EXHIBIT 10.61
AMENDED AND RESTATED
INITIAL PUBLIC OFFERING AGREEMENT
dated as of March 15, 2000
between
PHOENIX TECHNOLOGIES LTD.
and
INSILICON CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................ 1
Section 1.1. Definitions........................................................................... 1
ARTICLE II THE INITIAL PUBLIC OFFERING................................................................ 4
Section 2.1. Cooperation Before to the Initial Public Offering..................................... 4
Section 2.2. Conditions Precedent to the Initial Public Offering................................... 5
ARTICLE III INDEMNIFICATION............................................................................ 6
Section 3.1. Release of Claims..................................................................... 6
Section 3.2. Indemnification by inSilicon.......................................................... 7
Section 3.3. Indemnification by Phoenix............................................................ 8
Section 3.4. Notice and Payment of Claims.......................................................... 8
Section 3.5. Notice and Defense of Third-Party Claims.............................................. 9
Section 3.6. Insurance Proceeds....................................................................10
Section 3.7. Contribution..........................................................................10
Section 3.8. Subrogation...........................................................................10
Section 3.9. No Third-Party Beneficiaries..........................................................11
Section 3.10. Remedies Cumulative...................................................................11
Section 3.11. Survival of Indemnities...............................................................11
Section 3.12. After-Tax Indemnification Payments....................................................11
ARTICLE IV CERTAIN ADDITIONAL MATTERS.................................................................11
Section 4.1. Company Officers and Board of Directors...............................................11
Section 4.2. The Company Certificate of Incorporation and Bylaws...................................11
Section 4.3. Insurance Policies and Claims Administration..........................................11
Section 4.4. Non-Solicitation of Employees.........................................................13
ARTICLE V ACCESS TO INFORMATION......................................................................14
Section 5.1. Agreement For Exchange of Information.................................................14
Section 5.2. Auditors and Audits; Annual and Quarterly Statements and Accounting...................15
Section 5.3. Confidentiality; Protection...........................................................17
Section 5.4. Mail..................................................................................17
ARTICLE VI DISPUTE RESOLUTION.........................................................................18
Section 6.1. Dispute Resolution....................................................................18
-i-
TABLE OF CONTENTS
(CONTINUED)
Page
Section 6.2. Continuity of Service and Performance.................................................19
ARTICLE VII STANDSTILL; COVENANT NOT TO COMPETE........................................................19
Section 7.1. Standstill............................................................................19
Section 7.2. Non-Compete...........................................................................19
ARTICLE VIII MISCELLANEOUS..............................................................................20
Section 8.1. Termination...........................................................................20
Section 8.2. Expenses..............................................................................20
Section 8.3. Notices...............................................................................21
Section 8.4. Amendment and Waiver..................................................................21
Section 8.5. Counterparts..........................................................................21
Section 8.6. Governing Law.........................................................................22
Section 8.7. Entire Agreement......................................................................22
Section 8.8. Assignment............................................................................22
Section 8.9. Parties in Interest...................................................................22
Section 8.10. Tax Sharing Agreement.................................................................22
Section 8.11. Exhibits and Schedules................................................................22
Section 8.12. Legal Enforceability..................................................................22
Section 8.13. Titles and Headings...................................................................23
Section 8.14. Conflicting Agreements................................................................23
-ii-
AMENDED AND RESTATED
INITIAL PUBLIC OFFERING AGREEMENT
This Amended and Restated Initial Public Offering Agreement (this
"Agreement") is entered into effective as of March 15, 2000 by and between
Phoenix Technologies, Ltd., a Delaware corporation ("Phoenix"), and inSilicon
Corporation, a Delaware corporation and a wholly owned subsidiary of Phoenix
("inSilicon").
RECITALS
WHEREAS, the Board of Directors of Phoenix has determined that it is in
the best interests of Phoenix to separate the business and operations of Phoenix
engaged in the development and licensing of semiconductor intellectual property
cores, silicon subsystems, firmware stocks and drivers (the "Business") from
Phoenix's other operations by transferring the assets of the Business to
inSilicon and causing inSilicon to assume the liabilities of the Business (the
"Separation");
WHEREAS, the parties have determined that it is desirable and in the
best interests of inSilicon to obtain funds for the operation of the Business by
causing inSilicon to sell, in an initial public offering (the "Initial Public
Offering"), additional shares of its common stock, par value $.001 per share
("Common Stock");
WHEREAS, it is appropriate and desirable to set forth certain
agreements that will govern certain matters relating to the Separation and the
Initial Public Offering and the relationship of Phoenix and inSilicon and their
respective subsidiaries after the Initial Public Offering.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, provisions and covenants contained
in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. As used herein, the following terms have the
following meanings:
"ACTION" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or regulatory or
administrative agency or commission or any other tribunal or other Governmental
Authority.
"AFFILIATE" of any specified Person means any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such specified Person.
"AGREEMENT" has the meaning set forth in the preamble, as such
agreement may be amended and supplemented from time to time in accordance with
its terms.
"ANCILLARY AGREEMENTS" means each of the following agreements between
Phoenix and inSilicon dated as of November 30, 1999, as the same may be amended
from time to time: the Services and Cost-Sharing Agreement, the Employee Matters
Agreement, the Tax-Sharing Agreement, the Registration Rights Agreement and the
Technology Distributor Agreement.
"BUSINESS" has the meaning set forth in the first recital of this
Agreement.
"CLOSING DATE" means the first time at which any shares of Common Stock
are sold to the Underwriters pursuant to the Initial Public Offering in
accordance with the terms of the Underwriting Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" has the meaning set forth in the second recital of this
Agreement.
"COMPANY BYLAWS" means the bylaws of inSilicon in the form to take
effect immediately prior to the Closing Date filed as an exhibit to the
Registration Statement.
"COMPANY CERTIFICATE" means the restated certificate of incorporation
of inSilicon in the form to take effect immediately prior to the Closing Date
filed as an exhibit to the Registration Statement.
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement
between inSilicon and Phoenix dated as of November 30, 1999, as the same may be
amended from time to time.
"DISPUTES" has the meaning set forth in Section 6.1.
"EFFECTIVE INITIAL PUBLIC OFFERING DATE" means the date on which the
Registration Statement is declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"INDEMNIFIED PARTY" has the meaning set forth in Section 3.4.
"INDEMNIFYING PARTY" has the meaning set forth in Section 3.4.
"INFORMATION" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
2
direction (including attorney work product), and other technical, financial,
employee or business information or data.
"INITIAL PUBLIC OFFERING" has the meaning set forth in the second
recital of this Agreement.
"INSILICON CONTRACT" shall have the meaning set forth in the
Contribution Agreement.
"INSILICON INDEMNITEES" has the meaning set forth in Section 3.3.
"INSILICON'S AUDITORS" has the meaning set forth in Section 5.2(a).
"INSURANCE CHARGES" has the meaning set forth in Section 4.3(c).
"LIABILITY" shall have the meaning set forth in the Contribution
Agreement.
"PERSON" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
"PHOENIX'S AUDITORS" has the meaning set forth in Section 5.2(b).
"PHOENIX GROUP" means Phoenix and each Person (other than inSilicon and
its subsidiaries) that is an Affiliate of Phoenix immediately after the
Separation Date.
"PHOENIX INDEMNITEES" has the meaning set forth
"POLICY" has the meaning set forth in Section 4.3(a).
