SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 6, 1997
ACACIA RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
California 0-26068 95-440574
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
No.)
incorporation)
12 South Raymond Avenue, Pasadena, California 91105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (818)
449-6431
(Former name or former address, if changed since last report.)
Not applicable.
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 6, 1997, Acacia Research Corporation ("Registrant")
purchased from H. Lee Browne ("Browne") and David H. Schmidt
("Schmidt") a total of 2,625,000 shares (the "Soundview Shares")
of common stock, $.001 par value per share, of Soundview
Technologies Incorporated, a Delaware corporation ("Soundview"),
pursuant to the terms of a Common Stock Purchase Agreement among
Registrant, Browne and Schmidt dated July 6, 1997 (a copy of
which is attached hereto as Exhibit 2.1). The Soundview Shares
represent 35% of the outstanding capital stock of Soundview. As
a result of the transaction, Registrant now owns approximately
51% of the outstanding common stock of Soundview. Soundview
holds a patent relating to audio and video blanking technology
(commonly referred to as "V-chip" technology) and proprietary
technology relating to the telecommunications field. Soundview
has developed the V Chip Converter to enable audio and video
blanking to be performed on televisions which do not themselves
contain V-chip technology.
The purchase price for the Soundview Shares consisted of a
total of 400,000 shares of common stock of Registrant, $500,000
in cash and the issuance of non-recourse promissory notes to
Browne and Schmidt in the aggregate principal amount of $900,000
(the "Notes"). A portion of the proceeds of a private offering of
equity securities (common stock and warrants) of Registrant
completed in June 1997 was used to fund the cash component of the
transaction. The Notes are due and payable on November 1, 1997
and bear interest at the rate of 6.07% per annum. The Notes are
secured by a pledge of 843,750 shares (in the aggregate) of
Soundview common stock pursuant to two Pledge Agreements between
Registrant on the one hand, and each of Browne and Schmidt on the
other, dated as of July 6, 1997 (the "Pledge Agreements"). (The
Notes and the Pledge Agreements are attached hereto as Exhibits
2.2 and 2.3, respectively.) The purchase price was determined by
negotiations among the parties and is based upon estimates of the
business potential and risk of Soundview.
Pursuant to the Common Stock Purchase Agreement, Registrant,
Browne and Schmidt entered into an Amended and Restated
Stockholders' Agreement (which is attached hereto as Exhibit 2.4)
to provide for elections of directors and other matters relating
to Soundview. In addition, as part of the transaction, Soundview
entered into five year employment agreements with each of Browne
and Schmidt (such Employment Agreements are attached hereto as
Exhibit 2.5). Also, Registrant agreed to promptly file and
maintain a registration statement with the Securities and
Exchange Commission covering the proposed resale of shares of
Registrant's common stock by Browne and Schmidt.
Browne was and remains the President and Chief Executive
Officer of Soundview. Browne is also the Chief Executive Officer
and majority owner of Greenwich Information Technologies LLC, an
entity in which Registrant has a substantial minority ownership
interest. Schmidt was and remains the Vice President and
Director of Technology of Soundview.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Audited financial information. Financial
statements for the year ended December 31, 1996,
and independent auditor's report for 1996. It is
impracticable for the Registrant to file audited
financial information for 1996 at the time of
filing of this Current Report. Registrant will
file such audited financial information as soon as
practicable, but in no event later than 60 days
from July 21, 1997.
(b) Pro forma financial information. It is
impracticable for Registrant to file pro forma
financial information at the time of filing of
this Current Report. Registrant will file such
pro forma financial information as soon as
practicable, but in no event later than 60 days
from July 21, 1997.
(c) Exhibits
2.1 Common Stock Purchase Agreement dated July 6,
1997, among Acacia Research Corporation, H.
Lee Browne and David H. Schmidt.
2.2 Form of Non-Recourse Promissory Note of
Acacia Research Corporation in favor of each
of H. Lee Browne and David H. Schmidt.
2.3 Form of Pledge Agreement between Acacia
Research Corporation and each of H. Lee
Browne and David H. Schmidt.
2.4 Amended and Restated Stockholders' Agreement
among Acacia Research Corporation, Soundview
Technologies Incorporated, H. Lee Browne and
David H. Schmidt dated July 6, 1997.
2.5 Form of Employment Agreement between
Soundview Technologies Incorporated and each
of H. Lee Browne and David H. Schmidt.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ACACIA RESEARCH CORPORATION
/S/ PAUL R. RYAN
By: Paul R. Ryan
President and Chief Executive
Officer
DATED: July 21, 1997
<PAGE>
EXECUTION COPY
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is
made andentered into as of July 6, 1997, by and among ACACIA
RESEARCH CORPORATION, a California corporation (the "Purchaser"),
H. LEE BROWNE, an individual ("Browne"), and DAVID H. SCHMIDT, an
individual ("Schmidt" and, together with Browne, the Sellers").
R E C I T A L S:
WHEREAS, the Sellers desire to sell to the Purchaser, and
the Purchaser desires to purchase from the Sellers, shares of the
Common Stock, $0.001 par value, of Soundview Technologies
Incorporated, a Delaware corporation ("Soundview"), for the
consideration set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein, and subject to the terms and conditions
hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. On the basis of the
representations, warranties, covenants, and agreements, and
subject to the satisfaction or waiver of the terms and
conditions, set forth herein, Browne agrees to sell to the
Purchaser and the Purchaser agrees to purchase from Browne
1,312,500 shares of Common Stock (the "Browne Shares") and
Schmidt agrees to sell to the Purchaser and the Purchaser agrees
to purchase from Schmidt 1,312,500 shares of Common Stock (the
"Schmidt Shares" and, together with the Browne Shares the
"Soundview Shares") for an aggregate purchase price as follows:
(i) $250,000, paid in cash by the Purchaser to Browne
at the Closing;
(ii) $250,000, paid in cash by the Purchaser to Schmidt
at the Closing;
(iii) 200,000 shares of common stock, no par value, of
the Purchaser, issued in the name of Browne within
5 business days of the Closing ("Browne's Acacia
Shares");
(iv) 200,000 shares of common stock, no par value, of
the Purchaser, issued in the name of Schmidt
within 5 business days of the Closing ("Schmidt's
Acacia Shares" and, together with Browne's Acacia
Shares, the "Acacia Shares");
(v) a non-recourse promissory note in the aggregate
principal amount of $450,000, made by Purchaser in
favor of Browne (the "Browne Note") along with the
Pledge Agreement in the form of Exhibit A; and
(vi) a non-recourse promissory note in the aggregate
principal amount of $450,000, made by Purchaser in
favor of Schmidt (the "Schmidt Note" and, together
with the Browne Note, the "Notes") along with the
Pledge Agreement in the form of Exhibit A.
1.2 The Closing of Purchase and Sale of Common Stock. Such
purchase and sale shall take place at a closing (the "Closing")
to be held at the offices of Purchaser, 12 South Raymond Avenue,
Pasadena, California 91105, on July 6, 1997 at 10:00 a.m., or on
such other date and at such time as may be mutually agreed upon.
At the Closing, the Sellers will convey and deliver one or more
certificates, duly endorsed for transfer to Purchaser, evidencing
the Soundview Shares against two checks, each in the amount of
$250,000, payable to each of Browne and Schmidt, and the Notes
and related Pledge Agreements, in payment of the purchase price
for the Soundview Shares. In addition, at the Closing (i) each
party hereto shall have entered into the Amended and Restated
Stockholders' Agreement in the form set forth as Exhibit B
hereto, and (ii) Soundview, on the one hand, and each of Browne
and Schmidt, on the other hand, shall have entered into the
Employment Agreements in the form set forth in Exhibits C and D,
respectively.
1.3 Purchaser's Buy-Back Rights. In the event that any
Soundview Shares are held by either Seller following Purchaser's
failure to make timely payments under either Note, Purchaser may,
at any time prior to March 1, 1998, repurchase any such Soundview
Share from such Seller at a price equal to the unpaid balance of
such Note as of November 1, 1997 plus an amount equal to 1.5% of
such unpaid balance multiplied by the number of months (and any
fraction thereof) from November 1, 1997 through the date of such
payment, divided by the number of Soundview Shares released to
Sellers pursuant to the terms of the Pledge Agreement.
ARTICLE 2
REPRESENTATIONS BY PURCHASER
Purchaser represents that:
2.1 Authorization.
(i) Purchaser is duly authorized to execute and
deliver this Agreement and all other agreements and instruments
executed in connection herewith;
(ii) Purchaser is a duly organized and validly
existing corporation in good standing under the laws of the State
of California and has all requisite corporate power and authority
for the ownership and operation of its properties and for the
carrying on of its business as now conducted and as proposed to
be conducted. Purchaser is duly licensed or qualified and in
good standing as a foreign corporation authorized to do business
in all jurisdictions in which the nature of the respective
business conducted or property owned by it makes such
qualification necessary.
(iii) this Agreement and such other agreements and
instruments constitute the valid and binding obligations of
Purchaser, enforceable against it in accordance with their
respective terms;
(iv) the execution, delivery and performance of
this Agreement will not breach, violate or conflict with any
agreement to which Purchaser is a party or is bound; and this
Agreement and each other agreement contemplated hereby constitute
the legal, valid and binding obligations of Purchaser enforceable
against Purchaser in accordance with their respective terms;
(v) Purchaser is not in breach of, or default
under, its Articles of Incorporation or Bylaws, or any material
contract to which it is a party; and
(vi) no consent or approval of any Person is
required in connection with the execution, delivery and
performance of this Agreement and such other agreements and
instruments by Purchaser which has not heretofore been obtained.
