-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BMv+EvupM9QYghiek1nckJcrI0vphRy77wCx0Sb5iUAH0tpKQWklFuZLduJ31v9l fUJYqOXU/QK9XPRzF23X5Q== 0000895345-99-000284.txt : 19990624 0000895345-99-000284.hdr.sgml : 19990624 ACCESSION NUMBER: 0000895345-99-000284 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990525 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PARADIGM GEOPHYSICAL LTD CENTRAL INDEX KEY: 0000931131 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-55079 FILM NUMBER: 99634001 BUSINESS ADDRESS: STREET 1: MERKAZIM HOUSE 32 MASKIT ST STREET 2: P O BOX 2061 HERZLIA B CITY: ISRAEL STATE: L3 ZIP: 46120 BUSINESS PHONE: 2818763473 MAIL ADDRESS: STREET 1: 4 GREENSPOINT PLAZA 16945 NORTHCHASE STREET 2: DRIVE SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77060 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SHAMROCK HOLDINGS INC/CA CENTRAL INDEX KEY: 0001085480 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O SHAMROCK CAPITAL ADVISORS INC STREET 2: 4444 LAKESIDE DRIVE CITY: BURBANK STATE: CA ZIP: 91505 BUSINESS PHONE: 8189734225 MAIL ADDRESS: STREET 1: C/O SHAMROCK CAPTIAL ADVISORS INC STREET 2: 4444 LAKESIDE DRIVE CITY: BURBANK STATE: CA ZIP: 91505 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)* Paradigm Geophysical Ltd. - ------------------------------------------------------------------------------ (Name of Issuer) Ordinary Shares, NIS 0.5 par value - ------------------------------------------------------------------------------ (Title of Class of Securities) 69900J104 - ------------------------------------------------------------------------------ (CUSIP Number) David K. Robbins, Esq. Fried, Frank, Harris, Shriver & Jacobson 350 South Grand Avenue, 32nd Floor Los Angeles, CA 90071 (213) 473-2000 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 17, 1999 - ------------------------------------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_|. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 69900J104 Page of Pages 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Shamrock Holdings, Inc. - 75-1984190 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (SEE INSTRUCTIONS) (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] Not Applicable 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 1,110,943 Ordinary Shares BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 1,110,943 Ordinary Shares 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,110,943 Ordinary Shares 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.5% 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO SCHEDULE 13D CUSIP No. 69900J104 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Shamrock Holdings of California, Inc. - 95-3928494 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (SEE INSTRUCTIONS) (b) [X] 3 SEC USE ONLY 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] Not Applicable 6 CITIZENSHIP OR PLACE OF ORGANIZATION California NUMBER OF 7 SOLE VOTING POWER SHARES 233,750 Ordinary Shares BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 233,750 Ordinary Shares 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 233,750 Ordinary Shares 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [X] EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) Row (11) does not include 877,193 Ordinary Shares held directly by Shamrock Holdings, Inc. Beneficial ownership of those shares is disclaimed by the Reporting Person. 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.8% 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO ITEM 1. SECURITY AND ISSUER. ------------------- The securities to which this statement relates are Ordinary Shares of NIS 0.5 nominal value each ("Ordinary Shares"), of Paradigm Geophysical Ltd., an Israeli corporation (the "Company"). The principal executive offices of the Company are located at 32 Maskit Street, Merkazim Building, P.O.B. 2061, Herzliya B 46120, Israel. ITEM 2. IDENTITY AND BACKGROUND. ----------------------- (a)-(c), (f). The Reporting Persons consist of Shamrock Holdings, Inc., a Delaware corporation ("SHI") and Shamrock Holdings of California, Inc., a California corporation ("SHOC"). The principal executive offices of SHI and SHOC are located at 4444 Lakeside Drive, Burbank, California 91505. SHI and SHOC, together with their subsidiary entities, are holding companies engaged in the making, holding and disposing of investments in various industries, principally in the United States, Israel, Europe, Australia and New Zealand. Roy E. Disney and his wife, Patricia A. Disney, own approximately 4.5% of the common stock of SHI. Roy Patrick Disney, Susan Disney Loughman, Abigail Edna Disney and Timothy J. Disney (the "Disney Children") own an aggregate of approximately 45.4% of the common stock of SHI. In addition, Roy E. Disney is the sole trustee of four trusts established for the benefit of the respective Disney Children which hold an aggregate of approximately 50% of SHI common stock. SHOC is a wholly-owned subsidiary of SHI. The business address of each of the persons listed below is 4444 Lakeside Drive, Burbank, California 91505. The names and principal occupations or employments of the directors, executive officers and controlling persons of SHI and SHOC are as follows: Principal Occupation Name Position or Employment - ---- -------- ------------- Roy E. Disney Chairman of Chairman of the Board of Directors the Borad of SHI and SHOC; Vice Chairman of of Directors the Board of Directors of the Walt Disney Company (an international company engaged in family entertainment, with its principal executive offices located at 500 South Buena Vista Drive, Burbank, California 91521); Chairman of the Board of Directors of Shamrock Capital Advisors, Inc., a Delaware corporation ("SCA") (a closely-held corporation which provides management and consulting services, principally to Trefoil Capital Investors II, L.P., a Delaware limited partnership ("Trefoil L.P."), an investment partnership organized by SHOC to acquire businesses and to make strategic investments in debt or equity securities, and to businesses in which Trefoil L.P. invests); Director of Trefoil Investors II, Inc., a Delaware corporation ("Trefoil Investors") (a corporation organized to serve as the managing general partner of Trefoil L.P.) The principal executive offices of SCA, Trefoil L.P. and Trefoil Investors is 4444 Lakeside Drive, Burbank, CA 91505 Patricia A. Disney Vice Chairman Vice Chairman of the Board of of the Board Directors of SHI, SHOC and SCA Directors Stanley P. Gold Director and Director and President of SHI and President SHOC. Director, President, Treasurer and Managing Director of SCA; Director and President of Trefoil Investors; Director of The Walt Disney Company Robert G. Moskowitz Executive Vice Executive Vice President and President and Secretary of SHI and SHOC. Secretary Managing Director and Secretary of SCA; Vice President and Secretary of Trefoil Investors George J. Buchler Treasurer and Vice President, Chief Assistant Financial Officer and Secretary of Secretary of SHOC; Treasurer and Assistant SHI; Vice Secretary of SHI President, Chief Financial Officer and Treasurer of SHOC All of the persons listed above are citizens and residents of the United States. (d)-(e) During the last five years, neither of the Reporting Persons nor, to their best knowledge, any of their directors, executive officers or controlling persons, as the case may be, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. ------------------------------------------------- The total amount of funds used by SHI to purchase the 877,193 Ordinary Shares purchased by it on May 17, 1999, was $5,000,000. The total amount of funds used by SHOC to purchase the 233,750 Ordinary Shares purchased by it through May 17, 1999 was $1,094,384 (including brokers' commissions). All of such funds were derived from margin borrowings from SHI's trading account at Solomon Smith Barney Inc. None of the Ordinary Shares were pledged as security for the margin borrowings. ITEM 4. PURPOSE OF TRANSACTION. ---------------------- The Reporting Persons acquired the Ordinary Shares for investment purposes. SHI currently intends to transfer 877,193 of the Ordinary Shares owned by it to an investment fund (the "SHI Fund") formed by SHI and an unaffiliated foreign entity , as limited partners. An entity organized by the senior executive officers of SHI will serve as a general partner of the SHI Fund. The transfer is contingent upon the resolution of certain Israeli tax issues. Pursuant to the Share Purchase Agreement, dated as of April 14, 1999, between SHI and the Company (the "Share Purchase Agreement"), as long as SHI or its transferee holds more than 3.5% of the issued and outstanding Ordinary Shares, the Company has agreed to recommend to its shareholders, prior to any general meeting of shareholders at which directors may be proposed to be elected, to elect a representative of SHI or its transferee to the Company's board of directors. Pursuant to the Share Purchase Agreement, Michael Geiger, an employee of a consulting firm retained by SHOC, has been appointed to the Company's Board of Directors as SHI's representative. Notwithstanding the foregoing, the Reporting Persons may determine from time to time in the future, based on market and general economic conditions, the business affairs and financial condition of the Company, the availability of securities at favorable prices and alternative investment opportunities available to the Reporting Persons, and other factors that the Reporting Persons may deem relevant, to acquire additional securities of the Company in the open market, in privately negotiated transactions or otherwise, or to sell some or all of the securities it now holds or hereafter acquires as set forth above or otherwise. Except as stated in this response to Item 4, the Reporting Persons have no current plans or proposals with respect to the Company or its securities of the types enumerated in paragraphs (a) through (j) of Item 4 to the form of Schedule 13D promulgated under the Act. ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER. ------------------------------------- (a), (b) SHI directly holds 877,193 Ordinary Shares, constituting approximately 6.7% of the issued and outstanding Ordinary Shares. SHOC directly holds 233,750 Ordinary Shares, constituting approximately 1.8% of the issued and outstanding Ordinary Shares. Because SHI is a controlling person of SHOC, SHI and SHOC may be deemed to constitute a group within the meaning of Section 13(d)(3) of the Act with respect to the Ordinary Shares each owns. In that event, SHI would be deemed to beneficially own 1,110,943 Ordinary Shares, representing 8.5% of all outstanding Ordinary Shares. SHOC disclaims beneficial ownership of the Ordinary Shares held by SHI. Accordingly, SHI beneficially owns 877,193 Ordinary Shares, representing 6.7% of all outstanding Ordinary Shares, over which it possesses sole voting and dispositive power. In addition, Stanley P. Gold, an executive officer and director of SHI and SHOC, and Robert G. Moskowitz, an executive officer of SHI and SHOC, individually own 27,000 and 13,750 Ordinary Shares, respectively. Mr. Gold and Mr. Moskowitz each posses sole voting and dispostive power over those shares owned by them, which separately represent less than .5% of the outstanding Ordinary Shares. SHI and SHOC each disclaim beneficial ownership of those shares. Finally, each of the controlling persons of SHI and SHOC may be deemed to beneficially own the Ordinary Shares held by SHI, pursuant to Rule 13d-3 under the Act. Those controlling persons are identified in response to Item 2. The percentages set forth in this response to Items 5(a) and 5(b) assume that 13,026,336 Ordinary Shares were outstanding on May 17, 1999, as represented by the Company on such date. (c) On May 17, 1999, SHI purchased from the Company 877,193 Ordinary Shares, following the satisfaction of all conditions precedent under the Share Purchase Agreement, dated as of April 14, 1999, between SHI and the Company (the "Share Purchase Agreement") at a price per share of $5.70. Other than with respect to the shares purchased pursuant to the Share Purchase Agreement, to the best knowledge of the Reporting Persons, none of the persons named in response to Item 2 has effected any transactions in Ordinary Shares during the past 60 days. (d) The Reporting Persons have no knowledge of any other person that has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Ordinary Shares. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. ------------------------------------------------------------- Neither of the Reporting Persons have any knowledge of any contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in response to Item 2 or between such persons and any person with respect to any securities of the Company, other than as follows: SHI purchased 877,193 Ordinary Shares on May 17, 1999, pursuant to the Share Purchase Agreement in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Unregistered Shares"). Pursuant to the Share Purchase Agreement, as long as SHI or its transferee holds more than 3.5% of the issued and outstanding Ordinary Shares, the Company has agreed to recommend to its shareholders, prior to any general meeting of shareholders at which directors may be proposed to be elected, to elect a representative of SHI or its transferee to the Company's board of directors. The Share Purchase Agreement also contains customary representations and warranties and mutual indemnification provisions. On May 17, 1999, SHI entered into a Registration Rights Agreement with the Company, pursuant to which the Company granted SHI certain registration rights with respect to the Unregistered Shares. Pursuant to the Registration Rights Agreement, at any time after May 17, 2000, SHI may request that the Company use its best efforts to effect the registration of the Unregistered Shares pursuant to the Securities Act of 1933, as amended, provided that at least 350,000 of the Company's Ordinary Shares are to be registered (150,000 if the registration is on Form F-3). The Registration Rights Agreement also provides SHI with certain tag-along registration rights upon certain public offerings by the Company. The foregoing response is qualified in its entirety by reference to the full text of Exhibits 2 and 3 to this statement. The text of those exhibits is incorporated herein by this reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. -------------------------------- DOCUMENT -------- Exhibit 1 -- Agreement dated May 24, 1999 - Joint Filing of Schedule 13D Exhibit 2 -- Share Purchase Agreement between SHI and the Company, dated as of April 14, 1999 Exhibit 3 -- Registration Rights Agreement between SHI and the Company, dated as of May 17, 1999 Exhibit 4 -- Margin Account Agreement between Shamrock Holdings, Inc. and Solomon Smith Barney Inc. SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Date: May 24, 1999 SHAMROCK HOLDINGS, INC. By: /s/ Robert G. Moskowitz -------------------------------------- Robert G. Moskowitz Executive Vice President and Secretary SHAMROCK HOLDINGS OF CALIFORNIA, INC. By: /s/ Robert G. Moskowitz -------------------------------------- Robert G. Moskowitz Executive Vice President and Secretary EXHIBIT INDEX DOCUMENT -------- Exhibit 1 -- Agreement dated May 24, 1999 - Joint Filing of Schedule 13D Exhibit 2 -- Share Purchase Agreement between SHI and the Company, dated as of April 14, 1999 Exhibit 3 -- Registration Rights Agreement between SHI and the Company, dated as of May 17, 1999 Exhibit 4 -- Margin Account Agreement between Shamrock Holdings, Inc. and Solomon Smith Barney Inc. EX-1 2 EXHIBIT 1 AGREEMENT JOINT FILING OF SCHEDULE 13D Each of the undersigned hereby agrees to file jointly the statement on Schedule 13D to which this Agreement is attached, and any amendments thereto which may be deemed necessary, pursuant to Regulation 13D-G under the Securities Exchange Act of 1934. It is understood and agreed that each of the parties hereto is responsible for the timely filing of such statement and any amendments thereto, and for the completeness and accuracy of the information concerning such party contained therein, but such party is not responsible for the completeness or accuracy of information concerning any other party unless such party knows or has reason to believe that such information is inaccurate. It is understood and agreed that a copy of this Agreement shall be attached as an exhibit to the statement on Schedule 13D, and any amendments hereto, filed on behalf of each of the parties hereto. Date: May 24, 1999 SHAMROCK HOLDINGS, INC. By: /s/ Robert G. Moskowitz -------------------------------------- Robert G. Moskowitz Executive Vice President and Secretary SHAMROCK HOLDINGS OF CALIFORNIA, INC. By: /s/ Robert G. Moskowitz -------------------------------------- Robert G. Moskowitz Executive Vice President and Secretary EX-2 3 EXHIBIT 2 --------------------------------------------------- SHARE PURCHASE AGREEMENT BETWEEN PARADIGM GEOPHYSICAL LTD. AND SHAMROCK HOLDINGS, INC. --------------------------------------------------- Dated as of April 14, 1999 --------------------------------------------------- SHARE PURCHASE AGREEMENT SHARE PURCHASE AGREEMENT (the "Agreement") dated as of April 14, 1999 by and between Paradigm Geophysical Ltd., an Israeli corporation (the "Company"), and Shamrock Holdings, Inc., a Delaware corporation (the "Purchaser"). R E C I T A L S: - - - - - - - - WHEREAS, the Purchaser wishes to purchase from the Company, and the Company wishes to sell to the Purchaser, the number of Ordinary Shares (NIS 0.5 par value) of the Company (the "Ordinary Shares") as is set forth in Section 1.1 below, on the terms and subject to the conditions set forth herein; A G R E E M E N T: - - - - - - - - - NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions contained herein, the sufficiency of which is hereby acknowledged, and in order to set forth the terms and conditions of the transactions described herein and the mode of carrying the same into effect, the parties hereby agree as follows: ARTICLE I THE TRANSACTIONS 1.1 Purchase and Sale. ----------------- (a) Subject to the terms and conditions of this Agreement, Purchaser agrees to purchase from the Company and the Company agrees to sell to Purchaser at the Closing (as defined below) 877,193 Ordinary Shares of NIS 0.5 nominal value NIS 0.5 each of the Company (the "Shares") in consideration for an aggregate purchase price of $5,000,000, representing 7.69% of the issued and outstanding share capital of the Company immediately after the Closing (and approximately 5.69% on a fully diluted basis, assuming exercise of all outstanding warrants and options and assuming the investment by Eastgate as defined below). (b) The Purchaser agrees that the Company may issue 263,158 Ordinary Shares to Eastgate [full name] ("Eastgate") at the same price and otherwise according to the same terms and conditions as specified in this Agreement. The closing of the Eastgate investment is contemplated to take place simultaneously with the Closing (as defined in Section 1.3 below). 