CONFIDENTIAL
EXHIBIT 10.14
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TECHNOLOGY DEVELOPMENT AND LICENSE
AGREEMENT
by and between
INTERTRUST TECHNOLOGIES CORPORATION
and
UPGRADE CORPORATION OF AMERICA
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_________________________
August 7, 1996
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---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL
TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND RULES OF CONSTRUCTION................................... 2
1.1 Definitions............................................................. 2
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1.2 Rules of Construction................................................... 8
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ARTICLE 2. AGREEMENT AND PARTY STATUS.............................................. 9
2.1 Nature and Effect of Closing............................................
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2.2 Addition of SOFTBANK Internet Services.................................. 9
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2.3 Joint and Several Obligations........................................... 9
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ARTICLE 3. TECHNOLOGY ACCESS AND SUPPORT........................................... 9
3.1 Pre-Release Technology Review and Assistance............................ 9
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3.2 Technology Access....................................................... 9
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3.3 Training, Assistance and Technical Support.............................. 11
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3.4 Additional Assistance................................................... 12
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ARTICLE 4. COOPERATIVE PROJECTS AND APPLICATIONS................................... 13
4.1 Cooperative Projects.................................................... 13
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4.2 Potential Cooperative Applications...................................... 13
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ARTICLE 5. LICENSES AND RESTRICTIONS............................................... 14
5.1 License Grant to SSG.................................................... 14
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5.2 Sublicense Rights....................................................... 15
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5.3 No Additional Licenses.................................................. 16
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5.4 General Restrictions.................................................... 16
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ARTICLE 6. SSG SUPPORT AND ADDITIONAL COVENANTS.................................... 17
6.1 SSG Support of InterTrust Technology.................................... 17
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6.2 Customer Agreements..................................................... 19
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6.3 Legends and Notices..................................................... 20
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6.4 InterTrust Trademarks................................................... 21
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6.5 SSG's Use of SSG Trademarks on Cooperative Applications and SSG Products 22
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6.6 SSG Trademarks.......................................................... 22
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ARTICLE 7. LICENSE FEES AND PAYMENT TERMS.......................................... 23
7.1 Fees and Royalties...................................................... 23
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7.2 Payment Procedure....................................................... 25
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7.3 Currency................................................................ 25
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7.4 Taxes................................................................... 25
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7.5 Interest................................................................ 25
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7.6 Audit................................................................... 26
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ARTICLE 8. PROPRIETARY INFORMATION AND OWNERSHIP................................... 26
8.1 InterTrust Ownership.................................................... 26
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8.2 SSG Ownership........................................................... 27
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8.3 Joint Ownership......................................................... 27
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8.4 SSG License to InterTrust............................................... 27
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ARTICLE 9. PROMOTION AND MARKETING................................................. 28
9.1 Joint Press Release..................................................... 28
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9.2 Promotion and Marketing................................................. 28
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9.3 Marketing Program....................................................... 28
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9.4 Technology Advisory Committee........................................... 29
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ARTICLE 10. Partnering Commitments.................................................. 29
10.1 InterTrust Partnering Commitment........................................ 29
10.2 SSG Partnering Commitment............................................... 31
10.3 Additional Provisions................................................... 31
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ARTICLE 11. CONFIDENTIALITY......................................................... 32
11.1 Classification of Technology and Documents For Confidentiality Purposes. 32
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11.2 InterTrust Information.................................................. 32
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11.3 SSG Information......................................................... 34
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11.4 Exceptions.............................................................. 34
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11.5 Confidentiality of Agreement and Publicity.............................. 35
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11.6 Confidentiality of Payments, Audit and Certification Testing............ 35
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11.7 NDA..................................................................... 35
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ARTICLE 12. REPRESENTATIONS AND WARRANTIES.......................................... 36
12.1 Representations and Warranties of Both Parties.......................... 36
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12.2 Representations and Warranties of InterTrust............................ 36
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12.3 Limitation.............................................................. 36
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ARTICLE 13. INDEMNIFICATION AND REMEDIES............................................ 37
13.1 Indemnification......................................................... 37
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13.2 Cumulative Remedies..................................................... 38
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13.3 Equitable Remedies...................................................... 38
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ARTICLE 14. EXCLUSION OF DAMAGES.................................................... 39
ARTICLE 15. TERM AND TERMINATION.................................................... 39
15.1 Agreement............................................................... 39
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15.2 Events of Termination................................................... 39
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15.3 Effect of Termination................................................... 41
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15.4 Survival................................................................ 41
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ARTICLE 16. MISCELLANEOUS........................................................... 41
16.1 Governing Law........................................................... 41
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16.2 Venue and Jurisdiction.................................................. 42
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16.3 Compliance with Law and Export Controls................................. 42
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16.4 Amendment or Modification............................................... 42
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16.5 No Assignment........................................................... 43
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16.6 Notices................................................................. 43
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16.7 Waiver.................................................................. 43
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16.7 Waiver.................................................................. 44
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16.8 No Third Party Beneficiaries............................................ 44
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16.9 No Agency............................................................... 44
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16.10 Recovery of Costs and Expenses.......................................... 44
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16.11 Severability............................................................ 44
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16.12 Counterparts; Facsimiles................................................ 44
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16.13 Force Majeure........................................................... 45
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16.14 Entire Agreement........................................................ 45
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EXHIBIT A............................................................................ A-1
EXHIBIT B............................................................................ B-1
EXHIBIT C............................................................................ C-1
EXHIBIT D............................................................................ D-1
EXHIBIT E............................................................................ E-1
EXHIBIT F............................................................................ F-1
EXHIBIT G............................................................................ G-1
EXHIBIT H............................................................................ H-1
CONFIDENTIAL
TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
THIS TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement") is made and
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entered into as of the 7th day of August, 1996 (the "Effective Date") by and
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between:
(i) INTERTRUST TECHNOLOGIES CORPORATION, formerly Electronic Publishing
Resources, Inc., a Delaware corporation ("InterTrust"), with offices
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at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on the one
hand; and
(ii) on the other hand:
(a) UPGRADE CORPORATION OF AMERICA, d/b/a SOFTBANK Services Group, a
Delaware corporation ("UCA"), with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
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▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and
(b) to the extent that it becomes a Party to this Agreement pursuant
to Section 2.1 hereof, SOFTBANK INTERNET SERVICES, INC. ("SIS"), a
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corporation to be formed by UCA from certain business units of UCA.
