
Company, including, without limitation agreements regarding
such shareholders' shareholdings with respect to the
Subsidiary or such shareholders' employment arrangements
therewith).
5
(b) Assumed Liabilities.
(i) The Assets shall be conveyed free and clear of all
liabilities, obligations, liens, claims and encumbrances,
excepting only those liabilities, obligations, liens, claims
and encumbrances which are expressly to be assumed by
Purchaser hereunder, if any. Purchaser shall assume at the
Closing, and thereafter timely pay, perform or discharge, when
due, the "Assumed Liabilities," except to the extent that any
of such Assumed Liabilities have been paid or satisfied as of
the Closing Date. As used herein, the term "Assumed
Liabilities," all of which shall be set forth on Schedule 1(b)
annexed hereto, shall be expressly limited to:
(A) the sum of (w) the Company's accounts payable
incurred solely in the ordinary course of the
Company's Video Business (the "Trade Payables") in
the aggregate amount as set forth in the Company's
written advice to Purchaser no later than ten (10)
business days after the Closing Date, which written
advice shall also individually set forth such Trade
Payables on an account by account basis, including
the amount of time each of such Trade Payables has
been outstanding and when same is due and owing (x)
certain of the principal plus interest amount of the
Company's existing bank indebtedness (the precise
amount of which shall be determined by the parties at
Closing) with the banks listed on Schedule 1(b).2
attached hereto, which schedule may be delivered by
the Seller no later than ten (10) days after the
Closing (the "Company's Bank Debt"), plus (y) the
accrued employee severance benefits through the
Closing Date, plus (z) the Government Loan, if any,
to the extent that prior to Closing the Company has
actually received funds with respect to the
Government Loan and such funds have either been
retained by or used in connection with the Company's
Video Business; provided, however, sum of (w), (x),
(y) and (z) shall in no event exceed $2,500,000 U.S.
Dollars (such sum being hereinafter referred to as
the "Agreed Upon Accounts Payables"); it being
expressly agreed that $1,500,000 of such Agreed Upon
Accounts Payables shall be deposited into the
"Assumed Liabilities Escrow Account", as defined in,
and in
6
accordance with, the provisions of Section 18 below,
and the remaining $1,000,000 balance of such Agreed
Upon Accounts Payables shall be paid by Purchaser to
the appropriate creditors of the Company one hundred
and twenty (120) days subsequent to the Closing
hereof;
(ii) In addition, upon the Closing, Purchaser shall be
responsible for the full and timely payment of the Bill of
Sale Registration Tax and Stamp Duties
under Italian law.
(iii) Purchaser shall not and does not assume any liabilities,
obligations or commitments of the Company, other than the
Assumed Liabilities, and the Company shall be solely
responsible, without limitation, for the following:
(A) Legal, accounting, brokerage and finder's fees
and income, excise, if any, or other Transfer Taxes
(as defined in Section 4(c) hereof and which shall
not include the Bill of Sale Registration Tax and
Stamp Duties) or other expenses incurred by the
Company in connection with this Agreement or the
consummation of the transactions contemplated hereby;
provided that Purchaser agrees that it shall be
solely responsible for any and all payments of any
nature whatsoever due and owing to Hambro America
Securities, Inc. and Purchaser hereby agrees to
indemnify the Company with respect thereto;
(B) Debts, liabilities or obligations of any nature
of the Company except for the Assumed Liabilities;
(C) Except for the Bill of Sale Registration Tax and
Stamp Duties, any domestic, value added, if any,
federal, international, regional, provincial, state
or local or foreign income, franchise, excise, use,
property, payroll or similar or other Taxes (as
defined in Section 6(i) hereof)(or penalties and
interest thereon) imposed on the Company including,
without limitation, those due as a result of the
operation of the Company's Video Business through the
Closing Date;
7
(D) Any claim, legal action, suit, arbitration or
other legal or administrative proceeding (or
governmental investigation) pending or in effect, or
threatened against or relating to either the
Company's Video Business, the officers and directors
of the Company (as such litigation, if any, may
relate to the Company's Video Business), or the
Assets or the properties or business relative to the
Company's Video Business, all of which shall be
expressly retained by the Company; provided, however,
that Purchaser shall provide the Company (at no cost
to the Purchaser) with whatever cooperation and
assistance that the Company may reasonably require
subsequent to the Closing hereof in connection with
the foregoing; and
(E) Except as Purchaser shall have otherwise
expressly agreed to assume herein, liabilities and
obligations of the Company, if any, accruing prior
to, on or after the Closing Date relating to the
Company's employment of any of the Company's
employees, including, without limitation,
compensation, severance payments, if any,
contributions to employee benefit plans, workers'
compensation or other insurance claims.
(c) Excluded Assets. Except as set forth on Schedule 1(c)
annexed hereto, the Company is selling to Purchaser hereunder all, and is not
excluding any, of the assets of any nature whatsoever that are used by the
Company to conduct the Company's Video Business as presently operated and as
currently contemplated to be operated subsequent to the consummation of the
transaction contemplated by this Agreement (hereinafter referred to as the
"Excluded Assets"). Schedule 1(c) shall include, among other things, that
certain low interest loan(or any portion thereof) extended to the Company by the
Italian Government in accordance with that letter to the Company dated October
30, 1997 (the "Government Loan"), the true and complete documentation of which
is annexed hereto as Schedule 1(a)(xv), and (iii) a detailed listing on an
account by account basis of the Company's accounts receivables as of the Closing
Date (other than receivables due to Seller from the Subsidiary which shall be
the property of Projectavision) with respect to those goods and services that
the Company has fully delivered or performed solely in connection with the
Company's Video Business, as the case may be, all of which shall be retained by
the Company, which accounts receivables shall not be in excess of $1,167,000(the
"Accounts
8
Receivables"). It is agreed by Purchaser that Seller shall have the right,
during the ten(10) day period subsequent to the Closing, to update and amend
Schedule 1(c) to include receivables incurred prior to the Closing, subject to
the terms of this Section 1(c), by delivering to Purchaser within such ten (10)
day period a revised, updated Schedule 1(c) in writing.
(d) Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, but subject, nevertheless, to Section 14 hereof,
this Agreement shall not constitute an agreement to assign or transfer any
Governmental Approval, instrument, Contract, lease, permit or other agreement or
arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an attempt to make such an assignment
or transfer without the consent of a third party would constitute a breach or
violation thereof or affect adversely the rights of Purchaser or the Company
thereunder; any transfer or assignment to Purchaser by the Company or the
Subsidiary of any interest under any such instrument, Contract, lease, permit or
other agreement or arrangement that requires the consent or approval of a third
party shall be made subject to such consent or approval being obtained. In the
event any such consent or approval is not obtained on or prior to the Closing
Date, the Company shall continue to use its best efforts to obtain such approval
or consent after the Closing Date until such time as such consent or approval
has been obtained, and the Company will cooperate with Purchaser in any lawful
and economically feasible arrangement to provide that Purchaser shall receive
the interest of the Company, and/or the Subsidiary, as the case may be, in the
benefits under any such instrument, Contract, lease or permit or other agreement
or arrangement, including performance by the Company or the Subsidiary as agent,
if economically feasible, provided, that Purchaser shall undertake to pay or
satisfy the corresponding liabilities for the enjoyment of such benefit to the
extent Purchaser would have been responsible therefor hereunder if such consent
or approval had been obtained. The Company shall pay and discharge, and shall
indemnify and hold Purchaser harmless from and against any and all out-of-pocket
costs of seeking to obtain or obtaining any such consent or approval whether
before or after the Closing Date. Nothing in this Section 1(d) shall be deemed a
waiver by Purchaser of its right to have received on or before the Closing an
effective assignment of all of the Assets nor shall this Section 1(d) be deemed
to constitute an agreement to exclude from the Assets any assets described in
Section 1(a) hereof.
9
2. (a) Purchase Price. As full and total consideration for the sale,
transfer, conveyance, assignment and delivery of the Assets by the Company to
Purchaser, and in reliance upon the representations and warranties made herein
by the Company, Purchaser agrees, subject to any adjustments herein provided
for, (i) Purchaser shall pay, or cause to be paid on behalf of,
Seller,$3,500,000 upon the Closing, less any "Prepayments" (as that term is
defined in Section 2(b) below, payable by wire transfer or certified or official
bank check drawn on a bank which is a member of the New York Clearing House
Association payable to the order of the Company and (ii) Purchaser shall assume
the Agreed Upon Accounts Payables, $1,500,000 of which shall be deposited into
the "Assumed Liabilities Escrow Account" as that term is defined in Section 18
below. The aggregate consideration set forth in clause (i) and clause (ii) of
the immediately preceding sentence is hereinafter referred to as the "Purchase
Price."
(b) Purchase Price Prepayments. Upon the execution hereof,
the Company acknowledges that Purchaser has heretofore paid to the Company
$2,900,000 (the "Prepayments"), the entire sum of which shall be credited
towards the Purchase Price.
(c) Purchase Price Adjustment. The Purchase Price set forth in
Section 2(a) above (which is subject to the provisions of Section 15 below)
shall be subject to adjustment as hereinbelow set forth in this Section 2 (c).
Specifically, in the event that the Agreed Upon Accounts Payable are less than
Two Million Five Hundred Thousand Dollars ( 2,500,000), the Purchase Price shall
be increased on a dollar-for-dollar basis. By way of example, in the event that
the Agreed Upon Accounts Payable is Two Million Four Hundred Thousand Dollars ($
2,400,000)_, the Purchase Price shall be increased by $100,000 to Three Million
Six Hundred Thousand Dollars ($3,600,000). There shall also be a Purchase Price
adjustment in accordance with the provisions of that certain letter agreement
dated January 20,1998 by and between Projectavision and the Company relative to
the Subsidiary's "Bank Debt" (as such term is defined in such January 20, 1998
letter agreement).
(d) Allocation of Purchase Price. The Purchase Price payable
pursuant to Section 2(a) hereof, and the assets purchased and liabilities
assumed, as between Projectavision and International, shall be allocated as
provided on Schedule 2(c) annexed hereto. The parties hereto agree that
Purchaser may use such allocation for purposes of filing Internal Revenue
Service Form 8594 (Asset Acquisition Statement under Section 1060) pursuant to
the provisions of the Internal Revenue Code of 1986, as amended (the "Code").
10
(e) Acquisition by Affiliates. Notwithstanding anything to the
contrary in this Agreement, Purchaser may cause some or all of the Assets to be
acquired hereunder by one (1) or more affiliates of Purchaser; provided,
however, that Purchaser shall remain liable, jointly and severally, with any
such affiliate(s) for any and all obligations under this Agreement. The term
"affiliates" as used in this Section 2(d) shall have the same meaning as set
forth under the definition of "affiliates" in Rule 405 of the Securities Act of
1933, as amended.
3. (a) Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at the offices of Zukerman Gore &
Brandeis, LLP, 900 Third Avenue, New York, New York 10022 no later than December
7, 1998, provided that all conditions precedent set forth in Section 14 hereof,
or at such other time and place as the parties may agree. The day on which the
Closing actually takes place is herein sometimes referred to as the "Closing
Date."
(b) Further Action.
(i) The Company and Purchaser agree to use all reasonable good
faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions
contemplated hereby by the Closing Date, including but not
limited to (A) fulfilling the provisions of Section 12 below,
and (B) delivering all of the Schedules required to be annexed
to this Agreement; provided that a Schedule shall not be
deemed to have been delivered hereunder unless and until same
is complete and accurate in its entirety.
(ii) The Company and Purchaser shall, as promptly as
practicable, file or supply, or cause to be filed or supplied,
all applications, notifications and information required to be
filed or supplied pursuant to all applicable provisions of (A)
constitutions, treaties, statutes, laws (including common
law), rules, regulations, ordinances, codes or orders of any
Government Authority; and (B) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any
Governmental Authority (collectively, the "Applicable Laws")
in connection with this Agreement, the sale and transfer of
the Assets pursuant to this Agreement and the consummation of
the other transactions contemplated hereby.