"PROSPECTUS" means each preliminary, final or supplemental prospectus
forming a part of the Registration Statement.
"REGISTRATION STATEMENT" means the registration statement on Form S-1
filed by inSilicon with the Commission to effect the registration of the Common
Stock pursuant to the Securities Act, as such registration statement may be
amended from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEMICONDUCTOR INTELLECTUAL PROPERTY LIABILITIES" shall have the
meaning set forth in the Contribution Agreement.
"SEPARATION" has the meaning set forth in the second recital of this
Agreement.
"SEPARATION DATE" means November 30, 1999.
"TAX" or "TAXES" has the meaning set forth in the Tax-Sharing
Agreement.
"THIRD-PARTY CLAIM" has the meaning set forth in Section 3.5.
3
"UNDERWRITERS" means the Persons listed as "underwriters" in the final
Prospectus.
"UNDERWRITING AGREEMENT" has the meaning set forth in Section 3.2.
Unless otherwise specified, any reference to any "subsidiary" or
"subsidiaries" of Phoenix shall not include inSilicon.
ARTICLE II
THE INITIAL PUBLIC OFFERING
Section 2.1. COOPERATION BEFORE TO THE INITIAL PUBLIC OFFERING. (a)
TRANSACTIONS BEFORE THE INITIAL PUBLIC OFFERING.
(i) Subject to the conditions specified in Section 3.3,
Phoenix and inSilicon shall use their reasonable efforts to consummate
the Initial Public Offering. Such actions shall include, but not
necessarily be limited to, those specified in this Section 2.1.
(ii) inSilicon shall file the Registration Statement, and such
amendments or supplements thereto, as may be necessary in order to
cause the same to become and remain effective as required by law or by
the Underwriters, including, but not limited to, filing such amendments
to the Registration Statement as may be required by the Underwriting
Agreement, the Commission or federal, state or foreign securities laws.
inSilicon also shall prepare, file with the Commission and cause to
become effective a registration statement registering the Common Stock
under the Exchange Act, and any registration statements or amendments
thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans necessary or
appropriate in connection with the Separation and the Initial Public
Offering or the other transactions contemplated by this Agreement and
the Ancillary Agreements.
(iii) inSilicon shall enter into the Underwriting Agreement,
in form and substance reasonably satisfactory to inSilicon and shall
comply with its obligations thereunder.
(iv) Phoenix and inSilicon shall consult with each other and
the Underwriters regarding the timing, pricing and other material
matters with respect to the Initial Public Offering.
(v) inSilicon shall use its best efforts to take all such
action as may be necessary or appropriate under state securities and
blue sky laws of the United States (and any comparable laws under any
foreign jurisdictions) in connection with the Initial Public Offering.
(vi) inSilicon shall prepare, file and use best efforts to
seek to make effective, a listing application for quotation of the
Common Stock issued in the Initial Public Offering in the Nasdaq
National Market, subject to official notice of issuance.
4
(vii) inSilicon shall participate in the preparation of
materials and presentations as the Underwriters shall deem necessary or
desirable.
(viii) inSilicon shall pay the costs and expenses set forth in
Section 8.2.
(b) PROCEEDS OF THE INITIAL PUBLIC OFFERING. The Initial Public
Offering will consist of a primary offering of Common Stock by inSilicon.
inSilicon will receive the net proceeds of the Initial Public Offering, but
shall remain subject to any obligations to Phoenix under this Agreement, the
Contribution Agreement or any Ancillary Agreement required to be paid therefrom.
Section 2.2. CONDITIONS PRECEDENT TO THE INITIAL PUBLIC OFFERING. In no
event shall the Initial Public Offering occur unless the following conditions
shall, unless waived by Phoenix in its sole discretion, have been satisfied:
(a) The Registration Statement shall have been filed and declared
effective by the Commission, and there shall be no stop-order in effect with
respect thereto.
(b) The actions and filings with regard to state securities and blue
sky laws of the United States (and any comparable laws under any foreign
jurisdictions) described in Section 2.1 shall have been taken and, where
applicable, have become effective or been accepted.
(c) inSilicon's Board of Directors, as named in the Registration
Statement, shall have been elected by Phoenix, as sole stockholder of inSilicon,
and the Company Certificate and Company Bylaws shall be in effect.
(d) inSilicon and Phoenix shall have entered into the Underwriting
Agreement and all conditions to the obligations of inSilicon and the
Underwriters shall have been satisfied or waived.
(e) The Common Stock shall have been approved for quotation in the
Nasdaq National Market, subject to official notice of issuance.
(f) Each of the Ancillary Agreements, in form and substance
satisfactory to Phoenix, shall have been executed by the parties thereto and
shall remain in full force and effect and each of the transactions contemplated
by the Ancillary Agreements to be consummated on or before the Effective Initial
Public Offering Date shall have been consummated.
(g) No preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a government,
regulatory or administrative agency or commission, and no statute, rule,
regulation or executive order promulgated or enacted by any Governmental
Authority, shall be in effect preventing the Initial Public Offering or any of
the other transactions contemplated by this Agreement or any Ancillary Agreement
shall be in effect.
(h) Phoenix shall have been released from any Liabilities, guarantees
or other obligations with respect to any indebtedness or otherwise of inSilicon
or its subsidiaries.
5
(i) Such other actions as the parties may, based upon the advice of
counsel, reasonably request to be taken before the Initial Public Offering in
order to assure the successful completion of the Initial Public Offering and the
other transactions contemplated by this Agreement shall have been taken.
(j) This Agreement shall not have been terminated.
ARTICLE III
INDEMNIFICATION
Section 3.1. RELEASE OF CLAIMS. (a) Except as provided in Section
3.1(c), effective as of the Separation Date, inSilicon does hereby, for itself
and its Affiliates (other than any member of the Phoenix Group), successors and
assigns, and all Persons who at any time prior to the Separation Date have been
stockholders, directors, officers, agents or employees of inSilicon (in each
case, in their respective capacities as such), remise, release and forever
discharge Phoenix and each member of the Phoenix Group, their respective
successors and assigns, and all Persons who at any time prior to the Separation
Date have been stockholders, directors, officers, agents or employees of Phoenix
or any member of the Phoenix Group (in each case, in their respective capacities
as such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any facts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Separation Date, including in connection with the transactions and
all other activities to implement the Separation and the Initial Public
Offering.
(b) Except as provided in Section 3.1(c), effective as of the
Separation Date, Phoenix does hereby, for itself and each member of the Phoenix
Group, successors and assigns, and all Persons who at any time prior to the
Separation Date have been stockholders, directors, officers, agents or employees
of Phoenix or any member of the Phoenix Group (in each case, in their respective
capacities as such), remise, release and forever discharge inSilicon and its
subsidiaries, their respective successors and assigns, and all Persons who at
any time prior to the Separation Date have been stockholders, directors,
officers, agents or employees of inSilicon or any of its subsidiaries (in each
case, in their respective capacities as such), and their respective heirs,
executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any facts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Separation Date, including
in connection with the transactions and all other activities to implement the
Separation and the Initial Public Offering.
