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PHOENIX TECHNOLOGIES LTD.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is
made and entered into as of December 18, 1995 by and among Phoenix Technologies
Ltd., a Delaware corporation (the "Company"), and Intel Corporation, a Delaware
corporation (the "Investor").
R E C I T A L S
A. The Investor has agreed to purchase from
the Company, and the Company has agreed to sell to the Investor, shares of the
Company's Common Stock (the "Common Stock") and a Warrant (the "Warrant") on the
terms and conditions set forth in that certain Common Stock and Warrant Purchase
Agreement, dated of even date herewith by and between the Company and the
Investor (the "Purchase Agreement"). The Company and the Investor have entered
into an agreement of even date herewith relating to the licensing, marketing and
development of certain of the Company's system-level software designed for use
with desktop computer and server computer products (the "Technology Agreement").
B. The Purchase Agreement provides that the
Investor shall be granted certain information rights, registration rights and
other rights, all as more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing
recitals, the mutual promises hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. INFORMATION RIGHTS.
1.1 Financial Information. The Company
covenants and agrees that, commencing on the date of this Agreement, for so long
as the Investor holds shares of Common Stock issued under this Agreement or the
Purchase Agreement or shares of Common Stock issued pursuant to exercise of the
Warrant the Company will:
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(a) Annual Reports. Furnish to the Investor
within 90 days after the end of each fiscal year of the Company, a consolidated
Balance Sheet as of the end of such fiscal year, a consolidated Statement of
Income and a consolidated Statement of Cash Flows of the Company and its
subsidiaries for such year, setting forth in each case in comparative form the
figures from the Company's previous fiscal year, all prepared in accordance with
generally accepted accounting principles and practices and audited by nationally
recognized independent certified public accountants; and
(b) Quarterly Reports. Furnish to the
Investor within forty-five (45) days of the end of each fiscal quarter of the
Company (except the last quarter of the Company's fiscal year), quarterly
unaudited financial statements.
1.2 Board Observer. So long the Investor, together
with its Majority Owned Subsidiaries (as defined in Section 8.1(a)), holds at
least 894,971 shares of Common Stock of the Company (such number to be
proportionately adjusted for stock splits, stock dividends, and similar events),
the Company will permit a representative of the Investor (the "Representative")
reasonably acceptable to the Company's Board of Directors (the "Board") to
attend all meetings of the Board (whether in person, telephonic or other) in a
non-voting, observer capacity and shall provide to the Investor, concurrently
with the members of the Company's Board of Directors, notice of such meeting and
a copy of all materials provided to such members, provided that the Board may
exclude the Representative from any portion of any meeting and may redact from
any of such materials for or as to which the Board determines in its reasonable
discretion that the subject matter of such portion of the meeting or such
portion of the materials involves matters for which a conflict of interest
exists between the Company and the Investor, and provided further that the
Investor shall execute an appropriate confidentiality agreement.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "register,"
"registered," and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act of
1933, as amended, (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement.
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(b) Registrable Securities. The term
"Registrable Securities" means: (1) all the shares of Common Stock of the
Company issued (A) under the Purchase Agreement, (B) pursuant to an exercise of
the Warrant, and (C) pursuant to the Right of Participation (defined in Section
3 hereof) or the Right of Maintenance (defined in Section 4 hereof), and (2) any
shares of Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, any such shares of Common Stock described in clause (1) of this
subsection (b); excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which rights under this Section 2 are not
assigned in accordance with this Agreement or any Registrable Securities sold in
a public offering, whether sold pursuant to Rule 144 promulgated under the
Securities Act, or in a registered offering, or otherwise.
(c) Registrable Securities Then
Outstanding. The number of shares of "Registrable Securities then outstanding"
shall mean the number of shares of Common Stock which are Registrable Securities
and (1) are then issued and outstanding or (2) are then issuable pursuant to an
exercise of the Warrant.
(d) Holder. For purposes of this Section
2, the term "Holder" means any person owning of record Registrable Securities
that have not been sold to the public or pursuant to Rule 144 promulgated under
the Securities Act or any permitted assignee of record of such Registrable
Securities to whom rights under this Section 2 have been duly assigned in
accordance with this Agreement.
(e) Form S-3. The term "Form S-3" means
such form under the Securities Act as is 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.
(f) SEC. The term "SEC" or "Commission"
means the U.S. Securities and Exchange Commission.
2.2 Demand Registration.
(a) Request by Holders. If the Company
shall receive at any time subsequent to the third anniversary of the date of
this Agreement, a written request from the Holders of at least a majority of
the Registrable Securities then outstanding that the Company file a
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registration statement under the Securities Act covering the registration of
Registrable Securities pursuant to this Section 2.2, then the Company shall,
within ten (10) business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all Holders, and use its
best efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities which Holders request to be
registered and included in such registration by written notice given such
Holders to the Company within twenty (20) days after receipt of the Request
Notice, subject only to the limitations of this Section 2.2; provided that the
Registrable Securities requested by all Holders to be registered pursuant to
such request must be at least twenty-five percent (25%) of all Registrable
Securities then outstanding; and provided further that the Company shall not be
obligated to effect any such registration if the Company has, within the (12)
month period preceding the date of such request, already effected a registration
under the Securities Act pursuant to this Section 2.2 or Section 2.4, or in
which the Holders had an opportunity to participate pursuant to the provisions
of Section 2.3, other than a registration from which the Registrable Securities
of Holders have been excluded (with respect to all or any portion of the
Registrable Securities the Holders requested be included in such registration)
pursuant to the provisions of Section 2.3(a).
(b) Underwriting. If the Holders
initiating the registration request under this Section 2.2 ("Initiating
Holders") intend to distribute the Registrable Securities covered by their
request by means of an underwriting, then they shall so advise the Company as a
part of their request made pursuant to this Section 2.2 and the Company shall
include such information in the written notice referred to in subsection 2.2(a).
In such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the managing underwriter
or underwriters selected for such underwriting by the Holders of a majority of
the Registrable Securities being registered and reasonably acceptable to the
Company (including a market stand-off agreement of up to 180 days if required by
such underwriters). Notwithstanding any other provision of this Section 2.2, if
the underwriter(s) advise(s) the Company in writing that marketing factors
require a limitation of the number of securities to be underwritten then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be registered and underwritten pursuant hereto, and the number of
Registrable Securities that may be included in the underwriting shall be reduced
as required by the underwriter(s) and allocated among the Holders of Registrable
Securities on a pro rata basis according to the number of Registrable Securities
then outstanding held by each Holder requesting registration (including the
Initiating Holders); provided, however, that the number of shares of Registrable
Securities to be included in such underwriting and registration shall not be
reduced unless all other securities of the Company are first entirely excluded
from the underwriting and registration. Any Registrable Securities excluded and
withdrawn from such underwriting shall be withdrawn from the registration.
