SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)*
Paradigm Geophysical Ltd.
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(Name of Issuer)
Ordinary Shares, NIS 0.5 par value
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(Title of Class of Securities)
69900J104
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(CUSIP Number)
David K. Robbins, Esq.
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, CA 90071
(213) 473-2000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 17, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box |_|.
Note: Schedules filed in paper format shall include a signed original and
five copies of the Schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934, as amended ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 69900J104 Page of Pages
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Shamrock Holdings, Inc. - 75-1984190
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(SEE INSTRUCTIONS) (b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,110,943 Ordinary Shares
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 1,110,943 Ordinary Shares
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,110,943 Ordinary Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.5%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 69900J104
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Shamrock Holdings of California, Inc. - 95-3928494
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(SEE INSTRUCTIONS) (b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
NUMBER OF 7 SOLE VOTING POWER
SHARES 233,750 Ordinary Shares
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 233,750 Ordinary Shares
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
233,750 Ordinary Shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X]
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
Row (11) does not include 877,193 Ordinary Shares held directly by
Shamrock Holdings, Inc. Beneficial ownership of those shares is
disclaimed by the Reporting Person.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.8%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
<PAGE>
ITEM 1. SECURITY AND ISSUER.
-------------------
The securities to which this statement relates are Ordinary
Shares of NIS 0.5 nominal value each ("Ordinary Shares"), of Paradigm
Geophysical Ltd., an Israeli corporation (the "Company"). The principal
executive offices of the Company are located at 32 Maskit Street, Merkazim
Building, P.O.B. 2061, Herzliya B 46120, Israel.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a)-(c), (f). The Reporting Persons consist of Shamrock Holdings,
Inc., a Delaware corporation ("SHI") and Shamrock Holdings of California,
Inc., a California corporation ("SHOC"). The principal executive offices of
SHI and SHOC are located at 4444 Lakeside Drive, Burbank, California 91505.
SHI and SHOC, together with their subsidiary entities, are holding
companies engaged in the making, holding and disposing of investments in
various industries, principally in the United States, Israel, Europe,
Australia and New Zealand. Roy E. Disney and his wife, Patricia A. Disney,
own approximately 4.5% of the common stock of SHI. Roy Patrick Disney,
Susan Disney Loughman, Abigail Edna Disney and Timothy J. Disney (the
"Disney Children") own an aggregate of approximately 45.4% of the common
stock of SHI. In addition, Roy E. Disney is the sole trustee of four trusts
established for the benefit of the respective Disney Children which hold an
aggregate of approximately 50% of SHI common stock. SHOC is a wholly-owned
subsidiary of SHI.
The business address of each of the persons listed below is 4444
Lakeside Drive, Burbank, California 91505. The names and principal
occupations or employments of the directors, executive officers and
controlling persons of SHI and SHOC are as follows:
<PAGE>
Principal Occupation
Name Position or Employment
- ---- -------- -------------
Roy E. Disney Chairman of Chairman of the Board of Directors
the Borad of SHI and SHOC; Vice Chairman of
of Directors the Board of Directors of the Walt
Disney Company (an international
company engaged in family
entertainment, with its principal
executive offices located at 500
South Buena Vista Drive, Burbank,
California 91521); Chairman of the
Board of Directors of Shamrock
Capital Advisors, Inc., a Delaware
corporation ("SCA") (a closely-held
corporation which provides
management and consulting services,
principally to Trefoil Capital
Investors II, L.P., a Delaware
limited partnership ("Trefoil
L.P."), an investment partnership
organized by SHOC to acquire
businesses and to make strategic
investments in debt or equity
securities, and to businesses in
which Trefoil L.P. invests);
Director of Trefoil Investors II,
Inc., a Delaware corporation
("Trefoil Investors") (a
corporation organized to serve as
the managing general partner of
Trefoil L.P.) The principal
executive offices of SCA, Trefoil
L.P. and Trefoil Investors is 4444
Lakeside Drive, Burbank, CA 91505
Patricia A. Disney Vice Chairman Vice Chairman of the Board of
of the Board Directors of SHI, SHOC and SCA
Directors
Stanley P. Gold Director and Director and President of SHI and
President SHOC. Director, President,
Treasurer and Managing Director of
SCA; Director and President of
Trefoil Investors; Director of The
Walt Disney Company
Robert G. Moskowitz Executive Vice Executive Vice President and
President and Secretary of SHI and SHOC.
Secretary Managing Director and Secretary of
SCA; Vice President and Secretary
of Trefoil Investors
George J. Buchler Treasurer and Vice President, Chief
Assistant Financial Officer and Secretary of
Secretary of SHOC; Treasurer and Assistant
SHI; Vice Secretary of SHI
President,
Chief Financial
Officer and
Treasurer of
SHOC
All of the persons listed above are citizens and residents of the
United States.
(d)-(e) During the last five years, neither of the Reporting Persons nor,
to their best knowledge, any of their directors, executive officers or
controlling persons, as the case may be, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
The total amount of funds used by SHI to purchase the 877,193
Ordinary Shares purchased by it on May 17, 1999, was $5,000,000. The total
amount of funds used by SHOC to purchase the 233,750 Ordinary Shares
purchased by it through May 17, 1999 was $1,094,384 (including brokers'
commissions). All of such funds were derived from margin borrowings from
SHI's trading account at Solomon Smith Barney Inc. None of the Ordinary
Shares were pledged as security for the margin borrowings.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
The Reporting Persons acquired the Ordinary Shares for investment
purposes. SHI currently intends to transfer 877,193 of the Ordinary Shares
owned by it to an investment fund (the "SHI Fund") formed by SHI and an
unaffiliated foreign entity , as limited partners. An entity organized by
the senior executive officers of SHI will serve as a general partner of the
SHI Fund. The transfer is contingent upon the resolution of certain Israeli
tax issues.
Pursuant to the Share Purchase Agreement, dated as of April 14,
1999, between SHI and the Company (the "Share Purchase Agreement"), as long
as SHI or its transferee holds more than 3.5% of the issued and outstanding
Ordinary Shares, the Company has agreed to recommend to its shareholders,
prior to any general meeting of shareholders at which directors may be
proposed to be elected, to elect a representative of SHI or its transferee
to the Company's board of directors. Pursuant to the Share Purchase
Agreement, Michael Geiger, an employee of a consulting firm retained by
SHOC, has been appointed to the Company's Board of Directors as SHI's
representative.
Notwithstanding the foregoing, the Reporting Persons may
determine from time to time in the future, based on market and general
economic conditions, the business affairs and financial condition of the
Company, the availability of securities at favorable prices and alternative
investment opportunities available to the Reporting Persons, and other
factors that the Reporting Persons may deem relevant, to acquire additional
securities of the Company in the open market, in privately negotiated
transactions or otherwise, or to sell some or all of the securities it now
holds or hereafter acquires as set forth above or otherwise.
Except as stated in this response to Item 4, the Reporting
Persons have no current plans or proposals with respect to the Company or
its securities of the types enumerated in paragraphs (a) through (j) of
Item 4 to the form of Schedule 13D promulgated under the Act.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
-------------------------------------
(a), (b) SHI directly holds 877,193 Ordinary Shares, constituting
approximately 6.7% of the issued and outstanding Ordinary Shares.
SHOC directly holds 233,750 Ordinary Shares, constituting
approximately 1.8% of the issued and outstanding Ordinary Shares. Because
SHI is a controlling person of SHOC, SHI and SHOC may be deemed to
constitute a group within the meaning of Section 13(d)(3) of the Act with
respect to the Ordinary Shares each owns. In that event, SHI would be
deemed to beneficially own 1,110,943 Ordinary Shares, representing 8.5% of
all outstanding Ordinary Shares. SHOC disclaims beneficial ownership of the
Ordinary Shares held by SHI.
Accordingly, SHI beneficially owns 877,193 Ordinary Shares,
representing 6.7% of all outstanding Ordinary Shares, over which it
possesses sole voting and dispositive power.
In addition, Stanley P. Gold, an executive officer and director
of SHI and SHOC, and Robert G. Moskowitz, an executive officer of SHI and
SHOC, individually own 27,000 and 13,750 Ordinary Shares, respectively. Mr.
Gold and Mr. Moskowitz each posses sole voting and dispostive power over
those shares owned by them, which separately represent less than .5% of the
outstanding Ordinary Shares. SHI and SHOC each disclaim beneficial
ownership of those shares.
Finally, each of the controlling persons of SHI and SHOC may be
deemed to beneficially own the Ordinary Shares held by SHI, pursuant to
Rule 13d-3 under the Act. Those controlling persons are identified in
response to Item 2.
The percentages set forth in this response to Items 5(a) and 5(b)
assume that 13,026,336 Ordinary Shares were outstanding on May 17, 1999,
as represented by the Company on such date.
(c) On May 17, 1999, SHI purchased from the Company 877,193 Ordinary
Shares, following the satisfaction of all conditions precedent under the
Share Purchase Agreement, dated as of April 14, 1999, between SHI and the
Company (the "Share Purchase Agreement") at a price per share of $5.70.
Other than with respect to the shares purchased pursuant to the Share
Purchase Agreement, to the best knowledge of the Reporting Persons, none of
the persons named in response to Item 2 has effected any transactions in
Ordinary Shares during the past 60 days.
(d) The Reporting Persons have no knowledge of any other person that
has the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Ordinary Shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
-------------------------------------------------------------
Neither of the Reporting Persons have any knowledge of any
contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in response to Item 2 or between such
persons and any person with respect to any securities of the Company, other
than as follows:
SHI purchased 877,193 Ordinary Shares on May 17, 1999, pursuant
to the Share Purchase Agreement in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Unregistered Shares").
Pursuant to the Share Purchase Agreement, as long as SHI or its transferee
holds more than 3.5% of the issued and outstanding Ordinary Shares, the
Company has agreed to recommend to its shareholders, prior to any general
meeting of shareholders at which directors may be proposed to be elected,
to elect a representative of SHI or its transferee to the Company's board
of directors. The Share Purchase Agreement also contains customary
representations and warranties and mutual indemnification provisions.
On May 17, 1999, SHI entered into a Registration Rights Agreement
with the Company, pursuant to which the Company granted SHI certain
registration rights with respect to the Unregistered Shares. Pursuant to
the Registration Rights Agreement, at any time after May 17, 2000, SHI may
request that the Company use its best efforts to effect the registration of
the Unregistered Shares pursuant to the Securities Act of 1933, as amended,
provided that at least 350,000 of the Company's Ordinary Shares are to be
registered (150,000 if the registration is on Form F-3). The Registration
Rights Agreement also provides SHI with certain tag-along registration
rights upon certain public offerings by the Company.
The foregoing response is qualified in its entirety by reference
to the full text of Exhibits 2 and 3 to this statement. The text of those
exhibits is incorporated herein by this reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
DOCUMENT
--------
Exhibit 1 -- Agreement dated May 24, 1999 - Joint Filing of Schedule 13D
Exhibit 2 -- Share Purchase Agreement between SHI and the Company,
dated as of April 14, 1999
Exhibit 3 -- Registration Rights Agreement between SHI and the
Company, dated as of May 17, 1999
Exhibit 4 -- Margin Account Agreement between Shamrock Holdings, Inc.
and Solomon Smith Barney Inc.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is
true, complete and correct.
Date: May 24, 1999
SHAMROCK HOLDINGS, INC.
By: /s/ Robert G. Moskowitz
--------------------------------------
Robert G. Moskowitz
Executive Vice President and Secretary
SHAMROCK HOLDINGS OF CALIFORNIA, INC.
By: /s/ Robert G. Moskowitz
--------------------------------------
Robert G. Moskowitz
Executive Vice President and Secretary
<PAGE>
EXHIBIT INDEX
DOCUMENT
--------
Exhibit 1 -- Agreement dated May 24, 1999 - Joint Filing of Schedule 13D
Exhibit 2 -- Share Purchase Agreement between SHI and the Company,
dated as of April 14, 1999
Exhibit 3 -- Registration Rights Agreement between SHI and the
Company, dated as of May 17, 1999
Exhibit 4 -- Margin Account Agreement between Shamrock Holdings,
Inc. and Solomon Smith Barney Inc.
EXHIBIT 1
AGREEMENT
JOINT FILING OF SCHEDULE 13D
Each of the undersigned hereby agrees to file jointly the statement on
Schedule 13D to which this Agreement is attached, and any amendments
thereto which may be deemed necessary, pursuant to Regulation 13D-G under
the Securities Exchange Act of 1934.
It is understood and agreed that each of the parties hereto is
responsible for the timely filing of such statement and any amendments
thereto, and for the completeness and accuracy of the information
concerning such party contained therein, but such party is not responsible
for the completeness or accuracy of information concerning any other party
unless such party knows or has reason to believe that such information is
inaccurate.
It is understood and agreed that a copy of this Agreement shall be
attached as an exhibit to the statement on Schedule 13D, and any amendments
hereto, filed on behalf of each of the parties hereto.
Date: May 24, 1999
SHAMROCK HOLDINGS, INC.
By: /s/ Robert G. Moskowitz
--------------------------------------
Robert G. Moskowitz
Executive Vice President and Secretary
SHAMROCK HOLDINGS OF CALIFORNIA, INC.
By: /s/ Robert G. Moskowitz
--------------------------------------
Robert G. Moskowitz
Executive Vice President and Secretary
EXHIBIT 2
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SHARE PURCHASE AGREEMENT
BETWEEN
PARADIGM GEOPHYSICAL LTD.
AND
SHAMROCK HOLDINGS, INC.
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Dated as of April 14, 1999
---------------------------------------------------
<PAGE>
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (the "Agreement") dated as of April 14,
1999 by and between Paradigm Geophysical Ltd., an Israeli corporation (the
"Company"), and Shamrock Holdings, Inc., a Delaware corporation (the
"Purchaser").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Purchaser wishes to purchase from the Company, and
the Company wishes to sell to the Purchaser, the number of Ordinary Shares
(NIS 0.5 par value) of the Company (the "Ordinary Shares") as is set forth
in Section 1.1 below, on the terms and subject to the conditions set forth
herein;
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions contained herein, the sufficiency of which is hereby
acknowledged, and in order to set forth the terms and conditions of the
transactions described herein and the mode of carrying the same into
effect, the parties hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.1 Purchase and Sale.