(c) Nothing contained in Sections 3.1(a) or (b) shall impair any right
of any Person to enforce this Agreement, the Contribution Agreement or any
Ancillary Agreement. Nothing contained in Sections 3.1(a) and (b) shall release
any Person from:
6
(i) any Liability, contingent or otherwise, assumed,
transferred or assigned to such Person in accordance with, or any other
Liability of any Person under, this Agreement, the Contribution
Agreement or any Ancillary Agreement;
(ii) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article III and, if applicable, the
appropriate provisions of the Contribution Agreement or the Ancillary
Agreements; or
(iii) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 3.1; provided that the parties agree not to bring suit or
permit any of their subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 3.1 but for the
provision of this clause (iii).
(d) inSilicon shall not make, and shall not permit any of its
subsidiaries to make, any claim or demand or commence any Action asserting any
claim or demand, including any claim of contribution or indemnification, against
Phoenix or any member of the Phoenix Group or any other Person released pursuant
to Section 3.1(a), with respect to any Liabilities released pursuant to Section
3.1(a). Phoenix shall not make, and shall not permit any member of the Phoenix
Group to make, any claim or demand or commence any Action asserting any claim or
demand, including any claim of contribution or indemnification, against
inSilicon or any of its subsidiaries or any other Person released pursuant to
Section 3.1(b), with respect to any Liabilities released pursuant to Section
3.1(b).
(e) It is the intention of each of Phoenix and inSilicon by virtue of
the provisions of this Section 3.1 to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or failed to occur and
all conditions existing or alleged to have existed on or before the Separation
Date, between or among inSilicon or any of its subsidiaries, on the one hand,
and Phoenix or any member of the Phoenix Group, on the other hand (including any
contractual agreements or arrangements existing or alleged to exist between or
among such Persons on or before the Separation Date), except as expressly set
forth in Section 3.1(c). At any time, at the request of the other party, each
party shall execute and deliver, or shall cause such other appropriate Persons
to execute and deliver, releases reflecting the provisions hereof.
Section 3.2. INDEMNIFICATION BY INSILICON. Except as provided in
Section 3.5 and except as otherwise expressly provided in the Contribution
Agreement or any of the Ancillary Agreements, from and after the Separation
Date, inSilicon shall indemnify, defend and hold harmless Phoenix, each member
of the Phoenix Group and each of their respective directors, officers, employees
and agents and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Phoenix Indemnitees") from and against any and
all Liabilities of the Phoenix Indemnitees arising out of, relating to or
resulting from any of the following items (without duplication):
7
(a) the failure of inSilicon or any other Person to pay, perform or
otherwise promptly discharge any Semiconductor Intellectual Property Liability
or inSilicon Contract in accordance with their respective terms, whether before
or after the Separation Date;
(b) the Business, any Semiconductor Intellectual Property Liability or
any inSilicon Contract;
(c) any breach by inSilicon or any of its subsidiaries of this
Agreement, the Contribution Agreement or any of the Ancillary Agreements;
(d) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, other than information pertaining solely to Phoenix that is supplied
by Phoenix;
(e) any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, other than information pertaining solely to Phoenix that
is supplied by Phoenix;
(f) in whole or in part, any inaccuracy in the representations and
warranties of inSilicon contained in the underwriting agreement between
inSilicon and the Underwriters (the "Underwriting Agreement");
(g) in whole or in part upon any failure of inSilicon to perform its
obligations under the Underwriting Agreement or under law;
(h) any untrue statement or alleged untrue statement of any material
fact contained in any audio or visual materials provided by inSilicon or based
upon written information furnished by or on behalf of inSilicon including,
without limitation, slides, videos, films or tape recordings, used in connection
with the marketing of the shares of Common Stock sold pursuant to the
Prospectus; and
(i) any act or failure to act or any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the shares of
Common Stock sold pursuant to the Prospectus or the offering contemplated by the
Registration Statement, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (d), (e), (f), (g) or (h) above.
Section 3.3. INDEMNIFICATION BY PHOENIX. Except as provided in Section
3.5 and except as otherwise expressly provided in the Contribution Agreement or
any of the Ancillary Agreements, from and after the Separation Date, Phoenix
shall indemnify, defend and hold harmless inSilicon and each of its subsidiaries
and each of their respective directors, officers, employees and agents and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "inSilicon Indemnitees") from and against any and all
Liabilities of
8
the inSilicon Indemnitees arising out of, relating to or resulting from any
of the following items (without duplication):
(a) the failure of Phoenix or any other member of the Phoenix Group or
any other Person to pay, perform or otherwise promptly discharge any Liability
of the Phoenix Group other than the Semiconductor Intellectual Property
Liabilities in accordance with its terms, whether before or after the Separation
Date;
(b) any Liability of any member of the Phoenix Group other than the
Semiconductor Intellectual Property Liabilities and the business of any member
of the Phoenix group other than the Business;
(c) any breach by Phoenix or any member of the Phoenix Group of this
Agreement, the Contribution Agreement or any of the Ancillary Agreements;
(d) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, pertaining solely to Phoenix that is supplied by Phoenix, or the
omission or alleged omission therefrom of a material fact pertaining solely to
Phoenix required to be stated therein or necessary to make the statements
therein not misleading; and
(e) any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any supplement thereto), or the omission
pertaining solely to Phoenix that is supplied by Phoenix or alleged omission
therefrom of a material fact pertaining solely to Phoenix necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 3.4. NOTICE AND PAYMENT OF CLAIMS. If any Phoenix Indemnitee or
inSilicon Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification under this Article III (other than in connection
with any Action subject to Section 3.5), the Indemnified Party shall deliver to
the Person from whom such indemnification is sought (the "Indemnifying Party"),
a written notice specifying, to the extent reasonably practicable, the basis for
its claim for indemnification and the amount for which the Indemnified Party
reasonably believes it is entitled to be indemnified. After the Indemnifying
Party shall have been notified of the amount for which the Indemnified Party
seeks indemnification, the Indemnifying Party shall, within 30 days after
receipt of such notice, either (i) pay the Indemnified Party such amount in cash
or other immediately available funds (or reach agreement with the Indemnified
Party as to a mutually agreeable alternative payment schedule) or (ii) object to
the claim for indemnification or the amount thereof by giving the Indemnified
Party written notice setting forth the grounds therefor. Any objection shall be
resolved in accordance with Article VI. If the Indemnifying Party does not give
such notice within such 30-day period, the Indemnifying Party shall be deemed to
have acknowledged its liability for such claim and the Indemnified Party may
exercise any and all of its rights under applicable law to collect such amount.
Section 3.5. NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. Promptly
following the earlier of (A) receipt of written notice of the commencement by a
third party of any Action against or
9
otherwise involving any Indemnified Party or (B) receipt of written
information from a third party alleging the existence of a claim against an
Indemnified Party, in either case, with respect to which indemnification may
be sought pursuant to this Agreement (a "Third-Party Claim"), the Indemnified
Party shall give the Indemnifying Party prompt written notice thereof.
Failure of the Indemnified Party to give notice as provided in this Section
3.5 shall not relieve the Indemnifying Party of its obligations under this
Agreement, except to the extent that the Indemnifying Party is prejudiced by
such failure to give notice. Such notice shall describe the Third-Party Claim
in reasonable detail.