(c) Maximum Number of Demand
Registrations. The Company is obligated to effect only three (3) such
registrations pursuant to this Section 2.2.
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(d) Deferral. Notwithstanding the
foregoing, if the Company shall furnish to Holders requesting the filing of a
registration statement pursuant to this Section 2.2, a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its shareholders for such registration statement
to be filed, then the Company shall have the right to defer such filing for a
period of not more than 90 days after receipt of the request of the Initiating
Holders; provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period.
(e) Expenses. All expenses incurred in
connection with the first registration pursuant to this Section 2.2, including
without limitation all registration and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company, (but
excluding underwriters' discounts and commissions relating to shares sold by the
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.2 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering.
Notwithstanding the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 2.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered, unless the Holders
of a majority of the Registrable Securities then outstanding agree that such
registration constitutes the use by the Holders of one (1) demand registration
pursuant to this Section 2.2 (in which case such registration shall also
constitute the use by all Holders of Registrable Securities of one (1) such
demand registration); provided, further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, business, or prospects of the Company not known to the Holders at the
time of their request for such registration and have withdrawn their request for
registration with reasonable promptness after learning of such material adverse
change, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to this Section 2.2. The Company shall not be
required to pay for any expenses of any registration pursuant to this Section
2.2 after the Company has paid for one registration pursuant to this Section 2.2
(excluding any registration that is withdrawn after learning of such a material
adverse change).
2.3 Piggyback Registrations. The Company shall
notify all Holders of Registrable Securities in writing at least thirty (30)
days prior to filing any registration statement under the Securities Act for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating to any
registration under Section 2.2 or Section 2.4 of this Agreement or to any
employee benefit plan or a corporate reorganization) and will afford each such
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within twenty (20)
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days after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(a) Underwriting. If a registration
statement under which the Company gives notice under this Section 2.3 is for an
underwritten offering, then the Company shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder's
Registrable Securities to be included in a registration pursuant to this Section
2.3 shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting (including a market stand-off
agreement of up to 180 days if required by such underwriters). Notwithstanding
any other provision of this Agreement, if the managing underwriter determine(s)
in good faith that marketing factors require a limitation of the number of
shares to be underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Securities) from the registration and the underwriting,
and the number of shares that may be included in the registration and the
underwriting shall be allocated, first, to the Company, and second, to each of
the Holders requesting inclusion of their Registrable Securities in such
registration statement on a pro rata basis based on the total number of
Registrable Securities then held by each such Holder provided, however, that the
right of the underwriters to exclude shares (including Registrable Securities)
from the registration and underwriting as described above shall be restricted so
that (i) the number of Registrable Securities included in any such registration
is not reduced below fifteen percent (15%) of the aggregate number of shares
covered by the registration; and (ii) all shares that are not Registrable
Securities and are held by any other person, including, without limitation, any
person who is an employee, officer or director of the Company (or any subsidiary
of the Company) shall first be excluded from such registration and underwriting
before any Registrable Securities are so excluded. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to withdraw therefrom
by written notice to the Company and the underwriter, delivered at least ten
(10) business days prior to the effective date of the registration statement.
Any Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Holder", and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
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(b) Expenses. All expenses incurred in
connection with a registration pursuant to this Section 2.3 (excluding
underwriters' and brokers' discounts and commissions relating to shares sold by
the Holders), including, without limitation all federal and "blue sky"
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company shall be borne by the Company.
2.4 Form S-3 Registration. In case the Company
shall receive from any Holder or Holders of a majority of all Registrable
Securities then outstanding a written request or requests that the Company
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, then the Company will:
(a) Notice. Promptly give written
notice of the proposed registration and the Holder's or Holders' request
therefor, and any related qualification or compliance, to all other Holders of
Registrable Securities; and
(b) Registration. As soon as
practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within twenty (20) days
after the Company provides the notice contemplated by Section 2.4(a); provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(1) if Form S-3 is not available for such
offering by the Holders;
(2) if the Holders, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $2,000,000;
(3) if the Company shall furnish to the
Holders a certificate signed by the President or Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be materially detrimental to the Company and its shareholders
for such Form S-3 Registration to be effected at such time, in which
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event the Company shall have the right to defer the filing of the Form S-3
registration statement no more than once during any twelve month period for a
period of not more than 60 days after receipt of the request of the Holder or
Holders under this Section 2.4;
(4) if the Company has, within the twelve
(12) month period preceding the date of such request, already effected a
registration under the Securities Act other than a registration from which the
Registrable Securities of Holders have been excluded (with respect to all or any
portion of the Registrable Securities the Holders requested be included in such
registration) pursuant to the provisions of Section 2.3(a); or
(5) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Expenses. The Company shall pay all
expenses incurred in connection with each registration requested pursuant to
this Section 2.4, (excluding underwriters' or brokers' discounts and commissions
relating to shares sold by the Holders), including without limitation all
filing, registration and qualification, printers' and accounting fees.
(d) Not Demand Registration. Form S-3
registrations shall not be deemed to be demand registrations as described in
Section 2.2 above. Except as otherwise provided herein, there shall be no limit
on the number of times the Holders may request registration of Registrable
Securities under this Section 2.4.
2.5 Obligations of the Company. Whenever required
to effect the registration of any Registrable Securities under this Agreement,
the Company shall, as expeditiously as reasonably possible:
(a) Registration Statement. 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, provided, however, that the Company shall not be required to
keep any such registration statement effective for more than sixty (60) days.
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(b) Amendments and Supplements. Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.
(c) Prospectus. Furnish to the Holders
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them that are included in such registration.
(d) Blue Sky. Use its best efforts to
register and qualify the securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) Underwriting. In the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.
(f) Notification. Notify each Holder of
Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Opinion and Comfort Letter. Furnish,
at the request of any Holder requesting registration of Registrable Securities,
on the date that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities and (ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the
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Company, in form and substance aarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
2.6 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Sections 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company
such information regarding themselves, the Registrable Securities held by them,
and the intended method of disposition of such securities as shall be required
to timely effect the registration of their Registrable Securities.