2.2 Acacia Shares. The Acacia Shares have been duly
authorized, are validly issued and are fully paid and
nonassessable.
2.3 Investment.Purchaser is acquiring the Soundview Shares
for investment for its own account, and not with the view to, or
for resale in connection with, any "distribution" of all or any
portion thereof within the meaning of the Securities Act.
Purchaser understands that the Soundview Shares to be purchased
hereunder have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions
of the Securities Act which depends upon, among other things, the
bona fide nature of Purchaser's investment intent and the
accuracy of Purchaser's representations as expressed herein.
Purchaser also represents that it has not been organized solely
for the purpose of acquiring the Soundview Shares. Purchaser
acknowledges that the Soundview Shares being purchased hereunder
must be held indefinitely unless the transfer thereof is
registered under the Securities Act or unless an exemption from
such registration is available.
2.4 Accuracy of Information. Except as otherwise
disclosed to Sellers, as of the date hereof, all of Purchaser's
reports filed with the Securities and Exchange Commission under
the Exchange Act comply in all material respects with all
applicable requirements, and all information made publicly
available by Purchaser in such reports is true and complete in
all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make any statement therein not misleading.
2.5 Other. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest
or valid claim upon or against Sellers for any commission, fee or
other compensation as a finder or broker because of any act or
omission by such Purchaser and Purchaser agrees to indemnify and
hold Soundview harmless against any such commissions, fees or
other compensation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Browne represents and warrants that:
3.1 Good and Marketable Title. Browne has, and at the
Closing Purchaser will receive, good and marketable title to the
Browne Shares, free and clear of all liens, claims, security
interests, charges and encumbrances (other than those imposed by
the Pledge Agreement or the Stockholders' Agreement).
3.2 Authority; Enforceable Agreements. Browne has full
legal capacity and authority to enter into this Agreement and
each other agreement contemplated hereby to which such Browne is
a party; the execution, delivery and performance of this
Agreement will not breach, violate or conflict with any agreement
to which Browne is a party or is bound; and this Agreement and
each other agreement contemplated hereby constitutes the legal,
valid and binding obligation of Browne, enforceable against
Browne in accordance with its terms.
Schmidt represents and warrants that:
3.3 Good and Marketable Title. Schmidt has, and at the
Closing Purchaser will receive, good and marketable title to the
Schmidt Shares, free and clear of all liens, claims, security
interests, charges and encumbrances (other than those imposed by
the Pledge Agreement or the Stockholders' Agreement).
3.4 Authority; Enforceable Agreements. Schmidt has full
legal capacity and authority to enter into this Agreement and
each other agreement contemplated hereby to which Schmidt is a
party; the execution, delivery and performance of this Agreement
will not breach, violate or conflict with any agreement to which
Schmidt is a party or is bound; and this Agreement and each other
agreement contemplated hereby constitutes the legal, valid and
binding obligation of Schmidt, enforceable against Schmidt in
accordance with its terms.
Sellers jointly and severally represent and warrant that:
3.5 Material Contracts. Schedule 3.5 contains an accurate
and complete list of all contracts, agreements, licenses,
instruments and understandings (whether or not in writing) to
which either Seller or Soundview is a party or is bound and that
are material to the business, assets, financial condition or
results of operations of Soundview. Without limiting the
generality of the foregoing, such list includes all such
contracts, agreements, licenses and instruments: (a)providing for
payments of more than $25,000; (b)with any Affiliate; (c)for the
employment or retention or any director, officer, employee,
agent, shareholder, consultant or advisor; and (d)in the nature
of a profit sharing, bonus, stock option, stock purchase,
pension, deferred compensation or retirement, severance,
hospitalization, insurance or other plan or contract providing
benefits to any person or former director, officer, employee,
agent, shareholder, consultant or advisor or such persons'
dependents, beneficiaries or heirs. True and correct copies of
all items so listed in Schedule 3.5 have been provided to
Purchaser.
3.6 Litigation. There is no litigation or governmental
proceeding or investigation pending, or threatened against
Soundview affecting any of its properties or assets, or against
any officer, key employee or the shareholders of Soundview that
might result in any adverse change in the business, operations,
affairs or conditions of Soundview or that might call into
question the validity of this Agreement, any of the Soundview
Shares or any of the transaction contemplated hereby, nor has
there occurred any event, nor does there exist any condition, on
the basis of which any litigation, proceeding or investigation
might properly be instituted.
3.7 No Brokers or Finders. Sellers owe no commission, fee
or other compensation to any Person as a finder or broker as a
result of the transactions contemplated by this Agreement.
3.8 Capitalization; Status of Capital Stock. Soundview is
duly organized and existing under the laws of the State of
Delaware and is in good standing in Delaware and duly qualified
to do business in Connecticut. Soundview has a total authorized
capitalization consisting of 75,000,000 shares of Common Stock,
$.001 par value, of which 7,500,000 shares are issued and
outstanding. No amendment to the Certificate of Incorporation
has been filed or approved by the Board of Directors. All of the
outstanding shares of capital stock of Soundview have been duly
authorized, are validly issued and are fully paid and
nonassessable and have not been issued in violation of any
Person's preemptive rights. The Soundview Shares are duly
authorized, validly issued and fully paid and nonassessable free
and clear of all liens and encumbrances. There are no options,
warrants or rights to purchase shares of capital stock or other
securities of Soundview authorized, issued or outstanding, nor is
Soundview obligated in any other manner to issue shares of its
capital stock or other securities.
3.9 Assets and Liabilities. At the date hereof, Soundview
has at least $350,000 of cash and cash equivalents and total
liabilities at such date (contingent, accrued or otherwise) do
not exceed $50,000.
3.10 Compliance with Law. Soundview is organized and has
conducted its businesses in accordance with all applicable laws,
rules, regulations and orders of any governmental authority,
noncompliance with which could (individually or when aggregated
with all other such non-compliances) materially adversely affect
its business or condition, financial or otherwise, except
non-compliance being contested in good faith through appropriate
proceedings, so long as Soundview has established sufficient
reserves, if any, with respect to such items.
3.11 Absence of Changes. Since December 31, 1996, there has
been no event or condition of any character relating to Soundview
which materially adversely affects its business, properties,
condition (financial or otherwise), results of operations or
prospects.
3.12 Patents, Copyrights and Trademarks. Soundview has
sufficient title to and ownership of all necessary patents,
licenses, trademarks, service marks, trade names, copyrights,
trade secrets, inventions, franchises, computer software and
other proprietary rights, including those with respect to the
Patent, necessary for its businesses as now conducted, or as
presently proposed to be conducted, without any conflict with or
infringement of, the rights of others. Schedule 3.12 lists all
patents, licenses, trademarks, service marks, trade names,
copyrights, trade secrets, inventions, franchises, computer
software and other proprietary rights in which Soundview has an
interest and the nature and extent of such interest. To Sellers'
knowledge, Soundview has not violated any intellectual property
rights of any other person or entity. To Sellers' knowledge,
there is no third party which is infringing upon or violating any
of the intellectual property rights of Soundview. Soundview has
not granted any license or option or conferred any commercial
rights to any third parties with respect to the use of its
proprietary information.
3.13 Investment. Each Seller is acquiring the Acacia Shares
for investment for his own account, and not with the view to, or
for resale in connection with, any "distribution" of all or any
portion thereof within the meaning of the Securities Act. Each
Seller understands that the Acacia Shares to be acquired
hereunder have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions
of the Securities Act which depends upon, among other things, the
bona fide nature of each Seller's investment intent and the
accuracy of each Seller's representations as expressed herein.
Each Seller acknowledges that the Acacia Shares being acquired
hereunder must be held indefinitely unless the transfer thereof
is registered under the Securities Act or unless an exemption
from such registration is available, and that each share
certificate representing Acacia Shares shall bear a legend
setting forth the restrictions on the transfer thereof. Each
Seller is an "accredited investor" as defined in Rule 501 under
the Securities Act.
3.14 Rule 144. Each Seller acknowledges that he is aware of
the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private
placement, subject to the satisfaction of certain conditions,
including, among other things, the availability of certain
current public information about Acacia, the resale occurring
after the expiration of minimum holding periods after a party has
purchased and paid for the security to be sold, the sale being
affected through a "broker's transaction" or in transactions
directly with a "market maker" and the number of shares being
sold during any three-month period not exceeding specified
limitations (except as provided in Rule 144(k)).
3.15 Certain Transactions. Other than as set forth on
Schedule 3.15, there are no transactions, agreements or
obligations between Soundview, on the one hand, and its officers,
directors or shareholders (including the Shareholder), or their
immediate family members or other associates or affiliates, on
the other hand, and no such person is an interested party to any
contract of Soundview or holds a direct or indirect ownership
interest in any business or corporation which competes with
Soundview.