1.2 Payment of Purchase Price. ------------------------- (a) Payment by Purchaser of the aggregate purchase price for the Shares shall be made in cash via wire transfer of immediately available funds to a bank account designated by the Company on the Closing Date (as defined below). At the Closing, the Company shall deliver to Purchaser a certificate registered in the name of the Purchaser representing the Shares purchased by Purchaser in accordance with Section l.l(a) hereof and the documents specified in Section 5.3 below. 1.3 The Closing. ----------- Subject to the fulfillment of the conditions precedent specified in Article V hereof (any or all of which may be waived in writing by the respective parties whose performance is conditioned upon satisfaction of such conditions precedent), the purchase and sale of the Shares shall be consummated at a closing (the "Closing") to be held at the offices of Efrati, Galili & Co., 6 Wissotsky Street, Tel Aviv, Israel, on April 29, 1999 at 10:00 am, Israeli time, or as soon as practicable thereafter following the satisfaction or waiver of all relevant conditions precedent specified in Article V hereof, or at such other place and time as the Company and Purchaser shall mutually agree after the satisfaction or waiver of all conditions precedent specified in Article V hereof (the date on which the Closing occurs being herein referred to as the "Closing Date"). ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE PURCHASER Purchaser represents and warrants to the Company, as to all matters relevant thereto, as follows: 2.1 Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. 2.2 Authority. Purchaser has full corporate power and authority to execute and deliver this Agreement and each other agreement contemplated hereby, to carry out its obligations hereunder and to consummate the transactions contemplated on its part hereby. The execution, delivery and performance by Purchaser of this Agreement and each other agreement contemplated hereby have been duly authorized by all necessary corporate action on the part of Purchaser, and no other action on the part of Purchaser is necessary to authorize the execution and delivery of this Agreement and each other agreement contemplated hereby by Purchaser or the performance by Purchaser of its obligations hereunder. This Agreement has been duly executed and delivered by Purchaser and constitutes a legal, valid and binding agreement of Purchaser, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and subject to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 2.3 No Violation. The execution and delivery of this Agreement and the Registration Rights Agreement (as defined below) by Purchaser, the performance by Purchaser of its obligations hereunder and thereunder and the consummation by it of the transactions contemplated hereby and thereby will not (a) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to Purchaser, (b) require the consent, waiver, approval, license or authorization of or any filing by Purchaser with any person or governmental authority, except for filings to be made in connection with or in compliance with the provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Regulation D as promulgated under the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), to the extent applicable, or (c) violate, result (with or without notice or the passage of time, or both) in a material breach of or give rise to the right to accelerate, terminate or cancel any obligation under or constitute (with or without notice or the passage of time, or both) a material default under, any of the terms or provisions of any charter or bylaw, partnership agreement, indenture, mortgage, agreement, contract, order, judgment, ordinance, regulation or decree to which Purchaser is subject or by which Purchaser is bound except for any of the foregoing matters which would not have, individually or in the aggregate, a material and adverse effect upon the operations, financial condition or results of operations (a "Material Adverse Effect") of the Purchaser. 2.4 Securities Act Representation. Purchaser is an "accredited investor" as defined in Rule 501 promulgated as part of Regulation D under the Securities Act. Purchaser is not acquiring the Shares with a view to a distribution or resale of any of such securities in violation of any applicable securities laws. 2.5 Purchase for Investment. This Agreement is concluded with the Purchaser in reliance upon the Purchaser's representation to the Company that the Shares to be issued to the Purchaser will be acquired for investment for the Purchaser's own account, and not with a view to the sale or distribution of any part thereof. 2.6 Status of Purchaser. Purchaser is purchasing the Shares for its own account and not with the intention of effecting an offering of the Shares to the public. Purchasis knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in securities such as the Shares. Subject to the Company's representations made in this Agreement being correct, Purchaser has requested from the Company all information it would deem relevant in making a decision to execute this Agreement and to purchase the Shares. 2.7 Legends. Purchaser agrees that the certificates representing the Shares purchased hereunder shall bear the legend set forth below: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW COVERING SUCH SECURITIES OR THE CORPORATION RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE CORPORATION OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO THE CORPORATION INDICATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR PLEDGE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW." ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Purchaser as follows: 3.1 Corporate Organization. Each of the Company and its subsidiaries, as listed on Schedule 3.1, which indicates their respective jurisdictions of organization (the "Subsidiaries"), is a corporation or other entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization with all requisite corporate power and authority to lease its properties and to carry on its business as it is now being conducted, and is qualified or licensed to do business and is in good standing in each jurisdiction in which it currently carries on business, except where the failure to be so qualified or licensed or be in good standing would not reasonably be expected, individually or in the aggregate, to have, a material and adverse effect upon the operations, financial condition or results of operations of the Company and its Subsidiaries considered as a whole (a "Material Adverse Effect"). True and complete copies of the Articles of Association and the Memorandum of Association of the Company, each as amended to date, have been delivered to the Purchaser. 3.2 Share Capital. The authorized share capital of the Company consists in its entirety of 18,000,000 Ordinary Shares, of which, as of the date hereof, 10,528,884 are issued and outstanding (11,406,077 assuming issuance of the shares to Jerusalem Venture Partners L.P and Jerusalem Venture Partners (Israel) L.P pursuant to that Share Purchase Agreement dated March 12, 1999) (the "JVP Agreement") and 2,000,000 Special Preferred Shares, none of which are issued and outstanding. In addition, (a) an aggregate of 2,285,600 Ordinary Shares are reserved for issuance pursuant to the Company's 1994 Stock Option Plan for key employees, the May 1994 Stock Option Plan, the 1994 General Stock Option Plan, the 1997 Stock Option Plan for Qualifying Israel Employees, the 1997 Executive Stock Option Plan and the 1997 Stock Option Plan for U.S. Employees (collectively, the "1994 and 1997 Stock Option Plans"), of which options to purchase 1,578,216 Ordinary Shares were outstanding as of the date hereof; and (b) 1,199,908 Ordinary Shares are reserved for issuance in connection with the exercise of certain outstanding warrants. In addition, the Company has undertaken to issue warrants to purchase 250,000 Ordinary Shares of the Company to Schroder & Co., upon the closing of the investment by Eastgate, exercisable at an exercise price per share which is no less than the purchase price per Share payable hereunder. Other than the Shareholder Agreement (as defined below), which shall be terminated prior to the Closing, the Company is not aware of any other shareholders agreement or voting agreement affecting or binding upon the capital shares of the Company. All of the above outstanding shares have been duly authorized and validly issued, are fully paid and non-assessable, are not subject to preemptive rights, and are owned by the Company's shareholders free and clear of any liens, encumbrances, security interests, adverse claims or equities or rights in favor of another ("Encumbrances") imposed or created by the Company. Except as set forth in Schedule 3.2, none of the outstanding capital shares of the Company are subject to any co-sale right, registration right, right of first refusal or other similar right to purchase any shares pursuant to any agreement to which the Company is a party or otherwise imposed or created by the Company or imposed by Israeli law. Other than as described above, there are no outstanding options, warrants or other rights calling for the issuance of, and no commitments, plans or arrangements to issue, any capital shares of the Company or any security convertible into or exchangeable for share capital of the Company. All shares to be issued upon the exercise of outstanding warrants or options or upon the conversion of any security shall be, when issued or sold in accordance with the terms of the applicable agreements, validly issued, fully paid and non-assessable. 3.3 Share Capital of Subsidiaries. All the issued share capital and other equity securities of each Subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable, with no personal liability attaching thereto solely by virtue of the ownership thereof and are legally and beneficially owned by the Company directly, or indirectly through one of its other Subsidiaries, free and clear of all Encumbrances, and there are no outstanding options, warrants or other rights calling for the issuance of, and there are no commitments, plans or arrangements to issue, any capital shares or other equity securities of any Subsidiary of the Company or any security convertible or exchangeable or exercisable for capital shares or other equity securities of any Subsidiary of the Company; except for the capital shares or other equity securities of each Subsidiary of the Company owned by the Company directly, or indirectly through one of its other Subsidiaries, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital shares of any corporation or has or owns any equity securities in any firm, partnership, joint venture or other entity. Except for Paradigm Geophysical Corp., no Subsidiary of the Company is a Significant Subsidiary, as such term is defined in Rule 405 of the rules and regulations of the Securities and Exchange Commission (the "Commission") under the Securities Act. 3.4 Newly Issued Shares. The Shares to be sold and issued by the Company to the Purchaser in accordance with the terms of this Agreement have been duly authorized and, when issued as contemplated hereby, will be validly issued, fully paid and non-assessable, and no other person has any preemptive right, option, warrant, subscription agreement or other right with respect to such Shares. Upon the issuance of the Shares, the Purchaser will acquire good and marketable title to the shares free and clear of any and all Encumbrances, except such Encumbrances as may be created pursuant to this Agreement or by Purchaser. 3.5 Authority: Enforcement. The Company has full corporate power and authority to execute and deliver this Agreement, the Registration Rights Agreement, the Amendment to 1997 Warrants, the Amendment to 1996 Purchase Agreement, the Amendment to 1995 Purchase Agreement, the Amendment to 1994 Warrants, thShareholders Agreement and each other agreement contemplated hereby (collectively the "Agreements"), to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated on its part hereby and thereby. The execution, delivery and performance by the Company of the Agreements and the consummation of the transactions contemplated on its part hereby and thereby have been duly authorized by the Board, and no other corporate proceedings on the part of the Company to the Company's issuance of the Shares to be issued pursuant to this Agreement and to the Company's entering into the Agreements are necessary to authorize the execution and delivery of the Agreements by the Company or the performance by the Company of its obligations thereunder. The Agreements have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against the Company and each party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and subject to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.6 No Violation. The execution and delivery by the Company of the Agreements, the performance by the Company of its obligations thereunder and the consummation by it of the transactions contemplated thereby will not (a) violate any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to the Company or any of its Subsidiaries, or (b) require the consent, waiver, approval, license or authorization of or any filing by the Company with any person or governmental authority, except for filings to be made or consents to be obtained in connection with or in compliance with the provisions of the Exchange Act, Regulation D as promulgated under the Securities Act, applicable state securities laws, the Chief Scientist of the Israeli Ministry of Industry and Commerce, the Investment Center, Bank Hapoalim B.M. and the Bank for Industrial Development in Israel Ltd. and (with respect to registration rights to be granted to Purchaser under the Registration Rights Agreement) certain existing shareholders and warrant holders of the Company who have registration rights as specified in Section 5.3, or (c) violate, result (with or without notice or the passage of time, or both) in a breach of or give rise to the right to accelerate, terminate or cancel any obligation under or constitute (with or without notice or the passage of time, or both) a default under, any of the terms or provisions of any charter, articles of association, or bylaw, partnership agreement, indenture, mortgage, agreement, contract, order, judgment, ordinance, regulation or decree to which the Company or any of its Subsidiaries is subject or by which the Company or any of its Subsidiaries is bound, except for any of the foregoing matters which would not have, individually or in the aggregate, a Material Adverse Effect. 3.7 Brokers. The Company has not paid or become obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with this Agreement. 3.8 Foreign Private Issuer. The Company is a "foreign private issuer," as defined in Rule 3b-4 of the Exchange Act. 3.9 Commission Reports. Since its initial public offering in June 1998, the Company has filed with the Commission all reports, filings, proxy materials and registration statements required to be filed by it as a foreign private issuer listed on the Nasdaq National Market pursuant to the federal securities laws and has made all other filings with the Commission required to be made where the failure to have made such filing has or is expected by the Company to have a Material Adverse Effect on the Company (collectively and together with the Company's Registration Statement on Form F-1, Commission File No. 333-7926 (the "Registration Statement"), the "Commission Filings"). The Commission Filings did not (as of their respective filing dates, mailing dates or effective dates, as the case may be) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company has fully complied in all material respects with the Israeli Securities Law of 1968 and with the applicable term of any exemption granted thereunder. The Company acknowledges that the Purchaser is relying on the Commission Filings with respect to its purchases of the Shares pursuant to this Agreement. 