(individually, a "Party", and collectively, the "Parties") with reference to the
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following:
RECITALS
A. InterTrust has developed and is continuing to develop a unique, general
purpose architecture for, among other things, rights protection and event
management related to electronic commerce, such architecture including
technologies for clearinghouse, certification and other commerce
administration technologies. InterTrust's technology is designed to support
an interoperable foundation for the electronic marketplace.
B. SSG (as hereinafter defined) is engaged in the business of transactional
systems development, software distribution and related clearinghouse
services, and is interested in: (i) developing comprehensive application
and service models enabling a broad reaching digital marketplace for
electronic content; and (ii) enabling electronic value chain models
supporting cyberspace distribution of software programs and components.
C. SSG, with the assistance of InterTrust, intends to develop electronic
commerce infrastructure tools and services and such Cooperative
Applications as the Parties may mutually agree, and InterTrust intends to
grant SSG certain licenses to use and incorporate InterTrust Technology in
certain products and services as set forth herein.
D. Pursuant to a closing as set forth in Section 2.1 hereof: (i) InterTrust
will issue to UCA a warrant to purchase shares of InterTrust Class B Common
Stock in the form attached hereto in Exhibit A (the "Warrant"); and (ii)
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InterTrust and SOFTBANK Holdings, Inc.,
SSG/InterTrust Agreement _______/_______
CONFIDENTIAL
an entity that owns directly or through an Affiliate a majority interest in
UCA, will enter into a Series B Preferred Stock Purchase Agreement in the
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form attached hereto in Exhibit A (the "Stock Purchase Agreement"). This
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Agreement, together with the Warrant and Stock Purchase Agreements
(collectively the "Other Transaction Documents"), set forth the terms and
conditions with respect to the Parties' relationship contemplated
hereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree to the following terms and conditions:
ARTICLE 1. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Definitions. In addition to the other capitalized terms defined
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elsewhere in this Agreement, the following terms shall have the meanings set
forth below:
"Affiliate" of a Person means any Person that controls, is controlled
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by, or is under common control with the first Person. For purposes hereof,
"control" means the right to: (i) elect the board of directors or other
similar managing authority; or (ii) generally make or cause the making of
management decisions directly; provided, however, that an Affiliate shall
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remain an Affiliate for only so long as such control remains in effect.
"Application Products" means any software tool, template, application
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system or other software product that: (i) is developed using InterTrust
Technology and/or Modified Technology; (ii) directly contains or
incorporates InterTrust Technology solely in the form of Authorized
Application Software, and/or Modified Technology in either Object Code
and/or Source Code in accordance with the licenses granted by InterTrust to
SSG hereunder; (iii) is not enabled to permit the performance of any
Clearinghouse Functions unless InterTrust has otherwise specified in
writing; and (iv) is in Compliance with InterTrust Specifications, except
as otherwise expressly provided in Section 3.2(b) hereof. Notwithstanding
the foregoing, any software tool, template, application system or other
software product specially designed, adapted or developed in whole or in
part to exploit, implement or facilitate the implementation of the
InterTrust proprietary business concepts set forth in Section 4.2 hereof
shall not constitute Application Products, unless developed as a
Cooperative Application.
"Authorized Application Software" means such software representations
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of InterTrust Technology in Object Code and/or in Source Code (solely as
such Object Code and Source Code are identified and designated by
InterTrust on Exhibit B), that are permitted for distribution in accordance
with the applicable licenses hereunder in such form as specified on Exhibit
B, which Exhibit may be amended from time to time by InterTrust in its sole
discretion and that are incorporated in Application Products according to
the terms and conditions of this Agreement.
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CONFIDENTIAL
"Authorized Clearinghouse Provider" means any Person that is expressly
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licensed by InterTrust to engage in specified Clearinghouse Function
activities and services, but only to the extent: (i) of the scope of such
license; and (ii) that such license is valid and in force.
"Authorized Clearinghouse Software" means such software
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representations of InterTrust Technology solely in Object Code form (and
solely as such Object Code is identified and designated by InterTrust on
Exhibit B, which Exhibit may be amended from time to time by InterTrust in
its sole discretion), that are permitted for distribution as incorporated
in Clearinghouse Products, in accordance with the applicable licenses
hereunder.
"Clearinghouse Function(s)" means any one or more activities, as well
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as services resulting therefrom, that use any InterTrust Technology and/or
Modified Technology, or use information derived at least in part from use
of such technology, to: (i) enable payment fulfillment or provision of
other consideration (including service fees, product fees or any other fees
and/or charges) based at least in part on a Control Use; (ii) perform
audit, billing, payment fulfillment (or provision of other consideration)
and/or other clearing activities involving more than one Person; and/or
(iii) compile, aggregate, use and/or provide information relating to more
than one Person's use of one or more Secure Containers and/or Content,
including Contents of Secure Containers or any other Content Managed at
least in part using any InterTrust Technology and/or Modified Technology.
Clearinghouse Functions shall include, for example: (a) financial clearing;
(b) providing object registry services and rights, permissions, prices,
and/or other Rules and Controls information for registered objects; (c)
electronically certifying information used with or required by Rules and
Controls, such as authenticating identity, class membership or other
attributes of identity context; (d) providing information based upon usage
auditing, user profiling, and/or market surveying related to more than one
Person's use of one or more Secure Containers and/or Content; and (e)
employing information derived from user exposure to Content, such as
advertising.
