<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
(Mark one)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended JUNE 30, 1995 or
[ ] Transition report pursuant to Section or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
. ----------
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Commission file number 0-13218
COMPRESSION LABS, INCORPORATED
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 94-2390960
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
(NOTE: Previously I.R.S. EIN
77-0159558)
</TABLE>
2860 JUNCTION AVENUE, SAN JOSE, CALIFORNIA 95134
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (408) 435-3000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
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<CAPTION>
Class Shares outstanding at July 25, 1995
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<S> <C>
Common Stock 15,295,647
</TABLE>
<PAGE> 2
COMPRESSION LABS, INCORPORATED
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations --
For the Three Months Ended June 30, 1995 and 1994 . . . . . . . . 1
Condensed Consolidated Statements of Operations --
For the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . 2
Condensed Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows --
For the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements --
June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMPRESSION LABS, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------
1995 1994
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<S> <C> <C>
REVENUES
Net product sales $35,785 $38,964
Research and development contracts 2,616 2,876
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Total Revenues 38,401 41,840
COST OF REVENUES
Net product sales 22,384 24,695
Research and development contracts 1,095 2,908
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Total Cost of Revenues 23,479 27,603
GROSS MARGIN
Net product sales 13,401 14,269
Research and development contracts 1,521 (32)
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Total Gross Margin 14,922 14,237
OPERATING EXPENSES
Selling, general and administrative 11,339 10,511
Research and development 3,144 2,999
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Total Costs and Expenses 14,483 13,510
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OPERATING INCOME 439 727
Interest income 3 41
Interest expense (340) (200)
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NET INCOME $ 102 $ 568
======= =======
NET INCOME PER SHARE $ 0.01 $ 0.04
======= =======
WEIGHTED AVERAGE COMMON SHARES AND COMMON
SHARE EQUIVALENTS OUTSTANDING 15,505 15,280
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
COMPRESSION LABS, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
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1995 1994
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<S> <C> <C>
REVENUES
Net product sales $69,883 $71,751
Research and development contracts 8,564 7,880
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Total Revenues 78,447 79,631
COST OF REVENUES
Net product sales 45,114 44,623
Research and development contracts 5,291 7,876
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Total Cost of Revenues 50,405 52,499
GROSS MARGIN
Net product sales 24,769 27,128
Research and development contracts 3,273 4
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Total Gross Margin 28,042 27,132
OPERATING EXPENSES
Selling, general and administrative 21,975 20,266
Research and development 6,614 5,990
Settlement of litigation 897 --
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Total Costs and Expenses 29,486 26,256
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OPERATING INCOME (LOSS) (1,444) 876
Interest income 9 134
Interest expense (555) (414)
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NET INCOME (LOSS) $(1,990) $ 596
======= =======
NET INCOME (LOSS) PER SHARE $ (0.14) $ 0.04
======= =======
WEIGHTED AVERAGE COMMON SHARES AND COMMON
SHARE EQUIVALENTS OUTSTANDING 14,697 15,336
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
COMPRESSION LABS, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited) (Audited)
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,456 $ 11,319
Accounts receivable, less allowance for doubtful accounts
of $1,004 ($1,992 in 1994) 55,391 54,470
Inventories 26,374 29,511
Prepaid expenses and other current assets 2,194 2,715
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Total Current Assets 94,415 98,015
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PROPERTY AND EQUIPMENT 44,239 40,133
Less: Accumulated depreciation and amortization (23,206) (19,251)
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Net Property and Equipment 21,033 20,882
CAPITALIZED SOFTWARE, NET 14,639 11,868
OTHER ASSETS 6,915 886
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Total Assets $137,002 $131,651
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 12,852 $ 9,803
Current portion of long-term debt and capital lease obligations 1,254 750
Accounts payable 18,180 20,040
Accrued liabilities 10,867 6,362
Deferred revenue 6,716 7,240
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Total Current Liabilities 49,869 44,195
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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 1,519 494
STOCKHOLDERS' EQUITY
Preferred Stock -
Undesignated Preferred Stock, $.001 par value;
4,000,000 shares authorized, none issued and outstanding -- --
Common Stock -
$.001 par value; 25,153,658 shares authorized,
shares issued and outstanding: 14,666,753
(14,655,745 in 1994) 15 15
Additional paid-in capital 115,044 114,402
Accumulated deficit (29,445) (27,455)
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Total Stockholders' Equity 85,614 86,962
-------- --------
Total Liabilities and Stockholders' Equity $137,002 $131,651
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
COMPRESSION LABS, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Six months ended June 30,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated by (used in) operations:
Net income (loss) $(1,990) $ 596
Non-cash expenses included in net income (loss) -
Depreciation and amortization 5,806 6,373
Changes in certain assets and liabilities -
Accounts receivable (921) (9,756)
Inventories 3,137 (1,964)
Prepaid expenses 521 639
Accounts payable (1,860) (1,144)
Accrued liabilities 4,505 220
Deferred revenue (524) 2,028
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Net cash generated by (used in) operating activities 8,674 (3,008)
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CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (4,106) (5,103)
Increase in capitalized software (4,622) (3,012)
(Increase) decrease in other assets (6,029) 391
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Net cash used in investing activities (14,757) (7,724)
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CASH FLOWS FROM FINANCING ACTIVITIES
Sales of Common Stock, net of issuance costs 642 3,608
Payments of capital lease obligations (370) (88)
Collateralized borrowings 1,899 --
Borrowings under line of credit agreements 3,049 56
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Net cash generated by financing activities 5,220 3,576
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NET DECREASE IN CASH AND CASH EQUIVALENTS (863) (7,156)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,319 20,513
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,456 $13,357
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 7
COMPRESSION LABS, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
contain all adjustments of a normal recurring nature that in the
opinion of management are necessary to present fairly the financial
position and results of operations of Compression Labs, Incorporated
(the Company). Interim results of operations are not necessarily
indicative of the results to be expected for the full year.
The Company's interim fiscal quarters end on the Friday of the
thirteenth week following the end of the previous quarter. The fiscal
year end will remain as December 31. Accordingly, the actual dates of
the end of the second quarters of 1995 and 1994 were June 30 and July
1, respectively. The comparability of the financial statements
between years is not materially affected by this presentation.
The condensed consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto for
the year ended December 31, 1994, included in the Company's 1994
Annual Report.
2. NET INCOME (LOSS) PER SHARE
Net income per share is computed using the weighted average number of
common shares outstanding during each period including dilutive common
share equivalents (Common Stock options and warrants).
Net loss per share is computed using the weighted average number of
common shares outstanding. Common share equivalents have not been
included in the net loss per share calculation because the effect
would be anti-dilutive.
3. RESEARCH AND DEVELOPMENT CONTRACT REVENUE
In April 1992, the Company entered into a research and development
contract with Thomson Consumer Electronics, Inc. (Thomson) to develop
and manufacture a digital compressed video encoding system for the GM
Hughes Electronics' DIRECTV Direct Broadcast Satellite (DBS) system.
The agreement called for up to $5,000,000 in development funding and
encoding system purchases through 1993. In 1993, 1994 and 1995, this
agreement has subsequently been amended to provide for additional
funding of an aggregate of $19,541,000 for additional system purchases
as well as for additional development work consistent with the terms
of the original contract. In June 1992, the Company entered into a
research and development contract with North American Philips
Corporation (Philips) to develop and manufacture digital compressed
video encoders and decoders for cable satellite uplink and head-end
applications. The agreement with Philips calls for up to $1,500,000
in development funding and additionally outlines purchase terms for
the products. In 1993, this agreement was amended to provide for
additional funding of $488,000 to complete additional research and
development according to the terms of the original contract.
Additionally, in the second quarter of 1995, the Company purchased a
technology license to manufacture and supply MPEG-2 consumer and
professional decoders. Research and development contract revenues for
these two programs totaled $1,037,000 of the $2,616,000 in the second
quarter of 1995 and $1,857,000 of the $2,876,000 in the second quarter
of 1994. For the six months ended June 30, 1995 and 1994, research
and development contract revenues for these two programs totaled
$6,621,000 of the $8,564,000 and $6,433,000 of the $7,880,000,
respectively.
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<PAGE> 8
4. UNBILLED RESEARCH AND DEVELOPMENT CONTRACT RECEIVABLES AND ADVANCES
As of June 30, 1995, the Company had net unbilled receivables of
$7,213,000, primarily relating to research and development contracts
entered into with Thomson and Philips. See Note 3 of Notes to
Condensed Consolidated Financial Statements. These receivables are
generally billable based upon specified contractual milestones.
5. INVENTORIES
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
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<S> <C> <C>
Raw materials $ 6,121 $ 7,521
Work-in-process 3,192 4,293
Finished products
- Products on hand 12,296 13,151
- Products under rental and loan agreements 4,765 4,546
------------------------------------
$26,374 $29,511
====================================
</TABLE>
6. CAPITALIZED SOFTWARE
The Company capitalized $2,372,000 of internal software development
costs and $14,000 of purchased software during the quarter ended June
30, 1995. During the six months ended June 30, 1995, the Company
capitalized approximately $4,622,000 of software development costs and
purchased software. Amortization of capitalized software development
costs and purchased software was $1,036,000 for the quarter ended June
30, 1995 and $1,851,000 for the six months ended June 30, 1995. As of
June 30, 1995, capitalized software net of accumulated amortization
was $14,639,000 (including $232,000 of purchased software).