3.10 Litigation. Except as disclosed in Commission Filings prior to the date hereof or in Schedule 3.10, there is no legal action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or the assets of any of them which could have, individually or in the aggregate, a Material Adverse Effect on the Company, or on the Company's ability to perform or observe any obligation or condition under the Agreements. Except as disclosed in Schedule 3.10, there is no basis for a claim or a potential claim affecting the Company or any of its Subsidiaries which could have a Material Adverse Effect. 3.11 Disclosure. To the best knowledge of the Company after due inquiry, there is no fact or facts (excluding general economic conditions and prevailing economic conditions generally affecting the oil and gas industry) peculiar to the Company or any of its Subsidiaries which the Company has not disclosed to the Purchaser in writing or in the Commission Filings which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or the ability of the Company to perform the Agreements. 3.12 Intellectual Property and Other Tangible Assets. ----------------------------------------------- (a) The Company and the Subsidiaries (i) own or have the right to use, free and clear of all liens, claims and restrictions, all patents, trademarks, service marks, trade names and copyrights, and applications, licenses and rights with respect to the foregoing, and all trade secrets including know-how, inventions, designs, processes, works of authorship, computer programs and technical data and information (collectively, "Intellectual Property") used and sufficient for use in the conduct of its business as now conducted and/or as presently proposed to be conducted without infringing upon or violating, in any material respect, any right, lien, or claim of others, including without limitation former employees and former employers of its past and present employees and, (ii) except as described in Schedule 3.12, which lists by payee the amount of royalties or fees in excess of $50,000 per year that the Company or any of its Subsidiaries is obligated to pay, are not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business or otherwise. (b) Any and all Intellectual Property of any kind, relating to the business of the Company, currently being developed by any employee of the Company or any Subsidiary while in the employ of the Company or such Subsidiary, shall be the property solely of the Company or such Subsidiary. The Company and the Subsidiaries have taken security measures to protect the secrecy, confidentiality and value of all the Intellectual Property, which measures are reasonable customary in the industry in which the Company operates. Each of the Company's and the Subsidiaries' employees and other persons who, either alone or in concert with others, developed, invented, discovered, derived, programmed or designed the Intellectual Property, or who has a knowledge of or access to information about the Intellectual Property, have entered into a written agreement with the Company or such Subsidiary, in form and substance satisfactory to the Company management and reasonable and customary in the industry in which the Company operates (the "Proprietary Information Agreement") regarding ownership and treatment of the Intellectual Property. (c) Neither the Company nor any Subsidiary has received any communications alleging that the Company or any Subsidiary has violated or by conducting its business as proposed, would violate, any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. None of the Company's or any Subsidiary's employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee's best efforts to promote the interests of the Company or that would conflict with the Company's or any Subsidiaries' business as conducted and proposed to be conducted. Neither the execution nor delivery of the Agreement, nor the carrying on of the Company or such Subsidiary, nor the conduct of the Company's or any Subsidiaries' business as proposed to be conducted, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under any contract, covenant or instrument under which any of such employees is now obligated. It is not, and will not become, necessary to utilize any inventions of any of the Company's or any Subsidiary's employees (or people the Company or any Subsidiary currently intends to hire) made prior to their employment by the Company or such Subsidiary other than those that have been assigned to the Company pursuant to the Proprietary Information Agreement signed by such employee. 3.13 Industrial Company. The Company is qualified as an "Industrial Company" within the definition of the Law for the Encouragement of Industry (Taxes), 1969., and has obtained a certificate of the Company's auditors certifying such qualification, a copy of which is attached to this Agreement as Schedule 3.13. According to the Company's best knowledge, information and belief, there is no reason for disqualifying the Company from being an Industrial Company, nor would such reason arise through the conduct and performance of the Company's business and operations in accordance with its plans and projections. 3.14 Compliance with Laws. Each of the Company and its Subsidiaries is in compliance With all laws, ordinances, regulations, and orders applicable to it, the failure to comply with which would have, individually or in the aggregate, a Material Adverse Effect, including without limitation, the provisions of the Law for Encouragement of Capital Investments, 1959, applicable to the Company and the terms of any "Approval Letter" issued to the Company thereunder and its extensions, amendments and supplements, if any. Except as set forth on Schedule 3.14, the Company and its Subsidiaries have such licenses, franchises, permits and other approvals or authorizations from governmental regulatory authorities ("Permits") as are necessary under applicable law to own their respective properties and to conduct their respective businesses in the manner now being conducted and as described in the Registration Statement; and the Company and its Subsidiaries have fulfilled and performed all of their respective obligations with respect to such Permits, except where the failure to hold such Permits or perform such obligations would not have a Material Adverse Effect. Except as set forth on Schedule 3.14 or otherwise in this Agreement, (a) there are no citations, fines or penalties heretofore asserted against the Company or its Subsidiaries under any federal, state or local law or regulation which remain unpaid or which otherwise bind any assets material to the Company and its Subsidiaries, and (b) the Company or any of its Subsidiaries has not received any unresolved notice from any federal, state or local governmental authority with respect to any violation of any federal, state or local law or regulation which, if resolved against the Company or any of its Subsidiaries, would have, individually or in the aggregate, a Material Adverse Effect. 3.15 Insurance. The Company and its Subsidiaries have in full force insurance coverage of their respective properties, assets and business (including casualty, general liability, products liability and business interruption insurance) that is (i) no less protective in any material respect than the insurance the Company and its Subsidiaries have carried in accordance with their past practices or (ii) prudent given the nature of the business of the Company and its Subsidiaries and the prevailing practice among companies similarly situated. 3.16 Foreign Corrupt Practices Act. The activities of each of the Company and its Subsidiaries and its officers, directors and employees have complied, and the operations of each of the Company and its Subsidiaries and the activities of the officers, directors and employees of each of the Company and its Subsidiaries have complied, with all applicable laws governing corrupt or illicit business practices, including, without limitation, laws dealing with improper or illegal payments, gifts or gratuities and/or the payment of money or anything of value directly or indirectly to any person (whether a government official or private individual) for the purpose of illegally or improperly inducing any person or government official, or political party or official thereof, or any candidate for any such position, in making any decision or improperly assisting any person in obtaining or retaining business or taking any other action favorable to such person, and/or dealing with business practices in relation to foreign investments (including, by way of example, if applicable, the U.S. Foreign Corrupt Practices Act). 3.17 Foreign Currency Hedging Transactions. Neither the Company nor any of its Subsidiaries has entered into any foreign currency hedging arrangement. 3.18 Contracts. Except as set forth on Schedule 3.18, all contracts that are material to the Company and its Subsidiaries and to which the Company or any of its Subsidiaries is a party ("Material Contracts") which are required to have been filed as exhibits to the Registration Statement, have been so filed. All Material Contracts constitute valid and binding agreements of the Company or such Subsidiary and are enforceable against the Company or such Subsidiary in accordance with the terms thereof. There is not, with respect to the Material Contracts, any existing default, or event of default by the Company or its Subsidiaries or any other party, or event which with or without due notice or lapse of time or both would constitute a default or event of default on the part of the Company or its Subsidiaries, except such defaults or events of default on the part of the Company or its Subsidiaries, or any other party and other events which would not have, individually or in the aggregate, a Material Adverse Effect. No default exists, and no event has occurred which with notice or lapse of time, or both, would constitute a default in the due performance and observance of any term, covenant or condition of any Material Contract or other indenture, mortgage, deed of trust, bank loan or credit agreement, leaseor other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or their respective properties is bound or may be affected, which defaults would have, individually or in the aggregate, a Material Adverse Effect. 3.19 Financial Statements. Attached hereto as Schedule 3.19 balance sheets of the Company and its Subsidiaries as at December 31, 1998, December 31, 1997 and December 31, 1996, and statements of operations, cash flow and stockholders' equity for each of the fiscal years then ended, audited by the Company's independent public accountants, each including the accompanying notes. Such balance sheets of the Company and its Subsidiaries and the notes thereto present fairly the financial position of the Company and its Subsidiaries as at the respective dates thereof, and such statements of operations, cash flow and stockholders' equity of the Company and the notes thereto present fairly in all material respects the results of operations, cash flow and stockholders' equity of the Company for the periods therein referred to, all in accordance with United States generally accepted accounting principles consistently applied. 3.20 No Undisclosed Liabilities. Except as disclosed in Schedule 3.20, the Company and its Subsidiaries have no material liabilities which are not reflected or reserved against in the balance sheets specified in Section 3.19 above, except for liabilities incurred in the ordinary course of business and immaterial in amount consistent with past practice. 3.21 Listing of Ordinary Shares. The outstanding Ordinary Shares are listed on the Nasdaq National Market, and the Company's listing agreement with respect thereto is in full force and effect. No action has been taken or threatened by Nasdaq with respect to the delisting or suspension from trading of the Ordinary Shares. 3.22 Taxes. The Company and each of its Subsidiaries has timely filed all necessary tax returns and notices, and has paid all federal, state, county, local and foreign taxes of any nature whatsoever to the extent such taxes have become due (including, without limitation, all tax returns required under the laws of the State of Israel). The Company has no knowledge, or any reasonable grounds to know, of any tax deficiencies which might be assessed against the Company which, if so assessed, may have a Material Adverse Effect; the Company and each of its Subsidiaries has paid all taxes which have become due, whether pursuant to any assessments or otherwise, and there is no further liability (whether or not disclosed on such returns) or assessments for any such taxes, and no interest or penalties accrued or accruing with respect thereto, except as may be set forth or adequately reserved for in the Company's financial statements, copies of which have been delivered to Purchaser. The Company has been informed that the Israeli income tax authorities intend to audit its tax returns for the years 1993 to 1997 (inclusive). 3.23 Certain Relationships. No material relationship, direct or indirect, exists between or among the Company or its Subsidiaries on the one hand and the directors, officers, or shareholders of the Company, on the other hand, other than in the ordinary course of the Company's business, nor any relationship exists between or among the Company or its Subsidiaries on the one hand, and any of its customers or suppliers on the other hand, in value exceeding, with respect to any customer or supplier, 10% of the revenues or profits of the Company, on a consolidated basis, all except those described in the Registration Statement, including without limitation items required to be disclosed under Item 13 of Form 20-F of the rules and regulations of the Securities and Exchange Commission under the Securities Act if the Company were to file a Form 20-F as of the date hereof. 3.24 HSR Act. The transactions contemplated by the Purchase Agreement are exempt from the requirements of the HSR Act because, for each of the fiscal years ended December 31, 1997 and December 31, 1998, (i) the aggregate book value of the Company's assets located in the U.S. (other than investment assets, voting or nonvoting securities of another person, and assets included pursuant to Section 801.40(c)(2) of the HSR Act) was less than $15 million, and (ii) the Company's aggregate sales in or into the U.S. were less than $25 million. For purposes of this Section 3.27, the "Company" shall include all entities "controlled" by the Company, directly or indirectly, within the meaning of such term as defined in Section 801.1(b) of the HSR Act. ARTICLE IV COVENANTS AND AGREEMENTS 4.1 Board Member. (a) As long as the Purchaser holds more than three and a half percent (3.5%) of the issued and outstanding shares of the Company, the Company will recommend to the shareholders of the Company prior to any general meeting of shareholders of the Company, at which directors may be proposed to be elected, to elect a representative of the Purchaser to the Board of Directors of the Company (the "Purchaser's Director") and will take all lawful actions to solicit such election. (b) The Company shall notify the Purchaser of the proposed date for the Company's annual general meeting ("AGM") as soon as reasonably practicable but in any event not later than 21 days prior to the last day in each calendar year on which a shareholder may propose a nominee for election to the Board in accordance with Article 66(b) of the Company's Articles of Association. Purchaser will furnish the Company with the names and other information as is reasonably requested by the Company of the Purchaser's Directors, as will be proposed for election to the Board at the AGM, within 21 days after such notice. An individual designated by the Purchaser as a Purchaser's Director, other than any of Messrs. Stanley P. Gold, Michael Geiger, Robert G. Moskowitz, William Wynperle or any Managing Director of Shamrock Capital Advisors, Inc., shall be subject to the approval of the Board, which approval shall not be unreasonably withheld or delayed. Purchaser agrees that in the event that the Board submits to the shareholders of the Company a proposal, which provides for an amendment to the Articles of Association of the Company increasing the number of directors constituting the Board to nine, to be considered for shareholder vote at the next occurring AGM in order to appoint an additional independent director as contemplated by Section 4.1 of the JVP Agreement, Purchaser agrees to vote all Ordinary Shares owned by it in favor of such amendment and the appointment of such director. (c) If a vacancy is created due to the death, incapacitation or resignation of one of Purchaser's Director, the Company agrees to use its best efforts in causing the election of a substitute director, as designated by the Purchaser, to be placed on the agenda of the Company's next Board meeting. (d) The Company agrees that all reasonable out-of-pocket costs and expenses incurred by Purchaser's Director in his capacity as a member of the Board shall be borne by the Company in accordance with the Company's reimbursement policy. (e) Notwithstanding the Articles of Association of the Company, the Company shall give the Purchaser's Director prior notice of any meeting of the Board of Directors at the same time and in the same manner as it shall first notify any director of such meeting, but in any event it shall be in writing and no less than 7 days prior to such meeting, unless impractical due to the urgency of the matter. 