"Clearinghouse Products" means any software tool, template,
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application system or other software product that: (i) is developed using
InterTrust Technology and/or Modified Technology; (ii) directly contains or
incorporates InterTrust Technology solely in the form of Authorized
Clearinghouse Software, and/or Modified Technology only in Object Code, in
accordance with the licenses granted by InterTrust to SSG hereunder; (ii)
is enabled to permit the performance of any Clearinghouse Function; and
(iii) is in Compliance with InterTrust Specifications, except as otherwise
expressly provided in Section 3.2(b) hereof.
"Compliance" or "Compliant" means fully consistent with and fully
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conforming to all applicable portions of: (i) the most current version of
the InterTrust Specifications (as defined in Section 6.1(b) hereof)
existing on the date of SSG's first commercial use, distribution, sale or
other transfer of any applicable SSG Product, Cooperative Application or
first use thereof in connection with any service associated therewith, as
the case may be; and thereafter (ii) the most current InterTrust
Specifications in accordance with Section 6.1(b) hereof, as applied to any
such SSG Product, Cooperative Application or service associated therewith.
A SSG Product, Cooperative Application or any service
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CONFIDENTIAL
associated therewith that has not passed any required certification tests
as set forth in Section 6.1 hereof shall be deemed non-Compliant with
InterTrust Specifications.
"Content(s)" means any analog or digital information representing, for
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example, text, graphics, animation, video, digital linear motion pictures,
sound and sound recordings, still images, computer programs or executable
or interpretable components, and data. Content shall include, for example,
any electronic representation of: (i) Rules and Controls; and (ii)
electronic information derived from the Management of Content.
"Content Transaction" means any event or combination of events: (i)
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Managed, in whole or in part, through the use of any InterTrust Technology
and/or Modified Technology; and (ii) in connection with which compensation
(or other consideration) is due or payable to SSG and/or any other one or
more Persons, at least in part, for any (a) sale, rental, lease, license,
vending and/or other comparable provision of one or more rights related to
Content, or (b) use of, including any interaction with, Content (such as
access to Content, including production of modified Content).
"Control Use" means any use of InterTrust Technology and/or Modified
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Technology to Manage Content including initiating and/or otherwise
governing any consequence (electronic, physical or otherwise) related to
the use and/or processing of Content and/or provision of goods or services
conveyed by or associated with such Content. Control Use shall include, for
example: (i) metering, auditing, charging, and/or billing, for access to or
any other interaction with any Content; and/or (ii) administering permitted
and/or prohibited uses of Content.
"Cooperative Application(s)" means any Application Product and/or
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Clearinghouse Product that is: (i) developed pursuant to an applicable
Cooperative Application Project Plan in accordance with Section 4.1 hereof;
and (ii) marketed solely under any SSG Trademarks (except where use of
InterTrust Trademarks is also required hereunder, or other trademarks of
Persons are included in a secondary manner to identify technology or
services associated therewith), all in accordance with Section 6.5 and
other provisions hereof. Examples of possible Cooperative Applications
include those applications proprietary to InterTrust and described in
Section 4.2 hereof.
"Core Partner" means any Person (other than a Party) with whom
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InterTrust may directly enter into any agreement or set of agreements as
permitted hereunder, pursuant to which InterTrust directly: (i) provides
early access to InterTrust Technology prior to InterTrust's first
commercial release thereof to the general public; (ii) may undertake one or
more cooperative application projects of a substantially comparable nature
as set forth in Article 3 hereof; and (iii) grants a general purpose
license to use InterTrust Technology and to perform, and sublicense others
to perform, Clearinghouse Functions of a substantially comparable scope as
granted in Sections 5.1(b) and 5.2 hereof.
"Core Technology" means those components of InterTrust Technology
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described by InterTrust on Exhibit B hereto as core technologies of such
InterTrust Technology, as such Exhibit may be amended from time to time by
InterTrust in its sole discretion.
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CONFIDENTIAL
"Customer" means any Person that receives or acquires a SSG Product or
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Cooperative Application from SSG (as provided hereunder) with a present
intention: (i) to use such application or product privately as an end-user,
or further distribute such application or product, without modification, to
an end-user or one or more other Persons for distribution, without
modification, to an end-user; or (ii) to use such product or application
solely to (a) incorporate Authorized Application Software into Customer's
software products to provide a Rights User Node or (b) develop and
incorporate software components that initiate interface and operation with
a Rights User Node provided by InterTrust Commerce Technology, each of
which software components and Rights User Node is Compliant with InterTrust
Specifications. Customer shall not include any Person who has a present
intention to perform any Clearinghouse Function, unless such Person is an
Authorized Clearinghouse Provider.
"Distributable Documentation" means such portions of the Documentation
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that InterTrust has specifically and in writing identified on Exhibit B as
being suitable for general distribution by SSG to Customers, as such
portions of the Documentation may from time to time be cataloged by
InterTrust and provided to SSG in its discretion, wherein such
specification of such authorized documents and the content thereof may be
modified by InterTrust through amendment of the Distributable Documentation
identified and described on Exhibit B, in accordance with this Agreement.
"Documentation" means certain English language versions of
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documentation and/or instructions as specifically designated by InterTrust
that may assist SSG and/or its Customers in the use of InterTrust
Technology and that InterTrust may from time to time provide with the
InterTrust Technology (including any Distributable Documentation) and as
initially identified in Exhibit B hereto, wherein such documents and the
content thereof may be modified by InterTrust in its discretion through
amendment of the Documentation identified and described on Exhibit B, in
accordance with this Agreement.