7. BANK LINES OF CREDIT
The Company has an aggregate of $15,000,000 in revolving credit
facilities with banks that bear interest at the banks' prime rate
(currently 9.00%) plus zero to one and one-half percent, which expire
on August 24, 1995. The Company expects to replace these lines upon
their expiration. The line of credit agreements are secured by
substantially all of the Company's assets. Of the total $15,000,000
in credit facilities, $5,000,000 can only be accessed using qualified
non-domestic accounts receivable as collateral, as defined in the
agreement. Under the agreement, the Company is required to maintain
quarterly profitability, a certain minimum amount of working capital,
net worth and certain financial ratios, and may not declare or make
any cash or stock dividends. The Company was in compliance with these
requirements, or had obtained a waiver for non-compliance from the
bank, as of June 30, 1995. As of June 30, 1995, the balance
outstanding under these lines of credit was $12,852,000.
8. INCOME TAXES
Substantially all of the Company's federal income taxes to date have
been offset by utilization of net operating loss carryforwards. When
all such carryforwards are utilized, the Company anticipates a future
provision for federal income taxes that will more closely approximate
the statutory rates.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Total revenues in the second quarter of 1995 were $38.4 million compared to
$41.8 million in the second quarter of 1994, a decrease of 8%. For the six
months ended June 30, 1995 and 1994, total revenues were $78.4 million and
$79.6 million, respectively, a decrease of 1%. Net product revenues decreased
to $35.8 million in the second quarter of 1995 from $39.0 million in the second
quarter of 1994. This decrease in product sales was primarily the result of a
decline in sales of broadcast products. Because the broadcast market is
evolving on multiple fronts - including the highly regulated telephone segment
- and because of the transition to products based on the newly defined Moving
Picture Experts Group (MPEG) standards, the Company has experienced and
continues to expect fluctuating revenues in this market in the near future.
For the six months ended June 30, 1995 and 1994, net product revenues were
$69.9 million and $71.8 million, respectively. This decrease in product sales
was primarily the result of a decline in sales of broadcast products, partially
offset by an increase in sales of videoconferencing products. Codec shipments
were 619 units in the second quarter of 1995 compared to 639 units in the
second quarter of 1994.
Research and development contract revenues decreased in the second quarter of
1995 to $2.6 million from $2.9 million in the second quarter of 1994. For the
six months ended June 30, 1995 and 1994, research and development contract
revenues were $8.6 million and $7.9 million, respectively. The revenues in the
second quarters of 1995 and 1994 and for the six months ended June 30, 1995 and
1994, were primarily attributable to work on the contract with Thomson Consumer
Electronics, Inc. to develop and deliver digital compressed video encoders and
decoders using the MPEG standard. See Note 3 of Notes to Condensed
Consolidated Financial Statements.
International revenues decreased to $6.9 million, or 18% of total revenues, in
the second quarter of 1995, compared to $8.7 million, or 21% of total revenues,
in the second quarter of 1994. International revenues were $12.4 million, or
16% of total revenues, in the first six months of 1995 compared to $14.2
million, or 18% of total revenues, for the first six months of 1994. There
were no international revenues attributable to research and development
contracts.
GROSS MARGIN
Gross margin as a percentage of net product sales remained constant at 37% for
both the second quarter of 1995 and 1994. For the six months ended June 30,
1995 and 1994, gross margin as a percentage of net product sales was 35% and
38%, respectively. The decrease in gross margin for the six-month period in
1995 was due to a less favorable product mix in the broadcast market durng the
first quarter and lower prices in the videoconferencing market in the first
quarter of 1995. The Company continues to seek improvement in gross margin
through introduction of new products with higher margins, as well as through
cost reductions of existing products. However, the Company anticipates that
product gross margin will continue to be subject to fluctuations caused by the
introduction of new products, changes in product mix and variations in
manufacturing costs.
Gross margin as a percentage of research and development contract revenues
increased to 58% in the second quarter of 1995 compared to (1%) in the second
quarter of 1994. For the six months ended June 30, 1995 gross margin as a
percentage of research and development contracts increased to 38% from 0% for
the six months ended June 30, 1994. The increase in gross margin for both the
three-month period and six-month period ended June 30, 1995 was due primarily
to work on higher margin products relating to the Company's primary contract.
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<PAGE> 10
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to 30% of total revenues
for the second quarter of 1995 compared to 25% for the second quarter of 1994.
For the six months ended June 30, 1995 and 1994, selling, general and
administrative expenses are 28% and 25% of total revenues, respectively. The
increase in expenses as a percentage of total revenues is primarily due to
increases in sales, marketing and service personnel and facilities to stimulate
and support expected revenue growth in future periods. The Company anticipates
that selling, general and administrative expenses will generally increase with
increases in the level of revenues, but may vary from quarter to quarter as a
percentage of total revenues.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expense was 8% and 7% of total revenues for the second
quarter of 1995 and 1994, respectively. The increase in research and
development expense as a percentage of total revenues was due principally to
an increase in personnel costs, depreciation and equipment-related expense
related to the development of new products in the videoconferencing and
broadcast television markets, partially offset by an increase in the amounts
capitalized in conjunction with the development of new software for more
complex and feature-rich products, including MPEG standard-based broadcast
products. For both the six months ended June 30, 1995 and 1994, research and
development expense remained constant at 8% of total revenues. The Company
expects that the level of research and development spending will continue to
increase in absolute dollars in the future, but may fluctuate quarter to
quarter as a percentage of total revenues, due to varying levels of research
and development activities, external funding and amounts capitalized in
conjunction with software development activities.
INTEREST INCOME/INTEREST EXPENSE
Interest income decreased to $3,000 in the second quarter of 1995 from $41,000
in the second quarter of 1994. For the six months ended June 30, 1994,
interest income decreased to $9,000 from $134,000 in 1994. The decrease for
both the three months ended June 30, 1995 and the six months ended June 30,
1995 was principally due to a reduction of interest income from equipment
leases and funds available for investment.
Interest expense increased to $340,000 in the second quarter of 1995 from
$200,000 in the second quarter of 1994. For the six months ended June 30,
1994, interest expense increased to $555,000 from $414,000 in 1994. The
increase was due to higher interest rates and increased borrowings during the
three months ended June 30, 1995 and the six months ended June 30, 1995. See
Note 7 of Notes to Condensed Consolidated Financial Statements.
NET INCOME (LOSS)
The Company reported net income of $102,000 in the second quarter of 1995
compared to net income of $568,000 in the second quarter of 1994. The decrease
in net income was primarily due to higher operating expenses. For the six
months ended June 30, 1995 and 1994, the Company reported a net loss of
$1,990,000 and net income of $596,000, respectively. This decrease was
primarily due to higher operating expenses, which include costs of $897,000
relating to legal expenses associated with the class action suit filed in 1992
against the Company and settled in the first quarter of 1995, partially offset
by higher gross margins.
FACTORS AFFECTING FUTURE RESULTS
The Company continues to seek improvement in operating results through
introduction of new products that are expected to have higher margins, as well
as through cost reductions of existing products. However, there can be no
assurance that the Company will be successful in its efforts. In the future,
the Company's operating results may be impacted by a number of factors,
including cancellation or delays of customer orders, interruption or delays in
the supply of key components, changes in customer base or product mix, seasonal
patterns of capital spending by customers, new product announcements by the
Company or its competitors, pricing pressures and changes in general economic
conditions. Historically, a significant portion of the Company's shipments
have been made in the last month of each quarter. As a result, a shortfall in
revenue compared to expectation may not evidence itself until late in the
quarter. Additionally, the timing of expenditures for research and development
activities and sales and marketing programs, as well as the timing of orders by
major customers, may cause operating results to fluctuate between quarters and
between years.
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<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company has used internally generated funds, public and private offerings
of Common Stock and Preferred Stock, sale and leaseback arrangements and bank
credit lines to finance its growth since 1983. Cash generated by operations
was $8.7 million for the first six months of 1995 compared to cash used in
operations of $3.0 million in 1994, primarily due to a decrease in inventories
and an increase in accrued liabilities, partially offset by a decrease in
deferred revenue, a decrease in the rate of growth of accounts receivable and a
decrease in net operating results. Capital additions were $4.1 million for the
first six months of 1995 and other assets increased $6.0 million primarily due
to the acquisition of a technology license. While the Company expects the
level of capital expenditures in 1995 to be comparable to 1994 levels, there
are no material commitments to purchase capital equipment at the present time.
Net cash generated by financing activities was $5.2 million in the first half
of 1995 primarily due to borrowings against the lines of credit and the
establishment of term loans using capital equipment as collateral. See Note 7
of Notes to Condensed Consolidated Financial Statements.
As of June 30, 1995, the Company had cash and cash equivalents totaling $10.5
million. The Company had bank lines of credit as of June 30, 1995 in the
amount of $15.0 million of which $12.9 million was outstanding. See Note 7 of
Notes to Condensed Consolidated Financial Statements. Working capital
decreased to $44.5 million as of June 30, 1995, compared to $53.8 million at
December 31, 1994. During the second quarter of 1995, the Company entered into
an agreement for the sale of 565,000 to 765,000 shares of newly issued Company
common stock to Fletcher Asset Management, Inc. at prices equal to an average
of market prices on the Nasdaq National Market during a specified period.
Early in the third quarter, the Company received an aggregate of $4.65 million
relating to this Agreement. The Company anticipates this transaction to be
completed prior to September 30, 1995. The Company anticipates that existing
cash and lines of credit, together with sources of additional liquidity such as
private or public offerings, sale and leaseback arrangements, equipment lease
lines and bank credit lines, will be sufficient to meet cash requirements
through 1995. Should additional funding be required, however, there can be no
assurance that such funding will be available on acceptable terms as and when
required by the Company.