11
(iii) The Company and Purchaser, as promptly as practicable,
will use all reasonable efforts to obtain, or cause to be
obtained, all consents of any Governmental Authority and of
any third party (collectively, the "Consents") necessary to be
obtained in order to consummate the sale and transfer of the
Assets pursuant to this Agreement and the consummation of the
other transactions contemplated hereby.
(iv) The Company shall coordinate and cooperate with Purchaser
in exchanging such information and supplying such assistance
as may be reasonably required by Purchaser pursuant to
Applicable Laws in connection with this Agreement and the
"Company's Related Agreements" (as that term is defined in
Section 6(d) below).
(v) At all times prior to the Closing, the Company shall
promptly notify Purchaser in writing, and the Purchaser shall
promptly notify the Company in writing, upon becoming aware of
any fact, condition, event or occurrence that will or may
result in the failure to satisfy any of the conditions
precedent to the transactions contemplated by this Agreement
as set forth in Section 14 hereof.
(vi) The Company shall use its good faith, reasonable efforts
to enter into such agreements and other arrangements
(including sublicenses and subleases) with Purchaser as are
necessary to ensure that Purchaser receives benefits under the
Contracts set forth on Schedule 6(z) annexed hereto and the
other agreements to be transferred to Purchaser hereunder that
are the same as received under the Contracts prior to the
Closing or as contemplated to be received after the Closing.
(vii) The Company and Purchaser shall, collectively, use their
best efforts to secure a line of credit with one or more
Italian banking institutions on or before March 1, 1999 which
shall provide Purchaser with credit availability of not less
than $2,000,000.
4. (a) The Company's Delivery Obligations at the Closing;
Covenants; Further Assurances. At the Closing, the Company
agrees to deliver or cause to be delivered to Purchaser (and, as
applicable, execute):
12
(i) a Bill of Sale in English and a Bill of Sale in Italian,
each of which shall be duly executed by the Company in
substantially the form of Schedule 4(a).1 and Schedule 4(a).2,
respectively, annexed hereto;
(ii) such other good and sufficient deeds, bills of sale,
endorsements, assignments, documents of title and other
instruments of conveyance, assignment and transfer, in form
and substance reasonably satisfactory to Purchaser's counsel,
as shall be effective to vest in Purchaser good title to the
Assets;
(iii) all contracts, files and other data (including, without
limitation, lists of orders and computer disks and tapes) and
documents pertaining to the Assets;
(iv) certified copies of resolutions adopted by the Company's
Board of Directors authorizing the execution, delivery and
performance of this Agreement;
(v) an authenticated copy of the Subsidiary's Certificate of
Incorporation, as amended, certified by the Office of the
Secretary of State of the State of Delaware, and a true and
correct copy of the by-laws of the Subsidiary as certified by
the secretary of the Subsidiary;
(vi) the opinion of Company's counsel, substantially in the
form of Schedule 4(a)(vi) annexed hereto which opinion shall
cover, among other things, the due authorization, execution
and delivery of this Agreement and the transactions
contemplated hereby;
(vii) the Non-Competition Undertaking of Mr. Flavio Peralda,
which shall include, among other things, a provision
prohibiting any further use, directly or indirectly, of the
names and words "Vidikron Industries S.p.A." or Vidikron of
America, Inc.," or any other name confusingly similar to such
names and marks or any variation thereof (the "Peralda
Non-Competition Undertaking"), in the form of Schedule
4(a)(vii) annexed hereto;
(viii) the Employment Agreement (the "Peralda Employment
Agreement") between Purchaser and Mr. Flavio Peralda in the
form of Schedule 4(a)(viii) annexed hereto;
13
(ix) the Employment Agreement (the "Macario Employment
Agreement"), which shall include, among other things, a
provision prohibiting any further use, directly or indirectly,
of the names and words "Vidikron Industries S.p.A." or
Vidikron of America, Inc.," or any other name confusingly
similar to such names and marks or any variation thereof,
between Purchaser and Mr. Emilio Baj Macario in the form of
Schedule 4(a)(ix) annexed hereto;
(x) the Non-Competition Undertaking of Mr. Emilio Baj Macario,
which shall include, among other things, a provision
prohibiting any further use, directly or indirectly, of the
names and words "Vidikron Industries S.p.A." or Vidikron of
America, Inc.," or any other name confusingly similar to such
names and marks or any variation thereof (the "Macario
Non-Competition Undertaking") in the form of Schedule 4(a)(x)
annexed hereto;
(xi) approvals, if required by the terms thereof, in respect
of and an assignment and assumption agreement for the Leases
(as defined in Section 6(dd) hereof) in substantially the form
of Schedule 4(a)(xi) annexed hereto (the "Lease Assignment");
(xii) an assignment and assumption agreement for the equipment
leases in substantially the form of Schedule 4(a)(xii) annexed
hereto to be prepared by Purchaser (the "Personal Property
Assignment);" provided, however, Purchaser expressly agrees
that in the event that any Personal Property Assignment cannot
be executed and delivered at the Closing, it shall be
acceptable for the Company, in lieu thereof, to keep in
existence the applicable equipment lease for the benefit of
Purchaser and the Purchaser shall reimburse the Company on a
timely basis for any ongoing lease payments from time to time
as same become due and owing;
(xiii) a notarized assignment agreement for the Intellectual
Property to be included in each of the Bills of Sale referred
to in Section 4(a)(i) above, in accordance with applicable
laws and in substantially the form of Schedule 4(a)(xiii)
annexed hereto (the "Intellectual Property Assignment");
14
(xiv) all Consents, including, without limitation, those
necessary in connection with the Lease Assignment, if
required, the Personal Property Assignment and the
Intellectual Property Assignment;
(xv) a Certificate of the Registry of the Companies which
shall cover the Company's continued registration in the
Registry of Companies as of the Closing Date;
(xvi) a Certificate signed by a managing director of the
Company dated the Closing Date, reaffirming that all of the
representations and warranties set forth in Section 6 below;
(xvii) the lease with the Purchaser for the premises at the
Company's address first set forth above (the "Italian Lease")
for a term of not less than six (6) years at a rate of
140,000,000Li. per annum (plus normal operating expenses and
value added taxes, if any, all consistent with the terms and
conditions as are applicable to the Italian Lease upon the
execution hereof);
(xviii) the Assumed Liabilities Escrow Agreement" as that term
is defined in Section 18 below;
(xix) Governmental Approvals;
(xx) the Employment and Stock Purchase Agreement ("Cozzi
Employment Agreement") between Purchaser and Mr. Giovanni
Cozzi in the form of Schedule 4(a)(xx) annexed hereto;
(xxi) the Employment and Stock Purchase Agreement (the
"Wellnitz Employment Agreement") between Purchaser and Mr.
James Wellnitz in the form of Schedule 4(a) (xxi) annexed
hereto;
(xxii) the original stock certificate(s) or an affidavit of
lost certificate, reasonably satisfactory in form and
substance to Purchaser's counsel representing the Company's
eighty-five percent (85%) beneficial equity ownership interest
in the Subsidiary, accompanied by undated stock powers
executed in blank with signatures guaranteed;
15
(xxiii) the original stock certificate(s), representing the
beneficial equity ownership in the Subsidiary of each of Mr.
Giovanni Cozzi and Mr. James Wellnitz which, in the aggregate,
which equal fifteen percent (15%) of the beneficial equity
ownership in the Subsidiary, accompanied by undated stock
powers executed in blank with signatures guaranteed;
(xxiv) all of the books and records, stock ledger, bank
accounts, agreements, contracts, understandings,
correspondence, and all other materials of any nature
whatsoever relative to the Subsidiary;
(xxv) evidence in form and substance satisfactory to Purchaser
that all notices required to be given to the Company's
employees pursuant to Italian laws have been properly given in
a timely fashion in accordance with applicable Italian Laws;
and
(xxvi) all other documents and instruments required to be
delivered to Purchaser in order to consummate the transactions
herein contemplated.
(b) Billings. The Company agrees that from and after the
Closing Date, Purchaser shall have the right and authority to bill and collect
for its own account all billings in respect of work-in-process, if any, that are
being transferred to Purchaser as provided herein. The Company agrees that it
will promptly transfer and deliver to Purchaser any cash or other property which
the Company may receive in respect of such billings.
(c) Liability for Transfer Taxes. Except for the Bill of Sale
Registration Tax and Stamp Tax Duties, the Company shall be responsible for the
payment in the ordinary course of, and shall indemnify and hold harmless
Purchaser against, all income, sales (including, without limitation, bulk
sales), use, value added, documentary, stamp, gross receipts, transfer,
conveyance, excise (if any), license and other similar Taxes (as defined in
Section 6(i) hereof) and fees (collectively, "Transfer Taxes"), arising out of
or in connection with or attributable to the transactions effected pursuant to
this Agreement and the Company's Related Agreements. The Company shall prepare
and timely file all tax returns required to be filed in respect of Transfer
Taxes (including, without limitation, all notices required to be given with
respect to bulk sales taxes), provided
16
that Purchaser shall be permitted to prepare any such tax returns that are the
primary responsibility of Purchaser under Applicable Law. Purchaser's
preparation of any such tax returns shall be subject to the Company's approval,
which approval shall not be unreasonably withheld or delayed.
(d) Certificates of Tax Affidavits. On or before the Closing
Date, Purchaser shall obtain copies of certificates from appropriate taxing
authorities with respect to value added taxes relative to any country, federal,
state, regional, provincial or other taxing authority for which Purchaser or the
Company could have liability to withhold or pay with respect to the transfer of
the Assets or any of the transactions herein contemplated, provided, that
Purchaser's failure to obtain such certificates (provided that such failure
shall not be the fault of the Company) shall not relieve the Purchaser of its
obligations to enter into and complete the Closing. In the event that
notwithstanding its good faith efforts to the contrary, Purchaser is unable to
obtain such certificates prior to the Closing, Purchaser shall withhold or,
where appropriate, escrow such amount as necessary based upon the Purchaser's
reasonable estimate of the amount of such potential liability, or as determined
by the appropriate taxing authority, to cover such value added taxes until such
time as certificates are provided.
(e) Use of Business Name. Contemporaneously with the Closing,
the Company will change its name, and the Company will not, directly or
indirectly, use or do business, or allow any Affiliate (as hereinafter defined)
to use or do business, or assist any third party in using or doing business,
under the names and marks "Vidikron Industries S.p.A." or "Vidikron of America,
Inc.," or any other name confusingly similar to such names and marks or any
variation thereof. It is expressly acknowledged and agreed by the Company that
the provisions of this Section 4(e) are of the essence hereof.
(f) Further Assurances. At any time and from time to time
after the Closing, at Purchaser's request and expense, without further
consideration, the Company shall execute and deliver such other additional
instruments of sale, transfer, conveyance, assignment and confirmation and take
such other action as Purchaser may reasonably deem necessary or desirable in
order to transfer, convey and assign to Purchaser the Assets, subject to this
Agreement, to put Purchaser in actual possession and operating control thereof
and to assist Purchaser in exercising all of the Company's rights with respect
thereto and to take such action and execute such documents or instruments as may
be reasonably requested by the Purchaser in connection with
17
any governmental or regulatory matters or filings required to be made by
Purchaser, including, without limitation, any filings, documents or instruments
to be delivered to the United States Securities and Exchange Commission or any
other Governmental Authority, The Nasdaq Stock Market, Purchaser's, the
Company's and the Subsidiary's, lenders, auditors or any other appropriate
party.