"Gross Commercial Value" means all sums of money, and/or the fair
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market value of any other consideration, charged or provided in connection
with any Content Transaction, and/or in connection with performing any
other activity within the Clearinghouse Functions. Such consideration shall
include consideration based upon Management of Content or information
derived at least in part therefrom, including, for example, consideration:
(i) paid by a user as a consequence of, for example, user exposure to, or
other interaction with, Content; (ii) paid by a user as a consequence of
the acquisition of one or more rights related to Content; or (iii) paid by
a proxy or subsidizing payer (such as an advertiser) based upon user
exposure to Content, where, for example, after (due to or based on) receipt
of information about user exposure to Content, such advertiser pays
consideration based at least in part on value resulting from such exposure.
Notwithstanding the foregoing, Gross Commercial Value shall not include any
sales, use, value-added or other taxes (except withholding taxes) imposed
by any national, state, local or foreign government and paid by SSG as a
consequence of clearing a Content Transaction and/or as a consequence of
performing any other activities within the Clearinghouse Functions.
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CONFIDENTIAL
"Intellectual Property Rights" means all patent rights, copyrights,
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trademarks, trade secret rights, and other proprietary rights in any
jurisdiction, and all applications and registrations therefor.
"InterTrust (TM) Commerce Technology" means certain InterTrust
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technology directly relating to distributed rights management, electronic
content administration and/or distributed electronic commerce automation
and process control systems and methods, including, without limitation, the
InterTrust products described in Exhibit B hereto.
"InterTrust Specifications" means the InterTrust Technology
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specifications, as established or modified by InterTrust in its sole
discretion and in accordance with Section 6.1(b) hereof, that are provided
to SSG and that are applicable to licensees or Core Partners of InterTrust
Technology, as relevant. Such InterTrust Specifications may include: (i)
required design criteria for products and services employing InterTrust
Technology and/or Modified Technology, including, for example, product and
related criteria for ensuring the architectural and functional integrity,
standardization, security capability, and interoperability of InterTrust-
based technology, components, products and services (such as, for example,
criteria for electronic environments employing InterTrust Commerce
Technology for rights and/or other event related process management); (ii)
procedures and requirements for installation, initialization, backup,
restore and security updates; and (iii) required certification tests and
procedures to verify Compliance of SSG Products, Cooperative Applications
and related services with such InterTrust Specifications.
"InterTrust Technology" means technology developed by and/or for
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InterTrust and directly related to electronic rights and/or event
management, including the commercial administration thereof, and supplied
by InterTrust to SSG as set forth in this Agreement. Such technology shall
include InterTrust Commerce Technology and DigiBox Technology contained in
the SDK, TDK and CDK products and Documentation as referenced in Exhibit B
hereto (as such Exhibit may be modified by InterTrust in its sole
discretion from time to time to accommodate, for example, any updates and
upgrade releases, and product reconfigurations made available pursuant to
Sections 3.1 and 3.2 hereof); provided that any technology not described on
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Exhibit B hereto as of the Effective Date shall become InterTrust
Technology hereunder only if and to the extent such technology is supplied
to SSG in the manner set forth in Section 3.2(b).
"InterTrust Trademarks" means InterTrust's names, logos and other
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marks as listed on Exhibit C hereto, as such Exhibit may be modified by
InterTrust from time to time pursuant to Section 6.4(a) hereof.
"Licensed Rights" means all of InterTrust's worldwide Intellectual
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Property Rights (other than trademark rights) in and to the InterTrust
Technology, the Modified Technology and/or the Cooperative Applications,
that InterTrust (during the term of this Agreement) owns or has the right
to grant licenses of the scope granted herein without the agreement of, or
requirement for payment (or the granting of other consideration) to, any
Person.
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CONFIDENTIAL
"Manage or Management" means any form of governance, regulation,
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management and/or control, in any way and by any means, of, as applicable
in the context in which reference is made herein: (i) rights, processes
and/or obligations related to or associated with use of (including access
to, transport of, and/or storage of) Content, including Content related
disposition and/or consequences thereof; and/or (ii) events or event
processes related or associated in any manner to the use of (including
access to), attempted use of, and/or disposition of, Content and/or events,
including any consequences thereof.
"Material Defects" means defects or bugs in the InterTrust products
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incorporating InterTrust Technology (as defined in Exhibit B hereto) and as
delivered by InterTrust to SSG, wherein such defects or bugs cause one or
more such InterTrust products to fail to perform: (i) materially in
conformance with the capabilities ascribed to such products in the
applicable portions of InterTrust Specifications; and (ii) in a
commercially reasonable manner in accordance with reasonable software
industry practices relating to such capabilities. Material Defects shall
not include any defects or bugs introduced as a result of any modification
of (or to) the InterTrust Technology by SSG or any Person.
"Modified Technology" means all modifications of, and enhancements
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and/or additions to, the InterTrust Technology, created by (or for, as
provided hereunder) SSG, including without limitation all derivative works
of the InterTrust Technology (or other Modified Technology) as such term is
defined in the U.S. Copyright Act (17 U.S.C. ' 101 et seq., as amended),
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but only to the extent that such modifications, enhancements, additions
and/or derivative works are permitted under Article 5 and elsewhere in this
Agreement. Modified Technology shall not include any modifications,
enhancements, additions and/or derivative works of InterTrust Technology
(or of other Modified Technology) whatsoever, made by or for SSG or any
Person that fall outside the scope of this Agreement.
"Object Code" shall mean the computer executable binary code derived
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from compiled Source Code for execution on a computing system.
"Person" means any individual, corporation, limited liability company,
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partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, government body or agency, or other entity.
"Rights User Node" means a client installation that supports
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Management of Content.
"Rules and Controls" means any information that describes, and/or
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provides means for performing, permitted and/or required operations related
to Content, including restricting the performance of operations, such as,
for example, Management of such Content.
"Secure Containers" means electronic containers that: (i) employ
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cryptographic techniques to provide protection for Content; and (ii)
support the use of Rules and Controls to Manage Content.
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CONFIDENTIAL
"Source Code" means a human-readable, non-executable set of
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instructions for a computer program, from which it may be possible,
together with related source materials and documentation, to discern the
logic, algorithms, internal structure, and operating feature design
characteristics of such computer program.