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<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 24, 1993, the Company filed a complaint against
Oklahoma State University Education and Research Fund, Inc. (OSUERF)
in United Stated District Court claiming that OSUERF breached an
exclusive subcontract for the Company to provide equipment to OSUERF
under OSUERF's prime contract with the United States Army, TRADOC
Division. On November 18, 1993, the Company amended the complaint to
add Federal Leasing, Inc. (FLI) as a defendant. FLI is a third party
leasing company that acquired the Company's right, title and interest
in equipment installed under the contract pursuant to a Federal
Government Financing Agreement (Financing Agreement) effective
September 30, 1991 and leased the equipment to TRADOC. An assertion
of entitlement to indemnification has been received by the Company
from FLI. On February 4, 1994, the CIT Group/Equipment Financing Inc.
(CIT), as an assignee of FLI's rights under the Financing Agreement,
filed a complaint against the Company in United States District Court
claiming entitlement or indemnification from the Company. The Company
responded to the complaint by denying the material charging
allegations of the complaint and stating certain affirmative defenses.
Pursuant to court order, the OSUERF and CIT actions have been
consolidated. On April 21, 1995, CIT and FLI separately moved for
summary judgment against the Company seeking damages in the amount of
$2 million. The Company opposed the respective motions which are
currently under submission before Judge Robert P. Aguilar and believes
that it has meritorious defenses.
The Company's amended complaint now asserts causes of action
against OSUERF for (i) breach of contract, (ii) fraud, (iii)
interference with contractual relations and (iv) indemnity, and causes
of action against FLI for (a) breach of contract and (b) declaratory
judgment. By the amended complaint, the Company claims general and
consequential damages in an unspecified amount against OSUERF and FLI,
and seeks a judicial declaration on the question of whether the
Company is obligated to indemnify FLI for OSUERF's failure to continue
making monthly payments to FLI.
Trial of this matter was set for September 18, 1995. However,
due to the pending reassignment of the case to a new judge, the
parties stipulated that as of July 6, 1995, all deadlines in the case
which had not lapsed would be postponed. While the Company has
completed the bulk of its discovery, it is anticipated that further
discovery will be scheduled, including the depositions of additional
Company witnesses. A mandatory settlement conference has been ordered
but not scheduled.
The Company will vigorously defend the claims stated against
it by CIT, and believes that it has meritorious defenses. However,
there can be no assurance that the Company will prevail or obtain
indemnity for any recovery from OSUERF. If any of CIT's claims were
to be decided adversely to the Company, the Company would be liable to
pay monetary damages to CIT. The Company believes that the ultimate
resolution of this matter will not have a material adverse impact on
the Company's financial position.
On April 6, 1995, the Company filed a complaint against
Southwestern Bell Telephone Company (SWBT) in Santa Clara, California
Superior Court alleging that SWBT intentionally interfered with CLI's
contracts with OSUERF and Hughes Network Systems (HNS). In its
complaint, the Company claims general and punitive damages in an
unspecified amount against SWBT. SWBT moved to quash service of
summons for lack of personal jurisdiction, which motion was granted on
July 11, 1995. On July 25, 1995, the Company refiled the complaint in
the United States District Court for the Western District of Oklahoma.
Service of the company is pending.
In a complaint filed December 20, 1993, in United States
District Court, Datapoint Corporation (Datapoint) alleged that the
Company had infringed two United States patents owned by Datapoint and
relating to video conferencing networks. The complaint seeks a
judgment of infringement, monetary damages, injunctive relief and
reasonable attorney's fees. The Company responded to the complaint on
February 16, 1994 by denying the material allegations of the complaint
and asserting affirmative defenses. Pursuant to court order, the
parties have participated in mediation before a court-appointed
mediator. Discovery in the case has commenced. The Company believes
that it has meritorious defenses to the allegations of the complaint,
and is pursuing an aggressive defense; however, there can be no
assurance that the Company will prevail. If any of the claims were to
be decided adversely to the defendants, the Company could be liable
for monetary damages to the plaintiff and be subject to injunctive
relief. The
- 10 -
<PAGE> 13
Company believes that the ultimate resolution of this matter will not
have a material adverse impact on the Company's financial position.
The Company and Voicecraft, Inc. (Voicecraft) are parties to a
License Agreement dated December 3, 1987 pursuant to which the Company
licenses certain technology from Voicecraft in exchange for the
payments of royalties. At various times since the inception of the
license/royalty relationship, disputes have arisen between the Company
and Voicecraft relating to the scope of the license, as well as the
amount of royalties due. By letter dated May 6, 1994, Voicecraft
purported to terminate the Company's license as of July 5, 1994 for
its alleged failure to remit royalties as required by the License
Agreement. Voicecraft has further asserted that the Company is
infringing certain patent rights belonging to Voicecraft. The Company
disputes Voicecraft's assertions. At present, the Company and
Voicecraft are in discussion to resolve the issues outstanding between
them so as to avoid litigation. The Company believes that the
ultimate resolution of this matter will not have a material adverse
impact on the Company's financial position.
In the normal course of business, the Company receives and
makes inquiries with regard to other possible patent infringement.
Where deemed advisable, the Company may seek or extend licenses or
negotiate settlements. Outcomes of such negotiations may not be
determinable at any point in time; however, management does not
believe that such licenses or settlements will, individually or in the
aggregate, have a material adverse impact on the Company's financial
position or results of operations.
- 11 -
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the stockholders of the Company was held
on May 10, 1995.
(b) Management's nominee to the Board of Directors for a Class I
Director (for a three-year term expiring at the 1998 Annual
Meeting) was elected by the following votes:
David A. Wegmann (Class I) FOR: 12,731,745
WITHHELD: 543,715
The following are persons whose terms of office as Directors
of the Company continued after the meeting:
<TABLE>
<CAPTION>
Director Class Term Expires
-------- ----- ------------
<S> <C> <C>
John E. Tyson II 1996
Robert J. Casale II 1996
Dr. Arthur G. Anderson III 1997
Robert B. Liepold III 1997
</TABLE>
(c) With the exception of the ratification of management's
selection of the Company's auditors, the other matters
presented and the voting of stockholders with respect thereto
are as follows:
A proposal to approve amendments to the Company's 1980 Stock
Option Plan, 1984 Supplemental Stock Option Plan and 1984
Employee Stock Purchase Plan (the "Purchase Plan") which
increased the aggregate number of shares reserved under such
plans by 700,000 shares and replaced the current fixed limit
on the number of shares of Common Stock available for purchase
under the Purchase Plan of 25,000 shares per calendar quarter
with a limit to be set from time to time at the discretion of
the Board of Directors. The vote was:
FOR: 10,805,027 AGAINST: 2,374,591 ABSTAINING: 95,842
NON-VOTE: 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.38 Waiver and First Amendment to Credit Agreement,
entered into as of November 23, 1994, by and between
Compression Labs, Incorporated and Bank of America
National Trust and Savings Association.
10.39 Second Amendment to Credit Agreement and Partial
Release of Collateral, entered into as of May 12,
1995, by and between Compression Labs, Incorporated
and Bank of America National Trust and Savings
Association.
10.40 Waiver and Third Amendment to Credit Agreement,
entered into as of May 12, 1995, by and between
Compression Labs, Incorporated and Bank of America
National Trust and Savings Association.
10.41 Fourth Amendment to Credit Agreement, entered into
as of June 23, 1995, by and between Compression Labs,
Incorporated and Bank of America National Trust and
Savings Association.
10.42 Investment Agreement by and between Compression Labs,
Incorporated and Fletcher Asset Management, Inc.,
dated as of June 16, 1995.
27.1 Article 5 of Regulation S-X, Financial Data Schedules
for Compression Labs, Incorporated for the Quarter
Ending June 30, 1995.
</TABLE>
- 12 -
<PAGE> 15
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
June 30, 1995.
No other applicable items.
- 13 -
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPRESSION LABS, INCORPORATED
BY ___________________________________
WILLIAM A. BERRY
Senior Vice President,
Chief Financial Officer (Principal
Financial and Accounting Officer,
Authorized Officer)
DATE: August 11, 1995
- 14 -
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
10.38 Waiver and First Amendment to Credit Agreement, entered into as of
November 23, 1994, by and between Compression Labs, Incorporated and
Bank of America National Trust and Savings Association.
10.39 Second Amendment to Credit Agreement and Partial Release of Collateral,
entered into as of May 12, 1995, by and between Compression Labs,
Incorporated and Bank of America National Trust and Savings Association.
10.40 Waiver and Third Amendment to Credit Agreement, entered into as of
May 12, 1995, by and between Compression Labs, Incorporated and Bank
of America National Trust and Savings Association.
10.41 Fourth Amendment to Credit Agreement, entered into as of June 23, 1995,
by and between Compression Labs, Incorporated and Bank of America
National Trust and Savings Association.
10.42 Investment Agreement by and between Compression Labs, Incorporated and
Fletcher Asset Management, Inc., dated as of June 16, 1995.
27.1 Article 5 of Regulation S-X, Financial Data Schedules for Compression
Labs, Incorporated for the Quarter Ending June 30, 1995
</TABLE>
- 15 -
<PAGE> 1
EXHIBIT 10.38
WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT ("Waiver and
Amendment"), dated as of November 23, 1994, is entered into by and between
COMPRESSION LABS, INCORPORATED (the "Borrower") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a certain Credit
Agreement dated as of June 30, 1994 (the "Credit Agreement") pursuant to which
the Bank has extended certain credit facilities to the Borrower.
B. The Borrower has reported to the Bank the existence of an event
of default under the Credit Agreement. The Borrower has requested that the
Bank waive such event of default.
C. The Bank is willing to waive such default under the Credit
Agreement, subject to the terms and conditions of this Waiver and Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement.