5. Purchaser's Delivery Obligations at the Closing. (a)
At the Closing, Purchaser agrees to deliver, or cause to be
delivered, as the case may be, to the Company (and, as
applicable, execute):
(i) a certified or cashier's check for the balance of the
Purchase Price as provided in Section 2 hereof, less any and
all Prepayments thereto for delivered, subject to any
adjustment herein and the holdback provisions of Section 15
below;
(ii) a certified copy of resolutions adopted by the Board of
Directors of Purchaser authorizing the execution, delivery and
performance of this Agreement and the Purchaser's Related
Agreements (as defined in Section 7(a) hereof);
(iii) a certificate of good standing issued by the Secretary
of State of the State of Delaware as to the good standing and
corporate existence of Purchaser;
(iv) an opinion of Purchaser's counsel substantially in the
form of Schedule 5(a)(iv) annexed hereto which opinion shall
cover, among other things, the due authorization, execution
and delivery of this Agreement and the transactions
contemplated hereby;
(v) the Macario Employment Agreement;
(vi) the Macario Non-Competition Undertaking;
(vi) the Peralda Non-Competition Agreement;
(vii) the Peralda Employment Agreement;
(viii) the Cozzi Employment Agreement;
(ix) the Wellnitz Employment Agreement;
18
(x) (the Personal Property Assignment;
(xi) the Lease Assignment;
(xii) all other documents and instruments required to be
delivered to the Company pursuant to the provisions of this
Agreement;
(xiii) , the Trade Payables Escrow Agreement;
(xiv) the Lease;
(xv) the Bill of Sale in Italian and the Bill of Sale in
English duly executed by the Purchaser in substantially the
form of Schedule 4(a).2 annexed hereto; and
(b) At any time and from time to time after the Closing, at
the Company's request and expense, Purchaser shall execute and deliver such
other additional instruments as the Company may reasonably deem necessary to
evidence Purchaser's obligations under this Agreement, and Purchaser agrees to
take such actions as may be reasonably necessary to carry out the purposes and
intentions of this Agreement. For a reasonable period of time following the
Closing, Purchaser shall provide the Company with reasonable access to all books
and records of the Company that are delivered to Purchaser hereunder relating to
the Assets and the period through the Closing Date.
6. Representations and Warranties of the Company. The Company
represents and warrants to Purchaser, as of the date of this Agreement and as of
the Closing Date, as follows:
(a) Organization, Standing and Qualification. Each of the
Company and the Subsidiary (i) is a corporation duly organized, validly existing
and in good standing under the laws of Italy and the State of Delaware,
respectively; (ii) has all requisite corporate power and authority and is
entitled to carry on the business as now being conducted and to own, lease or
operate its properties in the places where such business is now conducted and
such properties are now owned, leased or operated; and (iii) the Subsidiary is
duly qualified, licensed and in good standing as a foreign corporation
authorized to do business in the states listed on Schedule 6(a) annexed hereto,
which are the only states where the failure to be so qualified would have a
material adverse effect on the condition, financial or otherwise, of the Company
or the Subsidiary. The Company has delivered to
19
Purchaser a true and complete copy of the certificate of incorporation of the
Subsidiary and all amendments thereto, certified as true and correct by the
Secretary of State of the State of Delaware, as well as the by-laws of the
Subsidiary as presently in effect, certified as true and correct by the
secretary of the Subsidiary.
(b) Subsidiaries. The Subsidiary has no subsidiaries except
those listed on Schedule 6(b) annexed hereto. Except as set forth on Schedule
6(b) annexed hereto, the Subsidiary owns all of the outstanding capital stock of
all of the subsidiaries of the Subsidiary listed on Schedule 6(b) annexed
hereto. Except as set forth on Schedule 6(b) annexed hereto, the Subsidiary has
no interest, directly or indirectly, and has no commitment to purchase any
interest, directly or indirectly, in any other corporation or in any
partnership, joint venture or other business enterprise or entity. Except as set
forth on Schedule 6(b) annexed hereto, the Company's Video Business has not been
conducted through any other direct or indirect subsidiary or affiliate of the
Subsidiary or the Company other than the Subsidiary. Except as set forth on
Schedule 6(b) annexed hereto, there are no securities of any subsidiary of the
Company or the Subsidiary directly or indirectly convertible, exercisable or
exchangeable for any of the capital stock of the Subsidiary, including, but not
limited to, any options, warrants, rights, agreements, understandings or
commitments, vested or unvested, of any nature whatsoever relating to the
capital stock of the Subsidiary.
(c) Transactions with Certain Persons. Except as set forth on
Schedule 6(c) annexed hereto, neither the Company with respect to the Company's
Video Business nor the Subsidiary has directly or indirectly, purchased, leased
from others or otherwise acquired any property or obtained any services from, or
sold, leased to others or otherwise disposed of any property or furnished any
services to, or otherwise dealt with (except with respect to remuneration for
services rendered as a director, officer or employee of the Company or the
Subsidiary), in the ordinary course of business or otherwise (i) any shareholder
of the Company or the Subsidiary, or (ii) any person, firm or corporation which,
directly or indirectly, alone or through one or more intermediaries controls, is
controlled by, or is under common control with the Company or the Subsidiary or
any shareholder of the Company or the Subsidiary (an "Affiliate"). Except as set
forth on Schedule 6(c) annexed hereto, neither the Company with respect to the
Company's Video Business, nor the Subsidiary, owes any amount to, or has any
contract with or commitment to, any shareholders, officers, employees or
20
consultants (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business), and none of such persons owes any amount to either the Company with
respect to the Company's Video Business or by the Subsidiary. Except as set
forth on Schedule 6(c) annexed hereto, no part of the property or assets of any
of the shareholders of the Company or the shareholders of the Subsidiary are
used by the Company in connection with the Company's Video Business or the
Subsidiary. Except as set forth on Schedule 6(c) annexed hereto, no part of the
property or Assets of the Company's Video Business or the Subsidiary are used by
any of the shareholders of the Company or shareholders of the Subsidiary for
their personal benefit or any purpose not related to the business of the
Company's Video Business or the Subsidiary.
(d) Execution, Delivery and Performance of Agreement;
Authority. Except as set forth on Schedule 6(d) annexed hereto, neither the
execution, delivery nor performance of this Agreement and all other agreements
to which the Company or the Subsidiary is a party that are required to be
delivered by the Company, pursuant to Section 4(a) hereof (which documents are
sometimes herein collectively referred to as the "Company's Related Agreements")
will, with or without the giving of notice or the passage of time, or both,
conflict with, result in a default, right to accelerate or loss of rights under,
or result in the creation of any lien, charge or encumbrance pursuant to any
provision of the Company's charter documents or the Subsidiary's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, Contract, agreement, Applicable Law, rule or regulation, or any order,
judgment or decree to which the Company or the Subsidiary are a party or by
which either of them may be bound or materially or adversely affected or require
any consent, authorization, approval or any other action by, or any notice to,
or filing or registration with, any Governmental Authority or other third party.
Except as set forth on Schedule 6(d) annexed hereto, no other party, including,
without limitation, any present or former partner, shareholder, or employee of
the Company or the Subsidiary has, may or will have any right (tangible or
intangible, choate or inchoate) to any interest in the Assets or the proceeds
from the sale of the Assets. Except as set forth on Schedule 6(d) annexed
hereto, no Consent is required to be obtained or made by the Company or the
Subsidiary in connection with the execution and delivery of this Agreement or
the Company's Related Agreements, and to consummate the transactions
contemplated thereby. The Company has the full right, power and authority to
enter into this Agreement and, if applicable, the Company's Related
21
Agreements, and to carry out the transactions contemplated hereby and thereby,
as applicable, and all proceedings required to be taken by it to authorize and
approve the execution, delivery and performance of this Agreement and the
Company's Related Agreements have been properly taken, and this Agreement and
the Company's Related Agreements constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, except that such
enforcement may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights generally. The execution, delivery and performance of this Agreement and
the Company's Related Agreements have been duly authorized, to the extent
required by Applicable Law and by all requisite corporate and shareholder action
of the Company.
(e) Capitalization; Ownership of Capital Stock. The
authorized capital of the Subsidiary consists of two hundred (200) shares of
common stock, no par value, of which one hundred (100) shares are issued and
outstanding on the date hereof, all of which have been duly authorized and
validly issued and are fully paid and non-assessable. All of the presently
authorized, issued and outstanding shares of capital stock of the Subsidiary are
legally and beneficially owned, free and clear of any liens, claims,
encumbrances, voting trusts, or any agreement, understanding or arrangement
regarding the transfer, sale, disposition, purchase or acquisition thereof, by
those individuals and entities in the amounts set forth on Schedule
6(g).2 annexed hereto. Except as otherwise disclosed on Schedule
6(g).1 annexed hereto, there are no outstanding subscriptions, rights, options,
warrants, calls, contracts, demands, commitments, convertible securities or
other agreements or arrangements of any character or nature whatsoever under
which the Subsidiary is, or may become obligated to, issue, assign or transfer
any shares of the capital stock of the Company or the Subsidiary, as the case
may be.
(f) [Intentionally Omitted]
(g) Financial Statements. Annexed hereto is a true and correct
copy of each of the Company's income statement relative to the Company's Video
Business, and the Subsidiary's audited income statement and balance sheet (which
audited income statement and balance sheet of the Subsidiary shall include
footnotes, and shall be all prepared in accordance with generally accepted
accounting principles), all with respect to the fiscal years ending December 31,
1995, 1996 and 1997 (collectively, the "Historical Financial Statements") and
which shall all be annexed hereto as Schedule 6(g).1; The Historical Financial
Statements,
22
have been prepared in good faith from the books and records of the Company and
the Subsidiary in accordance with past practices, are true and accurate in all
material respects, and fairly presents the financial position of each of them at
such dates and for the periods indicated thereon. In addition, the Historical
Financial Statements for the fiscal year ending December 31, 1997 have been
prepared in conformity with generally accepted accounting principles,
consistently applied.
(h) Absence of Undisclosed Liabilities. Except as set forth on
Schedule 6(h), as of the Company's balance sheet date with respect to the fiscal
year ended December 31, 1997, (the "Balance Sheet Date"), neither the Company's
Video Business nor the Subsidiary had any material debts, liabilities or
obligations (whether absolute, accrued, contingent or otherwise) except those
incurred in the ordinary course of business.
(i) Taxes. Except as set forth on Schedule 6(i).1 annexed
hereto, (i) all Taxes imposed by the United States, Italy or by any other
country or by any state, municipality, region, province, subdivision or
instrumentality of the United States, Italy or of any other country, or by any
other taxing authority, which are due or payable by the Company, the Subsidiary
or any Affiliate of the Company or the Subsidiary, and all interest and
penalties thereon, whether disputed or not, have been paid in full, all tax
returns required to be filed in connection therewith have been accurately
prepared and duly and timely filed prior to the expiration of any available
extension periods; and all deposits required by law to be made by the Company or
the Subsidiary or any Affiliate of the Company or the Subsidiary with respect to
employees' withholding or similar taxes have been duly made, except for the
current reporting period which will be paid when due. Neither the Company nor
the Subsidiary is currently delinquent in the payment of any foreign or domestic
tax, assessment or governmental charge or deposit and has no tax deficiency or
claim outstanding, or, to its knowledge, proposed or assessed against it, and,
to its knowledge, there is no basis for any such deficiency or claim. There is
not now in force any extension of time with respect to the date on which any tax
return was or is due to be filed by or with respect to the Company or the
Subsidiary. As used in this Agreement, "Taxes" shall include, without
limitation, all federal, state, regional, provincial, local, foreign or other
income, alternative minimum, accumulated earnings, add-on, personal holding
company, franchise, capital stock, net worth, capital, profits, gross receipt,
value added, sales, use, goods and services,
23
transaction, excise, customs, duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, charges, fees, severance,
environmental (including, taxes under Section 59A of the United States Internal
Revenue Code of 1986, as amended), real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers' compensation, payroll,
withholding, estimated or other similar tax, duty or other governmental charge
or assessment or deficiency thereof, including all interest and penalties
thereon and additions thereto whether disrupted or not, which is imposed by any
Governmental Authority. Upon the execution hereof, the Company shall deliver to
Purchaser its tax returns for the years ended December 31, 1995 and 1996, which
shall be annexed hereto as Schedule 6(i).2.