2.7 Indemnification. In the event any Registrable
Securities are included in a registration statement under Sections 2.2, 2.3 or
2.4:
(a) By the Company. To the extent
permitted by law, the Company will indemnify and hold harmless each Holder, the
partners, officers and directors of each Holder, any underwriter (as defined in
the Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended, (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the l934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements 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 not misleading, or
(iii) any violation or alleged violation by the Company
of the Securities Act, the 1934 Act, any federal or state
securities law or any rule or regulation promulgated under
the Securities Act, the 1934 Act or any federal or
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state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each such Holder, partner,
officer or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this subsection
2.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder.
(b) By Selling Holders. To the extent
permitted by law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder within
the meaning of the Securities Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, partner
or director, officer or controlling person of such other Holder may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
officer, director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
2.7(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; and provided
further, that the total amounts payable in indemnity by a Holder under this
Section 2.7(b) in respect of any Violation shall not exceed the net proceeds
received by such Holder in the registered offering out of which such Violation
arises.
(c) Notice. Promptly after receipt by an
indemnified party under this Section 2.7 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 2.7, deliver to the indemnifying party a written notice of the
commencement
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thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall relieve such indemnifying party of
liability to the indemnified party under this Section 2.7 to the extent the
indemnifying party is prejudiced as a result thereof, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.7.
(d) Defect Eliminated in Final Prospectus.
The foregoing indemnity agreements of the Company and Holders are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or the
amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for
just and equitable contribution to joint liability under the Securities Act in
any case in which either (i) any Holder exercising rights under this Agreement,
or any controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 2.7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 2.7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling Holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 2.7; then, and in each such case, the Company and
such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that such Holder is responsible for the portion represented
by the percentage that the public offering price of its Registrable Securities
offered by and sold under the registration statement bears to the public
offering price of all securities offered by and sold under such registration
statement, and the Company and other selling Holders are responsible for the
remaining portion; provided, however, that, in any such case, (A) no such Holder
will be required to contribute any amount in excess of the public offering price
of all such Registrable Securities offered and sold by such Holder pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
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(f) Survival. The obligations
of the Company and Holders under this Section 2.7 shall survive until the fifth
anniversary of the completion of any offering of Registrable Securities in a
registration statement, regardless of the expiration of any statutes of
limitation or extensions of such statutes.
2.8 Termination of the Company's
Obligations. The Company shall have no obligations pursuant to Sections 2.2
through 2.4 with respect to any Registrable Securities proposed to be sold by
a Holder in a registration pursuant to Section 2.2, 2.3 or 2.4 more than seven
(7) years after the date of this Agreement, or, if, in the opinion of counsel
to the Company, all such Registrable Securities proposed to be sold by a Holder
may then be sold under Rule 144 in one transaction without exceeding the
volume limitations thereunder.
3. RIGHT OF PARTICIPATION.
3.1 General. The Investor and any
Majority Owned Subsidiary of the Investor to which rights under this Section 3
have been duly assigned in accordance with Section 8.1 (the Investor and each
such assignee being hereinafter referred to as a "Participation Rights Holder")
has the right of first refusal to purchase such Participation Rights Holder's
Pro Rata Share (as defined below), of all (or any part) of any New Securities
(as defined in Section 3.3) that the Company may from time to time issue after
the date of this Agreement (the "Right of Participation"); provided, however,
that no Participation Rights Holder shall have the Right of Participation with
respect to any issuance of New Securities that would result in less than a ten
percent (10%) reduction in such Participation Rights Holder's Pro Rata Share.
3.2 Pro Rata Share. A Participation
Rights Holder's "Pro Rata Share" for purposes of the Right of Participation is
the ratio of (a) the number of Registrable Securities held by such Participation
Rights Holder, to (b) the difference between (i) the total number of shares of
Common Stock of the Company (and other voting securities of the Company, if any)
then outstanding (immediately prior to the issuance of New Securities giving
rise to the Right of Participation), and (ii) the number of Dilutive Securities
(defined below) issued since the last Notice Date (defined below) excluding any
Maintenance Securities (defined below) issued pursuant to the last Maintenance
Notice.
3.3 New Securities. "New Securities"
shall mean any Common Stock, Preferred Stock or other voting capital stock of
the Company, whether now authorized or not, and rights, options or warrants to
purchase such Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible or exchangeable into such Common
Stock,
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SCHEDULE 13D Page 42 of __
Preferred Stock or other capital stock; provided, however, that the term "New
Securities" does not include:
(a) any shares of the Company's Common Stock (and/or
options or warrants therefor) issued to employees,
officers, directors, contractors, advisors or
consultants of the Company pursuant to incentive
agreements or incentive plans approved by the Board of
Directors of the Company;
(b) any shares of Common Stock issued under the Purchase
Agreement, as such agreement may be amended;
(c) the Warrant or any shares of Common Stock issued upon
any exercise thereof;
(d) any securities issued in connection with any stock
split, stock dividend or other similar event in which
all Participation Rights Holders are entitled to
participate on a pro rata basis;
(e) any securities issued upon the exercise, conversion or
exchange of any outstanding security if such
outstanding security constituted a New Security; or
(f) any securities issued pursuant to the acquisition of
another corporation or entity by the Company by
consolidation, merger, purchase of assets, or other
reorganization in which the Company acquires, in a
single transaction or series of related transactions,
assets of such other corporation or entity or fifty
percent (50%) or more of the voting power of such other
corporation or entity or fifty percent (50%) or more of
the equity ownership of such other entity.
3.4 Procedures. In the event that the
Company proposes to undertake an issuance of New Securities (in a single
transaction or a series of related transactions) that would result in a ten
percent (10%) or greater reduction in the Pro Rata Share of each Participation
Rights Holder, it shall give to each Participation Rights Holder written notice
of its intention to issue New Securities (the "Participation Notice"),
describing the amount and the type of New Securities and the price and the
general terms upon which the Company proposes to issue such New Securities. Each
Participation Rights Holder shall have ten (10) business days from the date of
receipt of any such
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SCHEDULE 13D Page 43 of __
Participation Notice to agree in writing to purchase such Participation Rights
Holder's Pro Rata Share of such New Securities for the price and upon the terms
and conditions specified in the Participation Notice by giving written notice to
the Company and stating therein the quantity of New Securities to be purchased
(not to exceed such Participation Rights Holder's Pro Rata Share). If any
Participation Rights Holder fails to so agree in writing within such ten (10)
business day period to purchase such Participation Rights Holder's full Pro Rata
Share of an offering of New Securities, then such Participation Rights Holder
shall forfeit the right hereunder to purchase that part of its Pro Rata Share of
such New Securities that it did not so agree to purchase. Such Participation
Rights Holder shall purchase the portion elected by such Participation Rights
Holder concurrently with the closing of the transaction triggering the Right of
Participation.