2. Default and Waiver.
(a) For purposes of this Waiver and Amendment, the
"Existing Default" shall mean:
(i) the default existing on this date under Section
8.01(c) of the Credit Agreement solely as a consequence of a breach of
the negative covenant set forth at Section 7.15 of the Credit Agreement
solely to the extent such default relates to the financial results of
the Borrower for the quarter ended September 30, 1994.
(b) Subject to and upon the terms and conditions hereof,
the Bank hereby waives the Existing Default.
(c) Nothing contained herein shall be deemed a waiver of
(or otherwise affect the Bank's ability to enforce) any other default
or Event of Default, including without limitation (i) any default or
Event of Default as may now or hereafter exist and arise from or
otherwise be related to the Existing Default (including without
limitation any cross-default arising under the Credit Agreement by
virtue of any matters resulting from the Existing Default), and
1
<PAGE> 2
(ii) any default or Event of Default arising at any time after the
Effective Date and which is the same as the Existing Default.
3. Amendments to Credit Agreement.
(a) Section 2.02 of the Credit Agreement shall be amended by
deleting the references in such Section to "0.50%" and replacing them with
"1.00%".
(b) Section 2.04 of the Credit Agreement shall be amended by
(i) deleting the words "180 days after" in clause (i) of subsection (b)
thereof; (ii) adding the following as new subsection (f) thereto:
"(f) In addition to the limits set forth in subsection
2.01(b), the aggregate of the L/C Outstanding Amounts in respect of
standby letters of credit may not exceed at any time $1,000,000."
4. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) Other than the Existing Default, no Default or Event of
Default has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower of
this Waiver and Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any
registration with, consent or approval of, notice to or action by, any
person (including any governmental authority) in order to be effective
and enforceable. The Credit Agreement as amended by this Waiver and
Amendment constitutes the legal, valid and binding obligations of the
Borrower, enforceable against it in accordance with its respective
terms, without defense, counterclaim or offset.
(c) Subject to the Existing Default, all representations and
warranties of the Borrower contained in the Credit Agreement are true
and correct.
(d) The Borrower is entering into this Waiver and Amendment on
the basis of its own investigation and for its own reasons, without
reliance upon the Bank or any other Person.
5. Effective Date. The Waiver and Amendment will become effective
as of November 23, 1994 (the "Effective Date"), provided that each of the
following conditions precedent is satisfied:
2
<PAGE> 3
(a) The Bank has received from the Borrower a duly
executed original (or, if elected by the Bank, an executed facsimile
copy) of this Waiver and Amendment.
(b) All representations and warranties contained herein are
true and correct as of the Effective Date.
6. Reservation of Rights. The Borrower acknowledges and agrees
that neither the Bank's forbearance in exercising its rights and remedies in
connection with the Existing Default, nor the execution and delivery by the
Bank of this Waiver and Amendment, shall be deemed (i) to create a course of
dealing or otherwise obligate the Bank to forbear or execute similar waivers
under the same or similar circumstances in the future, or (ii) to waive,
relinquish or impair any right of the Bank to receive any indemnity or similar
payment from any person or entity as a result of any matter arising from or
relating to the Existing default.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall remain
in full force and effect and all references therein to such Credit
Agreement shall henceforth refer to the Credit Agreement as amended by
this Waiver and Amendment. This Waiver and Amendment shall be deemed
incorporated into, and a part of, the Credit Agreement.
(b) This Waiver and Amendment shall be binding upon and
inure to the benefit of the parties hereto and thereto and their
respective successors and assigns. No third party beneficiaries are
intended in connection with this Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and
construed in accordance with the law of the State of California.
(d) This Waiver and Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees that this
document (and any other document required herein) may be delivered by
any party thereto either in the form of an executed original or an
executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Bank of a facsimile transmitted document purportedly bearing the
signature of the Borrower shall bind the Borrower, with the same force
and effect as the delivery of a hard copy original. Any failure by the
Bank to receive the hard copy executed original of such document shall
not
3
<PAGE> 4
diminish the binding effect of receipt of the facsimile transmitted
executed original of such document which hard copy page was not
received by the Bank.
(e) This Waiver and Amendment, together with the Credit
Agreement, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Waiver and Amendment supersedes all prior drafts and communications
with respect thereto. This Waiver and Amendment may not be amended
except in accordance with the provisions of Section 9.05 of the Credit
Agreement.
(f) If any term or provision of this Waiver and Amendment
shall be deemed prohibited by or invalid under any applicable law, such
provision shall be invalidated without affecting the remaining
provisions of this Waiver and Amendment or the Credit Agreement,
respectively.
(g) The Borrower covenants to pay to or reimburse the Bank,
upon demand, for all costs and expenses (including allocated costs of
in-house counsel) incurred in connection with the development,
preparation, negotiation, execution and delivery of this Waiver and
Amendment and the administration of the Existing Default.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Waiver and Amendment as of the date first above written.
COMPRESSION LABS, INCORPORATED
By: /s/ WILLIAM A. BERRY
----------------------------------
Name: William A. Berry
Title: Senior Vice President
and Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ ALLAN B. MINER
----------------------------------
Name: Allan B. Miner
Title: Vice President
4
<PAGE> 1
EXHIBIT 10.39
SECOND AMENDMENT TO CREDIT AGREEMENT
AND PARTIAL RELEASE OF COLLATERAL
THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND PARTIAL RELEASE OF
COLLATERAL ("Amendment"), dated as of May 12, 1995, is entered into by and
between COMPRESSION LABS, INCORPORATED (the "Borrower") and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a certain Credit
Agreement dated as of June 30, 1994, as amended by that certain Waiver and
First Amendment to Credit Agreement dated as of November 23, 1994 (as so
amended, the "Credit Agreement") pursuant to which the Bank has extended
certain credit facilities to the Borrower.
B. The Credit Agreement is secured by, among other things, that
certain Amended and Restated Security Agreement dated as of August 15, 1994
(the "Security Agreement") between the Borrower and the Bank.
C. The Borrower has entered into that certain Security Agreement
dated as of March 30, 1995 in favor of USL Capital Corporation, as supplemented
by that certain Addendum to Security Agreement dated as of March 31, 1995
(collectively, the "USL Security Agreement").
D. In connection with the USL Security Agreement, the Borrower has
requested that the Bank agree to certain amendments of the Credit Agreement and
the release of certain collateral (as defined therein) from the lien of the
Security Agreement.
E. The Bank is willing to amend the Credit Agreement, and release
certain Collateral, all subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement or the Security Agreement, as applicable.
2. Amendments to Credit Agreement.
(a) Section 7.01 of the Credit Agreement shall be amended
by (i) deleting the period at the end of subsection (e) thereof, (ii) adding a
semicolon in lieu thereof, and (iii) adding the following subsection (f) after
subsection (e) thereof:
1
<PAGE> 2
"(f) indebtedness not to exceed the amount of $3,000,000 at any
time outstanding and secured by liens permitted under Section 7.02 on
demonstration equipment not carried as Inventory."
(b) Section 7.02 of the Credit Agreement shall be amended by (i)
deleting the word "and" at the end of subsection (f) thereof, (ii) inserting
the following prior to the parenthetical at the end of subsection (g) thereof:
"; and (h) without duplication, security interests in
demonstration equipment not carried as Inventory when the aggregate amount of
all liabilities secured by such equipment do not exceed, at any one time,
$3,000,000",
and (iii) in the parenthetical at the end of Section 7.02, deleting the letter
"(g)" and inserting "(h)" in lieu thereof.
3. Partial Release of Collateral. The Bank shall release from the
lien of the Security Agreement and terminate its security interest in the USL
Collateral. For purposes hereof, the "USL Collateral" means all of the
Equipment listed on the collateral listing attached to the USL Security
Agreement and hereto as Exhibit A (the "USL Equipment"), any and all additional
or accessions thereto or substitutions therefor and any and all proceeds of the
conversion, voluntary or involuntary, of all or any portion of the USL
Equipment now or from time to time hereafter subject or required or intended to
be subject to the lien of the USL Security Agreement and any form of proceeds
(including proceeds of insurance and of any governmental takings) arising from
the USL Equipment or in connection with the USL Equipment. On or before the
Effective Date, the Bank shall deliver to the Borrower an executed UCC-2 with
respect to the financing statement filed in connection with the Security
Agreement evidencing the partial release of the Collateral.
4. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the Borrower
of this Amendment have been duly authorized by all necessary corporate and
other action and do not and will not require any registration with, consent or
approval of, notice to or action by, any person (including any governmental
authority) in order to be effective and enforceable. Each of the Security
Agreement and the Credit Agreement as amended by this Amendment constitutes
the legal, valid and binding obligations of the Borrower, enforceable against
it in accordance with its respective terms, without defense, counterclaim or
offset.
2
<PAGE> 3
(c) All representations and warranties of the Borrower
contained in the Credit Agreement and the Security Agreement are true and
correct.
(d) The Borrower is entering into this Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Bank or any other person.
(e) The Borrower has provided to the Bank a true and
complete copy of the USL Security Agreement. The USL Collateral is and shall be
at all times demonstration equipment not carried as Inventory securing an
aggregate amount of liabilities that does not exceed, at any one time,
$3,000,000.
5. Effective Date. This Amendment will become effective as of the
date first above written; provided that the Bank has received from the Borrower
a duly executed original (or, if elected by the Bank, an executed facsimile
copy) of this Amendment.