(j) Absence of Changes or Events. Except as set forth on
Schedule 6(j) annexed hereto, since the Balance Sheet Date, each of the Company
with respect to the Company's Video Business and the Subsidiary has conducted
their business only in the ordinary course and has not, with respect to the
Company's Video Business and the Subsidiary:
(i) incurred any material obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become
due, except current liabilities for trade or business
obligations in the ordinary course of business and consistent
with its prior practice, none of which liabilities, in any
case or in the aggregate, materially and adversely affects the
business, properties, assets, liabilities or condition,
financial or otherwise, of the Company or the Subsidiary;
(ii) discharged or satisfied any lien, charge or encumbrance
other than those then required to be discharged or satisfied,
or paid any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, other
than current liabilities shown on the Balance Sheet and
current liabilities incurred since the Balance Sheet Date in
the ordinary course of business and consistent with its prior
practice;
24
(iii) declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect of any
shares of its capital stock, or purchased, retired or
redeemed, or obligated itself to purchase, retire or redeem,
any of its shares of capital stock or other securities (it
being understood that this Section 6(j)(iii) shall only be
applicable to the Subsidiary);
(iv) mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction any of its
property, business or assets, tangible or intangible;
(v) sold, transferred, leased to others or otherwise disposed
of any of its assets except in the ordinary course of
business, or cancelled or compromised any debt or claim, or
waived or released any right of substantial value;
(vi) received any notice of termination of any contract, lease
or other agreement or suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any case or in
the aggregate, has had a materially adverse effect on its
assets, properties, operations or prospects;
(vii) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages,
slow-downs or lock-outs or had any material change in its
relations with its employees, agents, customers or suppliers;
(viii) transferred or granted any rights under, or entered
into any settlement regarding the breach or infringement of,
any United States, Italian or any other license, patent,
copyright, trademark, trade name, invention or similar rights,
or modified any existing rights with respect thereto;
(ix) made any material change in the rate of compensation,
commission, bonus or
25
other direct or indirect remuneration payable, or paid or
agreed or orally promised to pay conditionally or otherwise,
any bonus, extra compensation, pension or severance or
vacation pay, to any shareholder, director, officer, employee,
salesman, distributor or agent of the Company with respect to
the Company's Video Business or the Subsidiary;
(x) issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or
warrants with respect thereto, or, solely with respect to the
Subsidiary, acquired any capital stock or other securities of
any corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any
person, firm or corporation;
(xi) made any capital expenditures or capital additions or
betterments in excess of an aggregate of $25,000;
(xii) changed its banking, credit, borrowing or safe deposit
arrangements;
(xiii) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body
relating to the property of either the Company's Video
Business or the Subsidiary;
(xiv) failed to replenish its inventories and supplies in a
normal and customary manner consistent with its prior practice
or made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business or at any
price in excess of the then current market price or upon terms
and conditions more onerous than those usual and customary in
the industry, or made any material change in its selling,
pricing, marketing, advertising or personnel practices
inconsistent with its prior practice or;
(xv) suffered any change, event or condition which, in any
case or in the
26
aggregate, has had or may have a materially adverse affect on
either the Company's Video Business or the Subsidiary's
condition (financial or otherwise), properties, assets,
liabilities, operations or prospects including, without
limitation, any change in either the Company's Video Business
or the Subsidiary's revenues, costs, levels of committed
business or relations with its employees, agents, customers or
suppliers;
(xvi) entered into any transaction, contract or commitment
other than in the ordinary course of business or paid or
agreed to pay any legal, accounting, brokerage, finder's fee,
taxes or other expenses in connection with or incurred any
severance pay obligations by reason of, this Agreement or the
transactions contemplated thereby; or
(xvii) entered into any agreement or made any commitment,
whether written or oral, to take any of the types of action
described in subparagraphs (i) through (xvi) above.
(k) Litigation. Except as set forth on the Historical
Financial Statements, there is no claim, legal action, suit, arbitration or
other legal or administrative proceeding (or governmental investigation) or any
order, decree or judgment in progress, pending or in effect, or threatened
against or relating to either the Company's Video Business or the Subsidiary,
the officers or directors of the Company (as such litigation, if any, may relate
to the Company's Video Business) or the Subsidiary, nor the Assets or the
properties or business relative to the Company's Video Business or the
properties, assets or business relative to the Subsidiary, and neither the
Company nor the Subsidiary knows or has reason to be aware of any basis for the
same, which if determined adversely to the Company or the Subsidiary would have
a material adverse affect on the Company's Video Business or the Subsidiary.
Except as set forth on Schedule 6(k) annexed hereto, there is no claim, legal
action, suit, arbitration or other legal or administrative proceeding (or
governmental investigation) or any order, decree or judgment in progress,
pending or in effect, or threatened against or relating to either the Company's
Video Business or the Subsidiary, the officers or directors of the Company (as
it may relate to the Company's Video Business) or the Subsidiary, the Assets or
the properties or business relative to the Company's Video Business or
properties, assets or business of the Subsidiary, and neither
27
the Company nor the Subsidiary knows or has reason to be aware of any basis for
the same, which if determined adversely to the Company or the Subsidiary would
have a material adverse affect on the Company's Video Business or the
Subsidiary.
(l) Compliance with Laws and Other Instruments. Except as set
forth in Schedule 6(l) annexed hereto, each of the Company, with respect to the
Company's Video Business, and the Subsidiary has complied with all existing
laws, rules, regulations, ordinances, orders, judgments and decrees now or
hereafter applicable to their Assets, business, properties assets and
operations. Neither the ownership nor use of the Assets nor the conduct of the
Company's Video Business conflicts with the rights of any other person, firm or
corporation, or violates, or with or without the giving of notice or the passage
of time, or both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms of provisions of either the
Company's or the Subsidiary's certificate of incorporation or by-laws as
presently in effect, or any lien, encumbrance, mortgage, deed of trust, lease,
license, agreement, law, ordinance, rule or regulation, or any order, judgment
or decree to which it is a party or by which it may be bound or affected.
(m) Title to Properties. Each of the Company and the
Subsidiary have good, marketable and insurable title to the Assets, and the
Subsidiary's assets, respectively. Except as set forth on Schedule 6(m) annexed
hereto, none of the Assets or the Subsidiary's assets are subject to any loan
agreement, conditional sale or title retention agreement, equipment obligations,
lease purchase agreement, mortgage, indenture, pledge, security agreement,
guaranty, lien, charge, security interest, encumbrance, restriction, lease,
license, easement, liability or adverse claim of any nature whatsoever
(excluding trade and account payables), direct or indirect, whether accrued,
absolute, contingent or otherwise.
(n) Insurance. Set forth on Schedule 6(n) annexed hereto is an
accurate and complete list and description of all fire, theft, casualty,
liability and other insurance policies procured by the Company with respect to
the Company's Video Business and the Subsidiary, specifying with respect to each
such policy the name of the insurer, the risk insured against, the limits of
coverage, the deductible amount (if any), the premium rate and the date through
which coverage will continue by virtue of premium already paid. Except as set
forth on Schedule 6(n) annexed hereto, all insurance policies relating to the
Company's Video Business and the Subsidiary are in full force and effect,
28
and all premiums due thereon have been paid. Set forth on Schedule 6(n) annexed
hereto, is a description of all open claims made by the Company with respect to
the Company's Video Business and the Subsidiary under any policy of insurance
and all claims which in the opinion of the Company or the Subsidiary reasonably
formed and held, should or could be made under any such policy.
(o) Territorial Restrictions. Except as set forth in Schedule
6(o) annexed hereto, neither the Company nor the Subsidiary is restricted by any
written agreement or understanding with any party from carrying on the Company's
Video Business or the business conducted by the Subsidiary, respectively,
anywhere in the world. Purchaser, solely as a result of its purchase of the
Assets and the assumption of the Assumed Liabilities, will not thereby become
restricted in carrying on any business anywhere in the world.
(p) Intellectual Property.
(i) Title. Schedule 6(p)(i) annexed hereto contains a complete
and correct list of all Intellectual Property that is owned by
the Company with respect to the Company's Video Business and
the Subsidiary (the "Owned Intellectual Property") other than
Intellectual Property that is not registered or subject to
application for registration. Except as set forth on Schedule
6(p)(i), the Company and the Subsidiary owns or has the
exclusive right to use pursuant to license, sublicense,
agreement or permission all Owned Intellectual Property, free
from any encumbrances and free from any requirement of any
past, present or future royalty payments, license fees,
charges or other payments, or conditions or restrictions
whatsoever. Except as set forth on Schedule 6(p)(i), the Owned
Intellectual Property comprise all of the Intellectual
Property necessary for Purchaser to conduct and operate the
Company's Video Business and the Subsidiary's business as same
are currently being conducted and are intended to be conducted
upon the consummation of the transaction herein contemplated.
(ii) Transfer. Except as set forth on Schedule 6(p)(ii)
hereof, upon the Closing, Purchaser will own all of the Owned
Intellectual Property and will have the right to use all Owned
Intellectual Property, free from any liens, claims or
encumbrances and on the same terms of any person in effect
prior to the Closing.
29
(iii) No Infringement. The conduct of the Company's Video
Business and the Subsidiary's business does not infringe or
otherwise conflict with any rights of any person in respect of
any Intellectual Property.
(iv) Licensing Arrangements. Schedule 6(p)(iv) annexed hereto
sets forth all material agreements, arrangements or laws (A)
pursuant to which the Company and the Subsidiary has licensed
Owned Intellectual Property to, or the use of Owned
Intellectual Property is otherwise permitted (through
non-assertion, settlement or similar agreements or otherwise)
by, any other party, and (B) pursuant to which the Company and
the Subsidiary has had Intellectual Property licensed to it,
or has otherwise been permitted to use Intellectual Property.
All of the agreements or arrangements set forth on Schedule
6(p)(iv) annexed hereto (x) are in full force and effect in
accordance with their terms and no default exists thereunder
by the Company by any other party thereto, (y) are free and
clear of all liens, and (z) except as set forth in Schedule
6(p)(iv) annexed hereto, do not contain any change in control
or other terms or conditions that will become applicable or
inapplicable as a result of the consummation of the
transactions contemplated by this Agreement. The Company has
delivered to the Purchaser true and complete copies of all
licenses and arrangements (including amendments) set forth on
Schedule 6(p)(iv) annexed hereto. All royalties, license fees,
charges and other amounts currently payable by, on behalf of,
to, or for the account of, the Company or the Subsidiary in
respect of any Intellectual Property are disclosed in the Pro
Forma Financial Statements.
(v) No Intellectual Property Litigation. No claim or demand
has been made nor is there any proceeding that is pending, or
to the knowledge of the Company threatened, which (A)
challenges the rights of the Company or the Subsidiary in
respect of any Intellectual Property, (B) asserts that the
Company or the Subsidiary is infringing or otherwise in
conflict with, or is, except as set forth on Schedule 6(p)(v)
annexed hereto, required to pay any royalty, license fee,
charge or other amount with regard to, any Intellectual
Property, or (C) claims that any default exists under any
agreement or arrangement listed on Schedule 6(p)(v) annexed
hereto. None of the
30
Intellectual Property is subject to any outstanding order,
ruling, decree, judgment or stipulation by or with any court,
arbitrator, or administrative agency.
(vi) Due Registration, Etc. The Owned Intellectual Property,
to the extent required, has been duly registered with, filed
in or issued by, as the case may be, the United State Patent
and Trademark Office, United States Copyright Office, the
Ufficio Italiano Brevgtti E Marchi, and the Company has taken
such other actions, to ensure full protection under any
Applicable Laws or regulations, and such registrations, if
any, filings, issuances and other actions remain in full force
and effect.
(vii) Use of Name and Mark. Except as set forth on Schedule
6(vii) annexed hereto, there are and immediately after the
Closing will be, no contractual restrictions or limitations
pursuant to any orders, decisions, injunctions, judgments,
awards or decrees of any Governmental Authority on the
Purchaser's right to use the name and mark "Vidikron
Industries, S.p.A." or "Vidikron of America, Inc." in the
conduct of business as carried on by the Company and the
Subsidiary upon the execution hereof.