ARTICLE 4
REGISTRATION RIGHTS WITH RESPECT TO ACACIA SHARES
4.1 Registration Rights.
(a) Registration. The Purchaser will file a Registration
Statement with the Securities and Exchange Commission (together
with any other federal agency at the time administering the
Exchange Act or the Securities Act of 1933, the "Commission") for
the resale of the Acacia Shares within thirty days of the date
hereof. Subject to the provisions of this Agreement, the
Purchaser shall use its reasonable best efforts to cause such
Registration Statement to be declared effective by the Commission
as promptly as shall be practicable. Purchaser shall use its
best efforts to keep such Registration Statement in effect until
Sellers have sold or otherwise distributed all Acacia Shares or
until such Acacia Shares may be traded without restriction
pursuant to paragraph (k) of Rule 144, if applicable. Purchaser
acknowledges and agrees that time is of the essence with respect
to the liquidity of the Acacia Shares. Sellers shall promptly
notify the Purchaser of the proposed manner of sale of any Acacia
Shares to be sold pursuant to such Registration Statement other
than in an unsolicited brokers' transactions including only usual
and customary brokers' commissions. Seller shall not undertake
any such transactions other than unsolicited brokers'
transactions including only usual and customary brokers'
commissions unless (i) Seller shall have furnished all
information required to be disclosed in any related prospectus
supplement, and (ii) Seller shall have agreed in writing to bear
all costs of registration and related expenses (including
attorneys' fees) in excess of $5,000.
(b) Suspension of Effectiveness. The Purchaser's
obligations under Section 4(a) above shall not restrict its
ability to suspend the effectiveness of, or direct the Sellers
not to offer or sell securities under, the Registration
Statement, at any time, for such reasonable period of time which
the Purchaser believes is necessary to prevent the premature
disclosure of any events or information having a material effect
on the Purchaser. In addition, the Purchaser shall not be
required to keep the Registration Statement effective, or may,
without suspending such effectiveness, instruct the Sellers not
to sell such securities, during any period during which the
Purchaser is instructed, directed, ordered or otherwise requested
by any governmental agency or self-regulatory organization to
stop or suspend such trading or sales.
(c) Holdback Agreement. In the event of any filing of a
prospectus supplement or the commencement of an underwritten
public distribution of the Purchaser's Common Stock under a
registration statement on or after the earlier to occur of (i)
payment of all principal of and interest on the Notes, and (ii)
April 15, 1998, the Sellers agree not to effect any public sale
or distribution of the Purchaser's Common Stock, including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act,
during a period designated by the Purchaser in a written notice
duly given to the Sellers, which period shall commence
approximately 14 days prior to the effective date of any such
filing of such prospectus supplement or the commencement of such
underwritten public distribution of such Common Stock under a
Registration Statement and shall continue for up to 134
consecutive days; provided, however, that Sellers shall be
afforded "piggy-back" registration rights allowing participation
in such underwritten public distribution (which shall be
customary and usual "piggy-back" rights, limited in scope by the
underwriter's reasonable cut-backs and other reasonable
restrictions) in the event that any sale or distribution of
Purchaser's Common Stock is restricted pursuant to this Section
4.1(c) prior to the second anniversary of the earlier to occur of
(i) payment of all principal of and interest on the Notes, and
(ii) April 15, 1998. The terms of such "piggy-back" registration
rights shall be negotiated in good faith by the parties hereto
immediately following the execution of this Agreement and
memorialized in a written agreement.
(d) Registration Procedures. Except as otherwise expressly
provided herein, in connection with any registration of Acacia
Shares pursuant to this Agreement, the Purchaser shall:
(i) furnish to the Sellers copies of such Registration
Statement and such other documents as proposed to be filed
(including copies of any document to be incorporated by
reference therein), and thereafter furnish to the Sellers
such number of copies as may be reasonably requested in
writing by the Sellers of such Registration Statement, each
amendment and supplement thereto (including copies of any
document to be incorporated by reference therein), including
all exhibits thereto, the prospectus included in such
registration statement (including each preliminary
prospectus), and, promptly after the effectiveness of a
Registration Statement, the definitive final prospectus filed
with the Commission;
(ii) notify the Sellers, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of any event as a
result of which the prospectus included in such Registration
Statement (including any document to be incorporated by
reference therein) contains an untrue statement of a material
fact or omits any fact necessary to make the statements
therein not misleading and, at the request of the Sellers,
the Purchaser shall prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to
the purchasers of such Acacia Shares, such prospectus will
not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
promptly make available to the Sellers any such supplement or
amendment; and
(iii) notify the Sellers promptly, and (if requested by
any such Person) confirm such advice in writing, (1) when
the Registration Statement, 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,
(2) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings
for that purpose and the Purchaser shall promptly use its
reasonable best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should
be issued and (3) of the receipt by the Purchaser of any
notification with respect to the suspension of the
qualification or exemption from qualification of a
Registration Statement or any of the Acacia Shares
for offer or sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
The Purchaser may require the Sellers to furnish to the
Purchaser such information regarding themselves and the
distribution of such Acacia Shares as the Purchaser may from time
to time reasonably request in writing and such other information
as may be legally required in connection with such registration.
The Sellers agree, by their acquisition of Acacia Shares and its
acceptance of the benefits provided to it hereunder, to furnish
promptly to the Purchaser all information required to be
disclosed in order to make any previously furnished information
not materially misleading.
The Sellers agree, in connection with any disposition of
Acacia Shares, to comply with all applicable prospectus delivery
requirements of the Commission. The Sellers further agree that
upon receipt of any notice from the Purchaser of the happening of
any event of the kind described herein requiring the cessation of
the distribution of a prospectus or the distribution of a
supplemented or amended prospectus, the Sellers will forthwith
discontinue disposition of Acacia Shares pursuant to the
Registration Statement covering such Acacia Shares until the
Sellers' receipt of the copies of the supplemented or amended
prospectus contemplated by this Agreement, or until it is advised
in writing by the Purchaser that the use of the prospectus may be
resumed, and, if so directed by the Purchaser, the Sellers will
deliver to the Purchaser (at the Purchaser's expense) all copies,
other than permanent file copies then in the Sellers' possession,
of the prospectus covering such Acacia Shares current at the time
of receipt of such notice.
(e) Registration Expenses. All expenses incident to the
Purchaser's performance of or compliance with the registration of
shares pursuant to this Agreement, including, without limitation,
all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and
disbursements of counsel of the Purchaser in connection with
"blue sky" qualifications of the Acacia Shares), fees and
expenses associated with filings required to be made with the
National Association of Securities Dealers, Inc., and with
listing on any national securities exchange or exchanges in which
listing may be sought, printing expenses, messenger and delivery
expenses, fees and expenses of counsel for the Purchaser and its
independent certified public accountants, securities acts
liability insurance (if the Purchaser elects to obtain such
insurance), the fees and expenses of any special experts retained
by the Purchaser in connection with such registration, and fees
and expenses of other persons retained by the Purchaser (all such
expenses being herein called "Registration Expenses") will be
borne by the Purchaser; provided that in no event shall
Registration Expenses payable by the Purchaser include any (i)
underwriting discounts, commissions, or fees attributable to the
sale of Acacia Shares, (ii) fees and expenses of any counsel,
accountants, or other persons retained or employed by the
Sellers, or (iii) transfer fees, if any.
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<PAGE>
ARTICLE 5
DEFINITIONS
5.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Agreement" means this Common Stock Purchase Agreement,
including all Exhibits and Schedules, as from time to time
amended and in effect between the parties hereto.
"Closing" shall have the meaning assigned to that term
in Section 1.2 of this Agreement.
"Common Stock" means Soundview's Common Stock, $.001
par value.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules
and regulations of the Securities and Exchange Commission (or of
any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"Patent" means United States patent number 4,554,584.
"Person" means an individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Pledge Agreements" means the Pledge Agreements, each
dated as of the date hereof, between Purchaser, on the one hand,
and each of Browne and Schmidt, on the other hand, in the form
set forth in Exhibit A.
"Purchaser" means Acacia Research Corporation, a
California corporation, and its successors and assigns.
"Registration Statement" means the registration
statement or comparable document under Securities Act through
which a public sale or disposition of the Acacia Shares may be
registered, including the prospectus, amendments and supplements
to such registration statement, all exhibits, and all material
incorporated by reference or deemed to be incorporated by
reference in such Registration Statement.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and
regulations of the Securities and Exchange Commission (or of any
other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"Soundview" means Soundview Technologies Incorporated,
a Delaware corporation, and its successors and assigns.
"Soundview Shares" shall have the meaning assigned to
that term in Section 1.1 of this Agreement.
"Stockholders' Agreement" means the Stockholders'
Agreement, dated as of the date hereof, among Soundview, the
Sellers and Purchaser, in the form set forth in Exhibit B.
"Subsidiary" or "Subsidiaries" means any corporation,
50% or more of the outstanding voting stock of which shall at the
time be owned by Soundview or by one or more Subsidiaries, or any
other entity or enterprise, 50% or more of the equity of which
shall at the time be owned by Soundview or by one or more
Subsidiaries.
ARTICLE 6
MISCELLANEOUS
6.1 No Waiver; Cumulative Remedies. No failure or delay
on the part of Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
6.2 Amendments, Waivers and Consents. Any provision in
this Agreement to the contrary notwithstanding, no changes in or
additions to this Agreement may be made, and compliance with any
covenant or provision herein set forth may not be omitted or
waived, without the prior written consent of the parties. Any
waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
6.3 Addresses for Notices, etc. All notices, requests,
demands and other communications provided for hereunder shall be
in writing (including telegraphic communication) and mailed, by
certified or registered mail, or telegraphed or delivered to the
applicable party at the addresses indicated below:
If to Purchaser:
Acacia Research Corporation
12 South Raymond Avenue
Pasadena, California 91105
Attention: Paul R. Ryan, President
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: D. Stephen Antion, Esq.
<PAGE>
If to Schmidt:
David H. Schmidt
Two Soundview Drive
Greenwich, Connecticut 06830
If to Browne:
H. Lee Browne
Two Soundview Drive
Greenwich, Connecticut 06830
with a copy to:
Finn, Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Brett Dixon, Esq.