(a) Within 30 days after receipt of such notice, the Indemnifying Party
may by giving written notice thereof to the Indemnified Party, (i) elect to
assume the defense of such Third-Party Claim at its sole cost and expense or
(ii) object to the claim of indemnification for such Third-Party Claim setting
forth the grounds therefor. Any objection shall be resolved in accordance with
Article VI. If the Indemnifying Party does not give such notice within such
30-day period, the Indemnifying Party shall be deemed to have acknowledged its
liability for such Third-Party Claim.
(b) Any defense of a Third-Party Claim as to which the Indemnifying
Party has elected to assume the defense shall be conducted by counsel employed
by the Indemnifying Party and reasonably satisfactory to Phoenix in the case of
Phoenix Indemnitees and inSilicon in the case of inSilicon Indemnitees. The
Indemnified Party shall have the right to participate in such proceedings and to
be represented by counsel of its own choosing at the Indemnified Party's sole
cost and expense; PROVIDED that if the defendants or parties against which
relief is sought in any such claim include both the Indemnifying Party and one
or more Indemnified Parties and, in the reasonable judgment of Phoenix in the
case of Phoenix Indemnitees and inSilicon in the case of inSilicon Indemnitees,
a conflict of interest between such Indemnified Parties and such Indemnifying
Party exists in respect of such claim, such Indemnified Parties shall have the
right to employ one firm of counsel selected by Phoenix for Phoenix Indemnitees
or inSilicon for inSilicon Indemnitees and in that event the reasonable fees and
expenses of such separate counsel (but not more than one separate counsel
reasonably satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party. If the Indemnifying Party assumes the defense of a
Third-Party Claim, the Indemnifying Party may settle or compromise the claim
without the prior written consent of the Indemnified Party; PROVIDED that
without the prior written consent of Phoenix in the case of Phoenix Indemnitees
and inSilicon in the case of inSilicon Indemnitees, the Indemnifying Party may
not agree to any such settlement unless as a condition to such settlement the
Indemnified Party receives a written release from any and all liability relating
to such Third-Party Claim and such settlement or compromise does not include any
remedy or relief to be applied to or against the Indemnified Party, other than
monetary damages for which the Indemnifying Party shall be responsible
hereunder.
(c) If the Indemnifying Party does not assume the defense of a
Third-Party Claim for which it has acknowledged liability for indemnification
under this Article III, Phoenix in the case of Phoenix Indemnitees and inSilicon
in the case of inSilicon Indemnitees may pursue the defense of such Third-Party
Claim and choose one firm of counsel in connection therewith. The Indemnifying
Party is required to reimburse Phoenix or inSilicon, as the case may be, on a
current basis for its reasonable expenses of investigation, reasonable
attorneys' fees and reasonable out-of-pocket expenses incurred by Phoenix in the
case of Phoenix Indemnitees and
10
inSilicon in the case of inSilicon Indemnitees in defending against such
Third-Party Claim and the Indemnifying Party shall be bound by the result
obtained with respect thereto, PROVIDED that the Indemnifying Party shall not
be liable for any settlement effected without the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
(d) The Indemnifying Party shall pay to the Indemnified Party in cash
the amount for which the Indemnified Party is entitled to be indemnified (if
any) no later than the later of (i) the date on which the Indemnified Party
makes any payment in satisfaction (partial or otherwise) of the Third-Party
Claim or (ii) the date on which such Indemnifying Party's objection, if any, to
its responsibility for indemnification under this Article III has been resolved
pursuant to Article VI or by settlement or compromise or the final nonappealable
judgment of a court of competent jurisdiction.
Section 3.6. INSURANCE PROCEEDS. The amount that any Indemnifying Party
is or may be required to pay to any Indemnified Party pursuant to this Article
III shall be reduced (including, without limitation, retroactively) by any
insurance proceeds or other amounts actually recovered by or on behalf of such
Indemnified Parties in reduction of the related Liability. If an Indemnified
Party shall have received the payment required by this Agreement from an
Indemnifying Party in respect of a Liability and shall subsequently actually
receive insurance proceeds, or other amounts in respect of such Liability as
specified above, then such Indemnified Party shall pay to such Indemnifying
Party a sum equal to the amount of such insurance proceeds or other amounts
actually received after deducting therefrom all of the Indemnifying Party's
costs and expenses associated with such Liability.
Section 3.7. CONTRIBUTION. If the indemnification provided for in this
Article III is unavailable to an Indemnified Party in respect of any Liability
arising out of or related to information contained in or omitted from the
Registration Statement or the Prospectus, then the inSilicon Indemnitees, or
Phoenix Indemnitees, as the case may be, in lieu of indemnifying the Phoenix
Indemnitees or inSilicon Indemnitees, as the case may be, shall contribute to
the amount paid or payable by the Phoenix Indemnitees or inSilicon Indemnitees,
as the case may be, as a result of such Liability in such proportion as is
appropriate to reflect the relative fault of inSilicon, on the one hand, and
Phoenix, on the other hand, in connection with the statements or omissions which
resulted in such Liability. If the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information pertaining solely to Phoenix, then Phoenix shall bear any
resulting Liability; otherwise, inSilicon shall bear any resulting Liability.
Section 3.8. SUBROGATION. In the event of payment by an Indemnifying
Party to any Indemnified Party in connection with any Third-Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the first place of
such Indemnified Party as to any events or circumstances in respect of which
such Indemnified Party may have any right or claim relating to such Third-Party
Claim. Such Indemnified Party shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 3.9. NO THIRD-PARTY BENEFICIARIES. This Article III shall inure
to the benefit of, and be enforceable by Phoenix, the Phoenix Indemnitees,
inSilicon and the inSilicon Indemnitees
11
and their respective successors and permitted assigns. The indemnification
provided for by this Article III shall not inure to the benefit of any other
third party or parties and shall not relieve any insurer who would otherwise
be obligated to pay any claim of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, provide any
subrogation rights with respect thereto and each party agrees to waive such
rights against the other to the fullest extent permitted.
Section 3.10. REMEDIES CUMULATIVE. The remedies provided in this
Article III shall be cumulative and shall not preclude assertion by any
Indemnified Party of any other rights or the seeking of any and all other
remedies against an Indemnifying Party. The procedures set forth in this Article
III, however, shall be the exclusive procedures governing any indemnity action
brought under this Article III or otherwise relating to Liabilities.
Section 3.11. SURVIVAL OF INDEMNITIES. The rights and obligations of
each of Phoenix and inSilicon and their respective Indemnitees under this
Article III shall survive the sale or other transfer by it of any assets or
businesses or the assignment by it of any Liabilities.
Section 3.12. AFTER-TAX INDEMNIFICATION PAYMENTS. Except as otherwise
expressly provided in this Agreement, the Contribution Agreement or in an
Ancillary Agreement, indemnification payments made by either party under this
Article shall give effect to, and be reduced by the value of, any and all
applicable deductions, losses, credits, offsets or other items for Federal,
state or other Tax purposes attributable to the payment of the indemnified
Liability by the Indemnified Party.
ARTICLE IV
CERTAIN ADDITIONAL MATTERS
Section 4.1. COMPANY OFFICERS AND BOARD OF DIRECTORS. On or prior to
the Closing Date, Phoenix shall take and shall cause inSilicon to take all
actions necessary to appoint as officers and directors of inSilicon those
persons named in the Registration Statement to constitute the officers and
directors of inSilicon on the Closing Date.