(q) Environmental Matters. Purchaser shall have no liability
of any nature with respect to, shall not be deemed to violate, and shall not
violate, any environmental laws or regulations or orders, or be required to take
any action to be in compliance with any environmental laws or regulations or
orders by virtue of the entering into of the Agreement, the acquisition of the
Assets, or effecting the transactions contemplated hereby.
(r) No Guaranties. Except as set forth on Schedule 6(r), none
of the obligations or liabilities of the Company's Video Business or the
Subsidiary is guaranteed by any other person, firm or corporation, nor has the
Company with respect to the Company's Video Business or the Subsidiary
guaranteed the obligations or liabilities of any other person, firm or
corporation. There are no outstanding letters of credit, surety bonds or similar
instruments of the Company with respect to the Company's Video Business or the
Subsidiary in connection with the Assets and the Subsidiary's assets, as the
case may be.
(s) [Intentionally Deleted]
31
(t) Absence of Certain Business Practices. Except as set
forth on Schedule 6(t) annexed hereto, neither the Company nor the Subsidiary
nor any executive officer of the Company and the Subsidiary, nor any other
person acting on its behalf, has, directly or indirectly, given or agreed to
give any gift or similar benefit, of a material nature to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the Company's Video Business or the Subsidiary (or assist the
Company with respect to the Company's Video Business or the Subsidiary in
connection with any actual or proposed transaction) which (i) might subject the
Company with respect to the Company's Video Business or the Subsidiary to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had an adverse effect on
the assets, business or operations of the Company's Video Business or the
Subsidiary as reflected on the Pro Forma Financial Statements or (iii) if not
continued in the future, might adversely affect the Assets, business, operations
or prospects of the Company's Video Business or the Subsidiary or which might
subject the Company or the Subsidiary to suit or penalty in any private or
governmental litigation or proceeding.
(u) Disclosure. No representation or warranty by the Company
contained in this Agreement or in any other document furnished or to be
furnished relative to the Company or the Subsidiary in connection herewith or
pursuant hereto, including but not limited to any Schedule, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements herein or therein contained
not misleading or necessary in order to provide a prospective purchaser of the
Assets and the Subsidiary with adequate information as to the Company or the
Subsidiary and its condition (financial and otherwise), properties, assets,
liabilities, business and prospects, and the Company or the Subsidiary have
disclosed to Purchaser in writing all material adverse facts known to them
related to the same. The representations and warranties contained in this
Section 6 shall not be affected or deemed waived by reason of the fact that
Purchaser and/or its representatives should have known that any such
representation or warranty is or might be inaccurate in any respect.
(v) Labor Disputes. Neither the Company with respect to the
Company's Video Business nor the Subsidiary is a party to or bound by any
collective bargaining agreement and there are no labor unions or other
organizations representing, purporting to represent or attempting to represent
any employees employed by
32
the Company with respect to the Company's Video Business or the Subsidiary. With
respect to the Company's Video Business and the Subsidiary (i) no work stoppage
by employees of the Company with respect to the Company's Video Business or the
Subsidiary has occurred and is continuing or to the best of the Company's
knowledge is threatened, (ii) the Company does not have any actual knowledge of
any pending or threatened charges against the Company with respect to the
Company's Video Business or the Subsidiary of unfair labor practices or
discrimination based on age, race or sex, (iii) there are no pending labor
negotiations with or union organization efforts by any employees of the Company
or the Subsidiary or with any union representing or attempting to represent any
employees of the Company with respect to the Company's Video Business or the
Subsidiary and (iv) the Company does not have any actual knowledge of employee
grievances which in the aggregate would be material and adverse to the Company's
Video Business or the business of the Subsidiary that have not been settled or
otherwise resolved to the satisfaction of the Company or the Subsidiary and the
employees. Schedule 6(v).1 annexed hereto sets forth the name and title of each
director, officer, employee, consultant and agent of the Company's Video
Business, and the functions actually performed by each of such employees
correspond to the position ("categoria") specified on Schedule 6(v).1. The
employees of the Company's Video Business have been duly and timely remunerated
for all the services performed in the course of their working relationship with
the Company in compliance with the applicable provisions of law and the
provisions of the relative labor agreements (including the applicable collective
labor agreement, if any). With respect to the remuneration paid to the
employees, all contributions have been made to compulsory health insurance and
social security and the relevant amounts have been duly paid as provided under
the applicable law. The overall remuneration, including bonuses and benefits due
to each employee that was formerly employed by the Company and is to be employed
by the Purchaser subsequent to the Closing, and the amount of each such
employee's accrued benefits, is set forth in Schedule 6(v).2 and no other form
of remuneration or particular benefit has been agreed to in addition to those
set out therein. The terms of employment applicable and actually applied to the
employees are solely those provided for by the applicable law and by the
provisions of the applicable collective labor agreement, if any. No verbal
commitments of any kind exist between the Company and any of its employees. No
claims by any of the employees or by the relevant trade unions are pending and
no situation exists which could give rise to any such claim in the future. No
claim has been made by any of the Company's consultants and agents that
33
any of such persons is entitled to compensation and/or benefits as if that he or
she were an employee of the Company.
(w) Customers and Accounts. Except as set forth on Schedule
6(w) annexed hereto, the Company does not have any knowledge or information that
any person or entity whose payments to the Company with respect to the Company's
Video Business or the Subsidiary, whether alone or together with any party
actually known by the Company or the Subsidiary to be such person's Affiliate,
who accounted for five percent (5)% or more of the gross revenues of the Company
and/or the Subsidiary in either of its fiscal years ending in 1996 or 1997 or in
the nine (9) month period ending,September 30, 1998 has ceased or will cease
doing business with the Company or the Subsidiary or Purchaser as its successor,
for any reason, or will or has reduced its payments to the Company with respect
to the Company's Video Business or the Subsidiary by more than ten (10%) percent
for any reason. Schedule 6(w) annexed hereto correctly lists the twenty (20)
largest clients of each of the Company with respect to the Company's Video
Business and the Subsidiary during each of the fiscal years ended in 1996, 1997
and nine (9) month period ended September 30, 1998, together with the amount of
billings made by each of the Company with respect to the Company's Video
Business or the Subsidiary to each such account during each such year or period.
(x) Suppliers; Raw Materials. Schedule 6(x) annexed hereto
sets forth (i) the names and addresses of all suppliers from which the Company
with respect to the Company's Video Business and the Subsidiary ordered raw
materials, supplies, equipment, merchandise and other goods and services with an
aggregate purchase price for each supplier of one hundred thousand dollars
($100,000) or more during the fiscal year ended December 31, 1997 and the nine
(9) month period ended September 30, 1998(ii) the amount for which each supplier
invoiced the Company with respect to the Company's Video Business during such
period. The Company has not received any notice or have any reason to believe
that there has been any material adverse change in the price of such raw
materials, supplies, merchandise and other goods or services, or that any
supplier will not sell raw materials, supplies, merchandise and other goods or
services to Purchaser at any time after the Closing on terms and conditions
similar to those currently enjoyed by the Company with respect to the Company's
Video Business, subject to general and customary price increases. No supplier of
the Company with respect to the Company's Video Business described in clause (i)
of the first sentence of this Section 6(x) has threatened to take any action
described in the immediately preceding sentence as a result of
34
the consummation of the transactions contemplated by this Agreement. Schedule
6(x) annexed hereto lists the twenty (20) largest vendors to each of the Company
with respect to the Company's Video Business and the Subsidiary in terms of cash
payments made during the 1996 and 1997 fiscal years and the nine (9) month
period ended September 30, 1998.
(y) Unbilled Costs and Advance Billings. All costs incurred on
jobs in process, whether reflected as unbilled costs or a reduction of advance
billings to clients, reflected on the Pro Forma Financial Statements (a true and
correct schedule of which is listed on Schedule 6(y) annexed hereto) were
calculated in accordance with the percentage of completion method of accounting,
applied on a basis consistent with the principles used in preparing the Pro
Forma Financial Statements and are realizable in the ordinary course of business
and were incurred in accordance with applicable budgets in respect thereof.
(z) Contracts and Proposals.
(i) Schedule 6(z)(i) annexed hereto contains (A) a complete
and correct list of all agreements, contracts, licenses,
commitments and other instruments and arrangements (whether
written or oral) by which each of the Company with respect to
the Company's Video Business and the Subsidiary is bound,
including but not limited to sales representation and
distribution agreements (collectively, the "Contracts"), (B)
the written anticipated revenues and costs for each written or
oral Contract and scheduled completion dates with respect to
each job that is yet to be completed and the Company has no
reason to believe that any of such jobs will not be completed
and (C) a list of all outstanding proposals, or other writings
prepared in an effort to obtain business, prepared by the
Company with respect to the Company's Video Business or the
Subsidiary, or on either of their behalf, and forwarded to
prospective clients or customers (the "Proposals").
(ii) The Company has delivered to Purchaser complete and
correct copies of all written Contracts, together with all
amendments thereto, including (A) an accurate descriptions of
all material terms of all oral Contracts and (B) all
Proposals, set forth or required to be set forth in Schedule
6(z)(i) hereto.
35
(iii) All Contracts are in full force and effect and
enforceable against each party thereto. There does not exist
under any Contract any event of default or event or condition
that, after notice or lapse of time or both, would constitute
a violation, breach or event of default thereunder on the part
of the Company or the Subsidiary, as the case may be, or any
other party thereto except as set forth in Schedule 6(z)(i)
annexed hereto and except for such events or conditions that,
individually and in the aggregate, (A) has not had or resulted
in, and will not have or result in a default or an event
which, after notice or lapse of time, or both, would
constitute a default or result in a right to accelerate a loss
of right (a "Material Adverse Effect") and (B) has not and
will not materially impair the ability of the Company or the
Subsidiary, as the case may be, to perform its obligations
under this Agreement and under the Company's Related
Agreements. None of existing or completed Contracts of the
Company with respect to the Company's Video Business or the
Subsidiary, as the case may be, are subject to renegotiation
with any governmental body. Except as set forth in Schedule
6(z)(i), and except as provided for by Italian law as set
forth on Schedule 6(z)(i), no consent of any third party is
required under any Contract as a result of or in connection
with, and the enforceability of any Contract will not be
affected in any manner by, the execution, delivery and
performance of this Agreement or any of the Company's Related
Agreements or the consummation of the transactions
contemplated thereby.
(iv) Except as set forth on Schedule 6(z)(iv), neither the
Company nor the Subsidiary has outstanding power of attorney
in favor of any party relating to either the Company's Video
Business or the Subsidiary.
(aa) [Intentionally Deleted]
(bb) Directors and Officers. Schedule 6(bb) annexed hereto
contains a complete and accurate list of the names of the Subsidiary's directors
and officers, the name of each bank in which the Subsidiary has an account or
safe deposit box and the names of all persons authorized to draw thereon or have
access thereto.
(cc) Inventories. All inventory of equipment of the Company
with respect to the Company's Video Business, all of
36
which are included in the Assets, and of the Subsidiary held for sale or rent,
spare parts, replacement and component parts, and office and other supplies
(solely with respect to the Subsidiary) (collectively, "Inventories") are of
good and usable quality in all material respects and except as set forth on
Schedule 6(cc) annexed hereto, do not include obsolete or discontinued items.
Except as set forth on Schedule 6(cc) annexed hereto, (i) all Inventories that
are finished goods are saleable or rentable as current inventories at the
current prices thereof in the ordinary course of business, (ii) all Inventories
are recorded on the Pro Forma Financial Statements on a last cost basis in
accordance with generally accepted accounting principles and (iii) no write-down
in Inventory has been made or should have been during the past two (2) years.
Schedule 6(cc) annexed hereto lists the locations of all Inventories.
(dd) Real Property.