-----------------
(a) Subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase from the Company and the Company agrees to
sell to Purchaser at the Closing (as defined below) 877,193 Ordinary Shares
of NIS 0.5 nominal value NIS 0.5 each of the Company (the "Shares") in
consideration for an aggregate purchase price of $5,000,000, representing
7.69% of the issued and outstanding share capital of the Company
immediately after the Closing (and approximately 5.69% on a fully diluted
basis, assuming exercise of all outstanding warrants and options and
assuming the investment by Eastgate as defined below).
(b) The Purchaser agrees that the Company may issue 263,158
Ordinary Shares to Eastgate [full name] ("Eastgate") at the same price and
otherwise according to the same terms and conditions as specified in this
Agreement. The closing of the Eastgate investment is contemplated to take
place simultaneously with the Closing (as defined in Section 1.3 below).
1.2 Payment of Purchase Price.
-------------------------
(a) Payment by Purchaser of the aggregate purchase price for
the Shares shall be made in cash via wire transfer of immediately available
funds to a bank account designated by the Company on the Closing Date (as
defined below). At the Closing, the Company shall deliver to Purchaser a
certificate registered in the name of the Purchaser representing the Shares
purchased by Purchaser in accordance with Section l.l(a) hereof and the
documents specified in Section 5.3 below.
1.3 The Closing.
-----------
Subject to the fulfillment of the conditions precedent
specified in Article V hereof (any or all of which may be waived in writing
by the respective parties whose performance is conditioned upon
satisfaction of such conditions precedent), the purchase and sale of the
Shares shall be consummated at a closing (the "Closing") to be held at the
offices of Efrati, Galili & Co., 6 Wissotsky Street, Tel Aviv, Israel, on
April 29, 1999 at 10:00 am, Israeli time, or as soon as practicable
thereafter following the satisfaction or waiver of all relevant conditions
precedent specified in Article V hereof, or at such other place and time as
the Company and Purchaser shall mutually agree after the satisfaction or
waiver of all conditions precedent specified in Article V hereof (the date
on which the Closing occurs being herein referred to as the "Closing
Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
Purchaser represents and warrants to the Company, as to all
matters relevant thereto, as follows:
2.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
2.2 Authority. Purchaser has full corporate power and authority
to execute and deliver this Agreement and each other agreement contemplated
hereby, to carry out its obligations hereunder and to consummate the
transactions contemplated on its part hereby. The execution, delivery and
performance by Purchaser of this Agreement and each other agreement
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Purchaser, and no other action on the part of
Purchaser is necessary to authorize the execution and delivery of this
Agreement and each other agreement contemplated hereby by Purchaser or the
performance by Purchaser of its obligations hereunder. This Agreement has
been duly executed and delivered by Purchaser and constitutes a legal,
valid and binding agreement of Purchaser, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally and subject to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
2.3 No Violation. The execution and delivery of this Agreement
and the Registration Rights Agreement (as defined below) by Purchaser, the
performance by Purchaser of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and thereby
will not (a) violate any provision of law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to
Purchaser, (b) require the consent, waiver, approval, license or
authorization of or any filing by Purchaser with any person or governmental
authority, except for filings to be made in connection with or in
compliance with the provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Regulation D as promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and applicable
state securities laws, and the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), to the extent applicable, or (c)
violate, result (with or without notice or the passage of time, or both) in
a material breach of or give rise to the right to accelerate, terminate or
cancel any obligation under or constitute (with or without notice or the
passage of time, or both) a material default under, any of the terms or
provisions of any charter or bylaw, partnership agreement, indenture,
mortgage, agreement, contract, order, judgment, ordinance, regulation or
decree to which Purchaser is subject or by which Purchaser is bound except
for any of the foregoing matters which would not have, individually or in
the aggregate, a material and adverse effect upon the operations, financial
condition or results of operations (a "Material Adverse Effect") of the
Purchaser.
2.4 Securities Act Representation. Purchaser is an "accredited
investor" as defined in Rule 501 promulgated as part of Regulation D under
the Securities Act. Purchaser is not acquiring the Shares with a view to a
distribution or resale of any of such securities in violation of any
applicable securities laws.
2.5 Purchase for Investment. This Agreement is concluded with the
Purchaser in reliance upon the Purchaser's representation to the Company
that the Shares to be issued to the Purchaser will be acquired for
investment for the Purchaser's own account, and not with a view to the sale
or distribution of any part thereof.
2.6 Status of Purchaser. Purchaser is purchasing the Shares for
its own account and not with the intention of effecting an offering of the
Shares to the public. Purchasis knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in securities such as the Shares. Subject to the Company's
representations made in this Agreement being correct, Purchaser has
requested from the Company all information it would deem relevant in making
a decision to execute this Agreement and to purchase the Shares.
2.7 Legends. Purchaser agrees that the certificates representing
the Shares purchased hereunder shall bear the legend set forth below:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS AND HAVE BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO THE DISTRIBUTION THEREOF, AND NEITHER SUCH
SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
ASSIGNED, TRANSFERRED OR PLEDGED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND ANY APPLICABLE STATE SECURITIES LAW COVERING
SUCH SECURITIES OR THE CORPORATION RECEIVES AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
CORPORATION OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO THE CORPORATION INDICATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR PLEDGE IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 Corporate Organization. Each of the Company and its
subsidiaries, as listed on Schedule 3.1, which indicates their respective
jurisdictions of organization (the "Subsidiaries"), is a corporation or
other entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization with all
requisite corporate power and authority to lease its properties and to
carry on its business as it is now being conducted, and is qualified or
licensed to do business and is in good standing in each jurisdiction in
which it currently carries on business, except where the failure to be so
qualified or licensed or be in good standing would not reasonably be
expected, individually or in the aggregate, to have, a material and adverse
effect upon the operations, financial condition or results of operations of
the Company and its Subsidiaries considered as a whole (a "Material Adverse
Effect"). True and complete copies of the Articles of Association and the
Memorandum of Association of the Company, each as amended to date, have
been delivered to the Purchaser.
3.2 Share Capital. The authorized share capital of the Company
consists in its entirety of 18,000,000 Ordinary Shares, of which, as of the
date hereof, 10,528,884 are issued and outstanding (11,406,077 assuming
issuance of the shares to Jerusalem Venture Partners L.P and Jerusalem
Venture Partners (Israel) L.P pursuant to that Share Purchase Agreement
dated March 12, 1999) (the "JVP Agreement") and 2,000,000 Special Preferred
Shares, none of which are issued and outstanding. In addition, (a) an
aggregate of 2,285,600 Ordinary Shares are reserved for issuance pursuant
to the Company's 1994 Stock Option Plan for key employees, the May 1994
Stock Option Plan, the 1994 General Stock Option Plan, the 1997 Stock
Option Plan for Qualifying Israel Employees, the 1997 Executive Stock
Option Plan and the 1997 Stock Option Plan for U.S. Employees
(collectively, the "1994 and 1997 Stock Option Plans"), of which options to
purchase 1,578,216 Ordinary Shares were outstanding as of the date hereof;
and (b) 1,199,908 Ordinary Shares are reserved for issuance in connection
with the exercise of certain outstanding warrants. In addition, the Company
has undertaken to issue warrants to purchase 250,000 Ordinary Shares of the
Company to Schroder & Co., upon the closing of the investment by Eastgate,
exercisable at an exercise price per share which is no less than the
purchase price per Share payable hereunder. Other than the Shareholder
Agreement (as defined below), which shall be terminated prior to the
Closing, the Company is not aware of any other shareholders agreement or
voting agreement affecting or binding upon the capital shares of the
Company. All of the above outstanding shares have been duly authorized and
validly issued, are fully paid and non-assessable, are not subject to
preemptive rights, and are owned by the Company's shareholders free and
clear of any liens, encumbrances, security interests, adverse claims or
equities or rights in favor of another ("Encumbrances") imposed or created
by the Company. Except as set forth in Schedule 3.2, none of the
outstanding capital shares of the Company are subject to any co-sale right,
registration right, right of first refusal or other similar right to
purchase any shares pursuant to any agreement to which the Company is a
party or otherwise imposed or created by the Company or imposed by Israeli
law. Other than as described above, there are no outstanding options,
warrants or other rights calling for the issuance of, and no commitments,
plans or arrangements to issue, any capital shares of the Company or any
security convertible into or exchangeable for share capital of the Company.
All shares to be issued upon the exercise of outstanding warrants or
options or upon the conversion of any security shall be, when issued or
sold in accordance with the terms of the applicable agreements, validly
issued, fully paid and non-assessable.
3.3 Share Capital of Subsidiaries. All the issued share capital
and other equity securities of each Subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable,
with no personal liability attaching thereto solely by virtue of the
ownership thereof and are legally and beneficially owned by the Company
directly, or indirectly through one of its other Subsidiaries, free and
clear of all Encumbrances, and there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no commitments,
plans or arrangements to issue, any capital shares or other equity
securities of any Subsidiary of the Company or any security convertible or
exchangeable or exercisable for capital shares or other equity securities
of any Subsidiary of the Company; except for the capital shares or other
equity securities of each Subsidiary of the Company owned by the Company
directly, or indirectly through one of its other Subsidiaries, neither the
Company nor any of its Subsidiaries owns, directly or indirectly, any
capital shares of any corporation or has or owns any equity securities in
any firm, partnership, joint venture or other entity. Except for Paradigm
Geophysical Corp., no Subsidiary of the Company is a Significant
Subsidiary, as such term is defined in Rule 405 of the rules and
regulations of the Securities and Exchange Commission (the "Commission")
under the Securities Act.
3.4 Newly Issued Shares. The Shares to be sold and issued by the
Company to the Purchaser in accordance with the terms of this Agreement
have been duly authorized and, when issued as contemplated hereby, will be
validly issued, fully paid and non-assessable, and no other person has any
preemptive right, option, warrant, subscription agreement or other right
with respect to such Shares. Upon the issuance of the Shares, the Purchaser
will acquire good and marketable title to the shares free and clear of any
and all Encumbrances, except such Encumbrances as may be created pursuant
to this Agreement or by Purchaser.
3.5 Authority: Enforcement. The Company has full corporate power
and authority to execute and deliver this Agreement, the Registration
Rights Agreement, the Amendment to 1997 Warrants, the Amendment to 1996
Purchase Agreement, the Amendment to 1995 Purchase Agreement, the Amendment
to 1994 Warrants, thShareholders Agreement and each other agreement
contemplated hereby (collectively the "Agreements"), to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated on its part hereby and thereby. The execution, delivery and
performance by the Company of the Agreements and the consummation of the
transactions contemplated on its part hereby and thereby have been duly
authorized by the Board, and no other corporate proceedings on the part of
the Company to the Company's issuance of the Shares to be issued pursuant
to this Agreement and to the Company's entering into the Agreements are
necessary to authorize the execution and delivery of the Agreements by the
Company or the performance by the Company of its obligations thereunder.
The Agreements have been duly executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company, enforceable
against the Company and each party thereto in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting creditors' rights generally and subject to general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.6 No Violation. The execution and delivery by the Company of
the Agreements, the performance by the Company of its obligations
thereunder and the consummation by it of the transactions contemplated
thereby will not (a) violate any provision of law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to
the Company or any of its Subsidiaries, or (b) require the consent, waiver,
approval, license or authorization of or any filing by the Company with any
person or governmental authority, except for filings to be made or consents
to be obtained in connection with or in compliance with the provisions of
the Exchange Act, Regulation D as promulgated under the Securities Act,
applicable state securities laws, the Chief Scientist of the Israeli
Ministry of Industry and Commerce, the Investment Center, Bank Hapoalim
B.M. and the Bank for Industrial Development in Israel Ltd. and (with
respect to registration rights to be granted to Purchaser under the
Registration Rights Agreement) certain existing shareholders and warrant
holders of the Company who have registration rights as specified in Section
5.3, or (c) violate, result (with or without notice or the passage of time,
or both) in a breach of or give rise to the right to accelerate, terminate
or cancel any obligation under or constitute (with or without notice or the
passage of time, or both) a default under, any of the terms or provisions
of any charter, articles of association, or bylaw, partnership agreement,
indenture, mortgage, agreement, contract, order, judgment, ordinance,
regulation or decree to which the Company or any of its Subsidiaries is
subject or by which the Company or any of its Subsidiaries is bound, except
for any of the foregoing matters which would not have, individually or in
the aggregate, a Material Adverse Effect.
3.7 Brokers. The Company has not paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
3.8 Foreign Private Issuer. The Company is a "foreign private
issuer," as defined in Rule 3b-4 of the Exchange Act.
3.9 Commission Reports. Since its initial public offering in June
1998, the Company has filed with the Commission all reports, filings, proxy
materials and registration statements required to be filed by it as a
foreign private issuer listed on the Nasdaq National Market pursuant to the
federal securities laws and has made all other filings with the Commission
required to be made where the failure to have made such filing has or is
expected by the Company to have a Material Adverse Effect on the Company
(collectively and together with the Company's Registration Statement on
Form F-1, Commission File No. 333-7926 (the "Registration Statement"), the
"Commission Filings"). The Commission Filings did not (as of their
respective filing dates, mailing dates or effective dates, as the case may
be) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading. The Company has fully complied in all material
respects with the Israeli Securities Law of 1968 and with the applicable
term of any exemption granted thereunder. The Company acknowledges that the
Purchaser is relying on the Commission Filings with respect to its
purchases of the Shares pursuant to this Agreement.
3.10 Litigation. Except as disclosed in Commission Filings prior
to the date hereof or in Schedule 3.10, there is no legal action, suit,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or
the assets of any of them which could have, individually or in the
aggregate, a Material Adverse Effect on the Company, or on the Company's
ability to perform or observe any obligation or condition under the
Agreements. Except as disclosed in Schedule 3.10, there is no basis for a
claim or a potential claim affecting the Company or any of its Subsidiaries
which could have a Material Adverse Effect.
3.11 Disclosure. To the best knowledge of the Company after due
inquiry, there is no fact or facts (excluding general economic conditions
and prevailing economic conditions generally affecting the oil and gas
industry) peculiar to the Company or any of its Subsidiaries which the
Company has not disclosed to the Purchaser in writing or in the Commission
Filings which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or the ability of the
Company to perform the Agreements.