3.5 Failure to Exercise. Upon the
expiration of such ten (10) day period, the Company shall have 120 days
thereafter to sell the New Securities described in the Participation Notice
(with respect to which the Participation Rights Holders' rights of first refusal
hereunder were not exercised) at the same or higher price and upon non-price
terms not materially more favorable to the purchasers thereof than specified in
the Participation Notice. In the event that the Company has not issued and sold
such New Securities within such 120 day period, then the Company shall not
thereafter issue or sell any New Securities without again first offering such
New Securities to the Participation Rights Holders pursuant to this Section 3.
3.6 Termination. The Right of
Participation shall terminate upon the earliest to occur of (i) the expiration
of or any termination of the Technology Agreement in accordance with its terms
for any reason (except for a termination by Intel Corporation due to the uncured
breach by the Company of one of its material obligations thereunder), (ii)
immediately prior to any Corporate Event (as defined in Section 5.1), or (iii)
the first date that the Investor holds less than 894,971 shares of Common Stock
of the Company (such number to be proportionately adjusted for stock splits,
stock dividends and similar events).
4. RIGHT OF MAINTENANCE.
4.1 General. Each Participation Rights
Holder will, pursuant to the terms and conditions of this Section 4, have the
right to purchase shares of Common Stock, voting Preferred Stock or other voting
capital stock ("Maintenance Securities") from the Company at the Purchase Price
(as defined in Section 4.3) following the issuance by the Company of Dilutive
Securities (as defined in Section 4.2) that the Company may from time to time
issue after the date of this Agreement, solely in order to maintain such
Participation Rights Holder's Prior Percentage Interest (as defined in Section
4.4) in the Company (the "Right of Maintenance"). Each right to purchase
Maintenance Securities pursuant to this Section 4 shall be on the same terms
(other than price to the extent provided in Section 4.3 below) as the issuance
of the Diluting Securities which gave rise to the right to purchase such
Maintenance Securities.
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4.2 Dilutive Securities. "Dilutive Securities"
shall mean any Common Stock, voting Preferred Stock or other voting capital
stock of the Company, whether now authorized or not; provided, however, that
the term "Dilutive Securities" does not include:
(a) any securities other than Common Stock,
voting Preferred Stock or other voting capital stock (e.g.
warrants or options to purchase Common Stock, Preferred
Stock or other capital stock);
(b) any shares of Common Stock issued under the
Purchase Agreement, as such agreement may be amended;
(c) the Warrant or any shares of Common Stock
issuable upon any exercise thereof;
(d) any securities issued in connection with any
stock split, stock dividend or similar event in which all
Participation Rights Holders are entitled to participate
on a pro rata basis;
(e) any securities for which the issuance gave
rise to the Right of Participation (regardless of whether
any such right was exercised); or
(f) any securities issuable upon the exercise,
conversion or exchange of any securities described in (d)
or (e) above.
4.3 Purchase Price.
(a) Employee Stock. To the extent that
the right to purchase Maintenance Securities arises out of the issuance of
Dilutive Securities to employees, officers, directors, contractors, advisors or
consultants of the Company pursuant to incentive agreements or incentive plans
approved by the Board of Directors of the Company ("Employee Stock"), the per
share
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SCHEDULE 13D Page 45 of
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"Purchase Price" of the Maintenance Securities shall equal the average
Market Price (as defined below) of such Maintenance Securities over the thirty
(30) trading days immediately preceding the date on which the Participation
Rights Holder elects to purchase such Maintenance Securities.
(b) Other Dilutive Securities. To the extent that
the right to purchase Maintenance Securities arises out of any issuance of
Dilutive Securities other than Employee Stock, the per share "Purchase Price" of
the Maintenance Securities shall equal the greater of (i) the per share price at
which such Dilutive Securities were issued, and (ii) 75% of the average of the
Market Price (as defined below) of such Maintenance Securities over the thirty
(30) trading days immediately preceding the date on which the Participation
Rights Holder elects to purchase such Maintenance Securities, unless the
issuance of such other Dilutive Securities occurred upon the exercise,
conversion or exchange of other securities ("Exchangeable Securities"), in which
case, the per share "Purchase Price" of the Maintenance Securities shall equal
the greater of (i) the sum of (A) the per share amount paid upon such exercise,
conversion or exchange, and (B) the per share amount previously paid for the
Exchangeable Securities (adjusted for any stock splits, stock dividends or other
similar events), and (ii) 75% of the average Market Price of such Maintenance
Securities over the thirty (30) trading days immediately preceding the date on
which the Participation Rights Holder elects to purchase such Maintenance
Securities.
(c) Market Price. For purposes of this Section 4.3,
"Market Price" means as to any Maintenance Securities on a given day the average
of the closing prices of such security's sales on all domestic securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on such day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the Nasdaq National Market as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not quoted in the Nasdaq
National Market, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization. If at any
time the Maintenance Securities are not listed on any domestic securities
exchange or quoted in the Nasdaq National Market or the domestic
over-the-counter market ("Unlisted Securities"), the "Market Price" shall be the
fair value thereof determined jointly by the Company and the Holder.
(d) Consideration Other than Cash. In the event that
Dilutive Securities or Exchangeable Securities were issued for consideration
other than cash, the per share amounts paid for such Dilutive Securities or
Exchangeable Securities shall be determined jointly by the Company and the
Participation Rights Holder.
(e) Appraiser. If the Company and the Participation
Rights Holder are unable to reach agreement within a reasonable period of time
with respect to (i) the Market Price
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SCHEDULE 13D Page 46 of
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of Unlisted Securities, or (ii) the per share amounts paid for Dilutive
Securities or Exchangeable Securities issued for consideration other than cash,
such Market Price or per share amounts paid, as the case may be, shall be
determined by an appraiser jointly selected by the Company and the Participation
Rights Holder. The determination of such appraiser shall be final and binding on
the Company and the Participation Rights Holder. The fees and expenses of such
appraiser shall be paid for by the Company, provided that such fees and expenses
shall be paid for by the Participation Rights Holder in the event that the
appraiser's determination of the Market Price or the per share amounts paid, as
the case may be, is higher than, or no more than 5% lower than, the last amount
previously offered by the Company.