6. Reservation of Rights. The Borrower acknowledges and agrees
that the execution and delivery by the Bank of this Amendment shall not be
deemed to create a course of dealing or otherwise obligate the Bank to forbear
or execute similar amendments under the same or similar circumstances in the
future.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall remain in full
force and effect and all references therein to such Credit Agreement shall
henceforth refer to the Credit Agreement as amended by this Amendment. This
Amendment shall be deemed incorporated into, and a part of, the Credit
Agreement. Except for the partial release of Collateral expressly provided for
herein, all terms, covenants and provisions (including without limitation the
security interest granted thereunder in the Collateral named therein) of the
Security Agreement are and shall remain in full force and effect.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may
3
<PAGE> 4
be delivered by any party thereto either in the form of an executed original or
an executed original sent by facsimile transmission to be followed promptly by
mailing of a hard copy original, and that receipt by the Bank of a facsimile
transmitted document purportedly bearing the signature of the Borrower shall
bind the Borrower, with the same force and effect as the delivery of a hard copy
original. Any failure by the Bank to receive the hard copy executed original of
such document shall not diminish the binding effect of receipt of the facsimile
transmitted executed original of such document which hard copy page was not
received by the Bank.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Amendment supersedes
all prior drafts and communications with respect thereto. This Amendment may
not be amended except in accordance with the provisions of Section 9.05 of the
Credit Agreement.
(f) If any term or provision of this Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision shall
be invalidated without affecting the remaining provisions of this Amendment,
the Credit Agreement, or the Security Agreement, respectively.
(g) The Borrower covenants to pay to or reimburse the Bank,
upon demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
COMPRESSION LABS, INCORPORATED
BY: /s/ WILLIAM A. BERRY
----------------------------------
Name: William A. Berry
Title: Senior Vice President
and Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
BY: /s/ ALLAN B. MINER
----------------------------------
Name: Allan B. Miner
Title: Vice President
5
<PAGE> 6
EXHIBIT A
Compression Labs, Incorporated
Demonstration Equipment
As of February 24, 1995
<TABLE>
<CAPTION>
SHIPMENT
------------------------------------- ORIGINAL ESTIMATED LOCATION
S/N PROD. LOCATION QTY. AMOUNT MARKET VALUE KEY
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5852 225 AT&T CPC, LA 1
5011 125 AT&T CPC, ATLANTA 1
5220 225 AT&T NETWORK DENVER 1
5143 225 AT&T SOUTHFIELD, MI 1
5739 225 BELL ATLANTIC, MALVERN 1
5279 225 CLI, BURLINGTON 1
5044 235 CLI, LIBERTY CORNER 1
5048 225 CLI SJ TRAINING-RAY BROOKSBY 1 1
5053 125 CLI SJ TRAINING-RAY BROOKSBY 1 1
5133 125 CLI SJ TRAINING-RAY BROOKSBY 1 1
5662 235 CLI SJ-CALIFORNIA RM 1 1
5763 225 CLI SJ-CDV MALL/SIERRA-12/16/94-PE 1 1
5125 225 CLI, RESTON TAG#21662 1 2
6011 225 CLI-ITASCA JIM 708-250-5888 1 3
6227 235 CLI-ITASCA-AFE#889 1 3
5504 225 CLI-PARKWOOD CIRCLE, ATLANTA D 1 4
5009 125 CLI-WHSE 1 5
5012 125 CLI-WHSE 1 5
5013 225 CLI-WHSE 1 5
5066 225 CLI-WHSE 1 5
5089 225 CLI-WHSE 1 5
5112 225 CLI-WHSE 1 5
5123 225 CLI-WHSE 1 5
5124 225 CLI-WHSE 1 5
5603 225 CLIPP/AT&T, SF 1 6
5686 235 NOW AT OGILVY & MATTHERS 1
5132 225 PAC BELL, SANTA CLARA 1
5546 225 PACIFIC BELL SAN DIEGO 1
5527 225 RTND BY AT&T CPC, BOSTON 1 5
5427 135 RTND BY-CLI-ATLANTA OFFICE 1 5
5334 125 US SPRINT/ATC, KANSAS CITY 1
5342 125 US SPRINT ATC, WASHINGTON 1
5064 235 US SPRINT CPC, WOBURN 1
5499 235 US SPRINT, COSTA MESA 1
5536 225 US SPRINT, WASHINGTON 1
5004 125 US SPRINT/ATC, KANSAS CITY 1
5513 235 US SPRINT/VAM, PITTSBURG 1
5857 235 US SPRINT/VAM, PITTSBURG 1
SUBTOTAL GALLERY 38 822,803.62 1,371,339.37
R10080 RG1 2nd-CLI-MALVERN, PA--ANITA VISALLI 1 7
R10173 RG1 2ND-CLI-SF 1 6
R10020 RG1 AT&T, LA-A/8#1349 1
R10007 RG1 CLI-ATLANTA 1 4
R10078 RG1 CLI-ATLANTA-AFE#909 1 4
R10077 RG1 CLI-BURLINGTON 1 8
R10161 RG1 CLI-CHICAGO 1 3
R10028 RG1 CLI-DALLAS 1 9
R10038 RG1 CLI-HOUSTON, TX 1 10
R10175 RG1 CLI-IRVINE CA 1 11
R10005 RG1 CLI-ITASCA 1 3
R10008 RG1 CLI-LIBERTY CORNER 1 12
R10299 RG1 CLI-NY 1 13
R10014 RG1 CLI-RESTON 1 2
</TABLE>
<PAGE> 7
Compression Labs, Incorporated Page 2 of 2
Demonstration Equipment
As of February 24, 1995
Shipment_______________________
<TABLE>
<CAPTION> ORIGINAL ESTIMATED LOCATION
S/N PROD. LOCATION QTY AMOUNT MARKET VALUE KEY
<S> <C> <C> <C> <C> <C> <C>
R10374 RG1 CLI-SJ CDV MALL 1 1
R10002 RG1 CLI-SJ, TOM MARSH 1 1
R10155 RG1 CLI-SOUTHFIELD 1 14
R10058 RG1 CLI-TRAINING ROOM AFE#933 1 1
R10023 RG1 MCI-MCI PLAZA 1
R10522 RG1 RTND BY NASTDY, WY-MKTG DEMO 1 1
R10226 RG1 WALTER A HAAS SCH OF BUSINESS 1
SUBTOTAL RG1 21 669,935.24 1,116,558.73
TOTAL EQUIPMENT 59 $1,492,738.86 $2,487,898.10
</TABLE>
<PAGE> 1
EXHIBIT 10.40
WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND THIRD AMENDMENT TO CREDIT AGREEMENT ("Waiver and
Amendment"), dated as of May 12, 1995, is entered into by and between
COMPRESSION LABS, INCORPORATED (the "Borrower") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a certain Credit
Agreement dated as of June 30, 1994, as amended (the "Credit Agreement")
pursuant to which the Bank has extended certain credit facilities to the
Borrower.
B. The Borrower has reported to the Bank the existence of certain
events of default under the Credit Agreement. The Borrower has requested that
the Bank waive such events of default.
C. The Bank is willing to waive such defaults under the Credit
Agreement, subject to the terms and conditions of this Waiver and Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement.
2. Default of Waiver.
(a) For purposes of this Waiver and Amendment, the "Existing
Defaults" shall mean:
(i) the default existing on this date under Section
8.01(c) of the Credit Agreement solely as a consequence of a breach of
(i) the negative covenant set forth at Section 7.13 of the Credit
Agreement and (ii) the negative covenant set forth at Section 7.15 of
the Credit Agreement, in each case solely to the extent such default
relates to the financial results of the Borrower for the quarter ended
March 31, 1995.
(b) Subject to and upon the terms and conditions hereof,
the Bank hereby waives the Existing Defaults.
(c) Nothing contained herein shall be deemed a waiver of (or
otherwise affect the Bank's ability to enforce) any other default or
Event of Default, including without limitation (i) any default or Event
of Default as may now or hereafter exist and arise from or otherwise be
related to the Existing Defaults (including without limitation any
1
<PAGE> 2
cross-default arising under the Credit Agreement by virtue of any
matters resulting from the Existing Defaults), and (ii) any default or
Event of Default arising at any time after the Effective Date and which
is the same as the Existing Default.
3. Amendment to Credit Agreement. Section 2.02 of the Credit
Agreement shall be amended by deleting the references in such Section to
"1.00%" and replacing them with "1.50%".
4. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) Other than the Existing Defaults, no Default or Event of
Default has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower
of this Waiver and Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any
registration with, consent or approval of, notice to or action by, any
person (including any governmental authority) in order to be effective
and enforceable. The Credit Agreement as modified by this Waiver and
Amendment constitutes the legal, valid and binding obligations of the
Borrower, enforceable against it in accordance with its respective
terms, without defense, counterclaim or offset.
(c) Subject to the Existing Defaults, all representations
and warranties of the Borrower contained in the Credit Agreement are
true and correct.
(d) The Borrower is entering into this Waiver and Amendment
on the basis of its own investigation and for its own reasons, without
reliance upon the Bank or any other Person.
5. Effective Date. This Waiver and Amendment will become effective
as of May 12, 1995 (the "Effective Date"), provided that each of the following
conditions precedent is satisfied:
(a) The Bank has received from the Borrower a duly executed
original (or, if elected by the Bank, an executed facsimile copy) of
this Waiver and Amendment.
(b) All representations and warranties contained herein are
true and correct as of the Effective Date.
6. Reservation of Rights. The Borrower acknowledges and agrees
that neither the Bank's forbearance in exercising its rights and remedies in
connection with the Existing Defaults, nor the execution and delivery by the
Bank of this Waiver and Amendment, shall be deemed (i) to create a course of
dealing or
2
<PAGE> 3
otherwise obligate the Bank to forbear or execute similar waivers under the
same or similar circumstances in the future, or (ii) to waive, relinquish or
impair any right of the Bank to receive any indemnity or similar payment from
any person or entity as a result of any matter arising from or relating to the
Existing default.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall remain
in full force and effect and all references therein to such Credit
Agreement shall henceforth refer to the Credit Agreement as modified by
this Waiver and Amendment. This Waiver and Amendment shall be deemed
incorporated into, and a part of, the Credit Agreement.