4.2 Best Efforts. Upon the terms and subject to the conditions herein provided, each of Purchaser and the Company agrees to use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement and each other agreement contemplated hereby including to fulfill all conditions on its part to be fulfilled under this Agreement and each other agreement contemplated hereby. In case at any time after the Closing Date any further action is reasonably necessary or desirable to carry out the purposes of this Agreement and each other agreement contemplated hereby. No party hereto will take any action for the purpose of delaying impairing or impeding the receipt of any required consent, authorization, order or approval or the making of any required filing. Each party hereto shall give prompt notice to all other parties of (i) any material failure of such party, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, and such party shall use all reasonable efforts to remedy such failure and (ii) the occurrence, or failure to occur, of any event which occurrence or failure would be likely to cause any representation or warranty of such party contained in this Agreement to be untrue or inaccurate in any material respect any time from the date hereof to the Closing Date. 4.3 Financial Statements and Information. The Company covenants and agrees to furnish to the Purchaser as long as the Purchaser holds at least three and a half percent (3.5%) of the issued and outstanding share capital of the Company, all annual and quarterly financial statements and reports filed or required to be filed with the Commission. In addition, the Company shall provide all information reasonably requested by the Purchaser's Director. 4.4 Indemnification. --------------- (a) Each party (the "Indemnifying Party") shall indemnify, defend and hold harmless, from and after the Closing Date, the other party and each of its affiliates, officers, directors, employees, members, agents, successors, transferees and assigns (each of the foregoing, an "Indemnified Party") from and against all liabilities, losses, damages, claims, costs, interest, judgments, fines, amounts paid in settlement and expenses (including without limitation reasonable attorney's fees, whether incurred in connection with a claim for indemnification hereunder or in connection with any third party claim) (collectively, "Losses") incurred by any of them based upon, resulting from or arising out of (i) the breach of any representation or warranty of the Indemnifying Party contained in this Agreement or any other agreement contemplated by this Agreement or (ii) the breach of any covenant or agreement of the Indemnifying Party contained in this Agreement or any other agreement contemplated by this Agreement, including with respect to indemnification by the Company, and without limiting any of the foregoing, the breach of its covenant under Section 4.5 below. No claim may be asserted nor may any action be commenced against the Indemnifying Party, unless prompt written notice of such claim or action is received by the Indemnifying Party describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or action; provided that the failure of the Indemnified Party to give the Indemnifying Party prompt notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent that the Indemnifying Party is prejudiced thereby; provided that (i) the amount to be indemnified under this Section 4.4 shall be limited to the purchase price paid by the Purchaser for the Shares and (ii) the Company's indemnification obligations hereunder relating to any breach of Sections 3.10, 3.12, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20, or 3.23 shall terminate on the 180th day after the Company has filed with the Commission a Form 20-F containing audited financial statements for the Company for the fiscal year ended December 31, 1999 unless a claim for indemnification shall be made with respect thereto, in which case such indemnification obligations shall remain in effect until the full and final resolution of such claim. (b) The Indemnified Party shall give the Indemnifying Party under this Section 4.4, prompt written notice (the "Indemnification Claim Notice") of any claim, assertion, event or proceeding by or in respect of a third party, of which such Indemnified Party has knowledge concerning any Loss as to which such Indemnified Party may request indemnification hereunder; provided that failure of the Indemnified Party to give the Indemnifying Party prompt notice as provided herein shall not relieve the Indemnifying Party of any of his, her or its obligations hereunder except to the extent that the Indemnifying Party is prejudiced thereby. The Indemnified Party may participate in such defense, but in such case the expenses of the Indemnified Party shall be paid by the Indemnified Party. The Indemnified Party shall, upon reasonable notice, provide the Indemnifying Party with access to his, her or its records and personnel relating to any such claim, assertion, event, proceeding or matter during normal business hours and shall otherwise cooperate with the Indemnifying Party in the defense settlement, or resolution thereof, and the Indemnifying Party shall reimburse the Indemnified Party for all his, her or its reasonable out-of-pocket expenses in connection therewith. The Indemnifying Party shall not pay, or permit to be paid, any part of any claim, or demand arising from such asserted liability unless the Indemnified Party consents in writing (which consent shall not be unreasonably withheld) to such payment or unless the Indemnifying Party withdraws from or fails to maintain the defense of such asserted liability or unless a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for such liability. No settlement in respect of any third party claim may be effected by the Indemnifying Party without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld) unless the settlement involves a full and unconditional release of the Indemnified Party. If the Indemnifying Party shall fail to undertake or maintain any such defense within thirty (30) days of receipt of the Indemnification Claim Notice, the Indemnified Party shall have the right to undertake the defense or settlement thereof, at the Indemnifying Party's expense. If the Indemnified Party assumes the defense of any such claim or proceeding pursuant to this Section 4.4 it may conduct such defense as it reasonably deems appropriate (without regard to the availability of indemnification hereunder), and the Indemnifying Party shall be responsible for and pay all costs and expenses of such defense, including its compromise or settlement. (c) The amounts for which an Indemnifying Party shall be liable under this Section 4.4 shall be reduced by the (i) net reimbursement to such party from any insurance proceeds received by the Indemnified Party in connection with the circumstances giving rise to the right of indemnification (to the extent such insurance proceeds exceed the Indemnified Party's expenses in recouping such insurance proceeds) and (ii) net tax benefit actually realized by such party (as reduced by any actual or projected tax detriment resulting from receipt of the indemnification payment) directly resulting from the Losses to which the indemnification relates. 4.5 Registration of Conversion of Preferred Shares. The Company will ensure the registration by the Israeli Registrar of Companies of the conversion of all the Preferred Shares in the share capital of the Co(except for the Special Preferred Shares) into Ordinary Shares. 4.6 Approval of Certain Business Combinations. Prior to the Closing, the Board of Directors of the Company shall resolve, that notwithstanding Article 110 of the Company's Articles of Association ("Article 110"), in the event that Purchaser shall at any time become an "interested shareholder" (within the meaning of such term under Article 110), the Company shall not be limited by virtue of Article 110 from engaging with Purchaser in any transaction falling under paragraph (iii) of the definition of "business combination" in Article 110, provided that in such transaction all or the majority of the Company's shareholders are offered to participate on the same terms. Such resolution (i) shall apply also to any assignee of Purchaser pursuant to Section 6.9 below, and (ii) shall not be revoked or rescinded at any time subsequent to the Closing. 4.7 The Company shall not issue any Special Preferred Shares without issuing at the same time to Purchaser a portion of such shares issued, which portion corresponds to Purchaser's then portion of the outstanding shares of the Company. ARTICLE V CONDITIONS PRECEDENT 5.1 Conditions to Each Party's Obligations. The respective obligations of each party, to effect the transactions contemplated by the Agreement shall be subject to the conditions that no United States, state or foreign governmental authority or other agency or commission or United States, state or foreign court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, injunction or other order (whether temporary, preliminary, or permanent) which is in effect and has the effect of prohibiting consummation of the transactions contemplated by this Agreement; and any filing required under U.S., state or other foreign securities laws shall have been made prior to the Closing. 5.2 Conditions to the Obligations of the Company. The obligation of the Company to effect the transactions contemplated by this Agreement to occur at the Closing shall be subject to the fulfillment at or prior to the Closing Date, of the following additional conditions: (a) The Purchaser shall have performed its obligations under this Agreement required to be performed by it on or prior to the Closing, pursuant to the terms hereof. (b) The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects at and as of the Closing, as if made at and as of such date, except to the extent that any such representation or warranty is made as of a specified date in which case such representation or warranty shall have been true and correct as of such date. (c) All necessary waivers, consents and approvals to or of the transactions contemplated by this Agreement to occur at the Closing, and each agreement contemplated hereby shall have been obtained, including without limitation the approval of the Chief Scientist of the Israeli Ministry of Industry and Commerce, the Investment Center. 5.3 Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to effect the transactions contemplated by this Agreement to occur at the Closing shall be subject to the fulfillment at or prior to the Closing, of the following additional conditions (any of which may be waived by Purchaser in writing): (a) The Company shall have performed its obligations under this Agreement required to be performed by it on or prior to the Closing, pursuant to the terms hereof. (b) The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects at and as of the Closing, as if made at and as of such date, except to the extent that any such representation or warranty is made as of a specified date in which case such representation or warranty shall have been true and correct as of such date and the Purchaser shall not have discovered any material conflict with any such representation or warranty. (c) Since December 31, 1997, there shall have been no event or occurrence which has or is likely to have a Material Adverse Effect on the Company. (d) The Purchaser shall have received on or prior to the Closing Date fully executed copies of a registration rights agreement between the Company and Purchaser, in the form of Exhibit A hereto (the "Registration Rights Agreement"), and any and all other agreements, documents, certificates or instruments contemplated by this Agreement and any of the foregoing. (e) The Purchaser shall have received on or prior to the Closing Date fully executed copies of amendments to the Warrant Agreements dated September 15, 1997 between the Company and each purchaser identified on Schedule 1 to the Note and Warrant Purchase Agreement dated September 15, 1997 among the Company, Paradigm Geophysical Corp., a Delaware corporation, and such purchasers, as amended ("1997 Warrants"), in accordance with the term sheet attached as Exhibit D hereto ("Amendment to 1997 Warrants"). (f) The Purchaser shall have received on or prior to the Closing Date fully executed copies of an amendment to the Share Purchase Agreement dated July 1, 1996 among the Company and the purchasers identified on Schedule 1 thereto, as amended ("1996 Purchase Agreement"), in accordance with the term sheet attached as Exhibit E hereto ("Amendment to 1996 Purchase Agreement"). (g) The Purchaser shall have received on or prior to the Closing Date fully executed copies of an amendment to the Share Purchase Agreement dated June l, 1995 among the Company and the purchasers identified on Schedule 1 thereto, as amended ("1995 Purchase Agreement"), in accordance with the term sheet attached as Exhibit F hereto ("Amendment to 1995 Purchase Agreement"). (h) The Purchaser shall have received on or prior to the Closing Date fully executed copies of amendments to the Warrant Certificates dated July 22, 1994 between the Company and each holder thereof, as amended ("1994 Warrants"), in accordance with the term sheet attached as Exhibit G hereto ("Amendment to 1994 Warrants"). (i) The Purchaser shall have received on or prior to the Closing Date fully executed copies of an amendment to the Shareholders Agreement dated June 7, 1995 among the Company and certain shareholders of the Company, as amended (the "Shareholders Agreement"), which provides for the termination of the Shareholders Agreement upon the Closing ("Amendment to Shareholders Agreement"). (j) The Purchaser shall have received on or prior to the Closing Date a legal opinion delivered by the Company's U.S. counsel dated as of the Closing Date, in substantially the form of Exhibit B hereto. (k) The Purchaser shall have received on or prior to the Closing Date a legal opinion delivered by the Company's Israeli counsel dated as of the Closing Date, in substantially the form of Exhibit C hereto. (l) The Purchaser shall have received on or prior to the Closing Date a copy of minutes or resolutions of the Board, which shall not have been rescinded or modified, a) approving the issuance of the Ordinary Shares to the Purchaser in accordance with the terms and conditions of the Purchase Agreement, and all other terms and conditions of this Agreement and all schedules and exhibits hereto, as certified by the Company's Secretary (b) as provided in Section 4.6 above, and (c) the appointment of Mr. Michael Geiger (or any other person designated by Purchaser in his stead) to the Board of Directors of the Company. (m) The Purchaser shall have received on or prior to the Closing Date a certificate of the Company's Secretary confirming the inscription of the Purchaser in the Company's register of members as the owner of the Ordinary Shares issued according to this Agreement. (n) The Purchaser shall have receion or prior to the Closing Date a copy of the share issuance form to be filed with the Company's Registrar, signed by the Company's Secretary. The Company shall have such form duly stamped and filed with the Registrar of Companies within 30 days after the Closing Date. (o) The Purchaser shall have received on or prior to the Closing Date a certificate of the Company's Chief Executive Officer or Chief Financial Officer dated the Closing Date, in substantially the form of Exhibit H hereto, certifying the satisfaction by the Company of all conditions precedent set forth in this Section 5.3. (p) All necessary waivers, consents and approvals to or of the transactions contemplated by this Agreement to occur on or prior to the Closing, or each other agreement contemplated shall have been obtained on or prior to the Closing Date, including without limitation the approval of the Chief Scientist of the Israeli Ministry of Industry and Commerce, Investment Center, the consent of Bank Hapoalim B.M. and the Bank for Industrial Development in Israel Ltd., and, with respect to registration rights to be granted to Purchaser under the Registration Rights Agreement, the approval of all securityholders and warrantholders of the Company holding registration rights, in accordance with the terms of such registration rights. (q) There shall have been no lawsuit, filed or threatened, which challenges this Agreement and all transactions contemplated hereby or seeks to impose any limitation on Purchaser's purchase of the Shares. ARTICLE VI MISCELLANEOUS 6.1 Amendment. This Agreement may be amended by the parties hereto. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 6.2 Waiver. Any waiver of or failure to insist on strict compliance with any representation, warranty, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 6.3 Termination. This Agreement may be terminated at any time prior to the Closing without further Board or shareholder action of either party: (i) by the mutual written consent of both parties; (ii) by the Company or Purchaser, if the closing conditions to the Closing have not been satisfied or waived by noon on May 31, 1999, unless the failure to satisfy such conditions is a result of any breach by such party. 6.4 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally, sent by commercial carrier or registered or certified mail (postage prepaid, return receipt requested) or transmitted by facsimile with automated receipt confirmation to the parties at the following addresses and numbers: (a) If to Purchaser, to: Shamrock Holdings, Inc. 4444 Lakeside Drive, 2nd Floor P.O. Box 7774 Burbank, California 91510-7774 Attention: Robert G. Moskowitz Fax No.: (818) 559-7320 with a copy to: Fried, Frank, Harris, Shriver & Jacobson 350 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Attention: David K. Robbins, Esq. Fax No.: (213) 473-2222 with a copy to: Zellermayer & Pelossof, Advocates Europe House 37 Shaul Hamelech Boulevard Tel Aviv 64928, Israel Attention: Michael Zellermayer, Adv. Fax No.: 011-972-3-695-2884 (b) If to the Company, to: Paradigm Geophysical Ltd. Merkazim Building 32 Maskit Street P.O.B. 2061 Herzliya B 46120, Israel Attention: Eldad Weiss Fax No.: 011-972-9-958-9327 with a copy to: Efrati, Galili & Co. 6 Wissotsky Street Tel Aviv 62338 Attention: Ian Rostowsky, Adv. Fax No.: 011-972-3-601-0111 with a copy to: Fulbright & Jaworski LLP 666 Fifth Avenue, 31st Floor New York, New York 10103-3198 Attention: Andrew C. Freedman, Esq. Fax No.: (212) 752-5958 6.5 Headings: Agreement. The headings contained in this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The term "Agreement" for purposes of representations and warranties hereunder shall be deemed to include the exhibits hereto to be executed and delivered by a party. 6.6 Publicity. So long as this Agreement is in effect and except as required by law, the parties hereto shall not, and shall cause their affiliates not to, issue or cause the publication of any press release or other announcement with respect to the transactions contemplated by this Agreement or the other agreements contemplated hereby without the consent of the other parties, which consent shall not be unreasonably withheld or delayed. 6.7 Entire Agreement. This Agreement (including all exhibits hereto) the entire agreement among the parties and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 6.8 Conveyance Taxes. The Company agrees to assume liability for and to hold the Purchaser harmless against any sales, use, transfer, stamp, and value added taxes, registration, recording or other fees, and any similar taxes incurred as a result of the issuance and sale of the Shares as contemplated hereby. 6.9 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Purchaser shall be permitted to assign any of its rights, interests or obligations under this Agreement, whether prior or subsequent to the Closing, to (i) Trefoil Euro Fund, L.P., (ii) any entity in which 30% or more of its voting or equity securities are owned, directly or indirectly, by Shamrock Holdings, Inc. ("SHI"), any executive officers of SHI, and/or any member of the Roy E. Disney family (or any trust for his/her benefit), or (iii) any entity in which SHI or any of the foregoing referenced in (i) or (ii) of this Section 6.10 serves as a general partner or manager; provided, however, that the Purchaser shall not assign this Agreement to any entity which derives revenues, in any material amount, from the oil and natural gas exploration and/or production business or the GeoSeis software business. Except as provided above, neither this Agreement nor any of the rights, interests or obligations shall be assigned by either party hereto without the prior written consent of the other party. 6.10 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original. 6.11 Governing Law. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York, without reference to the conflict of laws principles thereof. 6.12 Third Party Beneficiaries. This Agreement is not intended to confer upon any other person any rights or remedies hereunder. 6.13 Costs and Expenses. Each party will pay its own costs and expenses incurred in connection with the transactions contemplated hereby, except that, at the Closing, the Company shall pay all reasonable fees and expenses of legal counsel to Purchaser in an amount not to exceed $150,000. The Company shall also pay all stamp issuance taxes, fees of the Company's transfer agent and expensesof filing with the Israeli Registrar of Companies. IN WITNESS WHEREOF, the Purchaser and the Company have caused this Agreement to be duly signed as of the date first written above. PARADIGM GEOPHYSICAL LTD. an Israeli corporation By: /s/ Eldad Weiss ---------------------------------- Name: Eldad Weiss Title: President and Chief Executive Officer SHAMROCK HOLDINGS INC. a Delaware corporation By: /s/ Stanley P. Gold ---------------------------------- Name: Stanley P. Gold Title: President EXHIBITS Exhibit A Registration Rights Agreement Exhibit B Form of Legal Opinion of Company's U.S. Counsel Exhibit C Form of Legal Opinion of Company's Israeli Counsel Exhibit D Amendment to 1997 Warrants Exhibit E Amendment to 1996 Purchase Agreement Exhibit F Amendment to 1995 Purchase Agreement Exhibit G Amendment to 1994 Warrants Exhibit H Form of Closing Certificate SCHEDULES Schedule 3.1 Subsidiaries and Jurisdictions of Organization Schedule 3.2 Capitalization Schedule 3.10 Litigation Schedule 3.12 Intellectual Property Schedule 3.13 Industrial Company Certificate Schedule 3.14 Compliance with Laws Schedule 3.18 Material Contracts Schedule 3.19 Financials Schedule 3.20 Undisclosed Liabilities EX-3 4 EXHIBIT 3 REGISTRATION RIGHTS AGREEMENT ----------------------------- This Registration Rights Agreement (the "Agreement") is entered into as of May 17, 1999 by and among (a) Paradigm Geophysical Ltd., an Israeli company (the "Company") on the one part, (b) Shamrock Holdings, Inc., a Delaware corporation ("Shamrock") on the second part, and (c) Eastgate Fund, L.P., an Iowa limited partnership, Eastgate International Limited, a corporation formed under the laws of the Commonwealth of the Bahamas, Mr. Harris Kaplan, Berman Eastgate Growth Fund, an Iowa Partnership, (jointly "Eastgate"), on the third part. (Each of Shamrock and Eastgate, severally and not jointly, shall hereinafter be referred to as, the "Holder"). Capitalized terms not defined herein shall have the meanings assigned to such terms in the Purchase Agreements (as defined below). R E C I T A L S: - - - - - - - - Pursuant to the terms and subject to the conditions of that certain Share Purchase Agreement dated as of April 14, 1999 (the "Shamrock Purchase Agreements") between the Company and Shamrock Holdings, Inc., and that certain Share Purchase Agreement dated as of May __, 1999 between the Company and Eastgate (the "Eastgate Purchase Agreement"), the execution and delivery of this Agreement is a condition to the purchase and sale by each Holder of certain Ordinary Shares (NIS 0.5 par value) (the "Ordinary Shares") pursuant to the foregoing Purchase Agreements (as defined below). A G R E E M E N T: - - - - - - - - - NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Approved Underwriter" shall have the meaning set forth in Section 2. "Closing Date" shall mean the Closing Date as defined in the Purchase Agreements. "Demand Registration" shall have the meaning set forth in Section 2. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Form F-3" shall mean Form F-3 under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. "Form F-3 Registration" shall have the meaning set forth in Section 4. "Incidental Registration" shall have the meaning set forth in Section 3. "Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "Register", "registered" and "registration" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. "Registration Expenses" shall have the meaning set forth in Section 8. "Registrable Securities" shall mean all Ordinary Shares held by Holder as of the date hereof or subsequently transferred to a permitted transferee under Section 16 hereof, provided that such term shall not include any such Ordinary Shares, (i) sold to the public by a Holder pursuant to a Registration Statement under the Securities Act, or (ii) sold by such Holder in a private transaction in which such Holder's rights hereunder were not assigned to the purchasers thereof,or (iii) Ordinary Shares that can be sold according to Rule 144(k) of the Securities Act within the subsequent three (3) month period. "Registration Statement" shall mean any registration statement of the Company in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "SEC" shall mean the Securities and Exchange Commission. "Underwritten registration" or "underwritten offering" shall mean a registration in which securities of the Company are sold to an underwriter or through an underwriter as agent for reoffering to the public. 2. Demand Registration. ------------------- (a) Request for Demand Registration. At any time after the first anniversary of the Closing Date, Shamrock shall be entitled to request in writing that the Company use its best efforts to effect the registration under the Securities Act, and under the securities or "blue sky" laws of any jurisdiction designated by Shamrock, of Registrable Securities comprising at least 350,000 Ordinary Shares (including Registrable Securities as to which other holders of Registrable Securities are also seeking registration pursuant to such request) in accordance with this Section 2 (each, a "Demand Registration"). Any such request for a Demand Registration shall specify the amount of Registrable Securities proposed to be sold and the intended method of disposition thereof. Upon receiving a request for a Demand Registration, the Company will, as provided in this Section 2, use its best efforts to effect the registration under the Securities Act of the Registrable Securities in the manner which the Company has been so requested by Shamrock to register. (b) Limitation on Demand Registrations. Notwithstanding anything to the contrary set forth in Section 2(a) but subject to Section 8, the Company shall not be obligated to file a Registration Statement with respect to more than one (1) a Demand Registration upon a request by Shamrock under Section 2(a). (c) Effective Demand Registration. A registration shall not constitute a Demand Registration until the Registration Statement has become effective and remains continuously effective for the lesser of: (i) the period during which all Registrable Securities registered in the Demand Registration are sold: and (ii) 180 days; provided, however, that a registration shall not constitute a Demand Registration if (x) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason not attributable to Shamrock and such interference is not thereafter eliminated: or (y) the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by Shamrock. (d) Underwriting Procedures. If Shamrock so elects, the offering of Registrable Securities pursuant to a Demand Registration shall be in the form of a firm commitment underwritten offering and the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter (as hereinafter defined in Section 2(e)) selected in accordance with Section 2(e). With respect to any firm commitment underwritten offering, the Company shall enter into a reasonable and customary underwriting agreement with the Approved Underwriter. If the Approved Underwriter advises the Company in writing that, in its opinion, the aggregate amount of Ordinary Shares requested to be included in such offering is sufficiently large so as to have a material adverse effect on the success of such offering, then the Company shall include in such registration only the aggregate amount of Ordinary Shares that in the opinion of the Approved Underwriter may be sold without any such material adverse effect and shall allocate the amount of the Ordinary Shares to be included in such registration as follows: (i) first, Shamrock shall be permitted to include all Registrable Securities to be registered thereby; (ii) second, Eastgate shall be allowed to include such amount of Ordinary Shares as the Approved Underwriter deems appropriate, pro rata among the Eastgate entities to the amount of shares then held by each such Eastgate entity; and (iii) third, the Company and any other shareholder exercising piggyback registration rights shall be allowed to include such amount of Ordinary Shares as the Approved Underwriter deems appropriate; provided, however, that the amount of Ordinary Shares to be sold by the Company and any other shareholders under clause (iii) and/or (iv) and intended to be included in such offering shall be reduced in its entirety prior to any reduction of the number of Shamrock's Registrable Securities. (e) Selection of Underwriters. If any Demand Registration is in the form of an underwritten offering, Shamrock shall select and obtain one or more investment banking firms of national reputation to act as the managing underwriters of the offering (collectively, the "Approved Underwriter"); provided, however, that the Approved Underwriter shall, in any case, be acceptable to the Company in its reasonable judgment. 3. Incidental Registration. If the Company shall determine to register any Ordinary Shares, or any securities convertible into or exchangeable or exercisable for Ordinary Shares, for its own account or for the account of any shareholder (other than a registration on Forms F-4, or F-8 or any replacement or successor form thereof), each Holder shall be entitled to include Registrable Securities, on a pro rata basis with the other Holder based on the number of Registrable Securities then held by each Holder, in such registration (and related underwritten offering, if any) (each, an "Incidental Registration") on the following terms and conditions: (a) The Company shall promptly give written notice of such determination to the Holders, and the Holders shall have the right to request, by written notice given to the Company within thirty (30) days of the receipt by Holders of such notice of determination, that a specific number of Registrable Securities held by Holders be included in such Registration Statement; (b) If the proposed registration relates to an underwritten offering, the notice called for by Section 3(a) shall specify the name of the managing underwriter for such offering and the number of securities to be registered for the account of the Company and for the account of any other stockholder of the Company; (c) If the proposed registration relates to an underwritten offering, each Holder must: (i) sell all or a portion of its Registrable Securities on the same basis provided in the underwriting arrangements approved by the Company; and (ii) complete and execute all questionnaires, powers of attorney, indemnities (but only to the extent such indemnities relate specifically to information supplied by such Holder), hold-back agreements, underwriting agreements and other documents on the same basis as other similarly situated selling shareholders (or, if there are no other selling shareholders, as would be customary in a transaction of this type) required under the terms of such underwriting arrangements or by the SEC; (d) If the managing underwriter for the underwritten offering under the proposed registration to be made by the Company determines that inclusion of all or any portion of the Registrable Securities in such offering would adversely affect the ability of the underwriter for such offering to sell all of the securities requested to be included for sale or the price per share in such offering, the number of shares that may be included in such registration in such offering shall be allocated as follows: (i) first, the Company (if such registration was initiated thereby) or the selling shareholder exercising demand registration rights, as the case may be, shall be permitted to include all of the Ordinary Shares to be registered thereby; and (ii) second, the Holders, on a pro rata basis with one another, based on the number of Registrable Securities then held by each Holder, and any other selling shareholder exercising piggyback registration rights shall be allowed to include such amount of Registrable Securities as the managing underwriter(s) deems appropriate (on a pro rata basis with one another but only to the extent that such pro rata basis applies to the number of Ordinary Shares still retained at the time of such cutback); (e) Each Holder shall have the right to withdraw its Registrable Securities from the Registration Statement at any time prior to the effective date thereof, but if the same relates to an underwritten offering, it may only do so after the initial filing thereof during the time period and on terms deemed appropriate by the managing underwriters for such underwritten offering; and (f) The Company or any other shareholder exercising demand registration rights shall have the right to terminate or withdraw any registration statement filing under this Section 3 prior to the effective date of such registration for any reason without liability to the Holders as a result thereof, whether or not either Holder has elected to include its securities in such registration. 