3.12 Intellectual Property and Other Tangible Assets.
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(a) The Company and the Subsidiaries (i) own or have the
right to use, free and clear of all liens, claims and restrictions, all
patents, trademarks, service marks, trade names and copyrights, and
applications, licenses and rights with respect to the foregoing, and all
trade secrets including know-how, inventions, designs, processes, works of
authorship, computer programs and technical data and information
(collectively, "Intellectual Property") used and sufficient for use in the
conduct of its business as now conducted and/or as presently proposed to be
conducted without infringing upon or violating, in any material respect,
any right, lien, or claim of others, including without limitation former
employees and former employers of its past and present employees and, (ii)
except as described in Schedule 3.12, which lists by payee the amount of
royalties or fees in excess of $50,000 per year that the Company or any of
its Subsidiaries is obligated to pay, are not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business or otherwise.
(b) Any and all Intellectual Property of any kind, relating
to the business of the Company, currently being developed by any employee
of the Company or any Subsidiary while in the employ of the Company or such
Subsidiary, shall be the property solely of the Company or such Subsidiary.
The Company and the Subsidiaries have taken security measures to protect
the secrecy, confidentiality and value of all the Intellectual Property,
which measures are reasonable customary in the industry in which the
Company operates. Each of the Company's and the Subsidiaries' employees and
other persons who, either alone or in concert with others, developed,
invented, discovered, derived, programmed or designed the Intellectual
Property, or who has a knowledge of or access to information about the
Intellectual Property, have entered into a written agreement with the
Company or such Subsidiary, in form and substance satisfactory to the
Company management and reasonable and customary in the industry in which
the Company operates (the "Proprietary Information Agreement") regarding
ownership and treatment of the Intellectual Property.
(c) Neither the Company nor any Subsidiary has received any
communications alleging that the Company or any Subsidiary has violated or
by conducting its business as proposed, would violate, any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. None of the
Company's or any Subsidiary's employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's
best efforts to promote the interests of the Company or that would conflict
with the Company's or any Subsidiaries' business as conducted and proposed
to be conducted. Neither the execution nor delivery of the Agreement, nor
the carrying on of the Company or such Subsidiary, nor the conduct of the
Company's or any Subsidiaries' business as proposed to be conducted, will
conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under any contract, covenant or instrument
under which any of such employees is now obligated. It is not, and will not
become, necessary to utilize any inventions of any of the Company's or any
Subsidiary's employees (or people the Company or any Subsidiary currently
intends to hire) made prior to their employment by the Company or such
Subsidiary other than those that have been assigned to the Company pursuant
to the Proprietary Information Agreement signed by such employee.
3.13 Industrial Company. The Company is qualified as an
"Industrial Company" within the definition of the Law for the Encouragement
of Industry (Taxes), 1969., and has obtained a certificate of the Company's
auditors certifying such qualification, a copy of which is attached to this
Agreement as Schedule 3.13. According to the Company's best knowledge,
information and belief, there is no reason for disqualifying the Company
from being an Industrial Company, nor would such reason arise through the
conduct and performance of the Company's business and operations in
accordance with its plans and projections.
3.14 Compliance with Laws. Each of the Company and its
Subsidiaries is in compliance With all laws, ordinances, regulations, and
orders applicable to it, the failure to comply with which would have,
individually or in the aggregate, a Material Adverse Effect, including
without limitation, the provisions of the Law for Encouragement of Capital
Investments, 1959, applicable to the Company and the terms of any "Approval
Letter" issued to the Company thereunder and its extensions, amendments and
supplements, if any. Except as set forth on Schedule 3.14, the Company and
its Subsidiaries have such licenses, franchises, permits and other
approvals or authorizations from governmental regulatory authorities
("Permits") as are necessary under applicable law to own their respective
properties and to conduct their respective businesses in the manner now
being conducted and as described in the Registration Statement; and the
Company and its Subsidiaries have fulfilled and performed all of their
respective obligations with respect to such Permits, except where the
failure to hold such Permits or perform such obligations would not have a
Material Adverse Effect. Except as set forth on Schedule 3.14 or otherwise
in this Agreement, (a) there are no citations, fines or penalties
heretofore asserted against the Company or its Subsidiaries under any
federal, state or local law or regulation which remain unpaid or which
otherwise bind any assets material to the Company and its Subsidiaries, and
(b) the Company or any of its Subsidiaries has not received any unresolved
notice from any federal, state or local governmental authority with respect
to any violation of any federal, state or local law or regulation which, if
resolved against the Company or any of its Subsidiaries, would have,
individually or in the aggregate, a Material Adverse Effect.
3.15 Insurance. The Company and its Subsidiaries have in full
force insurance coverage of their respective properties, assets and
business (including casualty, general liability, products liability and
business interruption insurance) that is (i) no less protective in any
material respect than the insurance the Company and its Subsidiaries have
carried in accordance with their past practices or (ii) prudent given the
nature of the business of the Company and its Subsidiaries and the
prevailing practice among companies similarly situated.
3.16 Foreign Corrupt Practices Act. The activities of each of the
Company and its Subsidiaries and its officers, directors and employees have
complied, and the operations of each of the Company and its Subsidiaries
and the activities of the officers, directors and employees of each of the
Company and its Subsidiaries have complied, with all applicable laws
governing corrupt or illicit business practices, including, without
limitation, laws dealing with improper or illegal payments, gifts or
gratuities and/or the payment of money or anything of value directly or
indirectly to any person (whether a government official or private
individual) for the purpose of illegally or improperly inducing any person
or government official, or political party or official thereof, or any
candidate for any such position, in making any decision or improperly
assisting any person in obtaining or retaining business or taking any other
action favorable to such person, and/or dealing with business practices in
relation to foreign investments (including, by way of example, if
applicable, the U.S. Foreign Corrupt Practices Act).
3.17 Foreign Currency Hedging Transactions. Neither the Company
nor any of its Subsidiaries has entered into any foreign currency hedging
arrangement.
3.18 Contracts. Except as set forth on Schedule 3.18, all
contracts that are material to the Company and its Subsidiaries and to
which the Company or any of its Subsidiaries is a party ("Material
Contracts") which are required to have been filed as exhibits to the
Registration Statement, have been so filed. All Material Contracts
constitute valid and binding agreements of the Company or such Subsidiary
and are enforceable against the Company or such Subsidiary in accordance
with the terms thereof. There is not, with respect to the Material
Contracts, any existing default, or event of default by the Company or its
Subsidiaries or any other party, or event which with or without due notice
or lapse of time or both would constitute a default or event of default on
the part of the Company or its Subsidiaries, except such defaults or events
of default on the part of the Company or its Subsidiaries, or any other
party and other events which would not have, individually or in the
aggregate, a Material Adverse Effect. No default exists, and no event has
occurred which with notice or lapse of time, or both, would constitute a
default in the due performance and observance of any term, covenant or
condition of any Material Contract or other indenture, mortgage, deed of
trust, bank loan or credit agreement, leaseor other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties is bound or may be
affected, which defaults would have, individually or in the aggregate, a
Material Adverse Effect.
3.19 Financial Statements. Attached hereto as Schedule 3.19
balance sheets of the Company and its Subsidiaries as at December 31, 1998,
December 31, 1997 and December 31, 1996, and statements of operations, cash
flow and stockholders' equity for each of the fiscal years then ended,
audited by the Company's independent public accountants, each including the
accompanying notes. Such balance sheets of the Company and its Subsidiaries
and the notes thereto present fairly the financial position of the Company
and its Subsidiaries as at the respective dates thereof, and such
statements of operations, cash flow and stockholders' equity of the Company
and the notes thereto present fairly in all material respects the results
of operations, cash flow and stockholders' equity of the Company for the
periods therein referred to, all in accordance with United States generally
accepted accounting principles consistently applied.
3.20 No Undisclosed Liabilities. Except as disclosed in Schedule
3.20, the Company and its Subsidiaries have no material liabilities which
are not reflected or reserved against in the balance sheets specified in
Section 3.19 above, except for liabilities incurred in the ordinary course
of business and immaterial in amount consistent with past practice.
3.21 Listing of Ordinary Shares. The outstanding Ordinary Shares
are listed on the Nasdaq National Market, and the Company's listing
agreement with respect thereto is in full force and effect. No action has
been taken or threatened by Nasdaq with respect to the delisting or
suspension from trading of the Ordinary Shares.
3.22 Taxes. The Company and each of its Subsidiaries has timely
filed all necessary tax returns and notices, and has paid all federal,
state, county, local and foreign taxes of any nature whatsoever to the
extent such taxes have become due (including, without limitation, all tax
returns required under the laws of the State of Israel). The Company has no
knowledge, or any reasonable grounds to know, of any tax deficiencies which
might be assessed against the Company which, if so assessed, may have a
Material Adverse Effect; the Company and each of its Subsidiaries has paid
all taxes which have become due, whether pursuant to any assessments or
otherwise, and there is no further liability (whether or not disclosed on
such returns) or assessments for any such taxes, and no interest or
penalties accrued or accruing with respect thereto, except as may be set
forth or adequately reserved for in the Company's financial statements,
copies of which have been delivered to Purchaser. The Company has been
informed that the Israeli income tax authorities intend to audit its tax
returns for the years 1993 to 1997 (inclusive).
3.23 Certain Relationships. No material relationship, direct or
indirect, exists between or among the Company or its Subsidiaries on the
one hand and the directors, officers, or shareholders of the Company, on
the other hand, other than in the ordinary course of the Company's
business, nor any relationship exists between or among the Company or its
Subsidiaries on the one hand, and any of its customers or suppliers on the
other hand, in value exceeding, with respect to any customer or supplier,
10% of the revenues or profits of the Company, on a consolidated basis, all
except those described in the Registration Statement, including without
limitation items required to be disclosed under Item 13 of Form 20-F of the
rules and regulations of the Securities and Exchange Commission under the
Securities Act if the Company were to file a Form 20-F as of the date
hereof.
3.24 HSR Act. The transactions contemplated by the Purchase
Agreement are exempt from the requirements of the HSR Act because, for each
of the fiscal years ended December 31, 1997 and December 31, 1998, (i) the
aggregate book value of the Company's assets located in the U.S. (other
than investment assets, voting or nonvoting securities of another person,
and assets included pursuant to Section 801.40(c)(2) of the HSR Act) was
less than $15 million, and (ii) the Company's aggregate sales in or into
the U.S. were less than $25 million. For purposes of this Section 3.27, the
"Company" shall include all entities "controlled" by the Company, directly
or indirectly, within the meaning of such term as defined in Section
801.1(b) of the HSR Act.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Board Member. (a) As long as the Purchaser holds more than
three and a half percent (3.5%) of the issued and outstanding shares of the
Company, the Company will recommend to the shareholders of the Company
prior to any general meeting of shareholders of the Company, at which
directors may be proposed to be elected, to elect a representative of the
Purchaser to the Board of Directors of the Company (the "Purchaser's
Director") and will take all lawful actions to solicit such election.
(b) The Company shall notify the Purchaser of the proposed
date for the Company's annual general meeting ("AGM") as soon as reasonably
practicable but in any event not later than 21 days prior to the last day
in each calendar year on which a shareholder may propose a nominee for
election to the Board in accordance with Article 66(b) of the Company's
Articles of Association. Purchaser will furnish the Company with the names
and other information as is reasonably requested by the Company of the
Purchaser's Directors, as will be proposed for election to the Board at the
AGM, within 21 days after such notice. An individual designated by the
Purchaser as a Purchaser's Director, other than any of Messrs. Stanley P.
Gold, Michael Geiger, Robert G. Moskowitz, William Wynperle or any Managing
Director of Shamrock Capital Advisors, Inc., shall be subject to the
approval of the Board, which approval shall not be unreasonably withheld or
delayed. Purchaser agrees that in the event that the Board submits to the
shareholders of the Company a proposal, which provides for an amendment to
the Articles of Association of the Company increasing the number of
directors constituting the Board to nine, to be considered for shareholder
vote at the next occurring AGM in order to appoint an additional
independent director as contemplated by Section 4.1 of the JVP Agreement,
Purchaser agrees to vote all Ordinary Shares owned by it in favor of such
amendment and the appointment of such director.
(c) If a vacancy is created due to the death, incapacitation
or resignation of one of Purchaser's Director, the Company agrees to use
its best efforts in causing the election of a substitute director, as
designated by the Purchaser, to be placed on the agenda of the Company's
next Board meeting.
(d) The Company agrees that all reasonable out-of-pocket
costs and expenses incurred by Purchaser's Director in his capacity as a
member of the Board shall be borne by the Company in accordance with the
Company's reimbursement policy.
(e) Notwithstanding the Articles of Association of the
Company, the Company shall give the Purchaser's Director prior notice of
any meeting of the Board of Directors at the same time and in the same
manner as it shall first notify any director of such meeting, but in any
event it shall be in writing and no less than 7 days prior to such meeting,
unless impractical due to the urgency of the matter.
4.2 Best Efforts. Upon the terms and subject to the conditions
herein provided, each of Purchaser and the Company agrees to use its
reasonable best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement and each other
agreement contemplated hereby including to fulfill all conditions on its
part to be fulfilled under this Agreement and each other agreement
contemplated hereby. In case at any time after the Closing Date any further
action is reasonably necessary or desirable to carry out the purposes of
this Agreement and each other agreement contemplated hereby. No party
hereto will take any action for the purpose of delaying impairing or
impeding the receipt of any required consent, authorization, order or
approval or the making of any required filing. Each party hereto shall give
prompt notice to all other parties of (i) any material failure of such
party, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder,
and such party shall use all reasonable efforts to remedy such failure and
(ii) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of such
party contained in this Agreement to be untrue or inaccurate in any
material respect any time from the date hereof to the Closing Date.
4.3 Financial Statements and Information. The Company covenants
and agrees to furnish to the Purchaser as long as the Purchaser holds at
least three and a half percent (3.5%) of the issued and outstanding share
capital of the Company, all annual and quarterly financial statements and
reports filed or required to be filed with the Commission. In addition, the
Company shall provide all information reasonably requested by the
Purchaser's Director.