(b) This Waiver and Amendment shall be binding upon and
inure to the benefit of the parties hereto and thereto and their
respective successors and assigns. No third party beneficiaries are
intended in connection with this Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and
construed in accordance with the law of the State of California.
(d) This Waiver and Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees that this
document (and any other document required herein) may be delivered by
any party thereto either in the form of an executed original or an
executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Bank of a facsimile transmitted document purportedly bearing the
signature of the Borrower shall bind the Borrower, with the same force
and effect as the delivery of a hard copy original. Any failure by the
Bank to receive the hard copy executed original of such document shall
not diminish the binding effect of receipt of the facsimile transmitted
executed original of such document which hard copy page was not
received by the Bank.
(e) This Waiver and Amendment, together with the Credit
Agreement, contains the entire and exclusive agreement of the parties
hereto with reference to the matters discussed herein and therein. This
Waiver and Amendment supersedes all prior drafts and communications
with respect thereto. This Waiver and Amendment may not be amended
except in accordance with the provisions of Section 9.05 of the Credit
Agreement.
3
<PAGE> 4
(f) If any term or provision of this Waiver and Amendment
shall be deemed prohibited by or invalid under any applicable law, such
provision shall be invalidated without affecting the remaining
provisions of this Waiver and Amendment or the Credit Agreement,
respectively.
(g) The Borrower covenants to pay to or reimburse the Bank,
upon demand, for all costs and expenses (including allocated costs of
in-house counsel) incurred in connection
4
<PAGE> 5
with the development, preparation, negotiation, execution and delivery
of this Waiver and Amendment and the administration of the Existing
Defaults.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Waiver and Amendment as of the date first above written.
COMPRESSION LABS, INCORPORATED
By: /s/ WILLIAM A. BERRY
----------------------------------
Name: William A. Berry
Title: Senior Vice President
and Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ ALLAN B. MINER
----------------------------------
Name: Allan B. Miner
Title: Vice President
4
<PAGE> 1
EXHIBIT 10.41
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT ("Amendment"), dated as of
June 23, 1995, is entered into by and between COMPRESSION LABS, INCORPORATED
(the "Borrower") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a certain Credit
Agreement dated as of June 30, 1994, as amended by that certain Waiver and First
Amendment to Credit Agreement dated as of November 23, 1994, by that certain
Second Amendment to Credit Agreement and Partial Release of Collateral dated as
of May 12, 1995, and by that certain Waiver and Third Amendment dated as of May
12, 1995 (as so amended, the "Credit Agreement") pursuant to which the Bank has
extended certain credit facilities to the Borrower.
B. The Borrower has requested that the Bank agree to certain
amendments of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended
at the defined term "Availability Period" by amended and restated such defined
term in its entirety as follows:
"'AVAILABILITY PERIOD': the period commencing on the date of
this Agreement and ending on the date that is the earlier to occur of
(a) August 15, 1995, and (b) the date on which the Bank's commitment to extend
credit hereunder terminates."
(b) Subsection 2.01(a) of the Credit Agreement shall be
amended and restated in its entirety as follows:
"(a) From time to time during the Availability Period, subject to
the terms and provisions hereof, the Bank, on a revolving basis,
(i) will (x) make Advances denominated in dollars to the Borrower, and
(y) create and issue commercial letters of credit for the Borrower's
account, and (ii) may, in its sole discretion, create and issue
standby letters of credit for the Borrower's account."
1
<PAGE> 2
(c) Section 2.04 of the Credit Agreement shall be amended and
restated in its entirety as follows:
"2.04 Standby Letters of Credit Under the Revolving Facility.
(a) The Bank may, in its sole discretion, from time to time during the
Availability Period, subject to the terms and provisions hereof, issue
standby letters of credit hereunder for the account of the Borrower.
Each standby letter of credit shall be denominated in dollars and
issued pursuant to the terms and conditions hereof and of a Bank
standard form Application and Agreement for Standby Letter of Credit
(or such other form as the Bank may require) and such other documents
as the Bank may require in connection with such issuance, in each case
executed by the Borrower.
(b) Each standby letter of credit shall: (i) expire on or
before 360 days after the date such letter of credit is issued, but in
no event later than the last day of the Availability Period, unless
otherwise agreed to by the Bank in its sole discretion; and (ii) be
otherwise in form and substance and in favor of beneficiaries and for
purposes satisfactory to the Bank.
(c) The Borrower shall pay to the Bank a non-refundable fee
equal to 1.50% per annum of the face amount of each standby letter of
credit issued hereunder, payable upon issuance of each such letter of
credit. The Borrower shall also pay such other fees and commissions at
the times and in the amounts the Bank advises the Borrower from time to
time as being applicable to the Borrower's standby letters of credit.
(d) Each draft paid by the Bank under a standby letter of
credit issued hereunder shall be reimbursed by the Borrower to the Bank
on the date such draft is paid by the Bank. Any sum owed to the Bank
with respect to a standby letter of credit issued for the Borrower's
account which is not paid when due shall, at the option of the Bank in
each instance, be deemed to be an Advance outstanding under the
Revolving Facility and shall thereafter bear interest at the Floating
Rate.
(e) At the expiration of the Availability Period, or, in the
case of standby letters of credit issued having an expiration date
after the last day of the Availability Period, at the time of issuance
thereof or any time thereafter, the Bank may require the Borrower to
provide cash collateral in the amount of the L/C Outstanding Amount of
any standby letters of credit outstanding under this Agreement, and, in
addition to any other rights or remedies which the Bank may have under
this Agreement or otherwise, upon the occurrence of an Event of
Default, the Bank may require the Borrower to provide cash collateral
in the
2
<PAGE> 3
amount of the L/C Outstanding Amount of any standby letters of credit
outstanding under this Agreement."
3. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the
Borrower of this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent
or approval of, notice to or action by, any person (including any governmental
authority) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligations
of the Borrower, enforceable against it in accordance with its respective
terms, without defense, counterclaim or offset.
(c) All representations and warranties of the Borrower
contained in the Credit Agreement are true and correct.
(d) The Borrower is entering into this Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Bank or any other person.
4. Effective Date. This Amendment will become effective as of
the date first above written; provided that the Bank has received from the
Borrower a duly executed original (or, if elected by the Bank, an executed
facsimile copy) of (a) this Amendment, and (b) a copy of a resolution passed by
the board of directors of the Borrower, certified by the Secretary or an
Assistant Secretary of the Borrower as being in full force and effect on the
date hereof, authorizing the execution, delivery and performance of this
Amendment.
5. Reservation of Rights. The Borrower acknowledges and agrees
that the execution and delivery by the Bank of this Amendment shall not be
deemed to create a course of dealing or otherwise obligate the Bank to forbear
or execute similar amendments under the same or similar circumstances in the
future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms, covenants
and provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Amendment. This Amendment
shall be deemed incorporated into, and a part of, the Credit Agreement.
3
<PAGE> 4
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each
of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Bank of a facsimile transmitted document purportedly
bearing the signature of the Borrower shall bind the Borrower, with the same
force and effect as the delivery of a hard copy original. Any failure by the
Bank to receive the hard copy executed original of such document shall not
diminish the binding effect of receipt of the facsimile transmitted executed
original of such document which hard copy page was not received by the Bank.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Amendment
supersedes all prior drafts and communications with respect thereto. This
Amendment may not be amended except in accordance with the provisions of
Section 9.05 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision shall
be invalidated without affecting the remaining provisions of this Amendment or
the Credit Agreement.
(g) The Borrower covenants to pay to or reimburse the Bank,
upon demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
COMPRESSION LABS, INCORPORATED
By: /s/ WILLIAM A. BERRY
----------------------------------
Name: William A. Berry
Title: Senior Vice President
and Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ ALLAN B. MINER
----------------------------------
Name: Allan B. Miner
Title: Vice President
5
<PAGE> 6
COMPRESSION LABS, INCORPORATED
SECRETARY'S CERTIFICATE
The undersigned hereby certifies as follows:
1. That he is the duly elected and qualified, and at this date is,
Secretary of Compression Labs, Incorporated, a Delaware Corporation (the
"Company").
2. That the copies of the Company's certificate of incorporation
and bylaws previously delivered by it to the Bank are true and complete, and in
full force and effect, without amendment except as shown.
3. The resolutions adopted by the Board of Directors of the Company
on May 5, 1994 authorizing execution and delivery of the Credit Agreement and
Credit Agreement (ExIm Bank Guaranteed Line of Credit) and any other Credit
Documents, and previously delivered to the Bank, are in full force and effect,
were duly adopted, and have not been amended, modified or revoked, and
constitute all resolutions adopted with respect to the Credit Documents.
IN WITNESS WHEREOF, I have set my hand hereto as of the 23rd day of
June, 1995.
/s/ WILLIAM A. BERRY
---------------------------
William A. Berry
Secretary
<PAGE> 1
EXHIBIT 10.42
INVESTMENT AGREEMENT
BETWEEN
COMPRESSION LABS, INCORPORATED
AND
FLETCHER ASSET MANAGEMENT, INC.
DATED AS OF JUNE 16, 1995
<PAGE> 2
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (the "Agreement") is entered into as of June
16, 1995 (the "Agreement Date") by and between FLETCHER ASSET MANAGEMENT, INC.,
a Delaware corporation (the "Investor"), and COMPRESSION LABS, INCORPORATED, a
Delaware corporation (the "Company").