4. Form F-3 Registration. (a) At any time after the first anniversary of the Closing Date, Shamrock shall, subject to the provisions of this Section 4, be entitled to request that the Company effect a registration of its Registrable Securities comprising at least 150,000 Ordinary Shares on Form F-3 as shall be specified in such request (a "Form F-3 Registration"). (b) As soon as practicable after receipt of any written request pursuant to Section 4(a), the Company shall file a Form F-3 Registration Statement covering the Registrable Securities and shall effect such registration as would permit or facilitate the sale and distribution of all or such portion of Shamrock's Registrable Securities as are specified in such request. (c) At all times during which the Company is subject to the reporting requirements of the Exchange Act, the Company shall use its best efforts to make registrations on Form F-3 available for the sale of Registrable Securities. (d) If Shamrock so elects, the offering of Registrable Securities pursuant to a Form F-3 Registration shall involve a managing underwriter or underwriters selected for such offering by Shamrock; provided, however, that such managing underwriter shall be acceptable to the Company in its reasonable judgment. If the managing underwriter advises the Company in writing that in its opinion the aggregate amount of Ordinary Shares requested to be included in such offering is sufficiently large so as to have a material adverse effect on the success of such offering, then the Company shall include in such registration only the aggregate amount of Ordinary Shares that in the opinion of the managing underwriter may be sold without any such material adverse effect and shall allocate the amount of the Ordinary Shares to be included in such registration as follows: (i) first, Shamrock shall be permitted to include all Registrable Securities to be registered thereby; (ii) second, Eastgate shall be allowed to include such amount of Ordinary Shares as the Approved Underwriter deems appropriate, pro rata among the Eastgate entities to the amount of shares then held by each such Eastgate entity; and (iii) third, the Company and any other shareholder exercising piggyback registration rights shall be allowed to include such amount of Ordinary Shares as the managing underwriter deems appropriate; pr, however, that, the amount of Ordinary Shares to be sold by the Company and any other shareholders under clause (ii) and /or (iii) and intended to be included in such offering shall be reduced in its entirety prior to any reduction of the number of Holders' Registrable Securities. (e) Each Holder shall have the right to withdraw its Registrable Securities from the Registration Statement at any time prior to the effective date thereof, but if the same relates to an underwritten offering, it may only do so after the initial filing thereof during the time period and on terms deemed appropriate by the underwriters for such underwritten offering. (f) Notwithstanding anything to the contrary in Section 4(a) but subject to Section 8, the Company shall not be obligated to file a Registration Statement with respect to a Form F-3 Registration upon a request by Shamrock under Section 4(a), if the Company has paid the Registration Expenses for one Form F-3 Registrations in accordance with Section 8; provided, however, that only a Form F-3 Registration that has become effective and remained continuously effective for the lesser of: (i) the period during which all Registrable Securities registered thereunder are sold; and (ii) 180 days shall be counted as a Form F-3 Registration and be counted against the aforesaid limitation; and provided, further, however, that a registration shall not constitute a Form F-3 Registration if (x) after such Form F-3 Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Holders and such interference is not thereafter eliminated; or (y) the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such Form F-3 Registration are not satisfied or waived, other than by any reason of a failure not attributable to the Holders. 5. Blockage Periods. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to file any Registration Statement under Section 2 or Section 4 hereof, if, at any time, the Company's Board of Directors determines in good faith, as certified to the Holders in writing by the Company's President or Chief Executive Officer, that the filing of such a Registration Statement would be seriously detrimental to the Company. The Company may decline to file any Registration Statement for this reason only once in any twelve (12) month period and only for a maximum period of one hundred twenty (120) days at any one time. 6. Restrictions on Public Sale by Holder of Registrable Securities. If Registrable Securities are included (in whole or in part) in a Registration Statement filed by the Company under Sections 2 through 4 for sale in an underwritten offering, each Holder whose Registrable Securities are included in such Registration Statement agrees, if requested by the managing underwriter(s) of such offering, not to sell, make any short sale of, loan, grant any option for the purchase of, dispose of or effect any public sale or distribution of securities of the same class as (or securities exchangeable for or convertible into securities of the same class as) Registrable Securities included in a the Registration Statement, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten registration), during the five (5) day period prior to, and during the one hundred twenty (120) day period (or shorter period requested by the managing underwriter(s)) beginning on the closing date of such underwritten offering, to the extent timely notified in writing by the Company or the managing underwriter(s). 7. Registration Procedures. In connection with the Company's registration obligations pursuant to Sections 2 through 4 hereof, the Company will use its best efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company will as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its best efforts to cause such Registration Statement to become effective, and, upon the request of Shamrock or Eastgate, if it shall be a seller under each Registration Statement, keep such Registration Statement effective for up to one hundred eighty (180) days, provided that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company will furnish to each Holder and their respective counsel, copies of all such documents proposed to be filed at least five (5) days prior thereto, and the Company will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which Shamrock (or Eastgate, if it shall be a seller) shall reasonably object within such five (5) day period, provided, further, that the Company will not name or otherwise provide any information with respect to the Holders in any Registration Statement or Prospectus without the express written consent of the Holders, unless required to do so by the Securities Act and the rules and regulations thereunder; (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations thereunder with respect to the disposition of all securities covered by such Registration Statement; (c) promptly notify the Holders: (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) if at any time the representations and warranties of the Company contemplated by the Purchase Agreements cease to be true and correct; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (vi) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading; (d) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement as soon as possible; (e) furnish to the Holders, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (f) deliver to the Holders, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (and any documents incorporated by reference therein) as the Holders may reasonably request, all in full conformity with the Securities Act; the Company consents to the use of the Prospectus or any amendment or supplement thereto by the Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (g) prior to any of Registrable Securities covered by a Registration Statement, register or qualify or cooperate with the Holders in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as the Holders reasonably request, and use its best efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition of such Registrable Securities in all such jurisdictions reasonably requested by the Holders, provided that under no circumstances shall the Company be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such jurisdictions; (h) cooperate with the Holders and the managing underwriter or underwriters to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or the Holders may request; (i) upon the occurrence of any event contemplated by Section 7(c)(vi) above, prepare a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (j) make generally available to the holders of the Company's outstanding securities earnings statements satisfying the provisions of Section ll (a) of the Securities Act, no later than sixty (60) days after the end of any twelve (12) month period (or ninety (90) days, if such period is a fiscal year): (x) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm or best efforts underwritten offering, or, if not sold to underwriters in such an offering; (y) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said twelve (12) month period; (k) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement; (l) use its best efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Ordinary Shares issued by the Company is then listed, and admitted to trading, including, the Nasdaq Stock Market, if the Ordinary Shares are then admitted to trading on the Nasdaq Stock Market; and (m) enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities. (n) furnish, at the request of the Holders, on the date that the Registrable Securities are delivered to an underwriter for sale in connection with an underwritten registration, or, in connection with any other registration, on the date that the registration statement with respect to such registration becomes effective: (i) an opinion, dated such date, of the counsel representing the Company for the purpose of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders; and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders, subject to the Holders providing information reasonably requested by such independent certified public accountants to comply with the rules governing delivery of such letters. The Holders agree that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7(c)(vi) hereof, the Holders will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until the Holders' receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7(i) hereof, or until it is advised in writing by the Company that the use of the Prospectus may be resumed. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 7 with respect to the Registrable Securities of the Holders that the Holders shall furnish them to the Company such information regarding themselves and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of the Holder's Registrable Securities. 8. Registration Expenses. All expenses incident to any registration to be effected hereunder (whether or not the Registration Statement is filed or declared effective) and incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of the Company's counsel and of independent certified public accountants of the Company (including the expenses of any special audit required by or incident to such performance), the fees of one counsel representing the Holders in such offering (which counsel shall be selected by Shamrock if Shamrock is participating in such offering), expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities), all such expenses being herein called "Registration Expenses," will be borne by the Company. The Company will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by the Company. Notwithstanding the foregoing but subject to Section 12, the Company will not be obligated to pay Registration Expenses for more than two Demand Registrations effected pursuant to Section 2 of this Agreement or for more than one Form F-3 Registration effected pursuant to Section 4 of this Agreement. Registration Expenses incurred in connection with Registration Statements requested under Section 2 or Section 4 that are not filed or declared effective by the SEC will be paid by the Company and will not count against such limit; provided, however, if such Registration Statement not being filed or declared effective as the result of the actions of Shamrock, then Shamrock may in its sole and unlimited discretion elect to bear the Registration Expenses (and underwriting discounts and commissions and transfer taxes, if any) of such Demand Registration or such Form F-3 Registration, as the case may be, in which case such registration shall not be counted as a Demand Registration under Section 2 or a Form F-3 Registration under Section 4, as the case may be. In the event that Shamrock bears the Registration Expenses (and underwriting discounts and commissions and transfer taxes, if any) in connection with any Demand Registration requested under Section 2 or Form F-3 Registration under Section 4, such Registration Expenses shall be apportioned among the holders whose Ordinary Shares are then being registered, on the basis of the respective amounts (by number of Ordinary Shares) then being registered by them or on their behalf. 9. Indemnification. --------------- (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless Holders, their respective officers, directors, partners and employees and each person who controls Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, provided that the Company will not be liable to Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (x) based upon written information furnished to the Company by Holders expressly for the inclusion in such Registration Statement, (y) made in any preliminary prospectus if Holders failed to deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by Holders to the party asserting the claim underlying such Damages and such Prospectus would have corrected such untrue statement or omission and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus and Holders failed to deliver such amendment or supplement prior to or concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages. (b) Indemnification by Holders of Registrable Securities. If Registrable Securities are sold under a Prospectus which is a part of a Registration Statement, Shamrock and/or each of the Eastgate entities, individually and not jointly, as to their own statements or omissions only, agrees to indemnify and hold harmless the Company, its directors and each officer who signed such Registration Statement and each person who controls the Company (within the meaning of Section 15 of the Securities Act) under the same circumstances as the foregoing indemnity from the Company to Holders to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to Shamrock or the Eastgate entity, as the case may be, furnished in writing to the Company by such party expressly for use therein, provided that in no event shall the aggregate liability of Shamrock or the Eastgate entity, as the case may be, exceed the amount of the net proceeds received by such party upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company and Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances. (c) Procedure for Indemnification Proceedings. Any person entitled to indemnification hereunder will: (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification; and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless: (A) the indemnifying party has agreed to pay such fees or expenses; (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person; or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this Section 9(c), the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only the Company (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their respective officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable. (d) Contribution. If for any reason the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses: (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other but also the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. Notwithstanding the foregoing, the Holders shall not be required to contribute any amount in excess of the amount the Holders would have been required to pay to an indemnified party if the indemnity under Section 9(b) hereof was available. No person found liable for making a fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person who was found liable for making such fraudulent misrepresentation. (e) Timing of Payments. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this Section 9 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable. (f) Survival. These indemnity and contribution provisions shall remain in full force and effect, regardless of any investigation made by or on behalf of the Holders, its officers, directors, partners, attorneys, agents or any person, if any, who controls the Holders as aforesaid, and shall survive the transfer of such Registrable Securities by each Holder. 