4.4 Indemnification.
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(a) Each party (the "Indemnifying Party") shall indemnify,
defend and hold harmless, from and after the Closing Date, the other party
and each of its affiliates, officers, directors, employees, members,
agents, successors, transferees and assigns (each of the foregoing, an
"Indemnified Party") from and against all liabilities, losses, damages,
claims, costs, interest, judgments, fines, amounts paid in settlement and
expenses (including without limitation reasonable attorney's fees, whether
incurred in connection with a claim for indemnification hereunder or in
connection with any third party claim) (collectively, "Losses") incurred by
any of them based upon, resulting from or arising out of (i) the breach of
any representation or warranty of the Indemnifying Party contained in this
Agreement or any other agreement contemplated by this Agreement or (ii) the
breach of any covenant or agreement of the Indemnifying Party contained in
this Agreement or any other agreement contemplated by this Agreement,
including with respect to indemnification by the Company, and without
limiting any of the foregoing, the breach of its covenant under Section 4.5
below. No claim may be asserted nor may any action be commenced against the
Indemnifying Party, unless prompt written notice of such claim or action is
received by the Indemnifying Party describing in reasonable detail the
facts and circumstances with respect to the subject matter of such claim or
action; provided that the failure of the Indemnified Party to give the
Indemnifying Party prompt notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent that
the Indemnifying Party is prejudiced thereby; provided that (i) the amount
to be indemnified under this Section 4.4 shall be limited to the purchase
price paid by the Purchaser for the Shares and (ii) the Company's
indemnification obligations hereunder relating to any breach of Sections
3.10, 3.12, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20, or 3.23 shall
terminate on the 180th day after the Company has filed with the Commission
a Form 20-F containing audited financial statements for the Company for the
fiscal year ended December 31, 1999 unless a claim for indemnification
shall be made with respect thereto, in which case such indemnification
obligations shall remain in effect until the full and final resolution of
such claim.
(b) The Indemnified Party shall give the Indemnifying Party
under this Section 4.4, prompt written notice (the "Indemnification Claim
Notice") of any claim, assertion, event or proceeding by or in respect of a
third party, of which such Indemnified Party has knowledge concerning any
Loss as to which such Indemnified Party may request indemnification
hereunder; provided that failure of the Indemnified Party to give the
Indemnifying Party prompt notice as provided herein shall not relieve the
Indemnifying Party of any of his, her or its obligations hereunder except
to the extent that the Indemnifying Party is prejudiced thereby. The
Indemnified Party may participate in such defense, but in such case the
expenses of the Indemnified Party shall be paid by the Indemnified Party.
The Indemnified Party shall, upon reasonable notice, provide the
Indemnifying Party with access to his, her or its records and personnel
relating to any such claim, assertion, event, proceeding or matter during
normal business hours and shall otherwise cooperate with the Indemnifying
Party in the defense settlement, or resolution thereof, and the
Indemnifying Party shall reimburse the Indemnified Party for all his, her
or its reasonable out-of-pocket expenses in connection therewith. The
Indemnifying Party shall not pay, or permit to be paid, any part of any
claim, or demand arising from such asserted liability unless the
Indemnified Party consents in writing (which consent shall not be
unreasonably withheld) to such payment or unless the Indemnifying Party
withdraws from or fails to maintain the defense of such asserted liability
or unless a final judgment from which no appeal may be taken by or on
behalf of the Indemnifying Party is entered against the Indemnified Party
for such liability. No settlement in respect of any third party claim may
be effected by the Indemnifying Party without the Indemnified Party's prior
written consent (which consent shall not be unreasonably withheld) unless
the settlement involves a full and unconditional release of the Indemnified
Party. If the Indemnifying Party shall fail to undertake or maintain any
such defense within thirty (30) days of receipt of the Indemnification
Claim Notice, the Indemnified Party shall have the right to undertake the
defense or settlement thereof, at the Indemnifying Party's expense. If the
Indemnified Party assumes the defense of any such claim or proceeding
pursuant to this Section 4.4 it may conduct such defense as it reasonably
deems appropriate (without regard to the availability of indemnification
hereunder), and the Indemnifying Party shall be responsible for and pay all
costs and expenses of such defense, including its compromise or settlement.
(c) The amounts for which an Indemnifying Party shall be
liable under this Section 4.4 shall be reduced by the (i) net reimbursement
to such party from any insurance proceeds received by the Indemnified Party
in connection with the circumstances giving rise to the right of
indemnification (to the extent such insurance proceeds exceed the
Indemnified Party's expenses in recouping such insurance proceeds) and (ii)
net tax benefit actually realized by such party (as reduced by any actual
or projected tax detriment resulting from receipt of the indemnification
payment) directly resulting from the Losses to which the indemnification
relates.
4.5 Registration of Conversion of Preferred Shares. The Company
will ensure the registration by the Israeli Registrar of Companies of the
conversion of all the Preferred Shares in the share capital of the
Co(except for the Special Preferred Shares) into Ordinary Shares.
4.6 Approval of Certain Business Combinations. Prior to the
Closing, the Board of Directors of the Company shall resolve, that
notwithstanding Article 110 of the Company's Articles of Association
("Article 110"), in the event that Purchaser shall at any time become an
"interested shareholder" (within the meaning of such term under Article
110), the Company shall not be limited by virtue of Article 110 from
engaging with Purchaser in any transaction falling under paragraph (iii) of
the definition of "business combination" in Article 110, provided that in
such transaction all or the majority of the Company's shareholders are
offered to participate on the same terms. Such resolution (i) shall apply
also to any assignee of Purchaser pursuant to Section 6.9 below, and (ii)
shall not be revoked or rescinded at any time subsequent to the Closing.
4.7 The Company shall not issue any Special Preferred Shares
without issuing at the same time to Purchaser a portion of such shares
issued, which portion corresponds to Purchaser's then portion of the
outstanding shares of the Company.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligations. The respective
obligations of each party, to effect the transactions contemplated by the
Agreement shall be subject to the conditions that no United States, state
or foreign governmental authority or other agency or commission or United
States, state or foreign court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary, or
permanent) which is in effect and has the effect of prohibiting
consummation of the transactions contemplated by this Agreement; and any
filing required under U.S., state or other foreign securities laws shall
have been made prior to the Closing.
5.2 Conditions to the Obligations of the Company. The obligation
of the Company to effect the transactions contemplated by this Agreement to
occur at the Closing shall be subject to the fulfillment at or prior to the
Closing Date, of the following additional conditions:
(a) The Purchaser shall have performed its obligations under
this Agreement required to be performed by it on or prior to the Closing,
pursuant to the terms hereof.
(b) The representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing, as if made at and as of such date,
except to the extent that any such representation or warranty is made as of
a specified date in which case such representation or warranty shall have
been true and correct as of such date.
(c) All necessary waivers, consents and approvals to or of
the transactions contemplated by this Agreement to occur at the Closing,
and each agreement contemplated hereby shall have been obtained, including
without limitation the approval of the Chief Scientist of the Israeli
Ministry of Industry and Commerce, the Investment Center.
5.3 Conditions to the Obligations of the Purchaser. The
obligations of the Purchaser to effect the transactions contemplated by
this Agreement to occur at the Closing shall be subject to the fulfillment
at or prior to the Closing, of the following additional conditions (any of
which may be waived by Purchaser in writing):
(a) The Company shall have performed its obligations under
this Agreement required to be performed by it on or prior to the Closing,
pursuant to the terms hereof.
(b) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing, as if made at and as of such date,
except to the extent that any such representation or warranty is made as of
a specified date in which case such representation or warranty shall have
been true and correct as of such date and the Purchaser shall not have
discovered any material conflict with any such representation or warranty.
(c) Since December 31, 1997, there shall have been no event
or occurrence which has or is likely to have a Material Adverse Effect on
the Company.
(d) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of a registration rights agreement
between the Company and Purchaser, in the form of Exhibit A hereto (the
"Registration Rights Agreement"), and any and all other agreements,
documents, certificates or instruments contemplated by this Agreement and
any of the foregoing.
(e) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of amendments to the Warrant Agreements
dated September 15, 1997 between the Company and each purchaser identified
on Schedule 1 to the Note and Warrant Purchase Agreement dated September
15, 1997 among the Company, Paradigm Geophysical Corp., a Delaware
corporation, and such purchasers, as amended ("1997 Warrants"), in
accordance with the term sheet attached as Exhibit D hereto ("Amendment to
1997 Warrants").
(f) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of an amendment to the Share Purchase
Agreement dated July 1, 1996 among the Company and the purchasers
identified on Schedule 1 thereto, as amended ("1996 Purchase Agreement"),
in accordance with the term sheet attached as Exhibit E hereto ("Amendment
to 1996 Purchase Agreement").
(g) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of an amendment to the Share Purchase
Agreement dated June l, 1995 among the Company and the purchasers
identified on Schedule 1 thereto, as amended ("1995 Purchase Agreement"),
in accordance with the term sheet attached as Exhibit F hereto ("Amendment
to 1995 Purchase Agreement").
(h) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of amendments to the Warrant
Certificates dated July 22, 1994 between the Company and each holder
thereof, as amended ("1994 Warrants"), in accordance with the term sheet
attached as Exhibit G hereto ("Amendment to 1994 Warrants").
(i) The Purchaser shall have received on or prior to the
Closing Date fully executed copies of an amendment to the Shareholders
Agreement dated June 7, 1995 among the Company and certain shareholders of
the Company, as amended (the "Shareholders Agreement"), which provides for
the termination of the Shareholders Agreement upon the Closing ("Amendment
to Shareholders Agreement").
(j) The Purchaser shall have received on or prior to the
Closing Date a legal opinion delivered by the Company's U.S. counsel dated
as of the Closing Date, in substantially the form of Exhibit B hereto.
(k) The Purchaser shall have received on or prior to the
Closing Date a legal opinion delivered by the Company's Israeli counsel
dated as of the Closing Date, in substantially the form of Exhibit C
hereto.
(l) The Purchaser shall have received on or prior to the
Closing Date a copy of minutes or resolutions of the Board, which shall not
have been rescinded or modified, a) approving the issuance of the Ordinary
Shares to the Purchaser in accordance with the terms and conditions of the
Purchase Agreement, and all other terms and conditions of this Agreement
and all schedules and exhibits hereto, as certified by the Company's
Secretary (b) as provided in Section 4.6 above, and (c) the appointment of
Mr. Michael Geiger (or any other person designated by Purchaser in his
stead) to the Board of Directors of the Company.
(m) The Purchaser shall have received on or prior to the
Closing Date a certificate of the Company's Secretary confirming the
inscription of the Purchaser in the Company's register of members as the
owner of the Ordinary Shares issued according to this Agreement.
(n) The Purchaser shall have receion or prior to the Closing
Date a copy of the share issuance form to be filed with the Company's
Registrar, signed by the Company's Secretary. The Company shall have such
form duly stamped and filed with the Registrar of Companies within 30 days
after the Closing Date.
(o) The Purchaser shall have received on or prior to the
Closing Date a certificate of the Company's Chief Executive Officer or
Chief Financial Officer dated the Closing Date, in substantially the form
of Exhibit H hereto, certifying the satisfaction by the Company of all
conditions precedent set forth in this Section 5.3.
(p) All necessary waivers, consents and approvals to or of
the transactions contemplated by this Agreement to occur on or prior to the
Closing, or each other agreement contemplated shall have been obtained on
or prior to the Closing Date, including without limitation the approval of
the Chief Scientist of the Israeli Ministry of Industry and Commerce,
Investment Center, the consent of Bank Hapoalim B.M. and the Bank for
Industrial Development in Israel Ltd., and, with respect to registration
rights to be granted to Purchaser under the Registration Rights Agreement,
the approval of all securityholders and warrantholders of the Company
holding registration rights, in accordance with the terms of such
registration rights.
(q) There shall have been no lawsuit, filed or threatened,
which challenges this Agreement and all transactions contemplated hereby or
seeks to impose any limitation on Purchaser's purchase of the Shares.
ARTICLE VI
MISCELLANEOUS
6.1 Amendment. This Agreement may be amended by the parties
hereto. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
6.2 Waiver. Any waiver of or failure to insist on strict
compliance with any representation, warranty, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
6.3 Termination. This Agreement may be terminated at any time
prior to the Closing without further Board or shareholder action of either
party:
(i) by the mutual written consent of both parties;
(ii) by the Company or Purchaser, if the closing conditions
to the Closing have not been satisfied or waived by noon on May 31, 1999,
unless the failure to satisfy such conditions is a result of any breach by
such party.
6.4 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally, sent by commercial carrier
or registered or certified mail (postage prepaid, return receipt requested)
or transmitted by facsimile with automated receipt confirmation to the
parties at the following addresses and numbers:
(a) If to Purchaser, to:
Shamrock Holdings, Inc.
4444 Lakeside Drive, 2nd Floor
P.O. Box 7774
Burbank, California 91510-7774
Attention: Robert G. Moskowitz
Fax No.: (818) 559-7320
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, Suite 3200
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Fax No.: (213) 473-2222
with a copy to:
Zellermayer & Pelossof, Advocates
Europe House
37 Shaul Hamelech Boulevard
Tel Aviv 64928, Israel
Attention: Michael Zellermayer, Adv.
Fax No.: 011-972-3-695-2884
(b) If to the Company, to:
Paradigm Geophysical Ltd.
Merkazim Building
32 Maskit Street
P.O.B. 2061
Herzliya B 46120, Israel
Attention: Eldad Weiss
Fax No.: 011-972-9-958-9327
with a copy to:
Efrati, Galili & Co.
6 Wissotsky Street
Tel Aviv 62338
Attention: Ian Rostowsky, Adv.
Fax No.: 011-972-3-601-0111
with a copy to:
Fulbright & Jaworski LLP
666 Fifth Avenue, 31st Floor
New York, New York 10103-3198
Attention: Andrew C. Freedman, Esq.
Fax No.: (212) 752-5958
6.5 Headings: Agreement. The headings contained in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and
warranties hereunder shall be deemed to include the exhibits hereto to be
executed and delivered by a party.
6.6 Publicity. So long as this Agreement is in effect and except
as required by law, the parties hereto shall not, and shall cause their
affiliates not to, issue or cause the publication of any press release or
other announcement with respect to the transactions contemplated by this
Agreement or the other agreements contemplated hereby without the consent
of the other parties, which consent shall not be unreasonably withheld or
delayed.
6.7 Entire Agreement. This Agreement (including all exhibits
hereto) the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
6.8 Conveyance Taxes. The Company agrees to assume liability for
and to hold the Purchaser harmless against any sales, use, transfer, stamp,
and value added taxes, registration, recording or other fees, and any
similar taxes incurred as a result of the issuance and sale of the Shares
as contemplated hereby.
6.9 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Purchaser shall be
permitted to assign any of its rights, interests or obligations under this
Agreement, whether prior or subsequent to the Closing, to (i) Trefoil Euro
Fund, L.P., (ii) any entity in which 30% or more of its voting or equity
securities are owned, directly or indirectly, by Shamrock Holdings, Inc.
("SHI"), any executive officers of SHI, and/or any member of the Roy E.