Section 4.2. THE COMPANY CERTIFICATE OF INCORPORATION AND BYLAWS. Prior
to the Closing Date, Phoenix shall take all action necessary to cause the
Company Certificate and Company Bylaws to be amended and restated substantially
in the form attached to the Registration Statement as exhibits thereto.
Section 4.3. INSURANCE POLICIES AND CLAIMS ADMINISTRATION.
(a) MAINTENANCE OF INSURANCE COVERAGE PRIOR TO SEPARATION DATE. Phoenix
and inSilicon shall use reasonable efforts to maintain in full force and effect
at all times up to and including the Separation Date and for the periods set
forth in the Services and Cost-Sharing Agreement, its current property and
casualty insurance programs, including, without limitation, primary and excess
general liability, automobile, workers' compensation, property and crime
insurance policies (collectively, the "Policies" and individually, a "Policy").
inSilicon and its subsidiaries shall retain with respect to any insured claims
relating to periods before the
12
Separation Date or termination of the applicable period set forth in the
Services and Cost-Sharing Agreement with respect to each such Policy
(whichever is later), all of their respective rights, benefits and
privileges, if any, under such Policies. To the extent not already provided
for by the terms of a Policy, Phoenix shall use reasonable efforts to cause
inSilicon and its subsidiaries, as appropriate, to be named as additional
insureds under such Policy in respect of Covered Claims arising or relating
to periods prior to the Separation Date or termination of the applicable
period set forth in the Services and Cost-Sharing Agreement with respect to
each such Policy (whichever is later); PROVIDED, however, that nothing
contained herein shall be construed to require Phoenix or any of its
subsidiaries to pay any additional premium or other charges in respect to, or
waive or otherwise limit any of its rights, benefits or privileges under, any
such Policy to effect the naming of inSilicon and its subsidiaries as such
additional insureds except as required by the Services and Cost-Sharing
Agreement and then only to the extent the charge, if any, is borne by
inSilicon.
(b) COMPANY RESPONSIBLE FOR ESTABLISHING INSURANCE COVERAGE ON AND
AFTER SEPARATION DATE. Except as provided under the Services and Cost-Sharing
Agreement or any other Ancillary Agreement, commencing on and as of the
Separation Date, inSilicon and each of its subsidiaries shall be responsible for
establishing and maintaining its own separate insurance programs (including,
without limitation, primary and excess general liability, automobile, workers,
compensation, property, director and officer liability, fire, crime, surety and
other similar insurance policies) for activities and claims relating to any
period on or after the Separation Date involving inSilicon or any of its
subsidiaries. Notwithstanding any other agreement or understanding to the
contrary, except as set forth in the Services and Cost-Sharing Agreement or any
such Ancillary Agreement or Section 4.3(c) with respect to claims administration
and financial administration of the Policies, neither Phoenix nor any of its
subsidiaries shall have any responsibility for or obligation to inSilicon or its
subsidiaries relating to liability and casualty insurance matters for any
period, whether before, at or after the Separation Date except to the extent set
forth in the Services and Cost-Sharing Agreement.
(c) ADMINISTRATION AND PROCEDURE. (i) Phoenix or a subsidiary of
Phoenix, as appropriate, shall be responsible for the claims administration and
financial administration of all Policies for insured claims relating to the
assets, ownership or operation of the Business prior to the Separation Date or
termination of the applicable period set forth in the Services and Cost-Sharing
Agreement with respect to each such Policy (whichever is later); PROVIDED,
HOWEVER, that such retention by Phoenix of the Policies and the responsibility
for claims administration and financial administration of the Policies are in no
way intended to limit, inhibit or preclude any right to insurance coverage for
any insured claims under the Policies by inSilicon. Phoenix shall direct each
insurance carrier to pay to inSilicon any proceeds for the insured claims of
inSilicon or, if Phoenix receives such proceeds, it shall forward them promptly
to inSilicon. inSilicon or a subsidiary thereof, as appropriate, shall be
responsible for all administrative and financial matters relating to insurance
policies established and maintained by inSilicon and its subsidiaries for claims
relating to any period on or after the Separation Date involving inSilicon or
any of its subsidiaries.
(ii) inSilicon shall notify Phoenix of any insured claim
relating to inSilicon or a subsidiary thereof under one or more of the
Policies, and inSilicon agrees to cooperate and coordinate with Phoenix
concerning any strategy Phoenix may reasonably elect to
13
pursue to secure coverage and payment for such insured claim by the
appropriate insurance carrier. Notwithstanding the foregoing,
Phoenix shall not be entitled to settle any insured claim relating
to inSilicon or a subsidiary thereof without inSilicon's consent,
which consent will not be unreasonably withheld.
(iii) inSilicon or an appropriate subsidiary thereof shall
assume responsibility for, and shall pay to the appropriate insurance
carriers or otherwise, any premiums, retrospectively-rated premiums,
defense costs, indemnity payments, deductibles, retentions or other
charges, as appropriate (collectively, "Insurance Charges"), whenever
arising, which shall become due and payable under the terms and
conditions of any applicable Policy in respect of any liabilities,
losses, claims, actions or occurrences, whenever arising or becoming
known, involving or relating to any of the assets, businesses,
operations or liabilities of inSilicon or any of its subsidiaries, to
the extent set forth in Section 4.3(a) and any such charges that relate
to the period after the Separation Date or, if later, termination of
the applicable period set forth in the Services and Cost-Sharing
Agreement with respect to each such Policy. To the extent that the
terms of any applicable Policy provide that Phoenix or a subsidiary
thereof, as appropriate, shall have an obligation to pay or guarantee
the payment of any Insurance Charges, Phoenix or such subsidiary shall
be entitled to demand that inSilicon or a subsidiary thereof make such
payment directly to the Person entitled thereto. In connection with any
such demand, Phoenix shall submit to inSilicon or a subsidiary thereof
a copy of any invoice received by Phoenix or a subsidiary pertaining to
such Insurance Charges, together with appropriate supporting
documentation, if available. In the event that inSilicon or its
subsidiary fails to pay any Insurance Charges when due and payable,
whether at the request of the party entitled to payment or upon demand
by Phoenix or a subsidiary of Phoenix, Phoenix or a subsidiary of
Phoenix may (but shall not be required to) pay such Insurance Charges
for and on behalf of inSilicon or its subsidiary and, thereafter,
inSilicon or its subsidiary shall forthwith reimburse Phoenix or such
subsidiary of Phoenix for such payment.
Section 4.4. NON-SOLICITATION OF EMPLOYEES. Each party agrees not to
directly solicit or recruit the other party's employees for a period of one year
after the Separation Date if such solicitation or recruitment would be
disruptive or damaging or would interfere with the operation or business of the
other party. This prohibition on solicitation does not apply to actions taken by
a party (i) as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or a general
solicitation or (ii) as a result of an employee's initiative.
ARTICLE V
ACCESS TO INFORMATION
Section 5.1. AGREEMENT FOR EXCHANGE OF INFORMATION. Each of Phoenix and
inSilicon agrees to provide, or cause to be provided, to each other, at any time
before or after the Separation Date, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the control
of such party that the requesting party reasonably needs (i)
14
to comply with reporting, disclosure, filing or other requirements imposed on
the requesting party (including under applicable securities laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii)
for use in any other judicial, regulatory, administrative or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation or
other similar requirements, (iii) to comply with its obligations under this
Agreement, the Contribution Agreement or any ancillary Agreement or (iv) in
connection with the ongoing businesses of Phoenix or inSilicon, as the case
may be; provided, however, that in the event that any party determines that
any such provision of Information could be commercially detrimental, violate
any law or agreement, or waive any attorney-client privilege, the parties
shall take all reasonable measures to permit the compliance with such
obligations in a manner that avoids any such harm or consequence.