WHEREAS, the parties desire that the Investor become an equity investor
in the Company by purchasing shares (as determined under Article I hereof) of
the Company's Common Stock, par value $.001 per share (the "Common Stock").
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
1.1 PURCHASE AND SALE OF COMMON STOCK. Upon the terms and
conditions set forth herein, the Company shall issue and sell to the Investor
pursuant to an effective Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), and the Investor shall purchase, shares (as determined under this
Article I) of Common Stock (the "Shares"), including one Right, as defined in
the Amended and Restated Rights Agreement (the "Rights Agreement") between
Compression Labs, Incorporated and the First National Bank of Boston, dated
January 29, 1993 for each share of Common Stock (the "Rights"); provided,
however, that no Rights shall be issuable at each of the Closings (as defined
herein) if the Rights have been redeemed or repurchased by the Company prior to
such Closing. References herein to the Common Stock shall, unless the context
otherwise requires, be deemed to include the associated Rights.
1.2 INITIAL CLOSING. The Initial Closing Date shall be July 10,
1995, provided, however, that upon notice from the Company to Investor on or
before June 27, 1995, the Company, in its sole discretion, may accelerate the
Initial Closing Date to June 30, 1995. The "Initial Share Quantity" shall be
equal to 500,000 shares of Common Stock. The Initial Share Price shall be equal
to the average (rounded to the nearest thousandth of a dollar) of the three
lowest per share daily low sale prices of the Common Stock as reported by the
Nasdaq National Market (the "Nasdaq") in the period beginning on the Agreement
Date and ending one business day prior to the Initial Closing Date. The Initial
Payment shall be the dollar amount equal to the product of (i) the Initial
Share Quantity and (ii) the Initial Share Price. On the Initial Closing Date,
the Company shall deliver Initial Share Quantity number of shares of Common
Stock to the Investor against payment by the Investor therefor of the Initial
Payment to the Company. If the Rights are repurchased or redeemed by the
Company prior to the Initial Closing Date, the Initial Payment shall be reduced
by the product of (x) the Initial Share Quantity and (y) the per Right
repurchase or redemption price.
<PAGE> 3
1.3 INTERIM CLOSING. The Interim Closing Date shall be the first
business day following the Interim Trading Period. The Interim Trading Period
shall be the period beginning on the Agreement Date and ending August 7, 1995,
provided, however, that the ending date shall be extended to include an
additional trading day for the Common Stock for each day during the period
throughout which trading in the Common Stock had been suspended by the SEC or
the Nasdaq. The Interim Share Price shall be equal to the average (rounded to
the nearest thousandth of a dollar) of the daily volume-weighted average trade
price of the Common Stock as reported by Bloomberg for the days on which the
Common Stock is trading during the Interim Trading Period. Subject to the
limitation set forth in Section 1.5 hereof, on the Interim Closing Date, if and
only if the Interim Share Price is less than the Initial Share Price, then the
Company shall issue the Interim Share Quantity (as defined below) number of
shares of Common Stock, if any, to the Investor. Alternatively, on the Interim
Closing Date, if and only if the Interim Share Price is greater than the
Initial Share Price, then the Investor shall make payment of the Interim
Payment (as defined below) to the Company. The Interim Share Quantity shall be
the nearest whole number greater than or equal to zero to the quantity:
(Initial Share Price - Interim Share Price) x Initial Share Quantity
--------------------------------------------------------------------
Interim Share Price
The Interim Payment, if any, shall be the dollar amount equal to:
(Interim Share Price - Initial Share Price) x Initial Share Quantity
1.4 FINAL CLOSING. The Final Closing Date shall be the first
business day following the Final Trading Period. The Final Trading Period shall
be the period beginning on the Agreement Date and ending September 28, 1995,
provided, however, that the ending date shall be extended to include an
additional trading day for the Common Stock for each day during the period
throughout which trading in the Common Stock had been suspended by the SEC or
the Nasdaq. The Final Share Price shall be equal to the average (rounded to the
nearest thousandth of a dollar) of the daily volume-weighted average trade
price of the Common Stock as reported by Bloomberg for the days on which the
Common Stock is trading during the Final Trading Period. Subject to the
limitation set forth in Section 1.5 hereof, on the Final Closing Date, the
Company will issue the Final Share Quantity (as defined below) number of shares
of Common Stock, if any, to the Investor. The Final Share Quantity shall be the
nearest whole number greater than or equal to zero to the quantity:
(Interim Share Price - Final Share Price) x
(Initial Share Quantity + Interim Share Quantity)
-------------------------------------------------
Final Share Price
In addition, on the Final Closing Date, the Company shall deliver a number of
shares of Common Stock equal to the Supplemental Share Quantity, if any, to the
Investor against payment by the Investor therefor of the Supplemental Payment
to the Company. The Supplemental Share Quantity shall be the nearest whole
number greater than or equal to zero to (i) the Minimum Share Quantity (as
defined below) minus (ii) the sum of the Initial Share Quantity, Interim Share
2.
<PAGE> 4
Quantity and Final Share Quantity. The Minimum Share Quantity shall be equal to
565,000, provided, that the Investor shall have the option, to be exercised by
written notice to the Company two business days before the Final Closing Date,
to increase the Minimum Share Quantity to a whole number up to and including
765,000. The Supplemental Payment shall be the dollar amount equal to the
product of (i) the Supplemental Share Quantity and (ii) the lower of the
Interim Share Price or the Final Share Price.
1.5 MAXIMUM SHARE LIMITATION. The maximum number of shares
issuable to Investor pursuant to the Company's obligations under this Agreement
shall be 765,000 shares of Common Stock.
1.6 CLOSINGS. The Initial Closing, Interim Closing and Final
Closing (collectively, the "Closings") shall take place on the Initial Closing
Date, Interim Closing Date and Final Closing Date, respectively, at the offices
of Cooley Godward Castro Huddleson & Tatum, Five Palo Alto Square, 3000 El
Camino Real, Palo Alto, California 94705, at 2:00 p.m., Pacific time or at such
other time and place and/or on such other date as the Investor and the Company
may agree. At each of the Closings, (i) the Company shall deliver to the
Investor one or more stock certificates, as required hereunder, representing
the shares to be issued to the Investor, registered in the name as shall be
designated in writing by the Investor, or deposit the Initial Shares to the
account at Depository Trust Company as shall be designated in writing by the
Investor, and (ii) the Investor shall deliver to the Company payment, as
required hereunder, in immediately available funds by wire transfer to such
account as shall be designated in writing by the Company. In addition, each of
the Company and the Investor shall deliver all other documents, instruments and
writings required to be delivered by either of them pursuant to this
Agreement at or prior to the Closings.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Investor.
(a) ORGANIZATION AND QUALIFICATION. Each of the Company
and its subsidiaries is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated,
except, in the case of such subsidiaries, as would not have a Material Adverse
Effect (as defined below), and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. Each of the
company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
operations, properties, prospects, or financial condition of the Company and
its subsidiaries taken as a whole.
3.
<PAGE> 5
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement and to issue the Shares in accordance with the terms hereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company and (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
(c) CAPITALIZATION. The authorized capital stock of the
Company consists of (i) 25,153,658 shares of Common Stock, of which as of the
close of business on June 12, 1995, 14,733,225 shares were issued and
outstanding; (ii) 4,000,000 shares of Preferred Stock, of which 14,300 shares
have been designated Series B Redeemable Convertible Preferred Stock, par value
$.001 per share (the "Series B Preferred Stock"), of which no shares are issued
and outstanding; and (iii) 250,000 shares of Series A Junior Participating
Preferred Stock, of which no shares were issued and outstanding. All of such
outstanding shares of Common Stock and have been validly issued and are fully
paid and nonassessable. No shares of Common Stock are entitled to preemptive
rights. Except as disclosed in Schedule 2.1(c), as of the date of this
Agreement, there are no options, warrants, conversion privileges, preemptive
rights or other rights presently outstanding to purchase any of the authorized
but unissued shares of the Company, other than those under the Company's 1980
Stock Option Plan, 1984 Supplemental Stock Option Plan, 1984 Employee Stock
Purchase Plan, 1992 Non-Employee Directors' Stock Option Plan and the Rights
Agreement. The Company has furnished to the Investor true and correct copies of
the Company's Restated Certificate of Incorporation as in effect on the date
hereof (the "Certificate of Incorporation"), the Company's Bylaws, as in effect
on the date hereof (the "Bylaws") and the Company's Certificate of Designation
for the Series B Preferred Stock.
(d) ISSUANCE OF SHARES. The Shares are duly authorized,
and when paid for in accordance with the terms hereof shall be validly issued,
fully paid and nonassessable and the Rights shall be duly authorized and
validly issued (if issued pursuant to the terms hereof).
(e) NO CONFLICTS. The execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby or relating hereto do not (i) result in a
violation of the Company's Certificate of Incorporation or Bylaws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or, to the best of the Company's knowledge, result in a violation of any
law, rule, regulations, order, judgment or decree (including Federal and state
securities laws and regulations) applicable to the Company, any of its
subsidiaries or
4.
<PAGE> 6
by which any property or asset of the Company or any of its subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity,
except for possible violations which either singly or in the aggregate do not
have a Material Adverse Effect. Except as required under the Securities Act and
any applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or issue the Shares and Rights and
sell the Shares in accordance with the terms hereof.
(f) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since January 1,
1994, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (all of the foregoing
filed prior to the date hereof being hereinafter referred to herein as the "SEC
Documents"). The Company has delivered to the Investor true and complete copies
of the SEC Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents (when read together with all exhibits
included therein and financial statement schedules thereto and documents (other
than exhibits) incorporated by reference) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) REGISTRATION. The Shares are registered under the
Securities Act of 1933, as amended (the "Act") and, when issued in accordance
with the terms hereof, will be registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of any applicable state securities laws.