6.4 Costs, Expenses and Taxes. Each party shall pay its
own fees in connection with the investigation, preparation,
execution and delivery of this Agreement and other instruments
and documents to be delivered hereunder and the transactions
contemplated hereby and thereby. In addition, Sellers shall pay
any and all material stamp and other taxes payable or determined
to be payable by Sellers in connection with the execution and
delivery of this Agreement and other instruments and documents to
be delivered hereunder or thereunder, and agrees to save
Purchaser harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to
pay such taxes and filing fees. In the event of any controversy,
claim or dispute among the parties hereto arising out of or
relating to this Agreement, or any breach hereof, the prevailing
party shall be entitled to recover from the losing party
reasonable attorney's fees, expenses and costs.
6.5 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the
Purchaser and their respective successors and assigns.
6.6 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or any
other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or
thereof for a period of three (3) years from the date of this
Agreement.
6.7 Prior Agreements. This Agreement constitutes the
entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter
hereof.
6.8 Severability. The invalidity or unenforceability of
any provision hereto shall in no way affect the validity or
enforceability of any other provision.
6.9 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California.
6.10 Headings. Article, Section and subsection headings in
this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any
other purpose.
6.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
6.12 Further Assurances. From and after the date of this
Agreement, upon the reasonable request of Purchaser, the Sellers
shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm
and carry out and to effectuate fully the intent and purposes of
this Agreement and the transactions contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
ACACIA RESEARCH CORPORATION
By: /s/ KATHRYN KING-VAN WIE
Kathryn King-Van Wie
Chief Operating Officer
/s/ H. LEE BROWNE
H. LEE BROWNE, Individually
/s/ DAVID H. SCHMIDT
DAVID H. SCHMIDT, Individually
<PAGE>
FORM OF
NON-RECOURSE
PROMISSORY NOTE
DUE NOVEMBER 1, 1997
$450,000.00 Pasadena, California
July 6, 1997
FOR VALUE RECEIVED, ACACIA RESEARCH CORPORATION, a California
corporation ("MAKER"), unconditionally promises to pay to the
order of _______________, an individual ("PAYEE"), in the manner
and at the place hereinafter provided, the principal amount of
FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000.00).
Maker also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at a simple
interest rate equal to 6.07% per annum from July 6, 1997 through
November 1, 1997 ("Maturity"). Such interest shall not compound.
Interest on this Note shall be payable on the maturity date and
as set forth in Section 3 hereof.
PAYMENTS. All payments of principal and interest in respect
of this Note shall be made in lawful money of the United States
of America. Maker shall have the right at any time and from time
to time to prepay the principal of this Note in whole or in part,
without premium or penalty, such prepayment, if in full, to be
accompanied by accrued and unpaid interest to the date of
prepayment. Maker shall also have the option, but not the
obligation, on each date on which a partial payment is made to
pay any interest which has accrued as of such partial payment
date. Any partial payments made hereunder shall be credited to
(i) cost of collection with respect to the Pledged Shares as
defined in the Pledge Agreement, of even date herewith, between
Maker and Payee; and (ii) principal, unless otherwise provided
herein, and interest shall thereupon cease to accrue upon the
principal so credited.
ACCELERATION. Prior to the complete repayment of the Note
and within 10 business days after the closing of one or more
transactions (including, without limitation, offerings of equity
or the incurrence of debt) in which Maker raises capital to be
used for Maker's purposes, Maker agrees to use 32.5% of the net
proceeds realized by Maker in each transaction to reduce the
outstanding amount of this Note.
EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "EVENT OF DEFAULT:"
failure of Maker to pay any principal under this Note when
due, whether at stated maturity, acceleration, or otherwise, or
failure of Maker to pay any interest or other amount due under
this Note within five business days after the date due; and
if Maker shall challenge, or institute any proceedings to
challenge, the validity, binding effect or enforceability of this
Note or any endorsement of this Note or any other obligation to
Payee.
REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, Payee may, by written notice to Maker,
declare the principal amount of this Note, together with accrued
interest thereon, to be due and payable, and the principal amount
of this Note, together with such interest, shall thereupon
immediately become due and payable without presentment, further
notice, protest or other requirements of any kind (all of which
are hereby expressly waived by Maker).
MISCELLANEOUS.
(a) Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three business days after depositing
it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of Maker shall
be as specified under its signature below; the address of Payee
shall be Mr. H. Lee Browne, c/o Soundview Technologies
Incorporated, Two Soundview Drive, Greenwich, Connecticut 06830;
or in each case at such other address as shall be designated by
Payee or Maker.
(b) No failure or delay on the part of Payee or any other
holder of this Note to exercise any right, power or privilege
under this Note and no course of dealing between Maker and Payee
shall impair such right, power or privilege or operate as a
waiver of any default or an acquiescence therein, nor shall any
single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
expressly provided in this Note are cumulative to, and not
exclusive of, any rights or remedies that Payee would otherwise
have. No notice to or demand on Maker in any case shall entitle
Maker to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of Payee
to any other or further action in any circumstances without
notice or demand.
(c) Maker and any endorser of this Note hereby consent to
renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted
by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
(d) If any provision in or obligation under this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
(e) This Note is non-recourse to the Maker and its assets, and
Maker shall have no personal liability under this Note. Payee's
only recourse shall be against the collateral pledged to Payee
under the Pledge Agreement.
(f) This Note and the rights and obligations of Maker and
Payee hereunder shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of
California without regard to conflicts of laws principles.
IN WITNESS WHEREOF, Maker has caused this Note to be executed
and delivered by its authorized officer as of the day and year
and at the place first above written.
ACACIA RESEARCH CORPORATION
By: Paul R. Ryan
Its: President and Chief Executive
Officer
Notice Address:
Acacia Research Corporation
12 South Raymond Avenue
Pasadena, California 91105
<PAGE>
FORM OF
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is dated as of July
6, 1997 and entered into by and between ACACIA RESEARCH
CORPORATION, a California corporation ("Pledgor"), and __________
_________, an individual ("Secured Party").
PRELIMINARY STATEMENTS
A. Pledgor is a party to that certain Common Stock
Purchase Agreement with Secured Party dated as of July 6, 1997 (the
"Purchase Agreement"), pursuant to which Pledgor received
1,312,500 shares of Soundview Technologies Incorporated common
stock in exchange for Pledgor's agreement to pay Secured Party $700,000
in cash and 200,000 shares of Acacia Research Corporation common
stock (the "Acacia Shares").
B. As of the date hereof, Pledgor has paid $250,000 of
the $700,000 cash payment to Secured Party and agreed to issue the
Acacia Shares. Pledgor has executed a non-recourse promissory
note in the principal amount of $450,000 (the "Note") in order to
satisfy its remaining payment obligations for the 1,312,500
shares of Soundview Technologies Incorporated common stock
originally purchased.
C. This Agreement is intended to provide Secured Party with
security for the payment of the Note.
NOW, THEREFORE, in consideration of the premises and in
order to induce Secured Party to accept the Note and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1 Pledge of Security. Pledgor hereby pledges and
assigns to Secured Party, and hereby grants to Secured Party a
security interest in, all of Pledgor's right, title and interest
in and to:
(a) 421,875 shares of Soundview Technologies
Incorporated common stock (the "Pledged Shares");
(b) Subject to the provisions of Section 5(a) and
Section 5(b), all cash, securities, dividends and
other property at any time and from time to
time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the
Pledged Shares (the Pledged Shares and the pledged
property identified in this subsection (b) are
collectively referred to hereinafter as the
"Pledged Collateral"); and
(c) The Pledged Collateral will be reduced and released
to Pledgor with any principal payment of this Note,
in whole or in part, on a pro rata basis.
SECTION 2 Security for Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt
payment or performance in full when due, whether at stated
maturity, prepayment, acceleration or otherwise, of all
obligations and liabilities of Pledgor arising out of or in
connection with the Note and all extensions or renewals thereof,
whether for principal or interest, and all obligations of Pledgor
now or hereafter existing under this Agreement, including without
limitation obligations under Section 12 hereof (all such
obligations of Pledgor being the "Secured Obligations").
SECTION 3 Covenants as to the Pledged Collateral. So long
as any of the Secured Obligations shall remain outstanding,
Pledgor shall not, unless Secured Party shall otherwise consent
in writing, sell, assign, exchange or otherwise dispose of any of
the Pledged Collateral or any interest therein or create or
suffer to exist any lien, security interest or other charge or
encumbrance upon or with respect to any of the Pledged
Collateral, except for the pledge hereunder and the security
interest created hereby; provided, however, that Pledgor shall be
entitled to transfer the Pledged Shares so long as (a) such
transfer is permitted by the terms of the Pledge Agreement, (b)
such transfer is subject to the lien of and the other terms and
conditions of this Pledge Agreement, (c) any such assignee
becomes a party to this Pledge Agreement and agrees to be bound
by the terms hereof and thereof, (d)Secured Party is given
possession of any new certificate representing such Pledged
Shares and executed transfer power evidencing the transfer of
such Pledged Shares to such assignee, and (e) any such assignee
shall take such further actions and execute such further
documents as shall be necessary to perfect or evidence a security
interest of Secured Party in the Pledged Collateral.