(a) INTERNAL ACCOUNTING CONTROLS; FINANCIAL INFORMATION. Except as
provided in the Services and Cost-Sharing Agreement, after the Separation Date,
(i) each party shall maintain in effect at its own cost and expense adequate
systems and controls for its business to the extent necessary to enable the
other party to satisfy its reporting, accounting, audit and other obligations,
and (ii) each party shall provide, or cause to be provided, to the other party
and its subsidiaries in such form as such requesting party shall request, at no
charge to the requesting party, all financial and other data and information as
the requesting party determines necessary or advisable in order to prepare its
financial statements and reports or filings with any Governmental Authority.
(b) OWNERSHIP OF INFORMATION. Any Information owned by a party that is
provided to a requesting party pursuant to this Section 5.1 shall be deemed to
remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
(c) RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Section 5.1 and other provisions of this Agreement
after the Separation Date, each party agrees to use its reasonable commercial
efforts to retain all Information in their respective possession or control on
the Separation Date substantially in accordance with the policies of Phoenix as
in effect on the Separation Date. However, except as set forth in the Tax
Sharing Agreement, at any time after the Separation Date, each party may amend
their respective record retention policies at such party's discretion; PROVIDED,
however, that if a party desires to effect the amendment within three (3) years
after the Separation Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement. No party will destroy, or permit any of its subsidiaries to destroy,
any Information that exists on the Separation Date (other than Information that
is permitted to be destroyed under the current record retention policy of
Phoenix) without first using its reasonable commercial efforts to notify the
other party of the proposed destruction and giving the other party the
opportunity to take possession of such Information prior to such destruction.
(d) LIMITATION OF LIABILITY. No party shall have any liability to any
other party in the event that any Information exchanged or provided pursuant to
this Section 5.1 is found to be inaccurate, in the absence of willful misconduct
by the party providing such Information. No party shall have any liability to
any other party if any Information is destroyed or lost after reasonable
commercial efforts by such party to comply with the provisions of Section
5.1(c).
15
(e) OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights
and obligations granted under this Section 5.1 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in this Agreement, the
Contribution Agreement and any Ancillary Agreement.
(f) PRODUCTION OF WITNESSES; RECORDS; COOPERATION. After the Separation
Date, except in the case of a legal or other proceeding by one party against the
other party, each party shall use its reasonable commercial efforts to make
available to the other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of such party
as witnesses and any books, records or other documents within its control or
which it otherwise has the ability to make available, to the extent that any
such Person (giving consideration to business demands of such directors,
officers, employees, other personnel and agents) or books, records or other
documents may reasonably be required in connection with any legal,
administrative or other proceeding in which the requesting party may from time
to time be involved, regardless of whether such legal, administrative or other
proceeding is a matter with respect to which indemnification may be sought
hereunder. The requesting party shall bear all costs and expenses in connection
therewith.
Section 5.2. AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party agrees that, for so long as Phoenix is required in
accordance with United States generally accepted accounting principles to
consolidate inSilicon's results of operations and financial position:
(a) SELECTION OF AUDITORS. inSilicon shall not select a different
accounting firm than Ernst & Young LLP (or its successors) to serve as its (and
its subsidiaries') independent certified public accountants ("inSilicon's
Auditors") for purposes of providing an opinion on its consolidated financial
statements without Phoenix's prior written consent (which shall not be
unreasonably withheld).
(b) DATE OF AUDITORS' OPINION AND QUARTERLY REVIEWS. inSilicon shall
use its reasonable commercial efforts to enable the inSilicon Auditors to
complete their audit such that they will date their opinion on inSilicon's
audited annual financial statements on the same date that Phoenix's independent
certified public accountants ("Phoenix's Auditors") date their opinion on
Phoenix's audited annual financial statements, and to enable Phoenix to meet its
timetable for the printing, filing and public Dissemination of Phoenix's annual
financial statements. inSilicon shall use its reasonable commercial efforts to
enable the inSilicon Auditors to complete their quarterly review procedures such
that they will provide clearance on inSilicon's quarterly financial statements
on the same date that Phoenix's Auditors provide clearance on Phoenix's
quarterly financial statements.
(c) ANNUAL AND QUARTERLY FINANCIAL STATEMENTS. inSilicon shall provide
to Phoenix on a timely basis all Information that Phoenix reasonably requires to
meet its schedule for the preparation, printing, filing, and public
dissemination of Phoenix's annual and quarterly financial statements. Without
limiting the generality of the foregoing, inSilicon will provide all required
financial Information with respect to inSilicon and its subsidiaries to
inSilicon's Auditors in a sufficient and reasonable time and in sufficient
detail to permit inSilicon's Auditors to take all steps and perform all reviews
necessary to provide sufficient assistance to Phoenix's Auditors
16
with respect to Information to be included or contained in Phoenix's annual
and quarterly financial statements. Similarly, Phoenix shall provide to
inSilicon on a timely basis all Information that inSilicon reasonably
requires to meet its schedule for the preparation, printing, filing, and
public dissemination of inSilicon's annual and quarterly financial
statements. Without limiting the generality of the foregoing, Phoenix will
provide all required financial Information with respect to Phoenix and its
subsidiaries to Phoenix's Auditors in a sufficient and reasonable time and in
sufficient detail to permit Phoenix's Auditors to take all steps and perform
all reviews necessary to provide sufficient assistance to inSilicon's
Auditors with respect to Information to be included or contained in
inSilicon's annual and quarterly financial statements.
(d) IDENTITY OF PERSONNEL PERFORMING THE ANNUAL AUDIT AND QUARTERLY
REVIEWS. inSilicon shall authorize inSilicon's Auditors to make available to
Phoenix's Auditors both the personnel who performed or are performing the annual
audits and quarterly reviews of inSilicon and work papers related to the annual
audits and quarterly reviews of inSilicon, in all cases within a reasonable time
prior to inSilicon's Auditors' opinion date, so that Phoenix's Auditors are able
to perform the procedures they consider necessary to take responsibility for the
work of inSilicon's Auditors as it relates to Phoenix's Auditors' report on
Phoenix's financial statements, all within sufficient time to enable Phoenix to
meet its timetable for the printing, filing and public dissemination of
Phoenix's annual and quarterly statements. Similarly, Phoenix shall authorize
Phoenix's Auditors to make available to inSilicon's Auditors both the personnel
who performed or are performing the annual audits and quarterly reviews of
Phoenix and work papers related to the annual audits and quarterly reviews of
Phoenix, in all cases within a reasonable time prior to the Auditors' opinion
date, so that inSilicon's Auditors are able to perform the procedures they
consider necessary to take responsibility for the work of Phoenix's Auditors as
it relates to inSilicon's Auditors' report on inSilicon's statements, all within
sufficient time to enable inSilicon to meet its timetable for the printing,
filing and public dissemination of inSilicon's annual and quarterly financial
statements.