4.4 Prior Percentage Interest. A Participation
Rights Holder's "Prior Percentage Interest" for purposes of the Right of
Maintenance is the ratio of (a) the number of Registrable Securities held by
such Participation Rights Holder as of the date of such Maintenance Notice (as
defined in Section 4.6) (the "Notice Date"), to (b) the difference between (i)
the total number of shares of Common Stock of the Company (and other voting
securities of the Company, if any) outstanding on the Notice Date, and (ii) the
total number of Dilutive Securities issued since the later of the date of this
Agreement or the last Notice Date excluding any Maintenance Securities (defined
below) issued pursuant to the last Maintenance Notice.
4.5 Maintenance Amount. A Participation Rights
Holder's "Maintenance Amount" with respect to any Maintenance Notice shall equal
such number of Maintenance Securities as is obtained by multiplying the number
of Dilutive Securities specified in such Maintenance Notice by such
Participation Rights Holder's Prior Percentage Interest, rounded to the nearest
whole share.
4.6 Notice of Issuance. Within fifteen (15)
business days of each anniversary of this Agreement, and within fifteen (15)
business days of each issuance of Dilutive Securities which when cumulated with
all prior issuances of Dilutive Securities since the later of (i) the date of
this Agreement, or (ii) the date of the last Notice Date (subsequent to which
the Participation Rights Holder has had an opportunity to purchase Maintenance
Securities), results in a five percent (5%) reduction in a Participation Rights
Holders' Prior Percentage Interest, the Company shall give to each Participation
Rights Holder written notice (the "Maintenance Notice") describing the number of
Dilutive Securities issued since such prior Notice Date and the non-price terms
upon which the Company issued such Dilutive Securities, and the Maintenance
Amount of Maintenance Securities that such Participation Rights Holder is
entitled to purchase as a result of such issuances.
4.7 Purchase of Maintenance Securities. Each
Participation Rights Holder shall have twenty (20) days from the receipt of a
Maintenance Notice to elect to purchase up to such Participation Rights Holder's
Maintenance Amount of such Maintenance Securities at the Purchase Price as
defined in Section 4.3 and upon the terms and conditions specified in the
Maintenance Notice. The closing of such purchase shall occur within ten (10)
days after such election
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SCHEDULE 13D Page 47 of
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to purchase. If any Participation Rights Holder fails to elect to purchase such
Participation Rights Holder's full Maintenance Amount of Maintenance Securities
within such twenty (20) day period, then such Participation Rights Holder shall
forfeit the right hereunder to purchase that part of its Maintenance Amount that
it did not so elect to purchase.
4.8 Termination. The Right of Maintenance shall
terminate upon the termination of the Right of Participation.
5. RIGHTS IN CORPORATE EVENTS.
5.1 Corporate Event. A "Corporate Event" shall mean
any of the following, whether accomplished through one or a series of related
transactions (a) the acquisition of all or substantially all the assets of the
Company, (b) the acquisition of all or substantially all of the Company's
desktop personal computer and server BIOS technology, or (c) an acquisition of
the Company by another corporation or entity by consolidation, merger, share
purchase or exchange (other than pursuant to a "hostile" tender offer), or other
reorganization in which the holders of the Company's outstanding voting stock
immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) or more of the voting
power of the corporation or other entity surviving such transaction.
5.2 Unsolicited Offer/Solicited Offer. An
"Unsolicited Offer" means (a) any offer for a proposed Corporate Event received
from a third party in the absence of any act taken by any officer or director of
the Company with the intent of soliciting such offer, and (b) any proposal or
offer by the Company to such third party or from such third party for a proposed
Corporate Event arising from negotiations that followed the receipt of an offer
described in 5.2(a). Any offer for a proposed Corporate Event that is not an
Unsolicited Offer shall be deemed a Solicited Offer.
5.3 Solicitation of Offers for Corporate Event.
(a) Solicitation Notice. The Company agrees
that prior to soliciting any offers (other than an offer described in Section
5.2(b) above) for a proposed Corporate Event (a "Proposed Event"), the Company
will provide the Investor with written notice of such intent to solicit offers
(a "Solicitation Notice"), specifying the terms and conditions of the Proposed
Event, including the proposed selling price for the Company or the Assets (the
"Proposed Selling Price"), the proposed structure of the transaction, a list of
the persons from whom the Company in good faith
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SCHEDULE 13D Page 48 of
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intends to solicit such offers, when the Proposed Event involves an acquisition
of assets, a description of the assets to be sold (the "Assets"), and the other
material terms and conditions of the Proposed Event.
(b) Additional Parties Notice. The Company
agrees that prior to soliciting any offers (other than an offer described in
Section 5.2(b) above) for the consummation of the Proposed Event described in
the Solicitation Notice from any parties that were not listed in the
Solicitation Notice ("Additional Parties"), the Company will provide the
Investor with written notice of such intent to solicit such offers from such
Additional Parties (the "Additional Parties Notice").
(c) Different Terms and Conditions. In the
event that the Company proposes to accept a Solicited Offer for the consummation
of a Proposed Event on non-price terms and conditions which are not
substantially the same as the terms and conditions specified in the last
Solicitation Notice, then, regardless of whether the proposed price is above or
below 90% of the Proposed Selling Price in the last Solicitation Notice, the
Company agrees to provide the Investor with a new Solicitation Notice pursuant
to Section 5.3(a).