Disney family (or any trust for his/her benefit), or (iii) any entity in
which SHI or any of the foregoing referenced in (i) or (ii) of this Section
6.10 serves as a general partner or manager; provided, however, that the
Purchaser shall not assign this Agreement to any entity which derives
revenues, in any material amount, from the oil and natural gas exploration
and/or production business or the GeoSeis software business. Except as
provided above, neither this Agreement nor any of the rights, interests or
obligations shall be assigned by either party hereto without the prior
written consent of the other party.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
6.11 Governing Law. The validity and interpretation of this
Agreement shall be governed by the laws of the State of New York, without
reference to the conflict of laws principles thereof.
6.12 Third Party Beneficiaries. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
6.13 Costs and Expenses. Each party will pay its own costs and
expenses incurred in connection with the transactions contemplated hereby,
except that, at the Closing, the Company shall pay all reasonable fees and
expenses of legal counsel to Purchaser in an amount not to exceed $150,000.
The Company shall also pay all stamp issuance taxes, fees of the Company's
transfer agent and expensesof filing with the Israeli Registrar of
Companies.
IN WITNESS WHEREOF, the Purchaser and the Company have
caused this Agreement to be duly signed as of the date first written above.
PARADIGM GEOPHYSICAL LTD.
an Israeli corporation
By: /s/ Eldad Weiss
----------------------------------
Name: Eldad Weiss
Title: President and Chief
Executive Officer
SHAMROCK HOLDINGS INC.
a Delaware corporation
By: /s/ Stanley P. Gold
----------------------------------
Name: Stanley P. Gold
Title: President
<PAGE>
EXHIBITS
Exhibit A Registration Rights Agreement
Exhibit B Form of Legal Opinion of Company's U.S. Counsel
Exhibit C Form of Legal Opinion of Company's Israeli Counsel
Exhibit D Amendment to 1997 Warrants
Exhibit E Amendment to 1996 Purchase Agreement
Exhibit F Amendment to 1995 Purchase Agreement
Exhibit G Amendment to 1994 Warrants
Exhibit H Form of Closing Certificate
SCHEDULES
Schedule 3.1 Subsidiaries and Jurisdictions of Organization
Schedule 3.2 Capitalization
Schedule 3.10 Litigation
Schedule 3.12 Intellectual Property
Schedule 3.13 Industrial Company Certificate
Schedule 3.14 Compliance with Laws
Schedule 3.18 Material Contracts
Schedule 3.19 Financials
Schedule 3.20 Undisclosed Liabilities
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is entered into
as of May 17, 1999 by and among (a) Paradigm Geophysical Ltd., an Israeli
company (the "Company") on the one part, (b) Shamrock Holdings, Inc., a
Delaware corporation ("Shamrock") on the second part, and (c) Eastgate
Fund, L.P., an Iowa limited partnership, Eastgate International Limited, a
corporation formed under the laws of the Commonwealth of the Bahamas, Mr.
Harris Kaplan, Berman Eastgate Growth Fund, an Iowa Partnership, (jointly
"Eastgate"), on the third part. (Each of Shamrock and Eastgate, severally
and not jointly, shall hereinafter be referred to as, the "Holder").
Capitalized terms not defined herein shall have the meanings assigned to
such terms in the Purchase Agreements (as defined below).
R E C I T A L S:
- - - - - - - -
Pursuant to the terms and subject to the conditions of that certain
Share Purchase Agreement dated as of April 14, 1999 (the "Shamrock Purchase
Agreements") between the Company and Shamrock Holdings, Inc., and that
certain Share Purchase Agreement dated as of May __, 1999 between the
Company and Eastgate (the "Eastgate Purchase Agreement"), the execution and
delivery of this Agreement is a condition to the purchase and sale by each
Holder of certain Ordinary Shares (NIS 0.5 par value) (the "Ordinary
Shares") pursuant to the foregoing Purchase Agreements (as defined below).
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Approved Underwriter" shall have the meaning set forth in
Section 2.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreements.
"Demand Registration" shall have the meaning set forth in Section
2.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Form F-3" shall mean Form F-3 under the Securities Act as in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
"Form F-3 Registration" shall have the meaning set forth in
Section 4.
"Incidental Registration" shall have the meaning set forth in
Section 3.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by reference in
such Prospectus.
"Register", "registered" and "registration" shall mean and refer
to a registration effected by preparing and filing a Registration Statement
and taking all other actions that are necessary or appropriate in
connection therewith, and the declaration or ordering of effectiveness of
such Registration Statement by the SEC.
"Registration Expenses" shall have the meaning set forth in
Section 8.
"Registrable Securities" shall mean all Ordinary Shares held by
Holder as of the date hereof or subsequently transferred to a permitted
transferee under Section 16 hereof, provided that such term shall not
include any such Ordinary Shares, (i) sold to the public by a Holder
pursuant to a Registration Statement under the Securities Act, or (ii) sold
by such Holder in a private transaction in which such Holder's rights
hereunder were not assigned to the purchasers thereof,or (iii) Ordinary
Shares that can be sold according to Rule 144(k) of the Securities Act
within the subsequent three (3) month period.
"Registration Statement" shall mean any registration statement of
the Company in compliance with the Securities Act that covers Registrable
Securities pursuant to the provisions of this Agreement, including, without
limitation, the Prospectus, all amendments and supplements to such
Registration Statement, including all post-effective amendments, all
exhibits and all material incorporated by reference in such Registration
Statement.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Underwritten registration" or "underwritten offering" shall mean
a registration in which securities of the Company are sold to an
underwriter or through an underwriter as agent for reoffering to the
public.
2. Demand Registration.
-------------------
(a) Request for Demand Registration. At any time after the first
anniversary of the Closing Date, Shamrock shall be entitled to request in
writing that the Company use its best efforts to effect the registration
under the Securities Act, and under the securities or "blue sky" laws of
any jurisdiction designated by Shamrock, of Registrable Securities
comprising at least 350,000 Ordinary Shares (including Registrable
Securities as to which other holders of Registrable Securities are also
seeking registration pursuant to such request) in accordance with this
Section 2 (each, a "Demand Registration"). Any such request for a Demand
Registration shall specify the amount of Registrable Securities proposed to
be sold and the intended method of disposition thereof. Upon receiving a
request for a Demand Registration, the Company will, as provided in this
Section 2, use its best efforts to effect the registration under the
Securities Act of the Registrable Securities in the manner which the
Company has been so requested by Shamrock to register.
(b) Limitation on Demand Registrations. Notwithstanding anything
to the contrary set forth in Section 2(a) but subject to Section 8, the
Company shall not be obligated to file a Registration Statement with
respect to more than one (1) a Demand Registration upon a request by
Shamrock under Section 2(a).
(c) Effective Demand Registration. A registration shall not
constitute a Demand Registration until the Registration Statement has
become effective and remains continuously effective for the lesser of: (i)
the period during which all Registrable Securities registered in the Demand
Registration are sold: and (ii) 180 days; provided, however, that a
registration shall not constitute a Demand Registration if (x) after such
Demand Registration has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is
interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court for any reason not
attributable to Shamrock and such interference is not thereafter
eliminated: or (y) the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such Demand Registration
are not satisfied or waived, other than by reason of a failure by Shamrock.
(d) Underwriting Procedures. If Shamrock so elects, the offering
of Registrable Securities pursuant to a Demand Registration shall be in the
form of a firm commitment underwritten offering and the managing
underwriter or underwriters selected for such offering shall be the
Approved Underwriter (as hereinafter defined in Section 2(e)) selected in
accordance with Section 2(e). With respect to any firm commitment
underwritten offering, the Company shall enter into a reasonable and
customary underwriting agreement with the Approved Underwriter. If the
Approved Underwriter advises the Company in writing that, in its opinion,
the aggregate amount of Ordinary Shares requested to be included in such
offering is sufficiently large so as to have a material adverse effect on
the success of such offering, then the Company shall include in such
registration only the aggregate amount of Ordinary Shares that in the
opinion of the Approved Underwriter may be sold without any such material
adverse effect and shall allocate the amount of the Ordinary Shares to be
included in such registration as follows: (i) first, Shamrock shall be
permitted to include all Registrable Securities to be registered thereby;
(ii) second, Eastgate shall be allowed to include such amount of Ordinary
Shares as the Approved Underwriter deems appropriate, pro rata among the
Eastgate entities to the amount of shares then held by each such Eastgate
entity; and (iii) third, the Company and any other shareholder exercising
piggyback registration rights shall be allowed to include such amount of
Ordinary Shares as the Approved Underwriter deems appropriate; provided,
however, that the amount of Ordinary Shares to be sold by the Company and
any other shareholders under clause (iii) and/or (iv) and intended to be
included in such offering shall be reduced in its entirety prior to any
reduction of the number of Shamrock's Registrable Securities.
(e) Selection of Underwriters. If any Demand Registration is in
the form of an underwritten offering, Shamrock shall select and obtain one
or more investment banking firms of national reputation to act as the
managing underwriters of the offering (collectively, the "Approved
Underwriter"); provided, however, that the Approved Underwriter shall, in
any case, be acceptable to the Company in its reasonable judgment.
3. Incidental Registration. If the Company shall determine to register
any Ordinary Shares, or any securities convertible into or exchangeable or
exercisable for Ordinary Shares, for its own account or for the account of
any shareholder (other than a registration on Forms F-4, or F-8 or any
replacement or successor form thereof), each Holder shall be entitled to
include Registrable Securities, on a pro rata basis with the other Holder
based on the number of Registrable Securities then held by each Holder, in
such registration (and related underwritten offering, if any) (each, an
"Incidental Registration") on the following terms and conditions:
(a) The Company shall promptly give written notice of such
determination to the Holders, and the Holders shall have the right to
request, by written notice given to the Company within thirty (30) days of
the receipt by Holders of such notice of determination, that a specific
number of Registrable Securities held by Holders be included in such
Registration Statement;
(b) If the proposed registration relates to an underwritten
offering, the notice called for by Section 3(a) shall specify the name of
the managing underwriter for such offering and the number of securities to
be registered for the account of the Company and for the account of any
other stockholder of the Company;
(c) If the proposed registration relates to an underwritten
offering, each Holder must: (i) sell all or a portion of its Registrable
Securities on the same basis provided in the underwriting arrangements
approved by the Company; and (ii) complete and execute all questionnaires,
powers of attorney, indemnities (but only to the extent such indemnities
relate specifically to information supplied by such Holder), hold-back
agreements, underwriting agreements and other documents on the same basis
as other similarly situated selling shareholders (or, if there are no other
selling shareholders, as would be customary in a transaction of this type)
required under the terms of such underwriting arrangements or by the SEC;
(d) If the managing underwriter for the underwritten offering
under the proposed registration to be made by the Company determines that
inclusion of all or any portion of the Registrable Securities in such
offering would adversely affect the ability of the underwriter for such
offering to sell all of the securities requested to be included for sale or
the price per share in such offering, the number of shares that may be
included in such registration in such offering shall be allocated as
follows: (i) first, the Company (if such registration was initiated
thereby) or the selling shareholder exercising demand registration rights,
as the case may be, shall be permitted to include all of the Ordinary
Shares to be registered thereby; and (ii) second, the Holders, on a pro
rata basis with one another, based on the number of Registrable Securities
then held by each Holder, and any other selling shareholder exercising
piggyback registration rights shall be allowed to include such amount of
Registrable Securities as the managing underwriter(s) deems appropriate (on
a pro rata basis with one another but only to the extent that such pro rata
basis applies to the number of Ordinary Shares still retained at the time
of such cutback);
(e) Each Holder shall have the right to withdraw its Registrable
Securities from the Registration Statement at any time prior to the
effective date thereof, but if the same relates to an underwritten
offering, it may only do so after the initial filing thereof during the
time period and on terms deemed appropriate by the managing underwriters
for such underwritten offering; and
(f) The Company or any other shareholder exercising demand
registration rights shall have the right to terminate or withdraw any
registration statement filing under this Section 3 prior to the effective
date of such registration for any reason without liability to the Holders
as a result thereof, whether or not either Holder has elected to include
its securities in such registration.
4. Form F-3 Registration.
(a) At any time after the first anniversary of the Closing Date,
Shamrock shall, subject to the provisions of this Section 4, be entitled to
request that the Company effect a registration of its Registrable
Securities comprising at least 150,000 Ordinary Shares on Form F-3 as shall
be specified in such request (a "Form F-3 Registration").
(b) As soon as practicable after receipt of any written request
pursuant to Section 4(a), the Company shall file a Form F-3 Registration
Statement covering the Registrable Securities and shall effect such
registration as would permit or facilitate the sale and distribution of all
or such portion of Shamrock's Registrable Securities as are specified in
such request.
(c) At all times during which the Company is subject to the
reporting requirements of the Exchange Act, the Company shall use its best
efforts to make registrations on Form F-3 available for the sale of
Registrable Securities.
(d) If Shamrock so elects, the offering of Registrable Securities
pursuant to a Form F-3 Registration shall involve a managing underwriter or
underwriters selected for such offering by Shamrock; provided, however,
that such managing underwriter shall be acceptable to the Company in its
reasonable judgment. If the managing underwriter advises the Company in
writing that in its opinion the aggregate amount of Ordinary Shares
requested to be included in such offering is sufficiently large so as to
have a material adverse effect on the success of such offering, then the
Company shall include in such registration only the aggregate amount of
Ordinary Shares that in the opinion of the managing underwriter may be sold
without any such material adverse effect and shall allocate the amount of
the Ordinary Shares to be included in such registration as follows: (i)
first, Shamrock shall be permitted to include all Registrable Securities to
be registered thereby; (ii) second, Eastgate shall be allowed to include
such amount of Ordinary Shares as the Approved Underwriter deems
appropriate, pro rata among the Eastgate entities to the amount of shares
then held by each such Eastgate entity; and (iii) third, the Company and
any other shareholder exercising piggyback registration rights shall be
allowed to include such amount of Ordinary Shares as the managing
underwriter deems appropriate; pr, however, that, the amount of Ordinary
Shares to be sold by the Company and any other shareholders under clause
(ii) and /or (iii) and intended to be included in such offering shall be
reduced in its entirety prior to any reduction of the number of Holders'
Registrable Securities.
(e) Each Holder shall have the right to withdraw its Registrable
Securities from the Registration Statement at any time prior to the
effective date thereof, but if the same relates to an underwritten
offering, it may only do so after the initial filing thereof during the
time period and on terms deemed appropriate by the underwriters for such
underwritten offering.