(i) Leases. Schedule 6(dd) annexed hereto contains a complete
and correct list of all real estate leases (the "Leases")
pursuant to which the Company or the Subsidiary occupies or
uses real property in connection with the Company's Video
Business and the Subsidiary's business, respectively, setting
forth the address, landlord, remaining terms, base rent and
tenant for each Lease. The Company has delivered to the
Purchaser correct and complete copies of the Leases. Each
Lease is legal, valid, binding, enforceable, and in full force
and effect, except as may be limited by bankruptcy,
insolvency, reorganization and similar Applicable Laws
affecting creditors generally and by the availability of
equitable remedies. Neither the Company or the Subsidiary nor
the landlord under any of the Leases is (or upon the
consummation of the transactions contemplated hereby, will be)
in default, violation or breach in any respect under any
Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both,
would constitute a default, violation or breach in any respect
under any Lease. None of the Leases have been pledged,
mortgaged, assigned, modified or amended by the Company or the
Subsidiary. Each Lease grants the tenant under the Lease the
exclusive right to use and occupy the demised premises
thereunder. Each of the Company and the Subsidiary, as the
case may be, has good and valid title to the leasehold estate
under each Lease free and clear of all liens created by the
Company or the
37
Subsidiary, as the case may be. Each of the Company and the
Subsidiary, as the case may be, enjoys peaceful and
undisturbed possession under its respective Leases for the
leased real property. Except as set forth on Schedule 6(dd)
annexed hereto, no consent is required by any landlord,
lessor, ground lessor, mortgagee, or other party holding any
interest in connection with or in respect of any of the
Leases, by virtue of the transactions contemplated hereby.
(ii) No Proceedings. There are no eminent domain or other
similar proceedings pending or, to the knowledge of the
Company threatened affecting any portion of the leased real
property and there is no proceeding pending or, to the
knowledge of the Company threatened for the taking or
condemnation of any portion of the leased real property. There
is no writ, injunction, decree, order or judgment outstanding,
nor any action, claim, suit or proceeding, pending or
threatened, relating to the ownership, lease, use, occupance
or operation by any person of any of the leased real property.
(iii) Current Use. The use and operation of the real property
in the conduct of the Company's Video Business and the
Subsidiary's business does not violate in any material respect
any instrument of record or agreement affecting the real
property. There is no violation of any covenant, condition,
restriction, easement or order of any Governmental Authority
having jurisdiction over such property or of any other person
entitled to enforce the same affecting the real property or
the use or occupancy hereof. No damage or destruction has
occurred with respect to any of the real property.
(ee) Warranties. Set forth on Schedule 6(ee) annexed hereto is
an accurate list, and full description, of all of the standard warranties by the
Company with respect to the Company's Video Business or the Subsidiary in
respect of its products and services and a description of the annual costs to
the Company and the Subsidiary with respect thereto for the fiscal years ended
December 31, 1996, 1997 and for the nine (9) month period ended September 30,
1998 in connection with such warranties.
(ff) Dealer and Distributor Arrangements. Set forth on
Schedule 6(ff) annexed hereto is an accurate and complete list by
product, service, territory and term of all dealer and
38
distributors of products and/or services of the Company and the Subsidiary.
Except as set forth on Schedule 6(ff) annexed hereto, the Company does not any
knowledge or information that any person or entity who distributed products on
behalf of each of the Company with respect to the Company's Video Business
and/or the Subsidiary who accounted for five (5%) or more of the gross revenues
of the Company with respect to the Company's Video Business and/or the
Subsidiary in either of the fiscal years ending in 199 or 1997 or in the nine
(9) month period ending September 30, 1998 has ceased or will cease doing
business with the Company with respect to the Company's Video Business or the
Subsidiary or Purchaser as its successor, for any reason, or will or has reduced
its contribution to the Company's gross revenues with respect to the Company's
Video Business by more than ten (10%) percent for any reason. Schedule 6(ff)
annexed hereto correctly lists the twenty (20) largest distributors, indicating
whether they are exclusive or non-exclusive, of each of the Company with respect
to the Company's Video Business and the Subsidiary during each of the fiscal
years ended in 1996 and 1997 and the ten (10) month period ending September 30,
1998, together with the sales effected by each such distributor during each such
year or period.
(gg) Excluded Assets. Except as set forth on Schedule 1(c)
annexed hereto, the Assets constitute all of the assets and properties that the
Company is currently using to conduct the Company's Video Business and the
business of the Subsidiary as same are currently being conducted or are intended
to be conducted upon the consummation of the transactions contemplated by this
Agreement.
(hh) Government Loan. The Company is current and in
compliance in all respects with respect to all matters relative to the
Government Loan.
7. Representations and Warranties by Purchaser. Purchaser represents
and warrants to the Company as follows:
(a) Organization. Projectavision is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and International is an Italian corporation duly organized, validly
existing and in good standing under the laws of Italy, and Purchaser has full
corporate power and authority to enter into this Agreement and all other
agreements to which Purchaser is a party required to be delivered by Purchaser
pursuant to Section 5(a) hereof (which documents are hereinafter sometimes
collectively referred to as "Purchaser's Related Agreements") and
39
to carry out the transactions contemplated by this Agreement. Each of
Projectavision and International have delivered to the Company copies of their
respective certificates of incorporation, and all amendments thereto, and their
respective by-laws as presently in effect, each certified as true and correct by
Purchaser's secretary.
(b) Execution, Delivery and Performance of Agreement. Neither
the execution, delivery nor performance of this Agreement and Purchaser's
Related Agreements by Purchaser will, with or without the giving of notice or
the passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to any provision of Purchaser's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, ordinance, rule or regulation or any
order, judgment or decree to which Purchaser is a party or by which it may be
bound or affected. Purchaser has the full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby, all proceedings
required to be taken by Purchaser to authorize the execution, delivery and
performance of this Agreement and Purchaser's Related Agreements have been
properly taken, and this Agreement and Purchaser's Related Agreements constitute
the valid and binding obligation of Purchaser, enforceable in accordance with
their respective terms, except that such enforcement may be subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium and
similar law affecting creditors' rights generally.
(c) Litigation. Except as disclosed in the Company's public
filings, there is no claim, legal action, suit, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect or, to Purchaser's knowledge,
threatened against or relating to Purchaser in connection with or relating to
the transactions contemplated by this Agreement and the Purchaser's Related
Agreements and Purchaser does not know or have any reason to be aware of any
basis for the same.
8. Employment Matters; Employment Contracts. (a) The Company shall be
responsible for, and shall discharge, all obligations with respect to their
respective currently existing salary, wages, bonuses, commissions and other
compensation, group insurance claims, medical benefits reimbursable by the
Company or the Subsidiary under existing medical reimbursement policies,
severance and all other benefits accrued through the Closing Date to all
employees of the Company with respect to the Company's
40
Video Business, all of which are set forth on Schedule 8(a) (the "Employees") or
the employees of the Subsidiary and any such costs arising after the Closing
Date under the terms of any of the foregoing attributable to employment prior to
the Closing Date.
(b) Schedule 8(b) annexed hereto contains:
(i) an accurate and complete list and description of all
collective in house bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus
plans, deferred compensation agreements, employee stock
options or stock purchase plans and group life, health and
accident insurance and other employee benefit plans,
agreements, arrangements or commitments, whether or not
legally binding, including, without limitation, holiday,
vacation, Christmas and other bonus practices, to which the
Company with respect to the Employees or the Subsidiary is a
party or is bound;
(ii) the names and current annual salary rates of all
Employees and all persons who are currently employed by the
Subsidiary showing separately for each such person the amount
paid or payable as salary, bonus payments and any indirect
compensation for the year ended December 31, 1996 as well as
each of their current compensation;
(iii) all material written agreements providing for the
services of an independent contractor to which the Company
with respect to the Company's Video Business or the Subsidiary
is a party or by which it is bound; and
(iv) true and correct copies of all employee retirement plans,
pension plans, welfare plans and all employee benefits
covering the Employees and the Subsidiary's employees (and any
summary plan descriptions in effect for such plans and
benefits). Solely with respect to the Subsidiary's employees,
except as set forth on Schedule 8(b) annexed hereto, all
requirements of applicable law, including, without limitation,
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), have been
fulfilled with regard to said plans and the administration
thereof and will be fulfilled with regard to the termination
of any of said
41
plans. With respect to the Company's employees, all
requirements of applicable Italian law have been
satisfied.
(c) The execution and performance of this Agreement will not
constitute a stated triggering event under any plan or arrangement which will
result in payment (whether of deferred compensation, or otherwise) becoming due
to any Employee or former Employee of the Company or any employee of the
Subsidiary.
(d) There exist no obligations or liabilities, including
claims incurred (as defined herein) but not reported under any uninsured plan
providing medical benefits, arising out of or in connection with any Employee or
any Subsidiary's employee benefit plan or arrangement, except to the extent
funded or accrued as a liability. For purposes of the preceding sentence, a
medical claim shall be deemed to be incurred on the date of occurrence of an
injury, the diagnosis of an illness, or any other event giving rise to such
claim or series of related claims. No plan provides health, medical, death or
survivor benefits to any former employee of the Subsidiary in connection with
the Subsidiary or beneficiary thereof, except to the extent required under any
state insurance law providing for a conversion option, COBRA or other COBRA type
rights under a group insurance policy or under Section 601 of ERISA. There are
no multi-employer plans covering any employee of the Subsidiary nor has the
Company or the Subsidiary ever maintained a multi-employer plan.
(e) There has not been any (i) termination of any "defined
benefit plan" within the meaning of ERISA maintained by the Subsidiary which is
under "common control" (within the meaning of Paragraph 4001(b) of ERISA) with
the Subsidiary except to the extent that such "defined benefit plan" was fully
funded on the date of termination sufficient to pay all plan liabilities and no
liability in respect thereof exists (or shall exist) to the Pension Benefit
Guaranty Corporation, (ii) commencement of any proceeding to terminate any such
plan pursuant to ERISA, or otherwise or (iii) written notice given to the
Subsidiary of the intention to commence or seek the commencement of any such
proceeding.
(f) Except with respect to those employees set forth on
Schedule 6(v).2, Purchaser shall have the right, but not the obligation, from
and after the date hereof, to offer employment on terms and conditions as their
employment with the Company immediately prior to the Closing; provided, however,
that Purchaser shall not offer employment to any employee of the
42
Company that is not on Schedule 6(v).2 while such person is employed by the
Company.
(g) The Company has not failed in any respect to observe the
provisions of laws or regulations relating to labor relations and/or safety at
work or other laws, the violation of which, including any penalties or sanctions
which could be imposed, would have an adverse effect upon the financial
condition and/or operation of the Company's Video Business. The Company's
relations with its Employees has been established and conducted in compliance
with the provisions of the National Collective Contract for Industry ("Contratto
Collettivo Industria") integrated by the In-company agreement ("Accordo
Aziendale"), the ranking of Employees corresponds to the duties actually
performed, no judicial proceedings by Employees and/or agents of the Company or
by the competent Labor Inspectorate and/or Social Security Office are pending.
The Company has taken in a timely manner all steps required by law or applicable
conventions with respect to notifications to, consultations with, or other
action concerning, trade unions, works councils, or Employees in contemplation
of this Agreement and of the transactions contemplated thereby. Except as set
forth on Schedule 8(g) annexed hereto, there are no trade union affiliations or
conventions, no industry employment conventions, and no in-company employee
conventions other than those listed on Schedule 8(g).
(h) With respect to the Employees and the Subsidiary's
employees, the Company has duly paid all employee related insurance, social
security contributions, and other employee related charges, when due according
to applicable laws, rules or regulations, and no circumstances exist which could
give rise to additional payments thereunder. Adequate provisions have been made
in the Balance Sheet as at Closing, to reflect all such employee-related charges
accrued for periods prior to the Closing Date but not yet due and to reflect all
accrued employee vacation time or payment in lieu thereof. The reserve on the
Balance Sheet with respect to the T.F.R. (Severance Indemnity payments) due to
Employees and to the employees of the Subsidiary, is and will be adequate to
cover the accrued liabilities of the Company and the Subsidiary in respect of
such indemnity payments as at the respective date thereof. No circumstances
exist which could give rise to any additional indemnity payments.
(i) The Company is under no obligation (whether of a legal
nature or otherwise) to pay any pensions or other sums to, or in respect of, any
of its ex-Employees or ex-employees of the Subsidiary.