(d) Solicited Offer Rights. The Investor
shall have fifteen (15) business days from the date of receipt of the first
Solicitation Notice, seven (7) business days from the date of receipt of any
subsequent Solicitation Notice pursuant to Section 5.3(c), or five (5) business
days from the date of receipt of any Additional Parties Notice pursuant to
Section 5.3(b), to deliver written notice to the Company agreeing in writing to
purchase (for cash or publicly traded stock) the Company or the Assets, as the
case may be, at the Proposed Selling Price and on substantially the same terms
and conditions specified in the last Solicitation Notice, which agreement shall
call for the closing of such purchase within 120 days from the date of delivery
of such notice to the Company (such 120 day period subject to extensions for
regulatory compliance). The Company agrees that it will not unreasonably refuse
a request by the Investor to extend any such seven (7) business day period by up
to three (3) additional business days. If the Investor fails to so agree in
writing within such fifteen (15) business day period, seven (7) business day
period (subject to the above mentioned extension), or such five (5) business day
period, as the case may be, then, for a period of six (6) months thereafter, the
Company shall have the right to (i) solicit offers from any party listed in the
last Solicitation Notice or any Additional Parties Notice, both directly and
indirectly through its investment advisors, for the consummation of the Proposed
Event, and (ii) enter into a binding agreement with any party listed in the last
Solicitation Notice or any Additional Parties Notice substantially on the same
terms and conditions as those described in the last Solicitation Notice, which
agreement calls for the completion of the Corporate Event within six (6) months
of the date of such agreement (such six month period subject to extensions for
regulatory compliance), provided that the selling price for the Company or the
Assets, as the case may be, is 90% of, or greater than, the Proposed Selling
Price specified in the last Solicitation Notice.
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(e) Lower Price Notice. In the event that
the Company proposes to accept a solicited offer (a "Lower Offer") for the
consummation of the Proposed Event described in the last Solicitation Notice at
a purchase price for the Company or the Assets, as the case may be, that is less
than 90% of the Proposed Selling Price, but which is on terms and conditions
that are substantially the same as those described in the last Solicitation
Notice, then the Company will provide the Investor with written notice of such
intention to accept such Lower Offer (the "Lower Price Notice"). The Investor
shall have five (5) business days from the date of receipt of any such Lower
Price Notice to deliver written notice to the Company agreeing in writing to
consummate the purchase of the Company or the Assets, as the case may be, at the
purchase price specified in the Lower Price Notice and on substantially the same
terms and conditions specified in the Solicitation Notice or the Lower Price
Notice, which agreement shall call for the closing of such purchase within 120
days from the date of delivery of such notice to the Company (such 120 day
period subject to extensions for regulatory compliance). If the Investor fails
to so agree in writing within such five (5) business day period, then, for a
period of 120 days thereafter, the Company shall have the right to accept any
offer substantially on the same terms and conditions as those described in the
Solicitation Notice, provided that the selling price for the Company or the
Assets, as the case may be, is equal to or greater than the purchase price
specified in the Lower Price Notice.
5.4 Unsolicited Offers for Corporate Event. If the
Company receives an Unsolicited Offer from a third party for a proposed
Corporate Event (an "Offered Event"), the Company agrees that it will provide
the Investor with detailed written notice of the Offered Event specifying the
terms and conditions of the Offered Event including the name of such third
party, the proposed purchase price for the Company or the Offered Assets (the
"Offered Purchase Price"), the proposed structure of the Offered Event, when the
Offered Event involves an acquisition of assets, a description of the assets to
be sold (the "Offered Assets"), and the other material terms and conditions of
the Offered Event. If the Company proposes to accept the Offered Event or
recommend that its stockholders approve the Offered Event, the Company agrees
that it will provide the Investor with written notice of its intention, and the
Investor shall have seven (7) business days following the receipt of such notice
to offer to enter into the proposed Corporate Event on substantially the same
terms and conditions of the Offered Event but at a purchase price that is equal
to or greater than 115% of the Offered Purchase Price (an "Investor Offer"). The
Company agrees that it will not unreasonably refuse a request by the Investor to
extend any such seven (7) business day period by up to three (3) additional
business days. If the Investor fails to make an Investor Offer in writing within
such seven (7) business day period (subject to the above mentioned extension),
then, for a period of 90 days thereafter, the Company shall have the right to
enter into a binding agreement with such third party on substantially the same
terms and conditions as the Offered Event which calls for the completion of the
Corporate Event within six (6) months of the date of such agreement (subject to
extensions for regulatory compliance), provided that the purchase price for the
Company or the Assets, as the case may be, is equal to or greater than the
Offered Purchase Price. If the Investor makes an Investor Offer in writing
within such seven (7) business day period (subject to the above mentioned
extension), then, the Company agrees that it will not solicit further proposals
for a Corporate Event (unless and until the Corporate Event represented by such
Investor Offer is abandoned), that it will accept such Investor
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Offer, and that it will recommend that the Company's stockholders approve
acceptance of the Investor Offer.
5.5 Receipt of Offer to Acquire Securities. The
Company agrees that it will provide the Investor with detailed written notice of
any offer from a third party (i) to acquire 10% or more of the Company's
outstanding voting securities, or (ii) for a proposed Corporate Event, within
four (4) business days of the date the Company first becomes aware of such offer
or proposed Corporate Event.
5.6 Fiduciary Obligations. No action of the
Company (including the Board of Directors of the Company) shall be prohibited by
or be deemed a breach of this Section 5 if the Board of Directors of the Company
determines in good faith, upon the advice of outside legal counsel, that such
action would be required by reasons of the fiduciary duties of the Board of
Directors of the Company to the Company's stockholders under applicable law;
provided, however, that in the event that the Company takes an action pursuant
to this Section 5.6 that is otherwise inconsistent with the terms of the
remainder of this Section 5, and such action involves the solicitation of, or
the proposal by the Company to accept, an offer for a proposed Corporate Event,
the parties agree, notwithstanding any other provision herein, that such
proposed Corporate Event will be treated as an Offered Event pursuant to the
terms of Section 5.4.
5.7 Termination and Suspension of Rights. The
rights of the Investor under this Section 5 shall be suspended immediately prior
to the receipt by the Company from the Investor of any Unsolicited Offer for a
proposed Corporate Event and shall be reinstated upon abandonment of such
proposed Corporate Event by the Investor. The rights of the Investor under this
Section 5 shall terminate upon termination of the Right of Participation.