(e) ACCESS TO BOOKS AND RECORDS. inSilicon shall provide Phoenix's
internal auditors and their designees access to inSilicon's and its
subsidiaries' books and records so that Phoenix may conduct reasonable audits
relating to the financial statements provided by inSilicon pursuant hereto as
well as to the internal accounting controls and operations of inSilicon and its
subsidiaries. Similarly, Phoenix shall provide inSilicon's internal auditors and
their designees access to Phoenix's and its subsidiaries' books and records so
that inSilicon may conduct reasonable audits relating to the financial
statements provided by Phoenix pursuant hereto as well as to the internal
accounting controls and operations of Phoenix and its subsidiaries.
(f) NOTICE OF CHANGE IN ACCOUNTING PRINCIPLES. inSilicon shall give
Phoenix as much prior notice as reasonably practical of any proposed
determination of, or any significant changes in, its accounting estimates or
accounting principles from those in effect on the Separation Date. inSilicon
will consult with Phoenix and, if requested by Phoenix, inSilicon will consult
with Phoenix's independent public accountants with respect thereto. Phoenix
shall give inSilicon as much prior notice as reasonably practical of any
proposed determination of, or any significant changes in, its accounting
estimates or accounting principles from those in effect on the Separation Date.
17
(g) CONFLICT WITH THIRD-PARTY AGREEMENTS. Nothing in Sections 5.1 and
5.2 shall require inSilicon to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary Information
relating to that third party or its business; PROVIDED, however, that in the
event that inSilicon is required under Sections 5.1 and 5.2 to disclose any such
Information, inSilicon shall use commercially reasonable efforts to seek to
obtain such customer's consent to the disclosure of such Information.
Section 5.3. CONFIDENTIALITY; PROTECTION.
(a) CONFIDENTIAL INFORMATION. Except as otherwise expressly provided in
this Agreement, each party and each of its subsidiaries shall hold and shall
cause its respective directors, officers, employees, agents, consultants and
advisors to hold, in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its counsel, by other
requirements of law, all Information concerning the other party (except to the
extent that such Information can be shown to have been (i) in the public domain
through no fault of such party, (ii) later lawfully acquired on a
non-confidential basis from other sources by the party to which it was
furnished, (iii) independently generated without reference to any proprietary or
confidential Information of the other party, or (iv) Information that may be
disclosed pursuant to any Ancillary Agreement). Neither party shall release or
disclose any such Information to any other Person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors who
shall be advised of and agree to comply with the provisions of this Section 5.3.
For purposes of this Section 5.3, confidential Information of third parties that
is known to, in the possession of or acquired by a party shall be deemed
Information of that party.
(b) PROTECTIVE ARRANGEMENTS. In the event that either party (or any of
its subsidiaries) either determines on the advice of its counsel that it is
required to disclose any information pursuant to applicable law or receives any
demand under lawful process or from any Governmental Authority to disclose or
provide information of the other party (or any of its subsidiaries) that is
subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) or by
lawful process or such Governmental Authority.
Section 5.4. MAIL. After the Separation Date, each of Phoenix and
inSilicon may receive mail and other communications properly belonging to the
other. Accordingly, at all times after the Separation Date, each of Phoenix and
inSilicon authorizes the other to receive and open all mail and other
communications received by it and not unambiguously intended for the other party
or any of the other party's officers or directors specifically in their
capacities as such, and to retain the same to the extent that they relate to the
business of the receiving party or, to the extent that they do not relate to the
business of the receiving party and do relate to the business of the other
party, or to the extent that they relate to both businesses, the receiving party
shall promptly contact the other party by telephone for delivery instructions
and such mail or other communications (or, in case the same relate to both
businesses, copies thereof) shall promptly be forwarded to the other party in
accordance with its delivery instructions. The foregoing
18
provisions of this Section 5.4 shall constitute full authorization to the
postal authorities and courier companies and all other persons to make
deliveries to Phoenix or inSilicon, as the case may be, addressed to either
of them or to any of their officers or directors specifically in their
capacities as such. The provisions of this Section 5.4 are not intended to
and shall not be deemed to constitute an authorization by either Phoenix or
inSilicon to permit the other to accept service of process on its behalf, and
neither party is or shall be deemed to be the agent of the other for service
of process purposes or for any other purpose.
ARTICLE VI
DISPUTE RESOLUTION
Section 6.1. DISPUTE RESOLUTION. Except as otherwise set forth in any
Ancillary Agreement, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 6.1.
(a) NEGOTIATION. The parties shall make a good faith attempt to resolve
any Dispute arising out of, relating to or resulting from this Agreement through
negotiation. Within thirty (30) days after notice of a Dispute is given by
either party to the other party, each party shall select a first tier
negotiating team comprised of vice president level employees of such party and
shall meet and make a good faith attempt to resolve such Dispute and shall
continue to negotiate in good faith in an effort to resolve the Dispute or
renegotiate the applicable section or provision without the necessity of any
formal proceedings. If the first tier negotiating teams are unable to agree
within thirty (30) days of their first meeting, then each party shall select a
second tier negotiating team comprised of the chief executive officers of such
party and shall meet within thirty (30) days after the end of the first thirty
(30) day negotiating period to attempt to resolve the matter. During the course
of negotiations under this Section 6.1(a), all reasonable requests made by one
party to the other for Information, including requests for copies of relevant
documents, will be honored. The specific format for such negotiations will be
left to the discretion of the designated negotiating teams but may include the
preparation of agreed upon statements of fact or written statements of position
furnished to the other party.
(b) NON-BINDING MEDIATION. In the event that any Dispute arising out of
or related to this Agreement is not settled by the parties within fifteen (15)
days after the first meeting of the second tier negotiating teams under Section
6.1(a), the parties will attempt in good faith to resolve such Dispute by
non-binding mediation in accordance with the American Arbitration Association
Commercial Mediation Rules. The mediation shall be held within thirty (30) days
of the end of such fifteen (15) day negotiation period of the second tier
negotiating teams. Except as provided below in Section 6.1(c), no litigation for
the resolution of such dispute may be commenced until the parties try in good
faith to settle the dispute by such mediation in accordance with such rules and
either party has concluded in good faith that amicable resolution through
continued mediation of the matter does not appear likely. The costs of mediation
shall be shared equally by the parties to the mediation. Any settlement reached
by mediation shall be recorded in writing, signed by the parties, and shall be
binding on them.
19
(c) PROCEEDINGS. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the Dispute through
negotiation or mediation. In the event that litigation is commenced under this
Section 6.1(c), the parties agree to continue to attempt to resolve any Dispute
according to the terms of Sections 6.1(a) and 6.1(b) during the course of such
litigation proceedings under this Section 6.1(c).
(d) PAY AND DISPUTE. Except as provided herein or in any Ancillary
Agreement, in the event of any dispute regarding payment of a third-party
invoice (subject to standard verification of receipt of products or services),
the party named in a third party's invoice must make timely payment to such
third party, even if the party named in the invoice desires to pursue the
dispute resolution procedures outlined in this Section 6.1. If the party that
paid the invoice is found pursuant to this Section 6.1 to not be responsible for
such payment, such paying party shall be entitled to reimbursement, with
interest accrued at the prime interest rate announced by Bank of America NT&SA
plus one percent per annum compounded monthly for the period such amount remains
unpaid from the party found responsible for such payment.
Section 6.2. CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article VI with
respect to all matters not subject to such Dispute.