10. Preparation; Reasonable Investigation. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement: (a) the Company shall, with respect to a Registration Statement filed by the Company, give the Holders, the underwriter(s), if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and lawfully and properly filed with the SEC) and each Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and (b) the Company shall give the Holders, their underwriters, if any, and their respective counsel and accountants reasonable access to its books and records and opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Holders or such underwriter(s), to conduct a reasonable investigation within the meaning of Section ll(b)(3) of the Securities Act. 11. Rule 144. At all times during which the Company is subject to the periodic reporting requirements of the Exchange Act, the Company covenants that it will file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as the Holders may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A under the Securities Act), all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by: (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time; (b) Rule 144A under the Securities Act, as such Rule may be amended from time to time; or (c) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement verifying that it has complied with such information requirements. 12. No Inconsistent Agreements. The Company will not enter into any agreement offering registration rights of the nature set forth herein without the consent of the holder(s) of the majority of the Registrable Securities held by the Holders at such time, which consent may be withheld, in their sole discretion; provided that the Company may grant demand and incidental registration rights in the future to the Holders of Ordinary Shares on the following basis (in which event the consent of the Holders will not be required): (a) all cutbacks on incidental registrations shall be on a pro rata basis with the Ordinary Shares held by the Holders and any other selling shareholder exercising incidental registration rights (but only to the extent that such pro rata basis applies to the number of Ordinary Shares still retained at the time of such cutback); (b) an investor investing between $5,000,000 and $10,000,000 shall be entitled to not more than one (1) demand registration right and one F-3 Registration; (c) an investor investing between $10,000,000 and $20,000,000 shall be entitled to not more than two (2) demand registration rights and two F-3 Registrations; (d) an investor investing more than $20,000,000 shall be entitled to not more than three (3) demand registration rights and two (2) F-3 Registrations; and (e) holders of any registration rights granted subsequent to the date hereof shall not exercise any such rights, except incidental or registration rights, prior to the first anniversary of the closing of the purchase of the Ordinary Shares as to which such registration rights were granted. 13. Assignment of Rights. Each Holder may assign its respective rights under the Agreement to: (a) any transferee of the Registrable Securities of such Holder, if such transferee has executed this Agreement and agreed to be bound by the terms hereof (it being understood, however, that the Holder effecting such transfer shall retain all of its rights hereunder with respect to all Registrable Securities not so transferred thereby); or (b) any shareholder, subsidiary, partner, nominee or Affiliate of the Holder effecting such transfer or any such transferee. The transferor shall, within twenty (20) days after such transfer, furnish the Company with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned and a copy of this Agreement executed by the Transferee. 14. Specific Performance. The Holders, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of their rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 15. Notices. All notices required or permitted under the terms of this Agreement shall be delivered in the manner called for in the Purchase Agreements. 16. Successors and Assigns. Subject to Section 13, this Agreement shall inure to the benefit of the successors and permitted assigns of Holders, such that the rights under this Agreement shall inure to the benefit of and be binding upon such subsequent holders of Registrable Securities without the need for an express assignment. This Agreement shall inure to the benefit of and be binding upon the Company and any corporation resulting from any merger or consolidation of the Company with or into such corporation (in which the Company is not the surviving corporation) or any corporation whose securities are issued in exchange for Ordinary Shares. 17. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 18. Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and shall supersede any prior understandings, agreements or representations, written or oral, by or among the parties hereto. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument. 20. Amendment. Any provision of this Agreement may be amended, waived or modified only by a writing signed by the Company and holders of a majority of the Registrable Securities. 21. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The parties hereby consent to the sole and exclusive jurisdiction of any federal or state court in the State of New York, City of New York. [The remainder of the page is intentionally left blank.] IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the day and year first above written. PARADIGM GEOPHYSICAL LTD. an Israeli corporation By: /s/ Eldad Weiss -------------------------------- Name: Eldad Weiss Title: President and CEO SHAMROCK HOLDINGS, INC. By: /s/ Robert G. Moskowitz -------------------------------- Name: Robert G. Moskowitz Title: Executive Vice President and Secretary EASTGATE FUND L.P. by Eastgate Management Corporation, its general partner By: /s/ Harris Kaplan -------------------------------- Name: Harris Kaplan Title: President EASTGATE INTERNATIONAL LIMITED, by Eastgate Management Corporation, its Investment Manager and Authorized Agent By: /s/ Harris Kaplan -------------------------------- Name: Harris Kaplan Title: President /s/ Harris Kaplan ------------------------------------- MR. HARRIS KAPLAN BERMAN EASTGATE GROWTH FUND, by Eastgate Management Corporation, a general partner By: /s/ Harris Kaplan -------------------------------- Name: Harris Kaplan Title: President EX-4 5 EXHIBIT 4 SMITH BARNEY ACCOUNT APPLICATION AND CLIENT AGREEMENT A MEMBER OF TRAVELSERGROUP Please complete both sides of this document and be sure to sign on the reverse side. If this is not an individual or joint account, your Financial Consultant will advise you of any additional documentation requirements. FINANCIAL MANAGEMENT ACCOUNT(SM) (FMA(R)) SERVICES ARE NOT AVAILABLE ON IRA AND MANAGED ACCOUNTS. -------------------------------------- IRA AND MANAGED ACCOUNTS AUTOMATICALLY ACCOUNT NUMBER QUALIFY FOR A DAILY MONEY MARKET SWEEP. BRANCH ACCOUNT T C FC Please return the completed application to your Financial Consultant. -------------------------------------- Account Owner/ Co-Owner Your Name SHAMROCK HOLDINGS INC Name(s) - ---------------------------------------- ------------------------------------ - -------------------------------------------------------------------------------- TAX INFORMATION Please write in your Social Security Number or Tax ID Number here. MULTIPLE PARTY ACCOUNTS: USE THE SOCIAL SECURITY NUMBER OF THE FIRST OWNER NAMED ABOVE. [ ] Check here if you are subject to [ ] Social Security backup withholdings due to notification or 75-1984190 by the IRS. If so, you must also cross [X] Tax ID Number out the portion of the Tax Certification and Authorization section on the reverse side as indicated. - -------------------------------------------------------------------------------- PORTFOLIO If eligible, your account will have Portfolio CreditLine CREDITLINE(SM) borrowing privileges UNLESS you decline below. See accompanying literature for an explanation of Portfolio CreditLine borrowing. [ ] I/We do NOT want Portfolio CreditLine borrowing privileges in my/our account. Please note that you may not obtain an FMA Money Card (below) if you check this box. - -------------------------------------------------------------------------------- NAME DISCLOSURE The issuers of securities that are held for you in street name at Smith Barney may request the release of your name, address and securities position. If you do not wish this information to be released, check the box below. [X] DO NOT release my name, address and securities position to issuers. ================================================================================ TAX CERTIFICATION: UNDER PENALTIES OF PERJURY, BY SIGNING BELOW I CERTIFY THAT (A) THE NUMBER I HAVE ENTERED ON THE FRONT OF THIS FORM IS MY CORRECT TAX IDENTIFICATION NUMBER AND (B) THAT I AM NOT SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. I UNDERSTAND I MUST CROSS OUT ITEM (B) ABOVE IF I AM CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON MY TAX RETURN. - -------------------------------------------------------------------------------- ACCEPTANCE OF TERMS AND CONDITIONS OF AGREEMENTS: In consideration of Smith Barney Inc. (Smith Barney) accepting an account for me/us, I/we ("I") acknowledge that I have read, understand and agree to the terms of the attached Client Agreement in Section 1 through 11. If this is a multiple party account, I/we further acknowledge that I/we have read, understand and agree to the terms of the attached Client Agreement contained in Sections 12 through 14. If I have requested any of the services referenced in the FMA sections above, I agree to the terms of the FMA Agreement that has been provided to me. I authorize Smith Barney to establish checking privileges, Online Services and the Automatic Funds Transfer service, and to have the FMA Money Card(s) issued as instructed on this Account Application, and I affirm that I have the authority to open this account. I authorize Smith Barney and the FMA Money Card Issuer to have FMA Money Card(s) issued as indicated. I understand that this account is governed by the FMA Agreement, the Client Agreement, the Online Services Agreement, my agreement with the FMA Money Card Issuer, and/or other agreements I may have with Smith Barney or other providers of services related to the FMA account. I have read all the documents and agree to their terms. IF I/WE HAVE SELECTED ANY OF THE FMA SERVICES, I/WE UNDERSTAND THAT BOTH AN ACCOUNT MINIMUM BALANCE AND ANNUAL FEE APPLY. IF I CHOOSE TO USE ONLINE SERVICES, BY SIGNING THIS APPLICATION I AGREE THAT MY ONLINE SERVICES AGREEMENT WILL CONTAIN PROVISIONS LIMITING MY RIGHTS AND REMEDIES, INCLUDING, WHERE PERMITTED BY LAW, A LIMITATION ON CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES AND ON LOSSES ARISING FROM THE NEGLIGENCE OF SMITH BARNEY AND/OR ITS AGENTS. IF THIS ACCOUNT IS ESTABLISHED WITH PORTFOLIO CREDITLINE PRIVILEGES, I FURTHER ACKNOWLEDGE THAT I HAVE READ, UNDERSTAND AND AGREE TO THE TERMS OF THE ATTACHED CLIENT AGREEMENT CONTAINED IN SECTIONS 15 THROUGH 17 AND THAT MY/OUR SECURITIES MAY BE LOANED TO YOU OR LOANED OUT TO OTHERS. SMITH BARNEY INC. REQUIRES YOUR CONSENT TO THE APPLICABLE PROVISIONS OF THIS AGREEMENT IN ORDER TO OPEN AND MAINTAIN YOUR ACCOUNT. I ACKNOWLEDGE THAT I HAVE THE INTERNAL REVENUE SERVICE RECEIVED THE CLIENT DOES NOT REQUIRE YOUR CONSENT AGREEMENT WHICH CONTAINS TO ANY PROVISION OF THIS A PRE-DISPUTE ARBITRATION DOCUMENT OTHER THAN THE CLAUSE IN SECTION 6. CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING. ALL ACCOUNT OWNERS MUST ACCOUNT SIGN. OWNER'S /S/ STANLEY P. GOLD SIGNATURE IF FMA CHECKING IS REQUESTED, PLEASE SIGN AS YOU WILL CO-OWNER'S NORMALLY SIGN YOUR CHECKS. SIGNATURE CLIENT AGREEMENT In consideration of your opening one or more accounts for me ("we", "us" and "our" are each substituted for "I, "me" and "my", respectively, in the case of multiple account holders, corporations and other entities), and your agreeing to act as broker/dealer for me for the extension of credit and in the purchase or sale of securities, commodities, options and other property. It is agreed in respect to any and all accounts, whether upon margin or otherwise, which I now have or may at any future time have with Salomon Smith Barney Inc. or its direct or indirect subsidiaries and affiliates or their successors or assigns (hereinafter referred to as "you" or "your" or "SSB"), that: 1. All transactions entered into under this Agreement shall be subject to any applicable constitution, rules, regulations, customs and usages of the exchange or market and its clearinghouse, if any, where such transactions are executed by SSB or its agents and to all applicable laws, rules and regulations of governmental authorities and self-regulatory agencies. Such reference to the "constitution, rules, regulations, customs and usages of the exchange" shall in no way be construed to create a cause of action arising from any violation of such constitution, rules, regulations, customs and usages. If any provision is enacted that would e inconsistent with any of the provisions of this Agreement, the provision so affected shall be deemed modified or superseded by the enactment, but the remaining provisions of this Agreement shall remain in effect. Except as herein provided, no provision of this Agreement may be waived, altered, modified or amended unless the same is in writing and signed by the authorized official of SSB. 2. I agree that all property which I own or in which I have an ownership interest, whether owned individually, jointly or in the name of another person or entity, which at any time may be in your possession or control for any purpose, including safekeeping, shall be subject to a continuing security interest, lien and right of set-off for the discharge and satisfaction of any debts or obligations however arising that I may owe to SSB at any time and for any reason. SSB may at its discretion hold such property until my debts or obligations to SSB are fully satisfied or SSB may apply such property and the proceeds of the liquidation of such property toward the satisfaction of my debts and obligations and I will remain liable to SSB for any deficiency. In enforcing your security interest, you shall have the discretion to determine which property is to be sold and the order in which it is to be sold and shall have all the rights and remedies available to a secured party under the New York Uniform Commercial Code. Without your prior written consent, I will not cause or allow any of the collateral held in my account(s), whether now owned or hereafter acquired, to be or become subject to any liens, security interests, mortgages or encumbrances of any nature other than your security interest. Without limiting the generality of the foregoing, I hereby authorize SSB to automatically liquidate any money market fund shares or withdraw any savings deposit balances available in my account(s) from time to time to cover any of my indebtedness or obligations to SSB including non-trade related debts. You are further authorized to liquidate any other property held in my account(s) to satisfy any such indebtedness or obligations whenever in you discretion you consider it necessary for you protection. You are authorized without further direction from me to invest any eligible free credit balances in any of my accounts in the money market fund that I have chosen. If I fail to choose a money market fund, you are authorized to make this choice on my behalf. All such investments commonly called "sweeps" shall be governed by SSB's prevailing terms and conditions as they may exist from time to time. If I have elected the Insured Deposit Account ("IDA") feature as my sweep, you are authorized without further direction from me to invest eligible free credit balances in my accounts in savings deposits at the depository institutions in the order set forth on the list furnished to me from time to time. I understand that you may amend the list of depository institutions and that I may eliminate depository institutions from the list at any time. If my funds invested through the IDA feature reach the maximum amount that I have authorized you to so invest or that may be so invested, you are authorized to invest excess eligible free credit balances in the money market fund I have chosen or you have chosen pursuant to my authorization. I have read the IDA Disclosure Document and agree to be bound by its terms and conditions. "Property" as used anywhere in this Agreement shall include, but not be limited to, investment property, securities and commodities accounts, securities of all kinds, money, saving deposits, certificates of deposit, bankers' acceptances, commercial paper, options, commodities, and contracts for the future delivery of commodities or relating to commodities or securities, and the distributions, proceeds, products and accessions of any of the above. All property held in a securities account shall be treated as a financial asset under Article 8 of the New York Uniform Commercial Code. 3. In case of the sale of any security, commodity, or other property at my direction and the inability of SSB to deliver the same to the purchaser by reason of my failure to supply them to SSB. I authorize SSB to borrow any security, commodity, or other property necessary to make delivery thereof, and I hereby agree to be responsible for any loss which SSB may sustain thereby and any premiums, interest or other costs which SSB may be required to pay as a result of such borrowing, and for any loss or cost which SSB may sustain by reason of its inability to borrow the security, commodity, or other property sold. I agree that if I utilize your services to receive or issue funds by wire (wire transfer), I am responsible for the issuance of accurate and complete instructions in relation to said wire transfer and I will hold you harmless from all liabilities if I fail to fulfill this responsibility. I further agree that should I incur a loss in connection with a wire transfer as a result of negligence or other activities on your part, your liability will be limited to the actual amount of the misdirected or misapplied funds and no other damages of any other nature including consequential damages will be recoverable. You may charge my account(s) with such usual and customary charges as you may determine to cover your services and facilities, including, but not limited to, custody and transaction fees. I will promptly pay SSB any deficiency that might arise in my account(s). I understand and agree that a finance charge may be charged on any debt balance in any cash account I have with SSB in accordance with the terms described in the SSB literature previously provided me and any subsequent modifications thereto which will be provided to me. You may transfer excess funds between any of my accounts (including commodity accounts) for any reason not in conflict with the Commodity Exchange Act or any other applicable law. If any transactions are effected on an exchange in which a foreign currency is used, any profit or loss as a result of the fluctuation in the exchange rate will be charged or credited to my account(s). 