(f) Notwithstanding anything to the contrary in Section 4(a) but
subject to Section 8, the Company shall not be obligated to file a
Registration Statement with respect to a Form F-3 Registration upon a
request by Shamrock under Section 4(a), if the Company has paid the
Registration Expenses for one Form F-3 Registrations in accordance with
Section 8; provided, however, that only a Form F-3 Registration that has
become effective and remained continuously effective for the lesser of: (i)
the period during which all Registrable Securities registered thereunder
are sold; and (ii) 180 days shall be counted as a Form F-3 Registration and
be counted against the aforesaid limitation; and provided, further,
however, that a registration shall not constitute a Form F-3 Registration
if (x) after such Form F-3 Registration has become effective, such
registration or the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency
or court for any reason not attributable to the Holders and such
interference is not thereafter eliminated; or (y) the conditions to closing
specified in the underwriting agreement, if any, entered into in connection
with such Form F-3 Registration are not satisfied or waived, other than by
any reason of a failure not attributable to the Holders.
5. Blockage Periods. Notwithstanding any other provision of this
Agreement, the Company shall not be obligated to file any Registration
Statement under Section 2 or Section 4 hereof, if, at any time, the
Company's Board of Directors determines in good faith, as certified to the
Holders in writing by the Company's President or Chief Executive Officer,
that the filing of such a Registration Statement would be seriously
detrimental to the Company. The Company may decline to file any
Registration Statement for this reason only once in any twelve (12) month
period and only for a maximum period of one hundred twenty (120) days at
any one time.
6. Restrictions on Public Sale by Holder of Registrable Securities. If
Registrable Securities are included (in whole or in part) in a Registration
Statement filed by the Company under Sections 2 through 4 for sale in an
underwritten offering, each Holder whose Registrable Securities are
included in such Registration Statement agrees, if requested by the
managing underwriter(s) of such offering, not to sell, make any short sale
of, loan, grant any option for the purchase of, dispose of or effect any
public sale or distribution of securities of the same class as (or
securities exchangeable for or convertible into securities of the same
class as) Registrable Securities included in a the Registration Statement,
including a sale pursuant to Rule 144 under the Securities Act (except as
part of such underwritten registration), during the five (5) day period
prior to, and during the one hundred twenty (120) day period (or shorter
period requested by the managing underwriter(s)) beginning on the closing
date of such underwritten offering, to the extent timely notified in
writing by the Company or the managing underwriter(s).
7. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 2 through 4 hereof, the
Company will use its best efforts to effect such registration to permit the
sale of the Registrable Securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company will as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause
such Registration Statement to become effective, and, upon the request of
Shamrock or Eastgate, if it shall be a seller under each Registration
Statement, keep such Registration Statement effective for up to one hundred
eighty (180) days, provided that, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company will
furnish to each Holder and their respective counsel, copies of all such
documents proposed to be filed at least five (5) days prior thereto, and
the Company will not file any such Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which Shamrock (or
Eastgate, if it shall be a seller) shall reasonably object within such five
(5) day period, provided, further, that the Company will not name or
otherwise provide any information with respect to the Holders in any
Registration Statement or Prospectus without the express written consent of
the Holders, unless required to do so by the Securities Act and the rules
and regulations thereunder;
(b) prepare and file with the SEC such amendments, post-effective
amendments and supplements to the Registration Statement and the Prospectus
as may be necessary to comply with the provisions of the Securities Act and
the rules and regulations thereunder with respect to the disposition of all
securities covered by such Registration Statement;
(c) promptly notify the Holders: (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus
or for additional information; (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iv) if at any time the
representations and warranties of the Company contemplated by the Purchase
Agreements cease to be true and correct; (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and (vi) of the
happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein by reference
in order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement as soon as
possible;
(e) furnish to the Holders, without charge, at least one signed
copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(f) deliver to the Holders, without charge, such reasonable
number of conformed copies of the Registration Statement (and any
post-effective amendment thereto) and such number of copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto (and any documents incorporated by reference therein) as
the Holders may reasonably request, all in full conformity with the
Securities Act; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Holders in connection with the offer
and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(g) prior to any of Registrable Securities covered by a
Registration Statement, register or qualify or cooperate with the Holders
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as the Holders reasonably request, and use its best efforts
to keep each such registration or qualification effective, including
through new filings, or amendments or renewals, during the period such
Registration Statement is required to be kept effective pursuant to the
terms of this Agreement; and do any and all other acts or things necessary
or advisable to enable the disposition of such Registrable Securities in
all such jurisdictions reasonably requested by the Holders, provided that
under no circumstances shall the Company be required in connection
therewith or as a condition thereof to qualify to do business or to file a
general consent to service of process in any such jurisdictions;
(h) cooperate with the Holders and the managing underwriter or
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, free of any
and all restrictive legends, such certificates to be in such denominations
and registered in such names as the managing underwriter or underwriters,
if any, or the Holders may request;
(i) upon the occurrence of any event contemplated by Section
7(c)(vi) above, prepare a supplement or post-effective amendment to the
Registration Statement or the Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading;
(j) make generally available to the holders of the Company's
outstanding securities earnings statements satisfying the provisions of
Section ll (a) of the Securities Act, no later than sixty (60) days after
the end of any twelve (12) month period (or ninety (90) days, if such
period is a fiscal year): (x) commencing at the end of any fiscal quarter
in which Registrable Securities are sold to underwriters in a firm or best
efforts underwritten offering, or, if not sold to underwriters in such an
offering; (y) beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement,
which statements shall cover said twelve (12) month period;
(k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by each Registration
Statement from and after a date not later than the effective date of such
Registration Statement;
(l) use its best efforts to cause all Registrable Securities
covered by each Registration Statement to be listed, subject to notice of
issuance, prior to the date of the first sale of such Registrable
Securities pursuant to such Registration Statement, on each securities
exchange on which the Ordinary Shares issued by the Company is then listed,
and admitted to trading, including, the Nasdaq Stock Market, if the
Ordinary Shares are then admitted to trading on the Nasdaq Stock Market;
and
(m) enter into such agreements (including underwriting agreements
in customary form containing, among other things, reasonable and customary
indemnities) and take such other actions as the Holders shall reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities.
(n) furnish, at the request of the Holders, on the date that the
Registrable Securities are delivered to an underwriter for sale in
connection with an underwritten registration, or, in connection with any
other registration, on the date that the registration statement with
respect to such registration becomes effective: (i) an opinion, dated such
date, of the counsel representing the Company for the purpose of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders; and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders, subject to the Holders providing
information reasonably requested by such independent certified public
accountants to comply with the rules governing delivery of such letters.
The Holders agree that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
7(c)(vi) hereof, the Holders will forthwith discontinue disposition of
Registrable Securities under the Prospectus related to the applicable
Registration Statement until the Holders' receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 7(i) hereof, or
until it is advised in writing by the Company that the use of the
Prospectus may be resumed. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7
with respect to the Registrable Securities of the Holders that the Holders
shall furnish them to the Company such information regarding themselves and
the Registrable Securities held by it as shall be required by the
Securities Act to effect the registration of the Holder's Registrable
Securities.
8. Registration Expenses. All expenses incident to any registration to
be effected hereunder (whether or not the Registration Statement is filed
or declared effective) and incident to the Company's performance of or
compliance with this Agreement, including without limitation all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery
expenses, National Association of Securities Dealers, Inc., stock exchange
and qualification fees, fees and disbursements of the Company's counsel and
of independent certified public accountants of the Company (including the
expenses of any special audit required by or incident to such performance),
the fees of one counsel representing the Holders in such offering (which
counsel shall be selected by Shamrock if Shamrock is participating in such
offering), expenses of the underwriters that are customarily requested in
similar circumstances by such underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of
the Registrable Securities), all such expenses being herein called
"Registration Expenses," will be borne by the Company. The Company will
also pay its internal expenses, the expense of any annual audit and the
fees and expenses of any person retained by the Company. Notwithstanding
the foregoing but subject to Section 12, the Company will not be obligated
to pay Registration Expenses for more than two Demand Registrations
effected pursuant to Section 2 of this Agreement or for more than one Form
F-3 Registration effected pursuant to Section 4 of this Agreement.
Registration Expenses incurred in connection with Registration Statements
requested under Section 2 or Section 4 that are not filed or declared
effective by the SEC will be paid by the Company and will not count against
such limit; provided, however, if such Registration Statement not being
filed or declared effective as the result of the actions of Shamrock, then
Shamrock may in its sole and unlimited discretion elect to bear the
Registration Expenses (and underwriting discounts and commissions and
transfer taxes, if any) of such Demand Registration or such Form F-3
Registration, as the case may be, in which case such registration shall not
be counted as a Demand Registration under Section 2 or a Form F-3
Registration under Section 4, as the case may be. In the event that
Shamrock bears the Registration Expenses (and underwriting discounts and
commissions and transfer taxes, if any) in connection with any Demand
Registration requested under Section 2 or Form F-3 Registration under
Section 4, such Registration Expenses shall be apportioned among the
holders whose Ordinary Shares are then being registered, on the basis of
the respective amounts (by number of Ordinary Shares) then being registered
by them or on their behalf.
9. Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless Holders, their respective officers, directors,
partners and employees and each person who controls Holder (within the
meaning of Section 15 of the Securities Act) from and against any and all
losses, claims, damages and liabilities (including any investigation, legal
or other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted) (collectively, "Damages") to which Holder may become subject
under the Securities Act, the Exchange Act or other federal or state
securities law or regulation, at common law or otherwise, insofar as such
Damages arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or
supplement thereto, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities or
blue sky laws in connection with the Registration Statement, Prospectus or
preliminary prospectus or any amendment or supplement thereto, provided
that the Company will not be liable to Holder to the extent that such
Damages arise from or are based upon any untrue statement or omission (x)
based upon written information furnished to the Company by Holders
expressly for the inclusion in such Registration Statement, (y) made in any
preliminary prospectus if Holders failed to deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the
sale by Holders to the party asserting the claim underlying such Damages
and such Prospectus would have corrected such untrue statement or omission
and (z) made in any Prospectus if such untrue statement or omission was
corrected in an amendment or supplement to such Prospectus and Holders
failed to deliver such amendment or supplement prior to or concurrently
with the sale of Registrable Securities to the party asserting the claim
underlying such Damages.
(b) Indemnification by Holders of Registrable Securities. If
Registrable Securities are sold under a Prospectus which is a part of a
Registration Statement, Shamrock and/or each of the Eastgate entities,
individually and not jointly, as to their own statements or omissions only,
agrees to indemnify and hold harmless the Company, its directors and each
officer who signed such Registration Statement and each person who controls
the Company (within the meaning of Section 15 of the Securities Act) under
the same circumstances as the foregoing indemnity from the Company to
Holders to the extent that such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement of a material
fact or omission of a material fact that was made in the Prospectus, the
Registration Statement, or any amendment or supplement thereto, in reliance
upon and in conformity with information relating to Shamrock or the
Eastgate entity, as the case may be, furnished in writing to the Company by
such party expressly for use therein, provided that in no event shall the
aggregate liability of Shamrock or the Eastgate entity, as the case may be,
exceed the amount of the net proceeds received by such party upon the sale
of the Registrable Securities giving rise to such indemnification
obligation. The Company and Holders shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the
same extent as customarily furnished by such persons in similar
circumstances.
(c) Procedure for Indemnification Proceedings. Any person
entitled to indemnification hereunder will: (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification; and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any person entitled to
indemnification hereunder shall have the right to employ separate counsel
and to participate in the defense of such claim, but the fees and expenses
of such counsel shall be at the expense of such person and not of the
indemnifying party unless: (A) the indemnifying party has agreed to pay
such fees or expenses; (B) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory
to such person; or (C) in the reasonable judgment of such person and the
indemnifying party, based upon advice of their respective counsel, a
conflict of interest may exist between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies
the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on
behalf of such person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to consent to
the entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by all claimants or
plaintiffs to such indemnified party of a release from all liability in
respect to such claim or litigation. Any indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim.
As used in this Section 9(c), the terms "indemnifying party", "indemnified
party" and other terms of similar import are intended to include only the
Company (and its officers, directors and control persons as set forth
above) on the one hand, and the Holders (and their respective officers,
directors, partners, employees, attorneys and control persons as set forth
above) on the other hand, as applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses: (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other; or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law or provides a lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. Notwithstanding the foregoing, the
Holders shall not be required to contribute any amount in excess of the
amount the Holders would have been required to pay to an indemnified party
if the indemnity under Section 9(b) hereof was available. No person found
liable for making a fraudulent misrepresentation (within the meaning of
Section 11 of the Securities Act) shall be entitled to contribution from
any person who was found liable for making such fraudulent
misrepresentation.
(e) Timing of Payments. An indemnifying party shall make payments
of all amounts required to be made pursuant to the foregoing provisions of
this Section 9 to or for the account of the indemnified party from time to
time promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable.
(f) Survival. These indemnity and contribution provisions shall
remain in full force and effect, regardless of any investigation made by or
on behalf of the Holders, its officers, directors, partners, attorneys,
agents or any person, if any, who controls the Holders as aforesaid, and
shall survive the transfer of such Registrable Securities by each Holder.
10. Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of
this Agreement:
(a) the Company shall, with respect to a Registration Statement
filed by the Company, give the Holders, the underwriter(s), if any, and
their respective counsel and accountants the opportunity to participate in
the preparation of such Registration Statement (other than reports and
proxy statements incorporated therein by reference and lawfully and
properly filed with the SEC) and each Prospectus included therein or filed
with the SEC, and each amendment thereof or supplement thereto; and
(b) the Company shall give the Holders, their underwriters, if
any, and their respective counsel and accountants reasonable access to its
books and records and opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of the
Holders or such underwriter(s), to conduct a reasonable investigation
within the meaning of Section ll(b)(3) of the Securities Act.
11. Rule 144. At all times during which the Company is subject to the
periodic reporting requirements of the Exchange Act, the Company covenants
that it will file, on a timely basis, the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further
action as the Holders may reasonably request (including, without
limitation, compliance with the current public information requirements of
Rule 144(c) and Rule 144A under the Securities Act), all to the extent
required from time to time to enable the Holders to sell Registrable
Securities without registration under the Securities Act within the
limitation of the conditions provided by: (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time; (b) Rule 144A under the
Securities Act, as such Rule may be amended from time to time; or (c) any
similar rule or regulation hereafter adopted by the SEC. Upon the request
of any Holder, the Company will deliver to such Holder a written statement
verifying that it has complied with such information requirements.