ARTICLE VII
STANDSTILL; COVENANT NOT TO COMPETE
Section 7.1. STANDSTILL. Phoenix agrees that so long as Phoenix
beneficially owns, directly or indirectly, fifty percent (50%) or more of
inSilicon's outstanding voting securities, it shall not acquire by purchases in
"brokers' transactions" (as defined in the Securities Act) or in transactions
directly with a "market maker" (as defined in the Exchange Act) during any
twelve (12-) month period shares of Common Stock that exceed two percent (2%) of
the number of shares of Common Stock outstanding at the commencement of that
period, without inSilicon's prior consent.
Section 7.2. NON-COMPETE.
(a) During the "Phoenix Restricted Period," as defined below, Phoenix
agrees it will not carry on or become involved, directly or indirectly (whether
as owner, partner, agent, consultant or stockholder) in any business or activity
competitive with any business conducted by inSilicon as of the Separation Date
without the consent of inSilicon. For this purpose, the "Phoenix Restricted
Period" for any business or activity conducted by inSilicon as of the Separation
Date means the earliest of (i) November 30, 2004, (ii) the date Phoenix no
longer owns, directly or indirectly, ten percent (10%) or more of inSilicon's
outstanding voting securities and (iii) the date on which inSilicon no longer
engages in such business or activity.
20
(b) During the "inSilicon Restricted Period," as defined below,
inSilicon agrees it will not carry on or become involved, directly or indirectly
(whether as owner, partner, agent, consultant or stockholder) in any business or
activity competitive with any business conducted by Phoenix as of the Separation
Date (other than the Business) without the consent of Phoenix. For this purpose,
the "inSilicon Restricted Period" for any business or activity conducted by
Phoenix as of the Separation Date means the earliest of (i) November 30, 2004,
(ii) the date Phoenix no longer owns, directly or indirectly, ten percent (10%)
or more of inSilicon's outstanding voting securities and (iii) the date on which
Phoenix no longer engages in such business or activity.
(c) Each of Phoenix and inSilicon agrees that it will not unreasonably
withhold its consent to any request by the other to carry on or become involved
in any business or activity competitive with any business conducted by the other
as of the Separation Date, which request relates to activities which occur
following a "change in control" of the requesting party. For this purpose, a
"change of control" shall be deemed to have occurred on the earliest date on or
by which (i) the beneficial ownership of the equity securities of the affected
party on the part of any Person or group (other than Phoenix in the case of
inSilicon), together with the beneficial ownership thereof on the part of the
affiliates and/or associates of such Person or group, first equals or exceeds
fifty percent (50%) of the equity securities of the affected party or (ii) any
Person or group acquires assets of the affected party, which together with any
assets acquired from such party by any affiliates and/or associates of such
Person or group constitute fifty percent (50%) or more of the assets of the
affected party. A party shall not be deemed to be "unreasonable" in withholding
its consent if the Person acquiring control of a party competes with the party
from which consent is sought.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. TERMINATION. This Agreement may be terminated and/or the
Initial Public Offering may be deferred, modified or abandoned at any time prior
to the Closing Date by and in the sole discretion of the Board of Directors of
Phoenix without the approval of inSilicon. In the event of such termination, no
party hereto (or any of its respective directors or officers) shall have any
liability to any other party pursuant to this Agreement.
Section 8.2. EXPENSES. Except as specifically provided in Services and
Cost-Sharing Agreement or in this Agreement and except for the expenses of
Phoenix that are not third party expenses, all costs and expenses incurred in
connection with the interpretation, execution, delivery and implementation of
this Agreement and with the consummation of the transactions contemplated by
this Agreement shall be paid by inSilicon. The expenses payable by inSilicon
shall include without limitation the filing, legal, accounting, printing and
other out-of-pocket expenditures in connection with (i) the preparation,
printing and filing of the Registration Statement and (ii) sale of the shares of
Common Stock in the Initial Public Offering, including, without limitation,
third party costs, fees and expenses relating to the Initial Public Offering,
and all of the reimbursable expenses of the Underwriters pursuant to the
Underwriting Agreement, and all of the costs of producing, printing, mailing and
otherwise distributing the Prospectus.
21
After the Closing Date, all costs and expenses that are not subject to the
Services and Cost-Sharing Agreement or any other agreement between the
parties shall be borne by the party incurring the expense.
Section 8.3. NOTICES. All notices and communications under this
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been duly given when received addressed as follows:
If to Phoenix, to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
If to inSilicon, to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Any party may, by written notice so delivered to the other party,
change the address to which delivery of any notice shall thereafter be made.
Section 8.4. AMENDMENT AND WAIVER. This Agreement may not be altered or
amended, nor may rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver. No
waiver of any terms, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any one or more
instances shall be deemed to be, or construed as, a further or continuing waiver
of any such term, provision, condition, right or remedy or as a waiver of any
other term, provision or condition of this Agreement. Notwithstanding the
foregoing, this Agreement may not be altered or amended, nor may rights
hereunder be waived by inSilicon after the Closing Date without the affirmative
vote or written consent of a majority of the directors of inSilicon who are not
Affiliates of Phoenix.
Section 8.5. COUNTERPARTS. This Agreement may be executed in
counterparts each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same Agreement.
Section 8.6. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of California, without
regard to the conflicts of law rules of such state.
Section 8.7. ENTIRE AGREEMENT. This Agreement including the schedules
and the other agreements referenced specifically in this Agreement constitute
the entire understanding of the parties with respect to the subject matter of
this Agreement, superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter.
22
Section 8.8. ASSIGNMENT.
(a) No party to this Agreement shall (i) consolidate with or merge into
any Person or permit any Person to consolidate with or merge into such party
(other than a merger or consolidation in which the party is the surviving or
continuing corporation), or (ii) sell, assign, transfer, lease or otherwise
dispose of, in one transaction or a series of related transactions, all or
substantially all of its assets, unless the resulting, surviving or transferee
Person expressly assumes, by instrument in form and substance reasonably
satisfactory to the other parties, all of the obligations of the party under
this Agreement.
(b) Except as expressly provided in paragraph (a) above, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assignable, directly or indirectly, by any party without the prior written
consent of the party, and any attempt to so assign without such consent shall be
void.
Section 8.9. PARTIES IN INTEREST. Subject to Section 8.8, this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns. Nothing contained
in this Agreement, express or implied, is intended to confer any benefits,
rights or remedies upon any person or entity other than Phoenix and inSilicon,
and Phoenix Indemnitees and inSilicon Indemnitees under Article III hereof.
Section 8.10. TAX SHARING AGREEMENT. Notwithstanding any other
provision of this Agreement to the contrary, any and all matters relating to
Taxes shall be exclusively governed by the Tax Sharing Agreement.
Section 8.11. EXHIBITS AND SCHEDULES. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
Section 8.12. LEGAL ENFORCEABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
Section 8.13. TITLES AND HEADINGS. Titles and headings to Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
Section 8.14. CONFLICTING AGREEMENTS. In the event of conflict between
this Agreement and the Contribution Agreement, the provisions of this Agreement
and shall prevail.
23
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
PHOENIX TECHNOLOGIES LTD.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, General Counsel
and Secretary
INSILICON CORPORATION
By: /S/ ▇▇▇▇▇ ▇. POWER
-----------------------------------
Name: ▇▇▇▇▇ ▇. Power
Title: Vice President and General Counsel
24