SECTION 4 Further Assurances. Pledgor agrees that from time
to time, Pledgor will execute and deliver all further instruments
and documents, and take all further action that Secured Party may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
SECTION 5 Voting Rights; Distributions; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any
and all voting and other consensual rights and powers
relating or pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the
terms of this Agreement; and
(ii) Pledgor shall be entitled to recognize
all incidents of ownership in respect of the Pledged
Shares; and
(iii) any and all liquidating distributions
made on or in respect of the Pledged Collateral,
whether resulting from a subdivision, combination or
reclassification of the outstanding interests of any
issuer thereof or received in exchange for such Pledged
Collateral or any part thereof or as a result of any
merger, consolidation, acquisition or other exchange of
assets to which any such issuer may be a party or
otherwise, and any and all cash and other property
received in payment of the principal of or in
redemption of or in exchange for any Pledged Collateral
(either at maturity, upon call for redemption or
otherwise), shall be and become part of the Pledged
Collateral and, if received by the Pledgor, shall be
held in trust for the benefit of the Secured Party and
shall forthwith be delivered to the Secured Party or
its designated agent (accompanied by property
instruments of assignment and/or stock and/or bond
powers executed by such in accordance with the
Secured Party's instructions) to be held subject to the
terms of this Pledge Agreement.
(b) Upon the occurrence and during the
continuance of an Event of Default, upon written notice from
Secured Party to Pledgor, all rights of Pledgor to exercise the
voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 5(a)(i) shall cease, and
all such rights (so long as an Event of Default is continuing)
shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other
consensual rights. For the avoidance of doubt, the parties
acknowledge that if, as a result of an Event of Default, Secured
Party is entitled to exercise its remedies as provided hereunder
with respect to the Pledged Shares, such remedies shall include
the right to receive all profits with respect to the Pledged
Shares that have accrued from the date of this Agreement through
the date of any such Event of Default that remain undistributed
as of such date.
SECTION 6 Secured Party Appointed Attorney-in-Fact. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-
in-fact, with full authority in the place and stead of Pledgor
and in the name of Pledgor or otherwise, from time to time in
Secured Party's discretion during any period in which an Event of
Default is continuing, to take any action and to execute any
instrument which Secured Party deems reasonably necessary or
advisable to accomplish the purpose of this Agreement which
appointment is, irrevocable and coupled with an interest.
SECTION 7 Secured Party May Perform. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself
perform, or cause performance of, such agreement or obligation,
and the reasonable expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor.
SECTION 8 Standard of Care. Secured Party shall exercise
reasonable care in the custody of any of the Pledged Collateral
in its possession or control and shall be deemed to have
exercised such reasonable care if such Pledged Collateral is
accorded treatment substantially equal to that which Secured
Party accords its own property or if Secured Party takes such
action with respect to the Pledged Collateral as Pledgor shall
reasonably request in writing (which action Secured Party shall
endeavor to take if it determines, in its sole discretion, that
such action will not adversely affect the value as collateral of
the Pledged Collateral and such request is received by Secured
Party in time), but no failure to comply with any such request,
nor any omission to do any such act requested by the undersigned,
shall be deemed a failure to exercise reasonable care, nor shall
any failure of Secured Party to take necessary steps to preserve
rights against any parties with respect to any of the Pledged
Collateral in its possession or control be deemed a failure to
exercise reasonable care.
SECTION 9 Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default":
(a) Failure of Pledgor to pay any principal or
interest under the Note when due, whether at stated
maturity, prepayment, acceleration or otherwise; or
(b) Failure of Pledgor to perform or observe any
material term, covenant or agreement contained in this
Pledge Agreement or the Note and such failure is not cured
within 60 days after written notice thereof from Secured
Party.
SECTION 10 Remedies. If any Event of Default shall have
occurred and be continuing, following the expiration of any
applicable cure period, the Pledgor shall forfeit its Pledged
Collateral in consideration of the extinguishment of the
Pledgor's debt to Secured Party. Upon such forfeiture and except as
otherwise specifically provided herein, the Note shall be fully
discharged, and Pledgor shall have no further obligation or
liability to Secured Party or otherwise in respect of the Note or
this Pledge Agreement.
SECTION 11 Application of Proceeds. Except as expressly
provided elsewhere in this Agreement, all proceeds received by
Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral
may, in the discretion of Secured Party, be held by Secured Party
as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Secured Party against,
the Secured Obligations in the following order of priority:
FIRST: To the payment of all of the Secured Obligations;
SECOND: To the payment of all reasonable costs and expenses
of such sale, collection or other realization and all amounts for
which Secured Party is entitled to indemnification hereunder, and
to the payment of all reasonable costs and expenses paid or
incurred by Secured Party in connection with the exercise of any
right or remedy hereunder, all in accordance with Section 12; and
THIRD: To the payment to or upon the order of Pledgor, or
to whosoever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
SECTION 12 Indemnity and Expenses. Notwithstanding anything
in the Note or this Pledge Agreement to the contrary (including
the provisions of Section 14 hereof), Pledgor agrees to reimburse
the Secured Party, on demand, for all costs and expenses incurred
by the Secured Party in enforcing the Note or this Pledge
Agreement (including the reasonable fees and expenses of its
agents and counsel), to the extent such costs and expenses result
from the breach of any warranty or covenant hereunder by the
Pledgor. Pledgor agrees to indemnify and hold harmless the
Secured Party from and against any and all liability incurred by
the Secured Party in good faith hereunder (as a result of such
breach or misrepresentation) other than any liability arising as
a result of the Secured Party's negligence, recklessness or
willful misconduct.
SECTION 13 Continuing Security Interest. This Agreement
shall create a continuing security interest in the Pledged
Collateral and shall (a)remain in full force and effect until the
payment in full of all Secured Obligations, (b)be binding upon
Pledgor, its successors and assigns, and (c)inure, together with
the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and
assigns. Upon the payment in full of all Secured Obligations,
the security interest granted hereby shall terminate and all
rights to the Pledged Collateral shall revert to Pledgor. Upon
any such termination Secured Party will, at Pledgor's expense,
execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination and Pledgor shall
be entitled to the return, upon its request and at its expense,
against receipt and without recourse to Secured Party, of such of
the Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
SECTION 14 No Recourse. Notwithstanding anything to the
contrary in this Agreement (except Section 12), no recourse shall
be had, whether by levy or execution, or under any law, or by the
enforcement of any assessment or penalty or otherwise, for the
payment of any of the Secured Obligations, against Pledgor
individually or personally, or any successor, assign or affiliate
of Pledgor, or any of the assets of the aforesaid persons, it
being expressly understood that the sole remedies available to
Secured Party pursuant to this Agreement with respect to the
Secured Obligations shall be against the Pledged Collateral.
Except as aforesaid, in an Event of Default, the Secured Party
shall look for payment solely to the Pledged Collateral and will
not make any claim or institute any action or proceeding against
the Pledgor (or its successors or assigns of affiliates) for
payment of the Secured Obligations (or for any deficiency
remaining after application of the Pledged Collateral). Nothing
contained herein, however, shall be construed to release or
impair the lien upon the Pledged Collateral, or preclude the
application of the Pledged Collateral to the payment of the
Secured Obligations in accordance with the terms of this Pledge
Agreement.
SECTION 15 Amendments; Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, and no
consent to any departure by Pledgor therefrom, shall in any event
be effective unless the same shall be in writing and signed by
Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 16 Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telecopy or United States
mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of
telecopy or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party
hereto shall be as set forth below or, as to either party, such
other address as shall be designated by such party in a written
notice delivered to the other party hereto:
If to Pledgor:
Mr. Paul R. Ryan
Acacia Research Corporation
12 South Raymond Avenue
Pasadena, California 91105
If to Secured Party:
_____________________________
_____________________________
_____________________________
_____________________________
SECTION 17 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Secured Party in
the exercise of any power, right or privilege hereunder shall
impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other
power, right or privilege. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 18 Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
SECTION 19 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.
<PAGE>
SECTION 20 Governing Law; Terms. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE
UNIFORM COMMERCIAL CODE OF THE STATE OF CALIFORNIA PROVIDES THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF CALIFORNIA. Unless otherwise defined herein or in
the Note, terms used in Articles 8 and 9 of such Code are used
herein as therein defined.
SECTION 21 Counterparts. This Agreement may be executed in
one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have caused
this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
ACACIA RESEARCH CORPORATION, as Pledgor
By: Paul R. Ryan
Its: President and Chief Executive
Officer
______________, as Secured Party
By: ______________
<PAGE>
EXECUTION COPY
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"AGREEMENT") is madeasof this 6th day of July, 1997, by and among
SOUNDVIEW TECHNOLOGIES INCORPORATED, a Delaware corporation (the
"COMPANY"), H. Lee Browne ("BROWNE"), a natural person, David H.
Schmidt ("SCHMIDT"), a natural person, and ACACIA RESEARCH
CORPORATION, a California corporation ("ACACIA").
BACKGROUND
The Company was formed in March 1996 for the purpose,
among other things, of owning, developing and exploiting United
States patent number 4,554,584 and all related technology (the
"PATENT").
The Company was initially capitalized by issuing
7,500,000 shares of Common Stock, par value $0.001 per share (the
"COMMON STOCK"), in 1996 and the parties hereto entered into a
Stockholders' Agreement relating to election of directors and
various other matters. As of the date hereof, Acacia is
purchasing shares from Browne and Schmidt and consequently Acacia
owns approximately 51% of the total number of issued and
outstanding shares of Common Stock on a fully diluted basis, and
Browne and Schmidt each own approximately 9.5% of the total
number of issued and outstanding shares of Common Stock on a
fully diluted basis. Carl M. Elam and Dale A. Leavy (the
"INVENTORS") each owns 525,000 shares of Common Stock
representing in the aggregate 14% of the total number of issued
and outstanding shares of Common Stock on a fully diluted basis.
The remaining shares are owned by other investors.