"SDK 1.0" or "Systems Developer's Kit 1.0" or means certain software
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tools and applications described in Exhibit B hereto (as such Exhibit may
be modified from time to time by InterTrust in its discretion) that
incorporate InterTrust Technology, as provided by InterTrust to SSG in
accordance with this Agreement.
"SSG" means individually or collectively, as applicable in the context
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in which such reference is made: (i) Upgrade Corporation of America; and
(ii) SOFTBANK Internet Services, Inc., a corporation to be formed from
certain business units of Upgrade Corporation of America, to the extent
that SOFTBANK Internet Services, Inc. is joined as a Party pursuant to
Section 2.2 hereof.
"SSG Product(s)" means any Application Product(s) and/or Clearinghouse
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Product(s) (other than Cooperative Application(s)) that: (i) is developed
by or for SSG as permitted hereunder; and (ii) is branded and marketed
solely under the SSG Trademarks (except where use of InterTrust Trademarks
is also required herein, or other trademarks of Persons are also included
in a secondary manner to identify technology or services associated
therewith) and as stipulated in Section 6.5 and other provisions hereof.
"SSG Trademarks" means any names, logos and other marks owned or
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licensed for use exclusively by SSG or SOFTBANK Holdings, Inc. (hereinafter
"SOFTBANK"), that may be used as stipulated hereunder in connection with,
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and are limited in use to representing exclusively, the SSG Products,
services permitted hereunder, and/or identities of such companies and over
which SSG or SOFTBANK exercise exclusive control with respect to the
commercial use thereof. Such SSG or SOFTBANK Trademarks are listed on
Exhibit C hereto, as such Exhibit C may be modified by SSG from time to
time pursuant to Section 6.6 hereof.
1.2 Rules of Construction. As used in this Agreement, all terms used in
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the singular shall be deemed to include the plural, and vice versa, as the
context may require. The words hereof, herein and hereunder refer to this
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Agreement as a whole, including any exhibits hereto, as the same may from time
to time be amended or supplemented and not to any subdivision contained in this
Agreement. When used herein, including shall mean including, without
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limitation; discretion shall mean sole discretion; and InterTrust shall mean
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InterTrust and any lawful successor thereto. References herein to section
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and/or exhibit shall be to the applicable section and/or exhibit in this
Agreement, as such exhibit may be modified from time to time pursuant to the
terms of this Agreement. Descriptive headings are inserted for convenience only,
and shall not be utilized in interpreting this Agreement. This Agreement has
been negotiated by the Parties and their respective counsel and shall be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against either Party. References to specific forms of technology
representations such as electronic, digital, or analog shall include all future
successors and replacement forms of representations whether or not currently
contemplated, invented or conceived.
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CONFIDENTIAL
ARTICLE 2. AGREEMENT AND PARTY STATUS.
2.1 Nature and Effect of Closing
(a) Closing. As partial consideration for InterTrust's execution of
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this Agreement, UCA and SOFTBANK Holdings, Inc. hereby irrevocably commit
to execute the Other Transaction Documents relevant to it and make such
payments contemplated thereby, and consummate a closing, on or before
August 19, 1996 (the "Closing"), at the Washington D.C. offices of ▇▇▇▇▇▇▇▇
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& ▇▇▇▇▇▇▇▇, or at such other place as to which both Parties agree. At or
before such Closing, SOFTBANK shall: (i) execute and deliver the Stock
Purchase Agreement to InterTrust; (ii) pay to InterTrust by wire transfer
such sums as set forth in Schedule A of the Stock Purchase Agreement; and
(iii) consummate the transactions contemplated by the Stock Purchase
Agreement. In the event UCA and SOFTBANK fully comply with the terms of
this Section 2.1(a) and other terms of this Agreement, at the Closing
InterTrust shall: (i) execute and deliver the Stock Purchase Agreement to
SOFTBANK; and (ii) execute and issue the Warrant to UCA. UCA acknowledges
and agrees that to the extent the Closing fails to occur as the result of
UCA and/or SOFTBANK's failure to comply with this Section 2.1(a) or other
terms of this Agreement, as applicable, InterTrust shall have the right,
exercisable in its discretion, to terminate this Agreement pursuant to
Section 15.2(a) hereof without refund to SOFTBANK of any kind, in addition
to any and all remedies available to InterTrust at law or in equity. UCA
hereby irrevocably waives any right to contest or challenge, and covenants
not to contest or challenge, InterTrust's exercise of such right of
termination.
(b) Effect of Rights and Obligations. During the period from the date
--------------------------------
of execution hereof until the later of the Closing or termination of this
Agreement, the rights and obligations of the parties under Sections 5.4,
7.1(a)(i)(1), 7.4, 8.1, 8.2 and 8.3, and Articles 1, 10, 11, 12, 13, 14, 15 and
16 hereof shall be effective, and no other provisions of this Agreement shall
take effect. Upon the Closing and thereafter during the term of this Agreement,
all provisions of this Agreement shall be effective.
(c) Representation and Warranty. In addition to the representations
---------------------------
and warranties set forth in Section 12, as applicable, UCA and SOFTBANK jointly
and severally represent and warrant to InterTrust that (and InterTrust has
relied upon such representation and warranty that) the delay experienced in
closing the Stock Purchase Agreement was occasioned by Japanese government
regulatory processes for the export of funds from SOFTBANK Japan to SOFTBANK,
such funds being necessary for SOFTBANK to provide the payments due under this
Agreement and the Stock Purchase Agreement.
2.2 Addition of SOFTBANK Internet Services. UCA currently intends to form
--------------------------------------
SIS from certain business units of UCA. SIS will focus on developing certain
electronic commerce transaction and related technology utilizing the InterTrust
Technology. To the extent that SIS is formed and incorporated on or before
December 31, 1996 and qualifies as an Affiliate of SOFTBANK with substantially
similar equity ownership structure as UCA, within thirty (30) days of such
formation and incorporation, SIS may automatically become a Party to this
Agreement upon: (i) the execution of the Signature Page, attached hereto as
Exhibit D, by SIS; and (ii) the receipt of the original of such Signature Page
by InterTrust.