43
9. Indemnification. (a) The Company hereby agrees to defend and hold
Purchaser harmless from, against and in respect of (and shall, subject to the
other provisions of this Agreement, reimburse Purchaser for):
(i) any and all loss, liability or damage suffered or incurred
by Purchaser by reason of any untrue representation, breach of
warranty or nonfulfillment of any covenant by the Company
contained herein or in any certificate, document or instrument
delivered by the Company;
(ii) any and all loss, liability or damage suffered or
incurred by Purchaser in respect of or in connection with any
liabilities of the Company and the Subsidiary, except for the
Assumed Liabilities (including, without limitation, and
liabilities
relating to the Excluded Assets);
(iii) except as otherwise provided herein and except for the
Assumed Liabilities, any and all debts, liabilities or
obligations (including, and environmental liability and costs
and any other liabilities relating to Excluded Assets) of the
Company, direct or indirect, fixed, contingent or otherwise,
arising out of any act, transaction, circumstance or state of
facts which occurred or existed on or before the Closing Date,
whether or not then known, due or payable;
(iv) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees, court costs and expenses,
incident to (i), (ii) or (iii) above or (iv) below or incurred
in investigating or attempting to avoid the same or to oppose
the imposition thereof, or in enforcing this indemnity; and
(v) any and all loss, liability or damage suffered or incurred
by Purchaser by reason of or in connection with any claim for
finder's fee or brokerage or other commission arising by
reason of any services alleged to have been rendered to or at
the instance of the Company with respect to this Agreement or
any of the transactions contemplated hereby, subject to the
provisions of Section 9(b)(iii) below.
44
(b) Purchaser shall indemnify, defend and hold the Company
harmless from, against and in respect of (and shall, subject to the other
provisions of this Agreement, reimburse it for):
(i) any and all loss, liability or damage suffered or incurred
by the Company by reason of or resulting from any untrue
representation, breach of warranty or non-fulfillment of any
covenant or agreement by Purchaser contained herein or in any
certificate, document or instrument delivered by Purchaser to
the Company;
(ii) any and all loss, liability or damage suffered or
incurred by the Company in respect of or in connection with
Purchaser's failure to timely pay any of the Assumed
Liabilities;
(iii) any and all payments of any nature whatsoever due and
owing to Hambro America Securities, Inc. with respect to this
Agreement or any of the transactions contemplated hereby.
(iv) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees, court costs and expenses,
incident to (i), (ii) or (iii) above or (v) below or incurred
in investigating or attempting to avoid the same or to oppose
the imposition thereof, or in enforcing this indemnity; and
(v) any and all actual loss, liability or damage suffered or
incurred by the Company by reason of or in connection with any
claim for finder's fee or brokerage or other commission
arising by reason of any services alleged to have been
rendered to or at the instance of Purchaser with respect to
this Agreement or any of the transactions contemplated hereby.
(c) [Intentionally Omitted.]
(d) Any indemnifiable liability or reimbursement under this
Section 9 shall be limited to the amount of actual damages (of any nature)
subject to indemnification actually sustained by a party hereto, net of any
applicable insurance payments actually received, other reimbursement or tax
benefit actually realized by such party.
45
(e) If a claim by a third party is made against a party hereto
(an "Indemnified Party"), and if an Indemnified Party intends to seek indemnity
with respect thereto under this Section 9, the Indemnified Party shall promptly
notify the party required to indemnify the Indemnified Party pursuant to this
Section 9 (an "Indemnifying Party") of such claim (the "Indemnity Notice");
provided, however, that failure by an Indemnified Party to notify an
Indemnifying Party of such claim shall not effect the Indemnified Party's right
to seek indemnification so long as the Indemnifying Party is not materially
prejudiced by such failure to have been notified of such claim. The Indemnifying
Party shall have ten (10) days after receipt of the Indemnity Notice to
undertake, conduct and control, through counsel of its own choosing and at its
expense, but reasonably acceptable to the Indemnified Party, the settlement or
defense thereof, and the Indemnified Party shall cooperate with it in connection
therewith; provided, however, that with respect to settlements entered into by
the Indemnifying Party, the Indemnifying Party shall obtain the release of the
claiming party in favor of the Indemnified Party. If the Indemnifying Party
undertakes, conducts and controls the settlement or defense of such claim, the
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by the Indemnified Party, providing
that the fees and expenses of such counsel shall be borne by the Indemnified
Party. With respect to indemnification provided for hereunder, the Indemnified
Party shall not pay or settle any such claim so long as the Indemnifying Party
is reasonably contesting any such claim in good faith. Notwithstanding the
immediately preceding sentence, the Indemnified Party shall have the right to
pay or settle any such claims, provided that in such event it shall waive any
right to indemnity therefor by the Indemnifying Party.
(f) Subject to the limitations set forth in Sections 9(c)-(e),
if the Indemnifying Party does not notify the Indemnified Party within fifteen
(15) days after the receipt of the Indemnified Party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim in the exercise of its good faith reasonable judgment at the expense of
the Indemnifying Party subject to the other terms and provisions of this Section
9.
10. Survival of Representations, Warranties and Agreements. All
statements, representations, warranties, agreements and indemnities made by each
of the parties hereto (and in any schedule or exhibit annexed hereto) are and
shall be true and correct as of the date hereof and as of the Closing Date, and
46
each of them shall survive until the first anniversary of the Closing subject to
Section 9 hereof.
11. Conduct of Business Prior to Closing. (a) Subsequent to Balance
Sheet Date, each of the Company with respect to the Company's Video Business and
the Subsidiary shall conduct its business and affairs only in the ordinary
course and consistent with its prior practice and shall maintain, keep and
preserve the Assets, the Subsidiary's assets and properties in good condition
and repair and maintain insurance thereon in accordance and consistent with
present practices, and the Company will use its best efforts to preserve the
business and organization of the Company with respect to the Company's Video
Business and the Subsidiary intact, to keep available to Purchaser the services
of the present officers of the Company's Video Business and the Subsidiary to
preserve for the benefit of Purchaser the goodwill of the Company's Video
Business and the Subsidiary with its suppliers and customers and others having
business relations with it, including, without limitation, the following:
(i) Liabilities. Consistent with past practice, the Company
with respect to the Company's Video Business and the
Subsidiary shall pay or discharge its current liabilities when
the same become due and payable, except for such liabilities
as may be subject to a good faith dispute or counterclaim.
(ii) Litigation. The Company shall promptly notify Purchaser
of any lawsuits, claims, proceedings or investigations which
after the date hereof are commenced or, to the knowledge of
the Company threatened against the Company with respect to the
Company's Video Business, the Subsidiary or against any
officer, employee, consultant or agent of the Company with
respect to the Company's Video Business, the Subsidiary or the
transactions contemplated by this Agreement.
(iii) Compliance with Laws. The Company will take such action
as may be necessary to duly comply with all laws, statutes,
rules and regulations applicable to it as they relate to the
conduct of the Company's Video Business and the Subsidiary's
business.
(iv) Continued Effectiveness of Representations and
Warranties. The Company shall use its best efforts to conduct
the Company's Video Business and the business of the
Subsidiary in such a manner so that the
47
representations and warranties contained in Section 6 hereof
shall continue to be true and correct on and as of the Closing
Date as if made on and as of the Closing Date. The Company
shall promptly give to Purchaser notice of any event,
condition or circumstance occurring from the date hereof
through the Closing Date which would constitute a violation or
breach of their representations, warranties, covenants or
agreements contained in this Agreement.
(b) Without limiting the generality of Section 11(a) hereof,
prior to the Closing, the Company will not without Purchaser's prior written
approval:
(i) change the Subsidiary's certificate of incorporation or
by-laws or merge or consolidate or obligate the Company or the
Subsidiary to do so with or into any other entity;
(ii) enter into any contract, agreement, commitment or other
understanding or arrangement which is not in the ordinary
course of the Company's Video Business or the business of the
Subsidiary; or
(iii) perform, take any action or incur or permit to exist any
of the acts, transactions, events or occurrences of the type
described in subparagraphs (i), (ii), (iii), (iv), (v),
(viii), (ix), (x), (xi), (xii), (xiv), (xv) and (xvi) of
Section 6(j) hereof which would have been inconsistent with
the representations and warranties set forth therein had the
same occurred after the Balance Sheet Date and prior to the
date hereof.
(c) The Company shall give Purchaser prompt written notice of
any change in any of the information contained in the representations and
warranties made in Section 6 hereof or the Schedules referred to therein which
occurs prior to the Closing.
12. Access to Information and Documents.
(a) Each of the parties hereto recognizes that it will receive
confidential information concerning the other upon the execution of this
Agreement. Accordingly, each of the parties hereto agrees to use their
respective best efforts to prevent the "unauthorized disclosure" of any
confidential information concerning the other that is disclosed during the
course of the investigations contemplated by this Agreement and is clearly
48
designated as confidential at the time of disclosure. As used herein, the term
"unauthorized disclosure" shall mean disclosure by either the Company or the
Purchaser to any person or entity who is not an executive officer, director or
key employee of any party hereto or who is not an authorized representative of
any party hereto. An authorized representative shall include a party's
attorneys, accountants, financial advisors and bankers, and with respect to
Purchaser, its potential financing sources. The obligations of this paragraph
will not apply to information that (a) is or becomes part of the public domain,
(b) is disclosed by the disclosing party to third parties without restrictions
on disclosure or (c) is received by the receiving party from a third party
without breach of a nondisclosure obligation to the other party. The obligations
on nondisclosure set forth in this Section 12(a) will terminate two (2) years
after the date of this Agreement. It is expressly acknowledged and agreed that
all of the confidential information is special and unique and in the event of a
breach or threatened breach of the provisions of this Section 12(a), remedies
otherwise available at law may not be an adequate, sufficient or timely remedy.
Accordingly, each of the parties hereto expressly agrees that in the event of
any breach or threatened breach of the provisions of this Section 12(a) that, in
addition to all other remedies that may be available to either party, each of
the parties shall be entitled to seek injunctive or other equitable relief as a
remedy for any such breach or threatened breach of this Section 12(a).
(b) The Company will retain all books and records relating to
the Company's Video Business (whether or not such books and records also relate
to other business of the Company that are not being acquired by the Purchaser
hereunder) for ten (10) years (the "Retention Period"), during which time the
Company shall provide Purchaser access to all such books and records during
normal business hours upon Purchaser's reasonable request therefor. Subsequent
to the Retention Period, the Company shall dispose of or permit the disposal of
any such books and records not required to be retained under such policies
without first giving sixty (60) days' prior written notice to Purchaser offering
to surrender the same to Purchaser at Purchaser's expense. The Company agrees to
cooperate with Purchaser and shall furnish or make available to Purchaser such
books and records and any and all other assistance as Purchaser may reasonably
request relating to any matter relating to Taxes or a governmental inquiry of
investigation during the Retention Period.
13. [Intentionally Deleted.]
49
14. Conditions Precedent.
(a) Conditions to Obligations of Each Party. The obligations
of the parties to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by Purchaser or the Company, as the case
may be) on or prior to the Closing Date of the condition that: the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any Applicable Law, including any order, injunction, decree or
judgment of any court or other Governmental Authority; no court or other
Governmental Authority shall have determined any Applicable Law to make illegal
the consummation of the transactions contemplated by the Agreement, Purchaser's
Related Agreements or the Company's Related Agreements; and no proceeding with
respect to the application of any such Applicable Law to such effect shall be
pending.
(b) Conditions to Obligations of the Purchaser. All
obligations of the Purchaser hereunder are subject, at the option of Purchaser,
to the fulfillment of each of the following conditions at or prior to the
Closing, and the Company shall use its best efforts to cause such conditions to
be fulfilled:
(i) All representations and warranties of the Company
contained herein or in any Schedule or document delivered
pursuant hereto shall be true and correct in all material
respects when made and shall be deemed to have been made again
at and as of the date of the Closing Date, and shall then be
true and correct in all material respects.