The Company, Acacia, Browne and Schmidt desire to enter
into this Agreement to set forth certain rights and obligations
in respect of the Common Stock and the Company.
In consideration of the foregoing and the agreements set
forth below, the parties agree with each other, as follows:
BOARD OF DIRECTORS.
1.1 DESIGNATED BOARD. As of the date hereof, the only
members of the Board of Directors are H. Lee Browne, David H.
Schmidt, Paul R. Ryan and CarlM. Elam. Acacia, Browne and
Schmidt desire to expand the size of the Board to five (5)
directors and will take all necessary action to adjust the size
of the Board. At each meeting of the stockholders for the
election of directors or any solicitation of written consents for
such purpose or in filling any vacancies on the Board, Acacia,
Browne and Schmidt shall vote all shares of the Company's Common
Stock and any other shares of equity securities of the Company
now owned or hereafter acquired or controlled by them
(collectively, the "STOCK"), and otherwise use their best efforts
as stockholders and directors of the Company, to elect the
Designated Board (as defined below) which shall constitute the
entire Board of Directors. The "DESIGNATED BOARD" shall consist
of (i) three members designated by Acacia, (ii) one member
designated by Browne and (iii) one member designated by Schmidt;
provided, however, that in the event that (and for so long as)
Acacia holds less than 50% of the Common Stock as a result of
events arising out of Acacia's failure to timely pay principal of
and interest on two Notes, each dated the date hereof, each made
by Acacia in the principal amount of $450,000, one in favor of
Browne and the other in favor of Schmidt, respectively, the
"DESIGNATED BOARD" shall consist of (i) two members designated by
Acacia, (ii) one member designated by Browne, (iii) one member
designated by Schmidt, and (iv) one member elected by the
Company's shareholders voting independently. In the event of any
vacancy on the Board of Directors, Acacia, Browne and Schmidt
covenant and agree that each shall vote all of their Stock in
accordance with the procedure described above in order to fill
such vacancy. The Company, Acacia, Browne and Schmidt hereby
agree that the size of the Board of Directors shall not be
increased or decreased without the prior written consent of each
of Browne, Schmidt and Acacia.
1.2 BOARD APPROVAL OF CERTAIN ACTIONS. Each of the
Company, Acacia, Browne and Schmidt hereby agrees that each of
the following actions shall require (i) that a majority of the
Company's Board of Directors approve the action, (ii) that such
majority shall at a minimum include either the Browne designee or
the Schmidt designee to the Company's Board of Directors, and
(iii) that each director, in casting his or her vote on such
action, shall consider whether such action would be fair and
reasonable to the Company and shall consider the best interests
of the Company's shareholders as a whole.
(i) Any sale, pledge, assignment (by operation of law
or otherwise) or other disposition of the Patent; provided
that the Company may, without such approval, grant
non-exclusive licenses for the use of the Patent to third
parties on terms and conditions that are fair to the
Company.
(ii) Any transaction of merger or consolidation, or
liquidation, winding-up or dissolution of the Company, or
conveyance, sale, lease or sub-lease (as lessor or
sub-lessor), transfer or other disposition of, in one
transaction or a series of transactions, all or
substantially all of the Company's business, property or
assets, whether now owned or hereafter acquired.
(iii) Any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or
the rendering of any service) with any officer, director or
holder of 5% or more of any class of equity securities of
the Company or with any affiliate of the Company or of any
such officer, director or holder; provided that the Company
may, without the unanimous approval of the Board of
Directors, pay reasonable and customary fees to non-employee
members of the Board of Directors.
(iv) Any issuance of additional shares of Common Stock
or other equity of the Company (including, without
limitation, preferred stock, options, warrants, convertible
debentures, and similar instruments).
(v) Any amendment, repeal or alteration in any way of
any provision of the Certificate of Incorporation or Bylaws
of the Company.
TRANSFER OF SHARES.
2.1 PERMITTED TRANSFERS. (a) Acacia, Browne and
Schmidt may sell or otherwise transfer Stock, in accordance with
the terms and conditions of this Agreement, in a transaction that
is a bona fide sale for value in which the transferor and any
affiliate parts with their economic and voting interests in such
Stock (each, a "Bona Fide Transaction"). Stock sold in a Bona
Fide Transaction will not be subject to this Agreement so long as
the sale is otherwise permitted under this Agreement.
(b) No party hereto may sell or otherwise transfer
Stock in a transaction that is not a Bona Fide Transaction unless
the transferee in such transaction agrees in writing to be bound
by the terms of this Agreement as if such transferee were the
transferor.
2.2 INVALID TRANSFERS. Any sale, assignment or other
transfer of Common Stock by Acacia, Browne or Schmidt contrary to
the provisions of this Section2 shall be null and void, and the
purchaser shall not be recognized by the Company as the holder or
owner of the shares of Common Stock sold, assigned or transferred
for any purposes (including, without limitation, voting or
dividend rights), unless and until the transferring party has
satisfied the requirements of this Section2 with respect to such
sale, assignment or other transfer. The transferring party shall
provide the Company with written evidence that the requirements
of this Section2 have been or will be met or waived by the
Company and the non-transferring party prior to consummating any
sale, assignment or other transfer of shares of Common Stock, and
no shares of Common Stock shall be transferred on the books of
the Company until such written evidence has been received by the
Company.
MISCELLANEOUS.
3.1 TERMINATION. This Agreement shall terminate on
the earlier of (i) the date immediately prior to the closing of a
"Qualified Public Offering" or (ii) the date on which this
Agreement is terminated in writing by the parties hereto. As
used in this Section 3.1, "Qualified Public Offering" means and
includes the closing of an underwritten public offering pursuant
to an effective registration statement under the Securities Act
of 1933, as amended.
3.2 LEGEND. Each certificate representing shares of
Common Stock owned by Acacia, Browne and Schmidt shall state
thereon:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF
SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS
ARE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT DATED JULY 6,
1997, AMONG SOUNDVIEW TECHNOLOGIES INCORPORATED AND
CERTAIN STOCKHOLDERS THEREOF. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF SOUNDVIEW TECHNOLOGIES INCORPORATED."
3.3 NOTICES. All notices or other communications
required or permitted to be delivered hereunder shall be in
writing signed by the party giving the notice to the other
parties hereto at their respective addresses set forth on the
signature page to this Agreement. The Company, Acacia, Browne
and Schmidt may at any time change the address to which notice to
it shall be mailed by giving notice of such change to the other
parties, and such notice shall be deemed given when received by
the other parties hereto.
3.4 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties with respect to the matters
contemplated herein. This Agreement supersedes any and all prior
understandings between the parties as to the subject matter of
this Agreement.
3.5 AMENDMENTS, WAIVERS AND CONSENTS. Any provision
in this Agreement to the contrary notwithstanding, changes in or
additions to this Agreement may be made only by a writing signed
by each of the Company, Acacia and Browne and Schmidt, and
compliance with any covenant or provision herein set forth may be
omitted or waived only by a writing signed by the party waiving
party.
3.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the personal
representatives and successors of the respective parties.
3.7 GENERAL. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. In this
Agreement the singular includes the plural, the plural the
singular, the masculine gender includes the neuter, masculine and
feminine genders. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
3.8 SEVERABILITY. If any provision of this Agreement
shall be found by any court of competent jurisdiction to be
invalid or unenforceable, the parties hereby waive such provision
to the extent that it is found to be invalid or unenforceable.
Such provision shall, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable, and, as
modified, shall be enforced as any other provision hereof, all
the other provisions hereof continuing in full force and effect.
3.9 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the
same instrument.
3.10 ATTORNEYS' FEES. In the event of any controversy,
claim or dispute among the parties hereto arising out of or
relating to this Agreement, or breach hereof, the prevailing
party shall be entitled to recover from the losing party
reasonable attorneys' fees, expenses and costs.
3.11 VOTING OF SHARES. Each of Acacia, Browne and
Schmidt shall vote or cause to be voted the respective shares of
Common Stock of the Company held of record or owned beneficially
by it in such manner as will carry out the intents and purposes
of, and cause the effectuation and implementation of all of the
covenants and agreements contained in, this Agreement.
3.12 THIRD PARTIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than
the parties hereto and their respective permitted transferees,
successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of
any third person to any party to this Agreement, nor shall any
provision hereof give any third person any right of subrogation
or action over or against any party to this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY
BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the date first above written.
SOUNDVIEW TECHNOLOGIES INCORPORATED
By: /s/ H. LEE BROWNE
Name: H. Lee Browne
Title: President
Address: Two Soundview Drive
Greenwich, Connecticut 06830
"BROWNE"
/s/ H. LEE BROWNE
H. Lee Browne
Address: Two Soundview Drive
Greenwich, Connecticut 06830
<PAGE>
"SCHMIDT"
/s/ DAVID H. SCHMIDT
David H. Schmidt
Address: Two Soundview Drive
Greenwich, Connecticut 06830
ACACIA RESEARCH CORPORATION
By: /s/ KATHRYN KING-VAN WIE
Name: Kathryn King-Van Wie
Title: Chief Operating Officer
Address: 12 South Raymond Avenue,
Suite B
Pasadena, California 91105
<PAGE>
FORM OF
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into
by and between SOUNDVIEW TECHNOLOGIES INCORPORATED (the
"COMPANY") and ______________ ("EMPLOYEE"), as of the 6th day of
July 1997.
SECTION I EMPLOYMENT.