4. Communications may be sent to the mailing address on file with you, or at such other address as I may hereafter give in writing, and all communications so sent, whether by mail, telegraph, messenger or otherwise, shall be deemed given to me personally, whether actually received or not. I acknowledge that the rules of the Securities and Exchange Commission require that certain communications be sent to me rather than an agent acting on my behalf, I warrant that the address currently on file with you is an address where I personally receive communications unless it is the address of a qualified custodian as defined by the Securities and Exchange Commission. Transactions entered into for my account(s) shall be confirmed in writing to me where required by applicable law or regulation. In addition, SSB shall provide me with periodic statements reflecting activity in such account(s). I agree that transactions reflected on such confirmations and statements shall be conclusively deemed accurate as stated unless I notify SSB in writing within three (3) days and ten (10) days of receipt, respectively, that the information contained in such confirmation or statement is inaccurate. Such notice must be sent by me to SSB by telegram or letter directed to the attention of the Branch Office Manager of the office servicing the account. Failure to so notify SSB shall also preclude me from asserting at any later date that such transaction was unauthorized. I authorize you at your discretion to obtain reports and to provide information to others concerning my credit standing and my business conduct. You may ask credit reporting agencies for consumer reports of my credit history. Upon my request you will inform me whether you have obtained any such consumer reports and if you have, you will inform me of the name and address of the consumer reporting agency that furnished the reports to you. 5. I hereby represent that I am of the age of majority. Unless I advise you to the contrary, in writing, and provide you with a letter of approval from my employer, where required, I represent that I am not an employee of any exchange, or of any corporation of which any exchange owns a majority of the capital stock, or of a member of any exchange, or of a member firm or member corporation registered on any exchange, or of any corporation, firm or individual engaged in the business of dealing, either as a broker or as principal, in securities, bills of exchange acceptances or other forms of commercial paper. I further represent that no one except those signing this agreement has an interest in my account. If my account has been introduced to you and is carried by you only as a clearing broker, I agree that you are not responsible for the conduct of the introducing broker and your only responsibilities to me relate to the execution, clearing and bookkeeping of transactions in my accounts. 6. ARBITRATION () ARBITRATION IS FINAL AND BINDING ON THE PARTIES. () THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL. () PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS. () THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING, AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED. () THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY. I AGREE THAT ALL CLAIMS OR CONTROVERSIES, WHETHER SUCH CLAIMS OR CONTROVERSIES AROSE PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF, BETWEEN ME AND SSB AND/OR ANY OF ITS PRESENT OR FORMER OFFICERS, DIRECTORS, OR EMPLOYEES CONCERNING OR ARISING FROM (I) ANY ACCOUNT MAINTAINED BY ME WITH SSB INDIVIDUALLY OR JOINTLY WITH OTHERS IN ANY CAPACITY; (II) ANY TRANSACTION INVOLVING SSB OR ANY PREDECESSOR FIRMS BY MERGER, ACQUISITION OR OTHER BUSINESS COMBINATION AND ME, WHETHER OR NOT SUCH TRANSACTION OCCURRED IN SUCH ACCOUNT OR ACCOUNTS; OR (III) THE CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN US, ANY DUTY ARISING FROM THE BUSINESS OF SSB OR OTHERWISE, SHALL BE DETERMINED BY ARBITRATION BEFORE, AND ONLY BEFORE, ANY SELF-REGULATORY ORGANIZATION OR EXCHANGE OF WHICH SSB IS A MEMBER. I MAY ELECT WHICH OF THESE ARBITRATION FORUMS SHALL HEAR THE MATTER BY SENDING A REGISTERED LETTER OR TELEGRAM ADDRESSED TO SALOMON SMITH BARNEY INC. AT 386 GREENWICH STREET, NEW YORK, N.Y. 10013-2396, ATTN: LAW DEPARTMENT. IF I FAIL TO MAKE SUCH ELECTION BEFORE THE EXPIRATION OF FIVE(5) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM SSB TO MAKE SUCH ELECTION, SSB SHALL HAVE THE RIGHT TO CHOOSE THE FORUM. NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (I) THE CLASS CERTIFICATION IS DENIED; (II) THE CLASS IS DECERTIFIED; OR (III) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN. 7. The provisions of this Agreement shall be continuous, shall cover individually and collectively all accounts which I may open or reopen with SSB, and shall inure to the benefit of SSB's present organization, and any successor organization or assigns; and shall be binding upon my heirs, executors, administrators, assigns or successors in interest. Should any term or provision of this Agreement be deemed or held to be invalid or unenforceable, the remaining terms and provisions shall continue in full force and effect. Except for statutes of limitation applicable to claims, this Agreement and all the terms herein shall be governed and construed in accordance with the laws of the State of New York without giving effect to principles of conflict of laws. The statute of limitations applicable to any claim shall be that which would be applied by the courts of the state in which I reside. 8. I understand that you may in your sole discretion prohibit or restrict trading of securities or substitution of securities in any of my accounts. You have the right to terminate any of my accounts (including multiple owner accounts) at any time by notice to me. The provisions of this agreement shall survive the termination of any account. 9. Your failure to insist at any time upon strict compliance with any term of this Agreement, or any delay or failure on your part to exercise any power or right given to you in this Agreement, or a continued course of such conduct on your part shall at no time operate as a waiver of such power or right, nor shall any single or partial exercise preclude any other further exercise. All rights and remedies given to you in this Agreement are cumulative and not exclusive of any other rights or remedies which you otherwise have. 10. I understand that SSB shall not be liable for loss caused directly or indirectly by government restrictions, exchange or market rulings, suspension of trading, war, strikes or other conditions, commonly known as "acts of God," beyond SSB's control. 11. From time to time you may at your discretion, make loans to me for a purpose other than purchasing, carrying or trading in securities ("Express Credit Loans"). Express Credit Loans will be made in a nonsecurities credit account ("Express Credit Account"). The minimum and maximum amount of any particular loan may be established by you in your discretion regardless of the amount of collateral delivered to you and you may change such minimum and maximum amounts from time to time. I agree not to use the proceeds of any Express Credit Loan to purchase, carry or trade in securities. I also agree not to use Express Credit Loan proceeds directly or indirectly to repay other debt that I incur for the purpose of purchasing, carrying or trading in securities. ADDITIONAL TERMS FOR MULTIPLE PARTY ACCOUNTS PARAGRAPH 12 THROUGH 14 APPLY ONLY TO MULTIPLE PARTY ACCOUNTS. 12. If this is a multiple party account, in consideration of you and your successors carrying a multiple party account on margin or otherwise for the undersigned, each of us agrees to be jointly and severally liable for said account and to pay on demand any debit balance or losses at any time due in this account. Any of us has full power and authority to make purchases and sales, including short sales, to withdraw monies and securities from ,or to do anything else with reference to our account, either individually or in our joint names, and you and your successors are authorized and directed to act upon instructions received from any of us and to accept payment and securities from any of us for the credit of this account. Notwithstanding the ability of each of us to control the account individually, we understand and agree that you may, at your sole option, require written instructions signed by all account owners when payments or transfers are requested. Any and all notices, communications, or any demands for margin sent to any of us shall be binding upon all, and may be given by mail or other means of communication. We hereby declare this account to be joint tenancy with rights of survivorship unless we instruct you to establish another form of multiple ownership by executing a tenancy in common agreement, community property agreement, partnership agreement or other applicable agreement evidencing the desired form of ownership. 13. Each of us agrees to hold SSB harmless from and indemnify SSB against any losses, causes of action, damages and expenses arising from or as the result of SSB following the action, damages and expenses arising from or as the result of SSB following the instructions of either or any of us. SSB, in its sole discretion, may at any time suspend all activity in the multiple party account pending instructions from a court of competent jurisdiction or require that instructions pertaining to the multiple party account or the property therein be in writing signed by both or all of us. SSB shall be entitled to recover from the account or from any of us prior to distribution of the funds or property therein such costs as it may incur, including reasonable attorney's fees, as the result of any dispute between or among us relating to or arising from the account. 14. Each of us agrees that, in the event of the death of either or any of us, the survivor or survivors shall immediately give you written notice thereof, and you may, before or after receiving such notice, take such actions, require such papers, inheritance or estate tax waivers, retain such portion of the account and restrict transactions in the account as you may deem advisable to protect you against any tax, liability, penalty or loss under any present or future laws or otherwise. The estate of either or any of us who shall have died shall be liable and each survivor shall continue liable, jointly and severally, to you for any net debit balance or loss in said account in any way resulting from the completion of transactions initiated prior to the receipt by you of the written notice of the death of the decedent, or incurred in the liquidation of the account or the adjustment of the interest of the respective parties. If this account contains rights of survivorship, in the event of the death of either or any of us, all assets in the account shall pass to and be vested in the survivor or survivors on the same terms and conditions as previously held, without in any manner releasing the decedent's estate from the liabilities provided for herein. The estate of the decedent(s) and the survivors hereby jointly and severally agree to fully indemnify and hold harmless SSB from all liability for any taxes which may be owed in connection therewith or any claims by third parties. MARGIN AGREEMENT PARAGRAPHS 15 THROUGH 17 APPLY ONLY TO MARGIN ACCOUNTS 15. You are hereby authorized, without notice to me, and without regard as to whether or not you have in your possession or under your control at the time thereof other property of the same kind and amount to pledge, repledge, hypothecate or rehypothecate my property or any part thereof, either separately or together with other property of other clients, either for the amount due you from me or for a greater sum. 16. I agree to pay ON DEMAND any balance owing with respect to any of my accounts, including interest and commissions and any costs of collection (including attorney's fees, if incurred by you). I understand that you may demand full payment of the balance due in my account plus any interest charges accrued thereon, at your sole option, at any time without cause and whether or not such demand is made for your protection. I understand that all loans made are not for any specific term or duration but are due and payable at your discretion upon a demand for payment made to me. I agree that all payments received for my account(s) including interest, dividends, premiums, principal or other payments may be applied by you to any balances due in my account(s). If I maintain both a cash and a margin account with you, you are authorized in your discretion to utilize the equity in either type of account in satisfaction of any maintenance margin requirement without the actual transference of funds or securities between such accounts. Whenever you deem it necessary or appropriate for your protection, you are authorized, in your sole discretion, to sell, assign, transfer and deliver all or any part of my property which may be in your possession or control in any manner you deem appropriate, make any necessary purchases to cover short sales and/or any open commodity contract positions and/or to cancel any outstanding orders in order to close out the account. Without limiting the generality of the foregoing, such sale, purchase or cancellation may be made, in your sole discretion, on the exchange or other market where such business is then usually transacted, at public auction or at private sale without advertising the same. All of the above may be done without demand for margin or notice of purchase, sale or cancellation to me. No demand margin, or notice given to me of intent to purchase or sell property or to cancel orders in my account, shall impose on you any obligation to make such demand or provide such notice to me. Any such notice or demand is hereby expressly waived, and no specific demand or notice shall invalidate this waiver. After deducting all costs and expenses of the purchase and/or sale and deliveries, including, but not limited to, commissions and transfer and stamp taxes, you shall apply the residue of the proceeds to the payment of any and all of my liabilities to you, and I shall remain liable for any deficiency. Upon any such sale, you may purchase the whole or any part thereof free from any right of redemption. In the event of my death or incompetency the authority given by this Paragraph shall continue effective and shall be binding upon by personal representatives and heirs. 17. I will at all times maintain such margin for my account maintained by SSB, as SSB may require from time to time, and any debit balances arising in such account shall be charged interest in accordance with the terms described in the SSB literature previously provided me and any subsequent modifications thereto which will be provided to me. I am aware that interest charges, if not paid will be added to the debit balance in my account for the next interest period. I am aware and agree that you may impose, for my account(s), margin requirements more stringent than those required by law or exchange regulations. I further understand and agree that such margin requirements may be changed and modified by you from time to time without prior notice to me. I further agree that any waiver by you or failure to promptly enforce, as to my account or that of others, such margin requirements shall not in any way prevent you from subsequently enforcing said margin requirements with regard to my account. -----END PRIVACY-ENHANCED MESSAGE-----