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2.3 Joint and Several Obligations. By executing the Signature Page, SIS
-----------------------------
shall be bound by all the terms and conditions thereof applicable to UCA, from
the date such terms and conditions took effect with respect to UCA. By executing
this Agreement and approving SIS' addition as a Party, UCA and SIS, further
acknowledge and agree that: (i) each of UCA and SIS is jointly and severally
liable and responsible to InterTrust for the obligations of SSG under this
Agreement; and (ii) InterTrust's performance of its obligations under this
Agreement with respect to, or for the benefit of, either UCA or SIS shall fully
discharge its obligations to the other (and to SSG).
ARTICLE 3. TECHNOLOGY ACCESS AND SUPPORT.
3.1 Pre-Release Technology Review and Assistance. To expose SSG to, and
--------------------------------------------
demonstrate the status and functionality of, the SDK 1.0 and certain other
InterTrust Technology described in Exhibit B hereto, prior to the delivery to
SSG of SDK 1.0 for beta testing, InterTrust personnel will conduct technical
meetings with SSG personnel from time to time as mutually convenient to both
Parties (as is consistent with InterTrust's Assistance and support obligations
described in Section 3.3 hereof and taking into consideration the need to avoid
adversely affecting InterTrust's development efforts). Such technical meetings
will include presentations on technical strategies and reviews of the progress
of InterTrust's development effort, and afford SSG the opportunity to review and
comment upon, as appropriate SDK 1.0 design documents, schematics and
architectural models, working samples, prototypes and code (such meetings
between the Parties shall constitute Assistance, as defined in Section 3.3(a)
hereof, after thirty (30) man-hours have been expended by InterTrust personnel
therefor). The Parties expect, in addition, to meet periodically during such
same time period, as may be mutually agreed, to discuss and plan product
deployment and marketing strategies and activities; provided, however, that any
-------- ------- ----
time expended in these activities shall not constitute Assistance.
3.2 Technology Access.
-----------------
(a) Delivery of InterTrust Technology. Subject to the terms of this
---------------------------------
Agreement, InterTrust shall make available to SSG such InterTrust Technology as
set forth on Exhibit B hereto (as such Exhibit may be amended by InterTrust from
time to time pursuant to this Agreement). Such InterTrust Technology may employ
or may operate with one or more technologies that may not be proprietary to
InterTrust but are included within the Licensed Rights as specified by
InterTrust, in its sole discretion, on Exhibit B (the "InterTrust Technology
---------------------
Products"). InterTrust Technology as made available hereunder will contain the
--------
SDK 1.0, with the functionality ascribed thereto, as set forth on Exhibit B.
InterTrust's initial estimated schedule for the InterTrust Technology Products
is set forth on Exhibit B and SSG recognizes that such schedule may change in
the future. SSG acknowledges and agrees that Clearinghouse Prototype Components
and Sample Applications (as each are defined in Exhibit B) that may be provided
to SSG as part of InterTrust Technology are not designed, intended or warranted
by InterTrust in any manner for commercial use. For a period of [*] ([*]) years
after the Effective Date and pursuant to the terms and conditions of this
Agreement, InterTrust will make available to SSG all update and upgrade releases
as well as product reconfigurations and modifications to the InterTrust
Technology that InterTrust develops from time to time and makes generally
available to its Core Partners and shall, with respect to such update and
upgrade releases, product
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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reconfigurations and modifications [*]; provided that SSG shall be entitled to
-------- ----
such [*] as set forth in this Section 3.2(a) or elsewhere herein, only where
SSG, SOFTBANK, and any SOFTBANK Affiliate: (i) to the extent SSG, SOFTBANK, or
any SOFTBANK Affiliate perform any transaction clearing services, perform such
clearing services primarily for transactions related to and/or derived from use
of SSG Products or otherwise as set forth in Section 5.1(b); and (ii) refrain
from (a) developing, promoting, or acquiring any technology directly competitive
with InterTrust Special Advanced Technologies (as defined in Exhibit F hereto)
or InterTrust Secure Container technology (the "Competitive Technology"); and
----------------------
(b) licensing Competitive Technology, other than as necessary for SSG clearing
transactions as limited under subparagraph (i) above.
(b) Provision of Additional Technology and Documentation. Before
----------------------------------------------------
providing SSG with any technology or documentation other than the InterTrust
Technology and Documentation set forth on Exhibit B hereto as of the Effective
Date ("Additional InterTrust Technology/Documentation"), InterTrust shall
----------------------------------------------
provide SSG with notice of its intent to deliver such technology and/or
documentation, along with a summary description of the Additional InterTrust
Technology/Documentation. Provided that such Additional InterTrust
Technology/Documentation is not related to security and/or interoperability
aspects of InterTrust Technology, within ten (10) days thereafter, SSG may, at
its discretion, notify InterTrust that it does not wish to receive such
Additional InterTrust Technology/Documentation. Any decision by SSG to receive
or decline to receive Additional InterTrust Technology/Documentation shall have
no effect on any of SSG's obligations hereunder (including, but not limited to,
Sections 5.3 and 6.1) and no licenses of any kind under any of InterTrust's
Intellectual Property Rights shall be granted or deemed to have been granted
(expressly or by implication) with respect to any use of declined Additional
Technology/Documentation. To the extent that SSG declines to receive any
Additional InterTrust Technology/Documentation, every portion of any SSG product
(and any directly related services permitted hereunder) not at the time
immediately preceeding the effective date of InterTrust Specifications
applicable to such declined Additional Technology/Documentation, but containing
any technology relating to declined Additional Technology/Documentation, shall
be, thereafter, in accordance with the procedures of Section 6.1(b): (i) be
Compliant with all applicable InterTrust Security Related Specifications (as
defined immediately below) and InterTrust Specifications for the Special
Advanced Capabilities; and (ii) be Interoperable (as defined immediately below)
with all products Compliant with InterTrust Specifications. "Security Related
----------------
Specifications" means the InterTrust Specifications and all subsequent versions
--------------
thereof related to: (a) trusted systems techniques and technologies, interfaces,
and/or processes (such as, for example, security kernel structures, reference
monitor functions and structures, internal software protection structures and/or
any aspect having the potential to compromise the protection, secrecy, and/or
integrity of different InterTrust installations or DigiBox Secure Containers
created, processed, and/or used by different InterTrust installations); (b)
other security aspects of the InterTrust Technology, including cryptographic
algorithms, secure communications protocols, secure objects and/or data
structures, and/or interfaces related to any of the foregoing; and (c) ensuring
that trusted and/or other secure functions of the InterTrust Technology are
Interoperable in different installations and/or operating contexts.