6. STANDSTILL AGREEMENT.
6.1 Standstill. The Investor hereby agrees that the
Investor shall neither acquire, nor enter into discussions, negotiations,
arrangements or understandings with any third party to acquire, beneficial
ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of any Voting Stock (as defined below), any securities
convertible into or exchangeable for Voting Stock, or any other right to acquire
Voting Stock (except, in any case, by way of stock dividends or other
distributions or offerings made available to holders of any Voting Stock
generally) without the written consent of the Company, if the effect of such
acquisition would be to increase the Voting Power (as defined below) of all
Voting Stock then beneficially owned (as defined above) by the Investor or which
it has a right to acquire to more than nineteen and nine-tenths percent (19.9%)
(the "Standstill Percentage") of the Total Voting Power (as defined below) of
the Company at the time in effect; provided that:
(a) The Investor may acquire Voting Stock
without regard to the foregoing limitation, and such limitation shall be
suspended, but not terminated, if and for so long
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as (i) a tender or exchange offer is made and is not withdrawn or terminated by
another person or group to purchase or exchange for cash or other consideration
any Voting Stock which, if accepted or if otherwise successful, would result in
such person or group beneficially owning or having the right to acquire shares
of Voting Stock with aggregate Voting Power of more than ten percent (10%) of
the Total Voting Power of the Company then in effect and such offer is not
withdrawn or terminated prior to the Investor making an offer to acquire Voting
Stock or acquiring Voting Stock, or (ii) another person or group hereafter
acquires Voting Stock which results in such person or group beneficially owning
or having the right to acquire Voting Stock with aggregate Voting Power of more
than ten percent (10%) of the Total Voting Power of the Company then in effect
and such person or group would be required to file a Schedule 13D (under the
rules promulgated under Section 13(d) under the Securities and Exchange Act of
1934, as such rules and section are in effect on the date hereof) indicating
pursuant to Item 4 of such Schedule 13D that the purpose of such acquisition is
other than for mere investment; provided, however, that the foregoing standstill
limitation will be reinstated, in the case of (i) above, once any such tender or
exchange offer is withdrawn or terminated, or, in the case of (ii) above, once
the percentage of the Total Voting Power beneficially owned by such other person
or group falls below ten percent (10%).
(b) The Investor will not be obliged to dispose of
any Voting Stock if the aggregate percentage of the Total Voting Power of the
Company represented by Voting Stock beneficially owned by the Investor or which
the Investor has a right to acquire is increased beyond the Standstill
Percentage (i) as a result of a recapitalization of the Company or a repurchase
or exchange of securities by the Company or any other action taken by the
Company or its affiliates, (ii) as the result of acquisitions of Voting Stock
made during the period when the Investor's "standstill" obligations are
suspended pursuant to Section 6.1(a), (iii) as a result of an equity index
transaction, provided that Investor shall not vote such shares; (iv) by way of
stock dividends or other distributions or rights or offerings made available to
holders of shares of Voting Stock generally; (v) with the consent of a simple
majority of the authorized members of the Company's Board of Directors; or (vi)
as part of a transaction on behalf of Investor's Defined Benefit Pension Plan,
Profit Sharing Retirement Plan, 401(k) Savings Plan, Sheltered Employee
Retirement Plan and Sheltered Employee Retirement Plan Plus, or any successor or
additional retirement plans thereto (collectively, the "Retirement Plans") where
the Company's shares in such Retirement Plans are voted by a trustee for the
benefit of Investor employees or, for those Retirement Plans where Investor
controls voting, where Investor agrees not to vote any shares of such Retirement
Plan Voting Stock that would cause Investor to exceed the Standstill Percentage.
(c) As used in this Section 6, (i) the term "Voting
Stock" means the Common Stock and any other securities issued by the Company
having the ordinary power to vote in the election of directors of the Company
(other than securities having such power only upon the happening of a
contingency that has not occurred), (ii) the term "Voting Power" of any Voting
Stock means the number of votes such Voting Stock is entitled to cast for
directors of the Company at any meeting of shareholders of the Company, and
(iii) the term "Total Voting Power" means the total number of votes which may be
cast in the election of directors of the Company at any meeting of shareholders
of the Company if all Voting Stock was represented and voted to the fullest
extent possible at such meeting, other than votes that may be cast only upon the
happening of a contingency that has not occurred. For purposes of this Section
6, the Investor shall not be deemed to have beneficial ownership of any Voting
Stock held by a pension plan or other
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employee benefit program of the Investor if the Investor does not have the power
to control the investment decisions of such plan or program.
6.2 Termination of Standstill. The provisions of Section
6.1 shall terminate on the second anniversary of the date of this Agreement.
7. VOTING AGREEMENT.
7.1 Proportional Voting. Whenever the Investor directly or
indirectly owns (of record or beneficially) Voting Stock which constitutes ten
percent (10%) or more of the Total Voting Power of the Company, the Investor
agrees to vote all Registrable Securities of the Company then owned directly or
indirectly by the Investor, that consist of Voting Stock, in the same proportion
as the votes cast by all other holders of the Company's Voting Stock, except on
matters that the Investor, in its reasonable discretion, deems could potentially
be materially adverse to the Investor's interests.
7.2 No Dissent. The Investor hereby agrees that it will not
exercise dissenter's or appraisal rights or otherwise dissent or seek appraisal
rights with respect to any Corporate Event or any other merger or acquisition
involving the Company (e.g. an acquisition by the Company of a third party),
provided that, in the event that the provisions of Section 5 hereof have not
been terminated, the provisions of this Section 7.2 shall only apply with
respect to such a Corporate Event if the Company has complied with the
applicable provisions of Section 5 with respect to such Corporate Event.
7.3 Successors in Interest. The Investor agrees to ensure
that its successors in interest as to any Registrable Securities will be bound
by the provisions of Sections 7.1 and 7.2 so long as they respectively survive,
except to the extent such securities are sold in a public offering, whether
pursuant to Rule 144, a registered offering or otherwise.
7.4 Survival. The provisions of Section 7.1 shall terminate
on the fifth anniversary of the Closing (as defined in the Purchase Agreement).
The provisions of Section 7.2 shall terminate upon the later of (i) the fifth
anniversary of the Closing, or (ii) the date of expiration or termination of the
Technology Agreement.
8. ASSIGNMENT AND AMENDMENT.
8.1 Assignment. Notwithstanding anything herein to the
contrary:
(a) Information Rights. The rights of the Investor
under Section 1.1 are transferable only to a subsidiary of which the Investor
beneficially owns, either directly or indirectly, at least 50% of the voting
securities (a "Majority Owned Subsidiary"). The rights of the Investor under
Section 1.2 may not be assigned.
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(b) Registration Rights. The registration rights
of the Investor under Section 2 hereof may be assigned only to a party who
acquires at least 214,793 shares of Registrable Securities; provided, however
that no party may be assigned any of the foregoing rights unless the Company is
given written notice by the assigning party at the time of such assignment
stating the name and address of the assignee and identifying the securities of
the Company as to which the rights in question are being assigned; and provided
further that any such assignee shall receive such assigned rights subject to all
the terms and conditions of this Agreement, including without limitation the
provisions of this Section 8.