12. No Inconsistent Agreements. The Company will not enter into any
agreement offering registration rights of the nature set forth herein
without the consent of the holder(s) of the majority of the Registrable
Securities held by the Holders at such time, which consent may be withheld,
in their sole discretion; provided that the Company may grant demand and
incidental registration rights in the future to the Holders of Ordinary
Shares on the following basis (in which event the consent of the Holders
will not be required): (a) all cutbacks on incidental registrations shall
be on a pro rata basis with the Ordinary Shares held by the Holders and any
other selling shareholder exercising incidental registration rights (but
only to the extent that such pro rata basis applies to the number of
Ordinary Shares still retained at the time of such cutback); (b) an
investor investing between $5,000,000 and $10,000,000 shall be entitled to
not more than one (1) demand registration right and one F-3 Registration;
(c) an investor investing between $10,000,000 and $20,000,000 shall be
entitled to not more than two (2) demand registration rights and two F-3
Registrations; (d) an investor investing more than $20,000,000 shall be
entitled to not more than three (3) demand registration rights and two (2)
F-3 Registrations; and (e) holders of any registration rights granted
subsequent to the date hereof shall not exercise any such rights, except
incidental or registration rights, prior to the first anniversary of the
closing of the purchase of the Ordinary Shares as to which such
registration rights were granted.
13. Assignment of Rights. Each Holder may assign its respective rights
under the Agreement to: (a) any transferee of the Registrable Securities of
such Holder, if such transferee has executed this Agreement and agreed to
be bound by the terms hereof (it being understood, however, that the Holder
effecting such transfer shall retain all of its rights hereunder with
respect to all Registrable Securities not so transferred thereby); or (b)
any shareholder, subsidiary, partner, nominee or Affiliate of the Holder
effecting such transfer or any such transferee. The transferor shall,
within twenty (20) days after such transfer, furnish the Company with
written notice of the name and address of such transferee and the
securities with respect to which such registration rights are being
assigned and a copy of this Agreement executed by the Transferee.
14. Specific Performance. The Holders, in addition to being entitled
to exercise all rights provided herein or granted by law, including
recovery of damages, will be entitled to specific performance of their
rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by
it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would
be adequate.
15. Notices. All notices required or permitted under the terms of this
Agreement shall be delivered in the manner called for in the Purchase
Agreements.
16. Successors and Assigns. Subject to Section 13, this Agreement
shall inure to the benefit of the successors and permitted assigns of
Holders, such that the rights under this Agreement shall inure to the
benefit of and be binding upon such subsequent holders of Registrable
Securities without the need for an express assignment. This Agreement shall
inure to the benefit of and be binding upon the Company and any corporation
resulting from any merger or consolidation of the Company with or into such
corporation (in which the Company is not the surviving corporation) or any
corporation whose securities are issued in exchange for Ordinary Shares.
17. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
18. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and shall
supersede any prior understandings, agreements or representations, written
or oral, by or among the parties hereto.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be original, and all of which together
shall constitute one instrument.
20. Amendment. Any provision of this Agreement may be amended, waived
or modified only by a writing signed by the Company and holders of a
majority of the Registrable Securities.
21. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. The parties hereby
consent to the sole and exclusive jurisdiction of any federal or state
court in the State of New York, City of New York.
[The remainder of the page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
PARADIGM GEOPHYSICAL LTD.
an Israeli corporation
By: /s/ Eldad Weiss
--------------------------------
Name: Eldad Weiss
Title: President and CEO
SHAMROCK HOLDINGS, INC.
By: /s/ Robert G. Moskowitz
--------------------------------
Name: Robert G. Moskowitz
Title: Executive Vice President
and Secretary
EASTGATE FUND L.P.
by Eastgate Management Corporation,
its general partner
By: /s/ Harris Kaplan
--------------------------------
Name: Harris Kaplan
Title: President
EASTGATE INTERNATIONAL LIMITED, by
Eastgate Management Corporation, its
Investment Manager and Authorized Agent
By: /s/ Harris Kaplan
--------------------------------
Name: Harris Kaplan
Title: President
/s/ Harris Kaplan
-------------------------------------
MR. HARRIS KAPLAN
BERMAN EASTGATE GROWTH FUND, by
Eastgate Management Corporation, a
general partner
By: /s/ Harris Kaplan
--------------------------------
Name: Harris Kaplan
Title: President
EXHIBIT 4
SMITH BARNEY
ACCOUNT APPLICATION AND
CLIENT AGREEMENT
A MEMBER OF TRAVELSERGROUP
Please complete both sides of this
document and be sure to sign on the
reverse side. If this is not an
individual or joint account, your
Financial Consultant will advise you of
any additional documentation
requirements. FINANCIAL MANAGEMENT
ACCOUNT(SM) (FMA(R)) SERVICES ARE NOT
AVAILABLE ON IRA AND MANAGED ACCOUNTS. --------------------------------------
IRA AND MANAGED ACCOUNTS AUTOMATICALLY ACCOUNT NUMBER
QUALIFY FOR A DAILY MONEY MARKET SWEEP. BRANCH ACCOUNT T C FC
Please return the completed application
to your Financial Consultant. --------------------------------------
Account Owner/ Co-Owner
Your Name SHAMROCK HOLDINGS INC Name(s)
- ---------------------------------------- ------------------------------------
- --------------------------------------------------------------------------------
TAX INFORMATION Please write in your Social Security Number or Tax ID
Number here.
MULTIPLE PARTY ACCOUNTS: USE THE SOCIAL SECURITY NUMBER OF
THE FIRST OWNER NAMED ABOVE.
[ ] Check here if you are subject to
[ ] Social Security backup withholdings due to notification
or 75-1984190 by the IRS. If so, you must also cross
[X] Tax ID Number out the portion of the Tax Certification
and Authorization section on the reverse
side as indicated.
- --------------------------------------------------------------------------------
PORTFOLIO If eligible, your account will have Portfolio CreditLine
CREDITLINE(SM) borrowing privileges UNLESS you decline below. See
accompanying literature for an explanation of Portfolio
CreditLine borrowing. [ ] I/We do NOT want Portfolio
CreditLine borrowing privileges in my/our account.
Please note that you may not obtain an FMA Money Card
(below) if you check this box.
- --------------------------------------------------------------------------------
NAME DISCLOSURE The issuers of securities that are held for
you in street name at Smith Barney may request the
release of your name, address and securities position.
If you do not wish this information to be released,
check the box below. [X] DO NOT release my name,
address and securities position to issuers.
================================================================================
TAX CERTIFICATION: UNDER PENALTIES OF PERJURY, BY SIGNING BELOW I CERTIFY
THAT (A) THE NUMBER I HAVE ENTERED ON THE FRONT OF THIS FORM IS MY CORRECT
TAX IDENTIFICATION NUMBER AND (B) THAT I AM NOT SUBJECT TO BACKUP WITHHOLDING
AS A RESULT OF A FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR THE IRS HAS
NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. I UNDERSTAND
I MUST CROSS OUT ITEM (B) ABOVE IF I AM CURRENTLY SUBJECT TO BACKUP
WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON MY TAX
RETURN.
- --------------------------------------------------------------------------------
ACCEPTANCE OF TERMS AND CONDITIONS OF AGREEMENTS:
In consideration of Smith Barney Inc. (Smith Barney) accepting an account
for me/us, I/we ("I") acknowledge that I have read, understand and agree to
the terms of the attached Client Agreement in Section 1 through 11. If this
is a multiple party account, I/we further acknowledge that I/we have read,
understand and agree to the terms of the attached Client Agreement
contained in Sections 12 through 14. If I have requested any of the
services referenced in the FMA sections above, I agree to the terms of the
FMA Agreement that has been provided to me. I authorize Smith Barney to
establish checking privileges, Online Services and the Automatic Funds
Transfer service, and to have the FMA Money Card(s) issued as instructed on
this Account Application, and I affirm that I have the authority to open
this account. I authorize Smith Barney and the FMA Money Card Issuer to
have FMA Money Card(s) issued as indicated. I understand that this account
is governed by the FMA Agreement, the Client Agreement, the Online Services
Agreement, my agreement with the FMA Money Card Issuer, and/or other
agreements I may have with Smith Barney or other providers of services
related to the FMA account. I have read all the documents and agree to
their terms.
IF I/WE HAVE SELECTED ANY OF THE FMA SERVICES, I/WE UNDERSTAND THAT BOTH AN
ACCOUNT MINIMUM BALANCE AND ANNUAL FEE APPLY. IF I CHOOSE TO USE ONLINE
SERVICES, BY SIGNING THIS APPLICATION I AGREE THAT MY ONLINE SERVICES
AGREEMENT WILL CONTAIN PROVISIONS LIMITING MY RIGHTS AND REMEDIES,
INCLUDING, WHERE PERMITTED BY LAW, A LIMITATION ON CONSEQUENTIAL, SPECIAL
AND INDIRECT DAMAGES AND ON LOSSES ARISING FROM THE NEGLIGENCE OF SMITH
BARNEY AND/OR ITS AGENTS.
IF THIS ACCOUNT IS ESTABLISHED WITH PORTFOLIO CREDITLINE PRIVILEGES, I
FURTHER ACKNOWLEDGE THAT I HAVE READ, UNDERSTAND AND AGREE TO THE TERMS OF
THE ATTACHED CLIENT AGREEMENT CONTAINED IN SECTIONS 15 THROUGH 17 AND THAT
MY/OUR SECURITIES MAY BE LOANED TO YOU OR LOANED OUT TO OTHERS.
SMITH BARNEY INC. REQUIRES YOUR CONSENT TO THE APPLICABLE PROVISIONS OF
THIS AGREEMENT IN ORDER TO OPEN AND MAINTAIN YOUR ACCOUNT.
I ACKNOWLEDGE THAT I HAVE THE INTERNAL REVENUE SERVICE
RECEIVED THE CLIENT DOES NOT REQUIRE YOUR CONSENT
AGREEMENT WHICH CONTAINS TO ANY PROVISION OF THIS
A PRE-DISPUTE ARBITRATION DOCUMENT OTHER THAN THE
CLAUSE IN SECTION 6. CERTIFICATIONS REQUIRED TO
AVOID BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST ACCOUNT
SIGN. OWNER'S /S/ STANLEY P. GOLD
SIGNATURE
IF FMA CHECKING IS
REQUESTED,
PLEASE SIGN AS YOU WILL CO-OWNER'S
NORMALLY SIGN YOUR CHECKS. SIGNATURE
<PAGE>
CLIENT AGREEMENT
In consideration of your opening one or more accounts for me ("we", "us"
and "our" are each substituted for "I, "me" and "my", respectively, in the
case of multiple account holders, corporations and other entities), and
your agreeing to act as broker/dealer for me for the extension of credit
and in the purchase or sale of securities, commodities, options and other
property. It is agreed in respect to any and all accounts, whether upon
margin or otherwise, which I now have or may at any future time have with
Salomon Smith Barney Inc. or its direct or indirect subsidiaries and
affiliates or their successors or assigns (hereinafter referred to as "you"
or "your" or "SSB"), that:
1. All transactions entered into under this Agreement shall be subject to
any applicable constitution, rules, regulations, customs and usages of the
exchange or market and its clearinghouse, if any, where such transactions
are executed by SSB or its agents and to all applicable laws, rules and
regulations of governmental authorities and self-regulatory agencies. Such
reference to the "constitution, rules, regulations, customs and usages of
the exchange" shall in no way be construed to create a cause of action
arising from any violation of such constitution, rules, regulations,
customs and usages. If any provision is enacted that would e inconsistent
with any of the provisions of this Agreement, the provision so affected
shall be deemed modified or superseded by the enactment, but the remaining
provisions of this Agreement shall remain in effect. Except as herein
provided, no provision of this Agreement may be waived, altered, modified
or amended unless the same is in writing and signed by the authorized
official of SSB.
2. I agree that all property which I own or in which I have an ownership
interest, whether owned individually, jointly or in the name of another
person or entity, which at any time may be in your possession or control
for any purpose, including safekeeping, shall be subject to a continuing
security interest, lien and right of set-off for the discharge and
satisfaction of any debts or obligations however arising that I may owe to
SSB at any time and for any reason. SSB may at its discretion hold such
property until my debts or obligations to SSB are fully satisfied or SSB
may apply such property and the proceeds of the liquidation of such
property toward the satisfaction of my debts and obligations and I will
remain liable to SSB for any deficiency. In enforcing your security
interest, you shall have the discretion to determine which property is to
be sold and the order in which it is to be sold and shall have all the
rights and remedies available to a secured party under the New York Uniform
Commercial Code. Without your prior written consent, I will not cause or
allow any of the collateral held in my account(s), whether now owned or
hereafter acquired, to be or become subject to any liens, security
interests, mortgages or encumbrances of any nature other than your security
interest.
Without limiting the generality of the foregoing, I hereby authorize SSB to
automatically liquidate any money market fund shares or withdraw any
savings deposit balances available in my account(s) from time to time to
cover any of my indebtedness or obligations to SSB including non-trade
related debts. You are further authorized to liquidate any other property
held in my account(s) to satisfy any such indebtedness or obligations
whenever in you discretion you consider it necessary for you protection.
You are authorized without further direction from me to invest any eligible
free credit balances in any of my accounts in the money market fund that I
have chosen. If I fail to choose a money market fund, you are authorized to
make this choice on my behalf. All such investments commonly called
"sweeps" shall be governed by SSB's prevailing terms and conditions as they
may exist from time to time.
If I have elected the Insured Deposit Account ("IDA") feature as my sweep,
you are authorized without further direction from me to invest eligible
free credit balances in my accounts in savings deposits at the depository
institutions in the order set forth on the list furnished to me from time
to time. I understand that you may amend the list of depository
institutions and that I may eliminate depository institutions from the list
at any time. If my funds invested through the IDA feature reach the maximum
amount that I have authorized you to so invest or that may be so invested,
you are authorized to invest excess eligible free credit balances in the
money market fund I have chosen or you have chosen pursuant to my
authorization. I have read the IDA Disclosure Document and agree to be
bound by its terms and conditions.
"Property" as used anywhere in this Agreement shall include, but not be
limited to, investment property, securities and commodities accounts,
securities of all kinds, money, saving deposits, certificates of deposit,
bankers' acceptances, commercial paper, options, commodities, and contracts
for the future delivery of commodities or relating to commodities or
securities, and the distributions, proceeds, products and accessions of any
of the above. All property held in a securities account shall be treated as
a financial asset under Article 8 of the New York Uniform Commercial Code.