"Interoperable" means producing materially identical output or results based on
--------------
identical events or input.
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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3.3 Training, Assistance and Technical Support. Subject to the terms of
------------------------------------------
this Agreement, InterTrust agrees to provide the following training, assistance
and technical support to SSG for a period of thirty-six (36) months from the
Effective Date (the "Support Period"):
--------------
(a) Training and Assistance. In order to assist SSG in its evaluation
-----------------------
and/or use of InterTrust Technology products, the InterTrust Dedicated
Personnel (as defined in Section 3.3(d)) shall provide to SSG account
management, at no further cost to SSG and subject to applicable terms and
conditions of this Agreement, training, consulting, relationship
assistance, project management, and other assistance directly related
thereto ("Assistance") [*]. Such Dedicated Personnel shall provide up to
----------
two thousand (2,000) hours per annum of such Assistance, as described in
Section 3.3(d) hereof, so long as SSG is entitled to favorable treatment
under this Article 3. InterTrust shall further provide, as may be requested
by SSG, up to one hundred (100) hours of Assistance by persons other than
the Dedicated Personnel for general training and support purposes. All such
Assistance will be measured based upon InterTrust's man-hours expended
(excluding time expended to travel or perform administrative tasks related
to the relationship), and shall be subject to reasonable agreement between
the Parties on scheduling, availability of resources and related matters.
As appropriate, such Assistance may include certain training sessions to
which certain other InterTrust licensees (in addition to SSG) may be
invited to attend. In such an event, InterTrust will notify SSG in advance
of such other participants. SSG shall be responsible for all expenses
incurred by SSG's personnel in traveling to and attending any training and
support meetings. In the event InterTrust's personnel travel from
InterTrust's facilities (upon InterTrust's and SSG's mutual agreement), SSG
shall reimburse InterTrust for all actual and reasonable travel, living and
out-of-pocket expenses incurred by InterTrust's personnel based on SSG's
standard policies and procedures for reimbursement of its independent
contractors and its own employees.
(b) Correction of Material Defects. In addition to InterTrust's own
------------------------------
ongoing quality assurance efforts, InterTrust shall use reasonable prompt
efforts in accordance with reasonable U.S. software industry practices, at
InterTrust's expense and subject to InterTrust's standard support policies
as relevant, to correct Material Defects, or otherwise reasonably adjust
InterTrust Technology to mitigate Material Defects, identified by SSG to
InterTrust in a writing describing the alleged Material Defects in detail.
InterTrust shall have no obligation to: (i) investigate or correct any
Material Defects at any site other than an InterTrust facility, except that
InterTrust will visit SSG's facilities as may be required in the reasonable
judgment of both InterTrust and SSG to investigate Material Defects that
severely and critically degrade operation of InterTrust Technology and
cannot otherwise be diagnosed by SSG; (ii) communicate on the subject of
Material Defects with any Person other than SSG; or (iii) correct any
Material Defects that have been properly identified by SSG but that cannot
be reliably reproduced. Notwithstanding the foregoing, SSG shall reimburse
InterTrust for all actual and reasonable travel, living and out-of-pocket
expenses incurred by InterTrust's personnel (based on SSG's standard
policies and procedures for reimbursement of its independent contractors
and its own employees) for any site visit referenced in this Section 3.3(b)
after the second such site visit per calendar year.
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(c) Status Meetings. To assist the Parties in sharing information,
---------------
and coordinating and evaluating their efforts relating to InterTrust
Technology and their mutual technical and business objectives, following
the Effective Date the Parties shall meet from time to time to discuss,
among other things: (i) InterTrust's progress in development of the
InterTrust Technology; (ii) implementation of such technology by SSG; (iii)
feedback concerning Assistance provided to SSG and product development and
marketing progress by SSG; and (iv) other issues concerning the Parties'
mutual technical and business objectives (the "Status Meetings"). Such
---------------
Status Meetings shall: (1) be attended at a minimum by each Party's
Relationship Manager and Technical Project Manager (as defined in Section
3.3(d)); and (2) take place not less frequently than once every two (2)
months until January 1, 1998, and, thereafter, as may be agreed by the
Parties.
(d) Dedicated Personnel. InterTrust and SSG will each appoint a
-------------------
relationship manager, to coordinate its activities pursuant to this Section
3.3 and Article 4 ("Relationship Manager"), and a technical project
--------------------
manager, to coordinate and provide the Assistance set forth in Section
3.3(a) and 3.3(b), 3.3(b) ("Technical Project Manager") (collectively, the
-------------------------
"Dedicated Personnel"). Not less than one-half (1/2) of such InterTrust
-------------------
Relationship Manager's and such InterTrust Technical Project Manager's
working time shall be devoted exclusively to providing services and
Assistance for SSG as set forth herein, if reasonably required by the
circumstances or reasonably requested by SSG, so long as SSG is entitled to
most favored treatment under Section 3.2(b) hereof.