2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor
hereby makes the following representations and warranties to the Company:
5.
<PAGE> 7
(a) AUTHORIZATION; ENFORCEMENT. (i) The Investor has the
requisite corporate power and authority to enter into and perform this
Agreement, (ii) the execution and delivery of this Agreement by the Investor
and the consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary corporate action, and no further consent or
authorization of the Investor or its Board of Directors or stockholders is
required, (iii) this Agreement has been duly authorized, executed and delivered
by the Investor and (iv) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditor's rights and remedies
or by other equitable principles of general application.
(b) NO CONFLICTS. The execution, delivery and performance
of this Agreement and the consummation by the Investor of the transactions
contemplated hereby or relating hereto do not (i) result in a violation of the
Investor's charter documents or by-laws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, any agreement, indenture or instrument to which the Investor or
any of its subsidiaries is a party, or, to the best of the Investor's knowledge,
result in a violation of any law, rule, regulation, order, judgment or decree
of any court or governmental agency (including Federal and state securities
laws and regulations) applicable to the Investor, any of its subsidiaries or
their respective properties (except for such conflicts, defaults and violations
as would not, individually or in the aggregate have a material adverse effect
on the Investor). The businesses of the Investor and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which either singly or in
the aggregate do not have a material adverse effect. The Investor is not
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
purchase the Shares in accordance with the terms hereof.
ARTICLE III
COVENANTS
3.1 COMMON STOCK. From the date hereof through the Final Closing
Date, the Company shall not (i) amend its organizational documents; (ii) split,
combine or reclassify its outstanding capital stock; (iii) declare or set aside
or pay any dividend or other distribution with respect to the Common Stock; or
(iv) make plans or enter into any agreement with respect to the foregoing.
Notwithstanding the preceding sentence, the Company may take any such action to
the extent that any person (x) publicly announce a tender offer or exchange
offer for the Common Stock, (y) publicly announce plans for a merger,
consolidation or potential change in control of the Company or (z) beneficially
own 15% or more of the Common Stock, and if the Company determines that any
such action is necessary or appropriate, provided that in the event the Company
does take such action(s), appropriate adjustments to the number of Shares
6.
<PAGE> 8
purchasable hereunder or the price therefor will be made as are necessary to
preserve without impairment the purchase rights represented by this Agreement.
3.2 STANDSTILL AGREEMENT. For the period from the date hereof
through the fifth Anniversary of this Agreement, the Investor will not, and
will cause each of the affiliates of the Investor, not to (i) purchase, acquire
or own, or offer to agree to purchase, acquire or own, directly or indirectly,
any Voting Securities (as hereinafter defined) or direct or indirect rights or
options to acquire Voting Securities of the Company (or enter into any
arrangements or understandings with any third party to do any of the
foregoing), if after such acquisition the Investor would hold, beneficially or
of record, more than 9.99% of the Voting Securities of the Company or (ii)
propose to enter into, directly or indirectly, any merger or business
combination involving the Company or any of its subsidiaries, or in any way to
seek to control of the management, policies or Board of Directors of the
Company, provided that nothing in this clause (ii) shall limit the right to
vote as a stockholder for any merger or business combination. The foregoing
sentence shall be null and void upon any "distribution date" under the Rights
Agreement. For purposes of this Agreement, the term "Voting Securities" shall
mean (i) any securities which are entitled to vote generally in the election of
directors of the Company and (ii) any securities of the company convertible
into or exchangeable for any security described in clause (i) above.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL
THE SHARES. The obligation hereunder of the Company to sell the Shares to the
Investor is further subject to the satisfaction, at or before each of the
Closings, of each of the following conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
(a) ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Investors shall be true
and correct in all material respects as of the date when made and as of the
date of each of the Closings as though made at that time (except for
representations and warranties that speak as of a particular date).
(b) PERFORMANCE BY THE INVESTORS. The Investors shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Investors at or prior to each of the Closings.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
7.
<PAGE> 9
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTOR TO
PURCHASE THE SHARES. The obligation of the Investor hereunder to acquire and
pay for the Shares is subject to the satisfaction, at or before each of the
Closings, of each of the following conditions set forth below. These conditions
are for the Investor's sole benefit and may be waived by such Investor at any
time in its sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
date of each of the Closings as though made at that time (except for
representations and warranties that speak as of a particular date).
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to each of the Closings.
(c) REGISTRATION STATEMENT. No stop order suspending the
effectiveness of the Registration Statement pursuant to which the Company will
issue and sell, and the Investor shall purchase, the Shares, shall have been
issued; and no proceeding for that purpose shall have been initiated by the SEC.
(d) NASDAQ. The Company shall have given notice of the
issuance of the Shares to Nasdaq, and Shares shall be authorized for trading on
Nasdaq upon official notice of issuance; during the Trading Period, trading in
the Common Stock shall not be suspended by the SEC or the Nasdaq (except for
any suspension of trading of limited duration agreed to between the Company and
Nasdaq solely to permit dissemination of material information regarding the
Company); trading in securities generally as reported by the Nasdaq shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by the Nasdaq.
(e) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court of governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
ARTICLE V
TERMINATION
5.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time by the mutual consent of the Company and the Investor,
by action of their respective Board of Directors.
8.
<PAGE> 10
5.2 TERMINATION BY THE INVESTOR. This Agreement may be terminated
by action of the Board of Directors of the Investor at any time after July 15,
1995 if the sale of the Initial Share Quantity of the Shares shall not have
been consummated by July 15, 1995.
5.3 AUTOMATIC TERMINATION. This Agreement shall automatically
terminate without any further action of either party hereto if the Initial
Closing shall not have occurred by August 1, 1995.
ARTICLE VI
MISCELLANEOUS
6.1 FEES AND EXPENSES. Each party shall pay the fees and expenses
of its advisors, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
6.2 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect.
6.3 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which they may be entitled by law
or equity.
(b) Each of the Company and the Investor (i) hereby
irrevocably submits to the exclusive jurisdiction of the Chancery Court of the
State of Delaware for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Investor consents
to process being served in any such suit, action or proceeding by mailing a
copy thereof to such party at the address in effect for notices to it under
this Agreement and agrees that such services shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law.
6.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and thereby and, except
9.
<PAGE> 11
as specifically set forth herein, neither the Company nor the Investor makes
any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
6.5 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answerback received),
telecopy or facsimile at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Compression Labs, Incorporated
2860 Junction Avenue
San Jose, California 95134
Telecopy: (408) 922-5574
Attention: President
With copies to:
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Telecopy: (415) 857-0663
Attention: Peter F. Stone
If to the Investor:
Fletcher Asset Management, Inc.
767 Fifth Avenue, 48th Floor
New York, NY 10153
Telecopy: (212) 758-7090
Attention: President
With copies to:
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, N.W.
Washington, D.C. 20005
Telecopy: (202) 393-5760
Attention: Stephen W. Hamilton
10.
<PAGE> 12
Either party hereto may from time to time change its address for notices under
this Section 6.5 by giving at least 10 days' written notice of such changed
address to the other party hereto.
6.6 WAIVERS. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof; nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
6.7 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
6.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. The
parties hereto may amend this Agreement without notice to or the consent of any
third party. Neither the Company nor the Investor shall assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
other (which consent may be withheld for any reason in the sole discretion of
the party from whom consent is sought). The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such party
under this Agreement.
6.9 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
6.10 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without regard to the principles of conflict of laws.
6.11 SURVIVAL. The agreements and covenants of the Company contained
in Section 6.1 and this Section 6.11 shall survive the termination of this
Agreement. The representations and warranties of the Company and the Investor
contained in Article II and the agreements and covenants set forth in Sections
3.2, 6.1 and this Section 6.11 shall survive each of the Closings.
6.12 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause four
additional executed signature pages to be physically delivered to the other
party within five days of the execution and delivery hereof.
11.
<PAGE> 13
6.13 PUBLICITY. The Company and the Investor shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
COMPRESSION LABS, INCORPORATED
By: /s/ JOHN E. TYSON
---------------------------------------
John E. Tyson,
President and Chief Executive Officer
FLETCHER ASSETS MANAGEMENT, INC.
By: /s/ ALPHONSE FLETCHER, JR.
---------------------------------------
Alphonse Fletcher, Jr.
12.
<PAGE> 14
SCHEDULE 2.1(C)
As of the date of the Agreement, the following warrants were
outstanding:
Warrants to Purchase Shares of Common Stock
<TABLE>
<CAPTION>
Number of Shares
----------------
<S> <C>
Hambrecht & Quist 10,000
National Union 195,000
Other 560,916
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS, CONDENSED CONSOLIDATED BALANCE SHEETS,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 10,456
<SECURITIES> 0
<RECEIVABLES> 56,395
<ALLOWANCES> 1,004
<INVENTORY> 26,374
<CURRENT-ASSETS> 94,415
<PP&E> 44,239
<DEPRECIATION> 23,206
<TOTAL-ASSETS> 137,002
<CURRENT-LIABILITIES> 49,869
<BONDS> 0
<COMMON> 15
0
0
<OTHER-SE> 115,044
<TOTAL-LIABILITY-AND-EQUITY> 137,002
<SALES> 35,785
<TOTAL-REVENUES> 38,401
<CGS> 22,384
<TOTAL-COSTS> 23,479
<OTHER-EXPENSES> 14,483
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 340
<INCOME-PRETAX> 102
<INCOME-TAX> 0
<INCOME-CONTINUING> 102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>