3. In case of the sale of any security, commodity, or other property at my
direction and the inability of SSB to deliver the same to the purchaser by
reason of my failure to supply them to SSB. I authorize SSB to borrow any
security, commodity, or other property necessary to make delivery thereof,
and I hereby agree to be responsible for any loss which SSB may sustain
thereby and any premiums, interest or other costs which SSB may be required
to pay as a result of such borrowing, and for any loss or cost which SSB
may sustain by reason of its inability to borrow the security, commodity,
or other property sold.
I agree that if I utilize your services to receive or issue funds by wire
(wire transfer), I am responsible for the issuance of accurate and complete
instructions in relation to said wire transfer and I will hold you harmless
from all liabilities if I fail to fulfill this responsibility. I further
agree that should I incur a loss in connection with a wire transfer as a
result of negligence or other activities on your part, your liability will
be limited to the actual amount of the misdirected or misapplied funds and
no other damages of any other nature including consequential damages will
be recoverable.
You may charge my account(s) with such usual and customary charges as you
may determine to cover your services and facilities, including, but not
limited to, custody and transaction fees. I will promptly pay SSB any
deficiency that might arise in my account(s). I understand and agree that a
finance charge may be charged on any debt balance in any cash account I
have with SSB in accordance with the terms described in the SSB literature
previously provided me and any subsequent modifications thereto which will
be provided to me. You may transfer excess funds between any of my accounts
(including commodity accounts) for any reason not in conflict with the
Commodity Exchange Act or any other applicable law. If any transactions are
effected on an exchange in which a foreign currency is used, any profit or
loss as a result of the fluctuation in the exchange rate will be charged or
credited to my account(s).
4. Communications may be sent to the mailing address on file with you, or
at such other address as I may hereafter give in writing, and all
communications so sent, whether by mail, telegraph, messenger or otherwise,
shall be deemed given to me personally, whether actually received or not. I
acknowledge that the rules of the Securities and Exchange Commission
require that certain communications be sent to me rather than an agent
acting on my behalf, I warrant that the address currently on file with you
is an address where I personally receive communications unless it is the
address of a qualified custodian as defined by the Securities and Exchange
Commission. Transactions entered into for my account(s) shall be confirmed
in writing to me where required by applicable law or regulation. In
addition, SSB shall provide me with periodic statements reflecting activity
in such account(s). I agree that transactions reflected on such
confirmations and statements shall be conclusively deemed accurate as
stated unless I notify SSB in writing within three (3) days and ten (10)
days of receipt, respectively, that the information contained in such
confirmation or statement is inaccurate. Such notice must be sent by me to
SSB by telegram or letter directed to the attention of the Branch Office
Manager of the office servicing the account. Failure to so notify SSB shall
also preclude me from asserting at any later date that such transaction was
unauthorized.
I authorize you at your discretion to obtain reports and to provide
information to others concerning my credit standing and my business
conduct. You may ask credit reporting agencies for consumer reports of my
credit history. Upon my request you will inform me whether you have
obtained any such consumer reports and if you have, you will inform me of
the name and address of the consumer reporting agency that furnished the
reports to you.
5. I hereby represent that I am of the age of majority. Unless I advise you
to the contrary, in writing, and provide you with a letter of approval from
my employer, where required, I represent that I am not an employee of any
exchange, or of any corporation of which any exchange owns a majority of
the capital stock, or of a member of any exchange, or of a member firm or
member corporation registered on any exchange, or of any corporation, firm
or individual engaged in the business of dealing, either as a broker or as
principal, in securities, bills of exchange acceptances or other forms of
commercial paper. I further represent that no one except those signing this
agreement has an interest in my account.
If my account has been introduced to you and is carried by you only as a
clearing broker, I agree that you are not responsible for the conduct of
the introducing broker and your only responsibilities to me relate to the
execution, clearing and bookkeeping of transactions in my accounts.
6. ARBITRATION
() ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
() THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRIAL.
() PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT
FROM COURT PROCEEDINGS.
() THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING, AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
() THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
I AGREE THAT ALL CLAIMS OR CONTROVERSIES, WHETHER SUCH CLAIMS OR
CONTROVERSIES AROSE PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF, BETWEEN ME
AND SSB AND/OR ANY OF ITS PRESENT OR FORMER OFFICERS, DIRECTORS, OR
EMPLOYEES CONCERNING OR ARISING FROM (I) ANY ACCOUNT MAINTAINED BY ME WITH
SSB INDIVIDUALLY OR JOINTLY WITH OTHERS IN ANY CAPACITY; (II) ANY
TRANSACTION INVOLVING SSB OR ANY PREDECESSOR FIRMS BY MERGER, ACQUISITION
OR OTHER BUSINESS COMBINATION AND ME, WHETHER OR NOT SUCH TRANSACTION
OCCURRED IN SUCH ACCOUNT OR ACCOUNTS; OR (III) THE CONSTRUCTION,
PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN US, ANY DUTY
ARISING FROM THE BUSINESS OF SSB OR OTHERWISE, SHALL BE DETERMINED BY
ARBITRATION BEFORE, AND ONLY BEFORE, ANY SELF-REGULATORY ORGANIZATION OR
EXCHANGE OF WHICH SSB IS A MEMBER. I MAY ELECT WHICH OF THESE ARBITRATION
FORUMS SHALL HEAR THE MATTER BY SENDING A REGISTERED LETTER OR TELEGRAM
ADDRESSED TO SALOMON SMITH BARNEY INC. AT 386 GREENWICH STREET, NEW YORK,
N.Y. 10013-2396, ATTN: LAW DEPARTMENT. IF I FAIL TO MAKE SUCH ELECTION
BEFORE THE EXPIRATION OF FIVE(5) DAYS AFTER RECEIPT OF A WRITTEN REQUEST
FROM SSB TO MAKE SUCH ELECTION, SSB SHALL HAVE THE RIGHT TO CHOOSE THE
FORUM.
NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION,
NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY
PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; OR WHO IS A
MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT
TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (I) THE CLASS
CERTIFICATION IS DENIED; (II) THE CLASS IS DECERTIFIED; OR (III) THE
CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT.
SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE
A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED
HEREIN.
7. The provisions of this Agreement shall be continuous, shall cover
individually and collectively all accounts which I may open or reopen with
SSB, and shall inure to the benefit of SSB's present organization, and any
successor organization or assigns; and shall be binding upon my heirs,
executors, administrators, assigns or successors in interest. Should any
term or provision of this Agreement be deemed or held to be invalid or
unenforceable, the remaining terms and provisions shall continue in full
force and effect. Except for statutes of limitation applicable to claims,
this Agreement and all the terms herein shall be governed and construed in
accordance with the laws of the State of New York without giving effect to
principles of conflict of laws. The statute of limitations applicable to
any claim shall be that which would be applied by the courts of the state
in which I reside.
8. I understand that you may in your sole discretion prohibit or restrict
trading of securities or substitution of securities in any of my accounts.
You have the right to terminate any of my accounts (including multiple
owner accounts) at any time by notice to me. The provisions of this
agreement shall survive the termination of any account.
9. Your failure to insist at any time upon strict compliance with any term
of this Agreement, or any delay or failure on your part to exercise any
power or right given to you in this Agreement, or a continued course of
such conduct on your part shall at no time operate as a waiver of such
power or right, nor shall any single or partial exercise preclude any other
further exercise. All rights and remedies given to you in this Agreement
are cumulative and not exclusive of any other rights or remedies which you
otherwise have.
10. I understand that SSB shall not be liable for loss caused directly or
indirectly by government restrictions, exchange or market rulings,
suspension of trading, war, strikes or other conditions, commonly known as
"acts of God," beyond SSB's control.
11. From time to time you may at your discretion, make loans to me for a
purpose other than purchasing, carrying or trading in securities ("Express
Credit Loans"). Express Credit Loans will be made in a nonsecurities credit
account ("Express Credit Account"). The minimum and maximum amount of any
particular loan may be established by you in your discretion regardless of
the amount of collateral delivered to you and you may change such minimum
and maximum amounts from time to time.
I agree not to use the proceeds of any Express Credit Loan to purchase,
carry or trade in securities. I also agree not to use Express Credit Loan
proceeds directly or indirectly to repay other debt that I incur for the
purpose of purchasing, carrying or trading in securities.
ADDITIONAL TERMS FOR MULTIPLE PARTY ACCOUNTS PARAGRAPH 12 THROUGH 14 APPLY
ONLY TO MULTIPLE PARTY ACCOUNTS.
12. If this is a multiple party account, in consideration of you and your
successors carrying a multiple party account on margin or otherwise for the
undersigned, each of us agrees to be jointly and severally liable for said
account and to pay on demand any debit balance or losses at any time due in
this account. Any of us has full power and authority to make purchases and
sales, including short sales, to withdraw monies and securities from ,or to
do anything else with reference to our account, either individually or in
our joint names, and you and your successors are authorized and directed to
act upon instructions received from any of us and to accept payment and
securities from any of us for the credit of this account. Notwithstanding
the ability of each of us to control the account individually, we
understand and agree that you may, at your sole option, require written
instructions signed by all account owners when payments or transfers are
requested. Any and all notices, communications, or any demands for margin
sent to any of us shall be binding upon all, and may be given by mail or
other means of communication. We hereby declare this account to be joint
tenancy with rights of survivorship unless we instruct you to establish
another form of multiple ownership by executing a tenancy in common
agreement, community property agreement, partnership agreement or other
applicable agreement evidencing the desired form of ownership.
13. Each of us agrees to hold SSB harmless from and indemnify SSB against
any losses, causes of action, damages and expenses arising from or as the
result of SSB following the action, damages and expenses arising from or as
the result of SSB following the instructions of either or any of us. SSB,
in its sole discretion, may at any time suspend all activity in the
multiple party account pending instructions from a court of competent
jurisdiction or require that instructions pertaining to the multiple party
account or the property therein be in writing signed by both or all of us.
SSB shall be entitled to recover from the account or from any of us prior
to distribution of the funds or property therein such costs as it may
incur, including reasonable attorney's fees, as the result of any dispute
between or among us relating to or arising from the account.
14. Each of us agrees that, in the event of the death of either or any of
us, the survivor or survivors shall immediately give you written notice
thereof, and you may, before or after receiving such notice, take such
actions, require such papers, inheritance or estate tax waivers, retain
such portion of the account and restrict transactions in the account as you
may deem advisable to protect you against any tax, liability, penalty or
loss under any present or future laws or otherwise. The estate of either or
any of us who shall have died shall be liable and each survivor shall
continue liable, jointly and severally, to you for any net debit balance or
loss in said account in any way resulting from the completion of
transactions initiated prior to the receipt by you of the written notice of
the death of the decedent, or incurred in the liquidation of the account or
the adjustment of the interest of the respective parties.
If this account contains rights of survivorship, in the event of the death
of either or any of us, all assets in the account shall pass to and be
vested in the survivor or survivors on the same terms and conditions as
previously held, without in any manner releasing the decedent's estate from
the liabilities provided for herein. The estate of the decedent(s) and the
survivors hereby jointly and severally agree to fully indemnify and hold
harmless SSB from all liability for any taxes which may be owed in
connection therewith or any claims by third parties.
MARGIN AGREEMENT
PARAGRAPHS 15 THROUGH 17 APPLY ONLY TO MARGIN ACCOUNTS
15. You are hereby authorized, without notice to me, and without regard as
to whether or not you have in your possession or under your control at the
time thereof other property of the same kind and amount to pledge,
repledge, hypothecate or rehypothecate my property or any part thereof,
either separately or together with other property of other clients, either
for the amount due you from me or for a greater sum.
16. I agree to pay ON DEMAND any balance owing with respect to any of my
accounts, including interest and commissions and any costs of collection
(including attorney's fees, if incurred by you). I understand that you may
demand full payment of the balance due in my account plus any interest
charges accrued thereon, at your sole option, at any time without cause and
whether or not such demand is made for your protection. I understand that
all loans made are not for any specific term or duration but are due and
payable at your discretion upon a demand for payment made to me. I agree
that all payments received for my account(s) including interest, dividends,
premiums, principal or other payments may be applied by you to any balances
due in my account(s). If I maintain both a cash and a margin account with
you, you are authorized in your discretion to utilize the equity in either
type of account in satisfaction of any maintenance margin requirement
without the actual transference of funds or securities between such
accounts.
Whenever you deem it necessary or appropriate for your protection, you are
authorized, in your sole discretion, to sell, assign, transfer and deliver
all or any part of my property which may be in your possession or control
in any manner you deem appropriate, make any necessary purchases to cover
short sales and/or any open commodity contract positions and/or to cancel
any outstanding orders in order to close out the account. Without limiting
the generality of the foregoing, such sale, purchase or cancellation may be
made, in your sole discretion, on the exchange or other market where such
business is then usually transacted, at public auction or at private sale
without advertising the same. All of the above may be done without demand
for margin or notice of purchase, sale or cancellation to me. No demand
margin, or notice given to me of intent to purchase or sell property or to
cancel orders in my account, shall impose on you any obligation to make
such demand or provide such notice to me. Any such notice or demand is
hereby expressly waived, and no specific demand or notice shall invalidate
this waiver. After deducting all costs and expenses of the purchase and/or
sale and deliveries, including, but not limited to, commissions and
transfer and stamp taxes, you shall apply the residue of the proceeds to
the payment of any and all of my liabilities to you, and I shall remain
liable for any deficiency. Upon any such sale, you may purchase the whole
or any part thereof free from any right of redemption. In the event of my
death or incompetency the authority given by this Paragraph shall continue
effective and shall be binding upon by personal representatives and heirs.
17. I will at all times maintain such margin for my account maintained by
SSB, as SSB may require from time to time, and any debit balances arising
in such account shall be charged interest in accordance with the terms
described in the SSB literature previously provided me and any subsequent
modifications thereto which will be provided to me. I am aware that
interest charges, if not paid will be added to the debit balance in my
account for the next interest period. I am aware and agree that you may
impose, for my account(s), margin requirements more stringent than those
required by law or exchange regulations. I further understand and agree
that such margin requirements may be changed and modified by you from time
to time without prior notice to me. I further agree that any waiver by you
or failure to promptly enforce, as to my account or that of others, such
margin requirements shall not in any way prevent you from subsequently
enforcing said margin requirements with regard to my account.