The Company hereby employs Employee and Employee hereby
accepts such employment, upon the terms and conditions
hereinafter set forth, from July 6, 1997, to and including June
5, 2002 (the "TERM OF EMPLOYMENT"). Employee agrees to remain in
the employ of the Company until at least June 5, 1999 (the
"CONTRACT PERIOD"). During the Contract Period, if Employee
voluntarily terminates his employment, Employee shall find an
individual or individuals as replacements who (i) are acceptable
to and approved by the Board of Directors (such approval not to
be unreasonably withheld) and (ii) have comparable knowledge,
skills and abilities as Employee and are willing to work for
comparable salary and benefits as provided hereunder. If
Employee voluntarily terminates employment during the Contract
Period without finding such suitable and acceptable replacement,
Employee shall pay to Company as liquidated damages 75,000 shares
of the Common Stock of the Company. Employee acknowledges that
such amount is not a penalty and reflects the parties" reasonable
estimate of the minimal equity incentive needed to be given to a
potential replacement for Employee.
SECTION II DUTIES.
Employee shall serve during the course of his
employment with the Company as of the Company, and report directly
to the Board of Directors with duties and responsibilities consistent
in all respects with such positions.
Employee agrees to devote so much of his business time,
attention, and skills and efforts to the Company as is reasonably
necessary to fulfill his obligations to carry out the business
objectives of the Company, as such obligations are determined by
the Board of Directors of the Company.
For the term of this Agreement, Employee shall report
to the ____________________ of the Company.
SECTION III COMPENSATION.
Base Salary. The Company will pay to Employee a base
salary at the rate of $______ per year. Such salary shall be
earned monthly and shall be payable in periodic installments no
less frequently than monthly in accordance with the Company's
customary practices. Amounts payable shall be reduced by
standard withholding and other authorized deductions. Employee's
salary will be increased based on the Company achieving certain
performance goals based on the Company's quarterly net pre-tax
profits. For the purposes of this agreement net pre-tax profits
are any income realized by the Company after deducting all
expenses incurred by the Company, with the exception of taxes
payable, if any, from all revenue generated by the Company during
a specified period. The Company's quarterly performance goal and
corresponding salary increase are as
follows:
1) Upon the Company generating net pre-tax profits of
$250,000 in a fiscal quarter, Employee's salary shall be
increased to an annualized rate of $______.
2) Upon the Company generating net pre-tax profits of
$500,000 in a fiscal quarter, Employee's salary shall be
increased to an annualized rate of $______.
3) Upon the Company generating net pre-tax profits of
$1,000,000 in a fiscal quarter, Employee's salary shall be
increased to an annualized rate of $______.
Any such adjustments set forth in this Section III-A shall
be effective as of the beginning of the fiscal quarter next
following the quarter in which the applicable performance goal is
met.
Bonus, Savings and Retirement Plans. Employee shall be
entitled to participate in all Inventor Bonus Policies and
savings and retirement plans, practices, policies and programs,
if any, applicable generally from time to time at the discretion
of the Board of Directors of the Company.
Welfare Benefit Plans. Employee and/or his family, as
the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs, if any, provided by the Company from time
to time (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally from time to time as
established by the Company.
Expenses. Employee shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by
him in accordance with the policies, practices and procedures, if
any, as in effect generally from time to time as established by
the Company.
Fringe Benefits. Employee shall be entitled to fringe
benefits in accordance with the plans, practices, programs and
policies, if any, as in effect generally from time to time as
established by the Company.
Vacation. Employee shall be entitled to paid vacation
in accordance with the plans, policies, programs and practices,
if any, as in effect generally from time to time as established
by the Company.
Modification of Benefits. The Company reserves the
right to modify, suspend or discontinue any and all of the plans,
practices, policies and programs set forth in paragraphs B
through F above of this Section III at any time without recourse
by Employee so long as such action is taken generally with
respect to other similarly situated peer executives and does not
single out Employee.
SECTION IV TERMINATION.
Death or Disability. Employee's employment with the
Company shall terminate automatically upon Employee's death. If
the Company determines in good faith that the Disability of
Employee has occurred (pursuant to the definition of Disability
set forth below), it may give to Employee written notice in
accordance with Section XIX below of its intention to terminate
Employee's employment. In such event, Employee's employment with
the Company shall terminate effective on the 30th day after the
giving of such notice to Employee in accordance with Section XIX
below, unless within the 30 days after such notice date, Employee
shall have returned to full-time performance of his duties, in
which case Employee's employment with the Company shall resume as
if such notice of termination had never been given. During
Employee's Disability period, Employee's rights, if any, to
receive benefits under Section III-C above shall not be affected
by the Company's termination of Employee's employment with the
Company. For purposes of this Agreement, "Disability" shall mean
a physical or mental impairment which renders Employee unable to
perform the essential functions of his position, even with
reasonable accommodation which does not impose an undue hardship
on the Company for a period of not less than 90 days. The
Company reserves the right, in good faith, to make the
determination of Disability under this Agreement based upon
information supplied by Employee and/or his medical personnel, as
well as information from medical personnel (or others) selected
by the Company or its insurers.
Cause. The Company may terminate Employee's employment
for Cause. For purposes of this Agreement, "Cause" shall mean
that the Company, acting in good faith based upon the information
then known to the Company, determines that Employee has: (1)
committed a material breach of his duties and responsibilities
(other than as a result of incapacity (as defined below) due to
Disability), and such breach has not been cured after notice and
a reasonable opportunity to cure; or (2) been convicted of a
felony or misdemeanor which involves acts of moral turpitude or
which otherwise adversely affects the ability of the Company to
conduct its business in a material way; or (3) refuses to perform
required duties and responsibilities and which has or is
reasonably anticipated to have a material adverse effect on the
Company or performs them grossly incompetently; or (4) violated
any fiduciary duty owed to the Company and which has a material
adverse effect on the Company. "Incapacity" as used herein shall
be limited only to such Disability which substantially prevents
the Company from availing itself of the services of Employee.
Other than Cause or Death or Disability. The Company
may terminate Employee's employment at any time, with or without
cause, upon written notice.
Obligations of the Company Upon Termination.
1. Death or Disability. If Employee's employment is
terminated by reason of Employee's death or Disability, this
Agreement shall terminate without further obligations to
Employee or his estate, beneficiaries or legal
representatives under this Agreement, other than for (a)
payment of the sum of (i) Employee's annual base salary
(after giving effect to any adjustments to base salary
pursuant to Section III-A) through the date of termination
to the extent not theretofore paid, (ii) any compensation
previously deferred by Employee (together with any accrued
interest or earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid (the
sum of the amounts described in clauses (i) and (ii) shall
be hereinafter referred to as the "ACCRUED OBLIGATIONS"),
and (iii) any other compensation including the pro rata
portion of any bonus or incentive compensation payable to
the Employee in respect to the relevant fiscal year which
shall be paid to Employee or his estate, beneficiary, or
legal representatives, as applicable, in a lump sum in cash
within 30 days of the effective date of termination; and (b)
payment to Employee or his estate, beneficiary or legal
representatives, as applicable, any amounts due pursuant to
the terms of any applicable welfare benefit plans described
in Section III-C above.
<PAGE>
2. Cause or Quit.
(a) If Employee's employment is terminated by the
Company for Cause, this Agreement shall terminate
without further obligations to Employee other than for
the timely payment of Accrued Obligations and
payment of any amounts due pursuant to the terms of any
applicable welfare benefit plans described in Section
III-C above. If it is subsequently determined by a
non-appealable court of competent jurisdiction or by
final and binding arbitration pursuant to Section V
hereof that the Company did not have Cause for
termination under Section IV-B above, then the
Company's decision to terminate shall be deemed to
have been made under Section IV-C above and the amounts
payable under Section IV-D-3 below shall be the only
amounts Employee may receive for his termination.
(b) If Employee shall quit his employment with
the Company, this Agreement shall terminate without
further obligations to Employee other than for the
timely payment of Accrued Obligations and payment of
any amounts due pursuant to the terms of any applicable
welfare benefit plans described in Section III-C above.
Nothing in this paragraph shall be deemed to imply or
be interpreted to mean that Employee has the right
to quit his employment with the Company prior to the
expiration of this Agreement or earlier termination by
the Company of Employee's employment with the Company
pursuant to the other provisions of this Agreement.
3. Other than Cause or Death or Disability. If the
Company terminates Employee's employment for other than
Cause or Death or Disability, this Agreement shall terminate
without further obligations to Employee other than the
following: (a) the Company shall timely pay or cause to be
paid to Employee the amount of the Accrued Obligations; (b)
the Company shall pay or cause to be paid to Employee two
times the Employee's total cash compensation, including
Employee's annual salary at the time of termination,
through the Term of Employment (but not less than one year),
at such times as if Employee were still employed, less
standard withholdings and other authorized deductions, and,
if such termination occurs within the first two years of the
Term of Employment, the Company will pay Employee an
additional $250,000; (c) the Company shall provide to
Employee the benefits, or comparable benefits thereto,
provided under Section III-C above through the Term of
Employment; and (d) the Company shall timely pay or cause
to be paid to Employee any amounts due pursuant to the terms
of any applicable welfare benefit plans described in Section
III-C above.
SECTION V ARBITRATION.
Any controversy or claim arising out of or relating to this
Agreement, its enforcement or interpretation, or because of an
alleged breach, default, or misrepresentation in connection with
any of its provisions, shall be submitted to arbitration, to be
held in Los Angeles County, California in accordance with Labor
Arbitration Rules of the American Arbitration Association. In
the event either party institutes arbitration under this
Agreement, the party prevailing in any such litigation shall be
entitled, in addition to all other relief, to reasonable
attorneys' fees relating to such arbitration. The nonprevailing
party shall be responsible for all costs of the arbitration,
including but not limited to, the arbitration fees, court
reporter fees, etc.