(c) Rights of Participation and Maintenance. The
rights of the Investor under Sections 3 and Section 4 hereof may be assigned
only to a Majority Owned Subsidiary; provided, however that no party may be
assigned any of the foregoing rights unless the Company is given written notice
by the Investor at the time of such assignment stating the name and address of
the assignee and identifying the securities of the Company as to which the
rights in question are being assigned; and provided further that any such
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement.
(d) Rights On Corporate Events. The rights of the
Investor under Section 5 hereof may be assigned only in whole, and not in part,
and only to a Majority Owned Subsidiary; provided, however that no party may be
assigned any of the foregoing rights unless the Company is given written notice
by the Investor at the time of such assignment stating the name and address of
the assignee; and provided further that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement.
8.2 Amendment of Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investor (or, in the case of an amendment or
waiver of any provision of Section 2 hereof, only with the written consent of
the Company and the Holders of a majority of the Registrable Securities then
outstanding). Any amendment or waiver effected in accordance with this Section
8.2 shall be binding upon the Investor, each Holder, each permitted successor or
assignee of such Investor or Holder and the Company.
9. CONFIDENTIALITY
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9.1 (a) Each party to this Agreement will hold any of
the other's Confidential Information (as defined in the next paragraph) in
confidence and will: (i) use the same degree of care to prevent unauthorized
disclosure or use of the Confidential Information that the receiving party uses
with its own information of like nature (but in no event less than reasonable
care), (ii) limit disclosure of the Confidential Information, including any
materials regarding the Confidential Information that the receiving party has
generated, to such of its employees and contractors as have a need to know the
Confidential Information to accomplish the purposes of this Agreement, and (iii)
advise its employees, agents and contractors of the confidential nature of the
Confidential Information and of the receiving party's obligations under this
Agreement.
(b) For purposes of this Agreement, the term
"Confidential Information" refers to the following items relating to the
confidential and proprietary information, including trade secrets, of the
disclosing party: (i) all written materials provided by the disclosing party
that are clearly marked as confidential, (ii) any tangible materials provided by
the disclosing party that are clearly marked as confidential, and (iii) all
information that is orally or visually disclosed by the disclosing party if it
is identified as confidential at the time of disclosure and is reduced to
written disclosure delivered to the receiving party within thirty (30) days
after the original disclosure. "Confidential Information" will not include, even
if marked as confidential, materials or information which: (i) is rightfully
known without obligations of confidentiality by the receiving party, (ii) is or
becomes public knowledge through no wrongful act of the receiving party, its
agent, employees or affiliates, (iii) is rightfully received by the receiving
party from another party authorized by the disclosing party to disseminate such
materials or information, (iv) is independently developed by the receiving party
without breach of this Agreement, or (v) is approved in writing for release by
the disclosing party. Any employee or contractor of the receiving party having
access to the Confidential Information will be required to sign a non-disclosure
agreement protecting the Confidential Information if not already bound by such a
non-disclosure agreement.
9.2 Except to the extent required by law or judicial order
or except as provided herein, neither party shall disclose this Agreement or any
of its terms without the other's prior written approval, which approval will not
be delayed or unreasonably withheld. Either party may disclose this Agreement to
the extent required by law or judicial order, provided that if such disclosure
is pursuant to judicial order or proceedings, the disclosing party will notify
the other party promptly before such disclosure and will cooperate with the
other party to seek confidential treatment with respect to the disclosure if
requested by the other party and provided further that if such disclosure is
required pursuant to the rules and regulations of any federal, state or local
organization, the parties will cooperate to seek confidential treatment of this
Agreement to the maximum extent possible under law.
9.3 Prior to the execution of this Agreement, the parties
will agree on the content of a joint press release announcing the existence of
this Agreement, which press release will be issued as mutually agreed by the
parties.
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9.4 Neither party will be required to disclose to the other
any confidential information of any third party without having first obtained
such third party's prior written consent.
9.5 The provisions of this Section 9 shall survive for a
period of five (5) years from the date which the Investor ceases to have any
rights under Sections 1, 3, 4 and 5 of this Agreement.
10. GENERAL PROVISIONS.
10.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and received if personally delivered or, if deposited in the
U.S. mail, three (3) business days after having been so deposited, if sent by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
(a) if to the Investor, at: Intel Corporation
Xxxxxx Xxxxx Building
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: General Counsel
M/S SC4-203
with a copy to: Intel Corporation
Xxxxxx Xxxxx Building
0000 Xxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Treasurer
M/S SC4-210
(b) if to the Company, at: Phoenix Technologies Ltd.
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0000 Xx Xx Xxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
with a copy to: Phoenix Technologies Ltd.
0000 Xx Xx Xxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Legal Department
Any party hereto (and such party's permitted assigns) may by
notice so given change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail in the manner set forth above.
10.2 Entire Agreement. This Agreement, together with
all the Exhibits hereto, constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties respecting the subject
matter hereof.
10.3 Governing Law. This Agreement shall be governed
by and construed exclusively in accordance with the internal laws of the State
of Delaware as applied to agreements among Delaware residents entered into and
to be performed entirely within Delaware, excluding that body of law relating to
conflict of laws and choice of law.
10.4 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, then such
provision(s) shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.
10.5 Third Parties. Nothing in this Agreement,
express or implied, is intended to confer upon any person, other than the
parties hereto and their permitted successors and assigns, any rights or
remedies under or by reason of this Agreement.
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10.6 Successors And Assigns. Subject to the
provisions of Section 8.1, the provisions of this Agreement shall inure to the
benefit of, and shall be binding upon, the successors and permitted assigns of
the parties hereto.
10.7 Captions. The captions to sections of this
Agreement have been inserted for identification and reference purposes only and
shall not be used to construe or interpret this Agreement.
10.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Adjustments for Stock Splits, Etc. Wherever in
this Agreement there is a reference to a specific number of shares of Common
Stock of the Company, then, upon the occurrence of any subdivision, combination
or stock dividend of Common Stock, the specific number of shares so referenced
in this Agreement shall automatically be proportionally adjusted to reflect the
affect on the outstanding shares of such class or series of stock by such
subdivision, combination or stock dividend.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
PHOENIX TECHNOLOGIES LTD. INTEL CORPORATION
By: By:
------------------------ ------------------------
Name: Name:
---------------------- ----------------------
Title: Title:
--------------------- ---------------------
[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