(ii) All covenants, agreements and obligations required by the
terms of this Agreement to be performed by the Company at or
before the Closing shall have been duly and properly performed
in all material respects.
(iii) Since the Balance Sheet Date, there shall not have
occurred any material adverse change in the condition
(financial or otherwise), business, properties or prospects of
the Company or the Subsidiary or the Assets or the
Subsidiary's assets.
(iv) On the Closing Date, the Agreed Upon Accounts Payables
shall not exceed Two Million Five Hundred Thousand
($2,500,000) U.S. Dollars and there shall be no material
adverse change with respect to the
50
Historical Financial Statements, or the business or affairs of
the Company or the Subsidiary.
(v) All schedules required to be delivered to Purchaser at or
prior to the Closing and all documents required to be
delivered (and, as applicable, executed) at or prior to
Closing, including but not limited to these documents
described in Section 4(a) above, shall have been so delivered
(and, as applicable, executed).
(vi) There shall be delivered to Purchaser a certificate
executed by the President and Secretary of each of the Company
and the Subsidiary, dated the date of the Closing, certifying
that all of the conditions set forth in this Section 14(b)
have been fulfilled.
(vii) There shall be no additional material liability of any
nature whatsoever accruing to Purchaser with respect to this
Agreement or the transaction contemplated hereby.
(c) Conditions to Obligations of the Company. All obligations
of the Company at the Closing are subject, at the option of the Company, to the
fulfillment of each of the following conditions at or prior to the Closing, and
Purchaser shall use its best efforts to cause each such condition to be so
fulfilled:
(i) All representations and warranties of Purchaser contained
herein or in any schedule or document delivered pursuant
hereto shall be true and correct in all material respects when
made and shall be deemed to have been made again at and as of
the Closing Date, and shall then be true and correct in all
material respects.
(ii) All covenants, agreements and obligations required by the
terms of this Agreement to be performed by Purchaser at or
before the Closing shall have been duly and properly performed
in all material respects.
(iii) There shall be delivered to the Company a certificate
executed by the President and Secretary of Purchaser, dated
the date of the Closing, certifying that all of the conditions
set forth in this Section 14(c) have been fulfilled.
51
(iv) All Schedules, documents and other items required to be
delivered by Purchaser pursuant to Section 5(a) above at or
prior to the Closing shall be so delivered.
15. Intentionally Deleted.
(a)
(b) Purchaser entitled to
16. (a) Termination. Intentionally Deleted.
(i)
17. Right to Designate Director. Simultaneously upon the Closing, the
Company shall have the option to designate two (2) individuals to be elected to
Purchaser's board of directors as a director in accordance with Purchaser's
by-laws. It is agreed that those individuals shall be Mr. Flavio Peralda and Mr.
Emillio Baj Macario.
18. Assumed Liabilities Escrow Account. Upon the Closing of this
Agreement, pursuant to an escrow agreement (the "Assumed Liabilities Escrow
Agreement")to be entered into with counsel for the Company, counsel for the
Purchaser and the parties hereto, pursuant to which Company's counsel shall act
as escrow agent (the "Escrow Agent")., Purchaser shall deposit, upon the
Closing, into a segregated interest bearing escrow account (the " Assumed
Liabilities Escrow Account") One Million Five Hundred Thousand ($1,500,000)
Dollars (the " Assumed Liabilities Deposit"). The Assumed Liabilities Deposit
shall be held by the Escrow Agent in accordance with the provisions of the
Assumed Liabilities Escrow Agreement and the provisions hereinbelow set forth.
The T
52
Assumed Liabilities shall be paid on a timely basis by at the direction of
Seller, from time to time to those vendors and suppliers who are entitled to
same, immediate evidence of which shall be provided by Purchaser the Escrow
Agent to Purchaser. To the extent there remains any amount of the Assumed
Liabilities Deposit as a consequence of Purchaser settling any Agreed Upon
Accounts Payable with a vendor or supplier for less than the amount set forth on
Schedule 1(b).1, any such remaining amount of the Assumed Liabilities Deposit
shall be the sole and exclusive property of the Seller, provided however that,
Purchaser shall be entitled to a corresponding credit towards the Purchase
Price. All interest earned with respect to the Assumed Liabilities Deposit shall
be the property of the Purchaser and Purchaser shall be responsible for all
taxes in connection therewith.
19. [Intentionally Deleted]
20. Notices. Any and all notices, demands or requests required or
permitted to be given under this Agreement shall be given in writing and sent,
by registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
In the case of Purchaser, to:
Projectavision, Inc.
Two Penn Plaza
Suite 640
New York, NY 10121
Telephone no.: (212) 971-3000
Facsimile no.: (212) 971-6016
Attn: Martin J. Holleran, Chief Executive Officer
and President
with a copy simultaneously by like means to:
Zukerman Gore & Brandeis, LLP
900 Third Avenue
New York, NY 10022
Telephone no.: (212) 223-6700
Facsimile no.: (212) 223-6433
Attention: Clifford A. Brandeis, Esq.
53
and
In the case of the Company, to:
Vidikron Industries S.p.A.
Via Dei Guasti, 29
20020 Misinto (Milano)
C.so Venezia, 16-20121 Milano, Italy
Telephone no.: (011) 39-0-96.72.02.75
Facsimile no.: (011) 39-0-96.32.88.34
Attn: Mr. Flavio Peralda
with a copy simultaneously by like means to:
Cesaris, Nunziante e Breveglieri
20121 Milano
Via Marte Di Pieta, 24
Milan, Italy
Telephone no.: (011) 39-02.72.55.11
Facsimile no.: (011) 39-02.72.55.13.33
Attn: Avv. Luca Breveglieri
and
Rubin, Bailin, Ontoli, Mayer, Baker & Fry LLP
405 Park Avenue
New York, New York 10022
Telephone no.: (212) 935-0900
Facsimile no.: (212) 826-9307
Attn: Joseph Rubin, Esq.
(In addition, without constituting notice hereunder, the parties shall use
reasonable efforts to send by facsimile to counsel for the party to whom notice
is to be sent copies of all notices sent by such party). Notice given as
provided in this Section shall be deemed effective: (i) on the date hand
delivered, (ii) on the first business day following the sending thereof by
overnight courier, (iii) on the seventh calendar day (or, if it is not a
business day, then the next succeeding business day thereafter)
54
after the depositing thereof into the exclusive custody of the U.S. Postal
Service, and (iv) on the fourteenth (14th) calendar (or if not a business day,
then the next succeeding business day thereafter) after the deposit into the
exclusive custody of the Italian Postal Service).
21. Miscellaneous. (a) This Agreement, including, without limitation,
the schedules, Purchaser's Related Documents, the Company's Related Documents,
and other documents referred to herein, among the parties hereto, constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any and all prior agreements, arrangements or understandings with
respect hereto, including but not limited to that certain letter of intent dated
July 31, 1997 among certain of the parties hereto, and may not be modified or
amended except by a written agreement specifically referring to this Agreement
signed by all of the parties hereto.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
(c) This Agreement shall be binding upon and inure to the
benefit of each corporate party hereto, its successors and assigns.
(d) The section headings contained herein are for the purposes
of convenience only and are not intended to define or limit the contents of said
sections nor affect the meaning or interpretation of this Agreement.
(e) Each party hereto shall cooperate, shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
(f) Except as otherwise provided herein or in agreements
delivered in connection with this Agreement, all legal, accounting and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party or parties incurring
the same.
(g) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
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(h) This Agreement and all amendments hereto shall be governed
by, construed and enforced in accordance with the internal laws of Italy without
reference to principles of conflict of laws. Each of the parties expressly agree
that any dispute of any nature arising out of or relative to any of the
transactions contemplated by this Agreement, including but not limited to any
dispute relative to Section 15 above, shall be submitted to, and shall be
exclusively determined by, binding arbitration applying the rules of the
American Arbitration Association situated in New York City. Any decision
rendered in such arbitration shall be final and conclusive and binding on the
parties, and may only be entered in a court located in the State of New York,
County of New York. Each party shall be responsible for their own legal fees in
connection with any arbitration unless application to the contrary is made to,
and a decision is rendered by, the arbitration panel in connection with any
arbitration.
(i) If any provision of this Agreement shall be held invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provision, only to the extent it is invalid or unenforceable, and shall not in
any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
(j) All Schedules attached hereto shall be incorporated by
reference herein as if set forth herein in full.
(k) The Company, on the one hand, and Purchaser, on the other
hand, agree that, without the prior written consent of the other, unless
otherwise required by law, it shall not make or permit to be made any
announcement of any kind about this Agreement or the transactions contemplated
hereby, either prior to the Closing Date or any time hereafter in the event the
transactions contemplated hereby are not consummated as provided herein.
(l) The Company, on the one hand, and Purchaser, on the other
hand, represent and warrant to the other that there is no obligation to pay any
commission, finder's fee, broker's fee or similar charge in connection with the
transactions provided for in this Agreement, resulting from any agreements or
other action of such representing party.
(m) All documents to be delivered by the Company or the
Subsidiary for Purchaser's review hereunder shall be
56
delivered if originally written in a language other than English, in the
original language in which it was written.
(n) This Agreement is not intended to, and shall not confer
any rights upon, any parties other than the express parties hereto.
(o) Upon the execution of this Agreement, the Company
expressly agrees that it will not, directly or indirectly, solicit or discuss
with any potential third party any proposals with respect to the sale or other
disposition, however effected, to any third party of any capital stock or any
assets of the Company or the Subsidiary not in the ordinary course of business,
nor will the Company or the Subsidiary provide any information relating to any
such possible sale or other disposition of any of the Company's or the
Subsidiary's capital stock or assets (other than in the ordinary course of
business) to any potential third party buyer or disclose to any potential third
party buyer the fact that the Company or the Subsidiary is, or any of its
capital stock or assets (except in the ordinary course of business) are, for
sale or disposition, generally. In the event that the Company receives an
unsolicited inquiry relating to any of the forgoing, the Company shall
immediately advise Purchaser of same.
(p) The Company expressly acknowledges that the Purchaser is a
public company and subsequent to the execution of the Asset Purchase Agreement
the Company may (although not immediately), and upon the Closing of the
transaction contemplated by the Asset Purchase Agreement the Company will, have
a legal obligation to make public disclosures and filings in accordance with the
rules and regulations promulgated by the United States Securities and Exchange
Commission. Accordingly, the Company agrees to keep all negotiations relating
to, and the signing of, this Agreement, strictly confidential, and that
subsequent to the execution of this Agreement (although not immediately), the
Purchaser may, and upon the Closing the transaction contemplated by the Asset
Purchase Agreement will, prepare and issue a press release and effect other
public disclosures for dissemination and filing in accordance with the rules and
regulations of the United States Securities and Exchange Commission. The form,
substance and timing of all public disclosures and filings shall be determined
solely by the Purchaser upon consultation with the Company; provided, however,
that the Purchaser's determination with respect to all aspects of public
disclosure shall govern. The Purchaser acknowledges that subsequent to the
execution of this Agreement, the Company may, upon consultation with Purchaser,
make certain disclosures to
57
private individuals or entities in connection with the
transactions contemplated hereby.
(q) In the event that subsequent to the Closing the Company
receives funds relative to the Government Loan, the Company agrees that any such
funds will be utilized solely in connection with the Company's Video Business as
directed by Purchaser and Purchaser agrees to be obligated to repay all such
funds.
(r) Upon the Closing, the Company and Purchaser shall make
whatever appropriate adjustments that are required upon the mutual agreement of
the parties with respect to any projector engines that have been prepaid in
whole or in part by the Company and that will be sold subsequent to the Closing
for the benefit of the Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PROJECTAVISION, INC.
By:
----------------------------
Name: Martin J. Holleran
Title: President and Chief
Executive Officer
PROJECTAVISION INTERNATIONAL
By:
----------------------------
Name: Martin J. Holleran
Title: Sole Director
VIDIKRON INDUSTRIES S.p.A.
By:
----------------------------
Name: Flavio Peralda
Title: President
59