<PAGE>
SECTION VI ANTISOLICITATION.
Employee promises and agrees that during the Term of this
Agreement, he will not influence or attempt to influence
customers, clients, partners, investors, or joint venturers of
the Company or any of its present or future subsidiaries or
affiliates, either directly or indirectly, to divert their
business or investments to any individual, partnership, firm,
business, corporation or other entity then in direct or indirect
competition with the business of the Company, or any subsidiary
or affiliate of the Company.
SECTION VII. NONCOMPETITION
A. Employee agrees that, during Term of Employment, he
will not directly or indirectly, without the prior written
consent of the Board of Directors of the Company, provide
consultative service with or without pay, own, manage, operate,
join, control, participate in, or be connected as a stockholder,
partner, or otherwise with, any business, individual, partner,
firm, corporation, or other entity which is then in competition
with the business of the Company.
B. It is expressly agreed that the Company will or would
suffer irreparable injury if Employee were to compete with the
business of the Company or any subsidiary or affiliate of the
Company in violation of this Agreement and that the Company would
by reason of such competitions be entitled to injunctive relief
in a court of appropriate jurisdiction. Employee consents and
stipulates to the entry of such injunctive relief in such a court
prohibiting him from competing with the Company or any subsidiary
or affiliate of the Company in violation of this Agreement.
SECTION VIII. SOLICITING EMPLOYEES.
Employee promises and agrees that he will not, for a period
of one year following termination of his employment or the
expiration of the Term of this Agreement, directly or indirectly
solicit any of the employees of the Company, who, at any time
during the last six months of such Employee's employment with
Company, received an annual salary of $25,000 or more as an
employee of the Company to work for any business, individual,
partnership, firm, corporation, or other entity then in direct or
indirect competition with the business of the Company or any
subsidiary or affiliate of the Company.
SECTION IX. CONFIDENTIAL INFORMATION.
Employee shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses or
prospective businesses, which shall have been developed or
obtained by Employee during or prior to his employment by the
Company or any of its affiliated companies and which shall not be
public knowledge (other than by acts by Employee or his
representatives or agents in violation of this Agreement). After
termination of Employee's employment with the Company, he shall
not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
Employee agrees that all styles, designs, lists,
materials, books, files, reports, correspondence, records,
software programs, invention memoranda, and other documents
(collectively, the "COMPANY MATERIAL") used, prepared, or made
available to Employee, shall be and shall remain the property of
the Company. Upon the termination of employment or the
expiration of the Term of this Agreement, all materials owned by
or related to the Company shall be returned immediately to the
Company, and Employee shall not make or retain any copies
thereof.
SECTION X. TRADE SECRETS
A. Employee acknowledges that the Company possesses and
will continue to develop and acquire valuable Proprietary
Information (as defined below), including information that
Employee may develop or discover as a result of Employee's
employment with the Company. The value of that Proprietary
Information depends on it remaining confidential. The Company
will depends on Employee to maintain that confidentiality, and
Employee agrees to accept that position of confidence and trust.
B. As used in this Agreement, "Proprietary Information"
means any information (including any formula, pattern,
compilation, device, method, technique or process) that was
developed by, became known by, or was assigned or otherwise
conveyed to the Company and derives independent economic value,
actual or potential, from not being generally known to the public
or to other persons who can obtain economic value from its
disclosure or use, and includes information of the Company, its
customers, suppliers, joint venturers, licensors, licensees,
distributors and other persons and entities with whom the Company
does business.
Proprietary Information includes, without limitation, trade
secrets, information, data, know-how, software programs,
improvements, inventions, marketing plans, strategies, forecasts,
computer programs, copyrightable material and customer lists.
C. All Proprietary Information shall be the sole property
of the Company and its assigns, and the Company and its assigns
shall be the sole owner of all patents, copyrights and other
rights in connection therewith. Employee agrees to assign to the
Company any rights Employee may have or acquire in such
Proprietary Information. At all times, both during Employee's
Term of Employment by the Company and after its termination,
Employee agrees to keep in confidence and trust all Proprietary
Information, and Employee agrees not use or discuss any
Proprietary Information or anything relating to it without the
written consent of the Company, except as may be necessary in the
ordinary course of performing my duties to the Company. Employee
agrees to cooperate with the Company and use his best efforts to
prevent the unauthorized disclosure, use or reproduction of all
Proprietary Information.
SECTION XI. OWNERSHIP OF INVENTIONS
A. During the Term of Employment, Employee agrees to
promptly and fully disclose to the Company, or any persons
designated by it, all discoveries, improvements, inventions,
formulas, ideas, processes, designs, techniques, know-how, data,
and computer programs, whether or not patentable, made or
conceived or reduced to practice or learned by Employee, either
alone or jointly with others, during the Term of Employment that
are specifically related to the business of the Company (all said
improvements, inventions, formulas, ideas, processes, designs,
techniques, know-how, data, and computer programs shall be
hereinafter collectively called "Inventions").
B. Employee agrees that all Inventions which Employee
make, conceive, reduce to practice or develop (in whole or in
part, either alone or jointly with others) during Term of
Employment shall be the sole property of the Company to the
maximum extent permitted by law and the Company shall be the sole
owner of all patents, copyrights and other intellectual property
or other rights in connection therewith. Employee agrees to
assign to the Company any rights Employee may have or acquire in
such Inventions and any right, title and interest in any patents,
copyrights, or patent or copyright applications based thereon.
This Agreement does not require assignment of an invention which
an employee cannot be obligated to assign under federal or state
law. However, Employee agrees to disclose any Inventions as
required by Section X hereof regardless of whether Employee
believes the Invention is protected by law, in order to permit
the Company to engage in a review process to determine such
issues as may arise. Such disclosure shall be received in
confidence by the Company. Employee further understands that
Employee bears the burden of proving that an Invention cannot
belong to the Company under applicable federal or state laws.
C. Employee agrees to perform, during and after Term of
Employment, all acts deemed necessary or desirable by the Company
to permit and assist it, at the Company's expense, in obtaining
and enforcing patents, copyrights or other rights on such
Inventions and improvements in any and all countries. Such acts
may include, but are not limited to, execution of documents and
assistance or cooperation in legal proceedings. Employee agrees
to irrevocably designate and appoint the Company and its duly
authorized officers and agents, as Employee's agents and
attorneys-in-fact to act for and in Employee's behalf and instead
of Employee, to execute and file any applications or related
filings and to do all other lawfully permitted acts to further
the prosecution and issuance of patents, copyrights or other
rights thereon with the same legal force and effect as if
executed by Employee.
D. Notwithstanding the foregoing, Employee agrees to
assign to the Company (or to any of its nominees) all rights
which Employee may have or acquire in any Invention, full title
to which is required to be in the United States by a contract
between the Company and the United States or any of its agencies.
E. Employee will be entitled to bonuses under the
Company's Incentive Bonus Policy as in effect from time to time.
SECTION XII. SUCCESSORS.
A. This Agreement is personal to Employee and shall not,
without the prior written consent of the Company, be assignable
by Employee.
B. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any
such successor or assignee shall be deemed substituted for the
Company under the terms of this Agreement for all purposes. As
used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly
acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise.
SECTION XIII. WAIVER.
No waiver of any breach of any term or provision of this
Agreement shall be construed to be, nor shall be, a waiver of any
other breach of this Agreement. No waiver shall be binding
unless in writing and signed by the party waiving the breach.
SECTION XIV. MODIFICATION.
This Agreement may not be amended or modified other than by
a written agreement executed by Employee and an authorized
officer of the Company.
SECTION XV. SAVINGS CLAUSE.
If any provision of this Agreement or the application
thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given
effect without the invalid provisions or applications and to this
end the provisions of this Agreement are declared to be
severable.
SECTION XVI. COMPLETE AGREEMENT.
This instrument constitutes and contains the entire
agreement and understanding concerning Employee's employment with
the Company and the other subject matters addressed herein
between the parties, and supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether
written or oral, concerning the subject matters hereof. This is
an integrated document.
SECTION XVII. GOVERNING LAW.
This Agreement has been executed and delivered within the
State of Connecticut, and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance
with, and governed by, by the laws of the State of California
without regard to principles of conflict of laws.
SECTION XVIII. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of
this Agreement. Hence, in any construction to be made of this
Agreement, the same shall not be construed against any party on
the basis that the party was the drafter. The captions of this
Agreement are not part of the provisions hereof and shall have no
force or effect.
SECTION XIX. COMMUNICATIONS.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given when deposited in the United States mail by first
class, registered or certified mail, postage prepaid, addressed
to Employee at Soundview Technologies, Two Soundview Drive,
Greenwich, Connecticut 06830 or addressed to the Company at 12 S.
Raymond Avenue, Pasadena, California 91105. Either party may
change the address at which notice shall be given by written
notice given in the above manner.
SECTION XX. EXECUTION.
This Agreement is being executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Photographic copies of such signed counterparts may be used in
lieu of the originals for any purpose.
SECTION XXI. LEGAL COUNSEL.
Employee and the Company recognize that this is a legally
binding contract and acknowledge and agree that they have had the
opportunity to consult with legal counsel of their choice.
In witness whereof, the parties hereto have executed this
Agreement as of the date first above written.
SOUNDVIEW TECHNOLOGIES
INCORPORATED
By:
R. Bruce Stewart
Corporate Secretary
H. LEE BROWNE
"EMPLOYEE"
By:
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