3.4 Additional Assistance. During the Support Period, additional
---------------------
Assistance may be made available by InterTrust to SSG beyond the one hundred
(100) hours allocated under Section 3.3(a) hereunder. To the extent SSG
requests, and InterTrust decides (in the exercise of its sole discretion) to
provide, such additional Assistance, and SSG continues to be entitled to most
favored treatment under Section 3.2(b) hereof, SSG shall pay to InterTrust [*].
After the Support Period, any further support or Assistance desired by SSG shall
be subject to InterTrust's standard support policies and support packages, and
any fees charged to SSG in this regard shall be [*]. To the extent InterTrust
requires all of its Core Partners or customers who have license rights and
obligations comparable to SSG, as may be applicable, to maintain a basic level
of support, SSG shall maintain such basic support policy in the same manner as
is generally provided by InterTrust Core Partners or customers.
ARTICLE 4. COOPERATIVE PROJECTS AND APPLICATIONS.
4.1 Cooperative Projects. From time to time during the term of this
--------------------
Agreement, the Parties may discuss the terms and conditions under which they may
cooperate with respect to Cooperative Applications, including discussing the
types of projects and formulating the terms of a project plan (a "Cooperative
-----------
Application Project Plan"), which, upon agreement of the Parties, shall be
------------------------
attached as an Exhibit hereto. The Parties shall negotiate reasonably in an
attempt to agree on the terms and conditions upon which they may cooperate with
respect to one or more Cooperative Applications (which may include the
applications set forth in Section 4.2 below), but agreement to such terms and
conditions shall be in the reasonable discretion of each Party, and any failure
to agree shall not constitute a breach of this Agreement. The Parties' intent
with
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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respect to information to be contained within a Cooperative Application Project
Plan is described in Exhibit E hereto, as may be amended from time to time upon
the mutual agreement of the Parties (each in the exercise of its sole
discretion). Exhibit E further includes other information appropriate to
represent any agreement between the Parties related to any such project plan.
The provisions of this Agreement shall govern the Parties' actions in
implementing any Cooperative Application Project Plan to which the Parties
agree, except to the extent that such provisions herein are inconsistent with
explicit provisions of that specific Cooperative Application Project Plan, in
which event the provision of such Cooperative Application Project Plan shall
govern. A breach of a Cooperative Application Project Plan, other than those
terms relating to Intellectual Property Rights, ownership or licenses thereof
granted by InterTrust, shall not constitute a material breach of this Agreement,
unless expressly stipulated to the contrary in such Cooperative Application
Project Plan.
4.2 Potential Cooperative Applications. The Parties have, to date, had
----------------------------------
preliminary discussions concerning two potential Cooperative Applications:
(i) an information delivery model, tentatively denominated
"Electronic Express(TM)," supporting security for, and the auditing, validation,
and/or authentication of electronically delivered information (e.g., contracts
or other documents, multimedia, video transmissions, etc.), and further
including (a) a third party service provider that receives and/or can access
information that may be used to identify or validate at least a portion of the
delivered information for the purpose of verifying or reconstructing (in whole
or in part) facts relating to delivery of the information (e.g., the
transmitting party, transmitted content, and/or the receipt, identity and/or use
by the intended recipient of transmitted content) and/or (b) the distribution of
content in software containers to recipients employing secure, interoperable,
auditing and control means that make accessible to sending and/or receiving
parties explicit event validation and/or one or more facts for potential
identification purposes, wherein: (1) such containers have specified Rules and
Controls that manage use of the content and (2) one or more potential uses of
the content are controlled, at least in part, by one or more Rules and Controls
specified by a sending party; and
(ii) an application, tentatively denominated "Publish America(TM),"
that enables individual users and organizations to become cyberspace publishers
through the packaging of digital content in Secure Containers utilizing one or
more material portions of any Special Advanced Technologies.
ARTICLE 5. LICENSES AND RESTRICTIONS.
5.1 License Grant to SSG.
--------------------
(a) Licenses to InterTrust Technology and Modified Technology.
---------------------------------------------------------
Subject to the terms and conditions of this Agreement, InterTrust grants to
SSG during the term of this Agreement a limited, nonexclusive,
nontransferable (except as expressly provided in Section 5.2) worldwide
right and license under the Licensed Rights to:
(i) use and reproduce the InterTrust Technology solely for the
purpose of (a) designing, making, developing, producing and using SSG
Products and/or
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Cooperative Applications that are in Compliance with the InterTrust
Specifications; and (b) exercising the rights granted under Sections
5.1(a)(ii), 5.1(a)(iii), 5.1(a)(iv), and 5.1(b) hereof;
(ii) modify, enhance and create derivative works of the
InterTrust Technology, except the Core Technology, to create the
Modified Technology and use such Modified Technology solely for the
purpose of enabling incorporation of InterTrust Technology into SSG
Products and/or Cooperative Applications that are in Compliance with
InterTrust Specifications;
(iii) distribute, offer for sale, sell, license, import and/or
otherwise transfer SSG Products and Cooperative Applications that are
Application Products, and Distributable Documentation, to SSG's
Customers pursuant to a Customer Agreement in accordance with, and as
defined in, Section 6.2 hereof; and
(iv) distribute, offer for sale, sell, license, import and/or
otherwise transfer SSG Products and Cooperative Applications that are
Clearinghouse Products, solely to Authorized Clearinghouse Providers
under Section 5.2(b) pursuant to a Customer Agreement specific to such
Authorized Clearinghouse Providers, supplied in accordance with, and
as defined in, Section 6.2 hereof.
(b) License to Perform Clearinghouse Functions. Subject to the terms
------------------------------------------
and conditions of this Agreement, InterTrust grants to SSG during the term
of this Agreement a limited, nonexclusive (except as expressly provided in
Section 10.1), nontransferable (except as expressly provided in Section
5.2), worldwide right and license under the Licensed Rights to perform
Clearinghouse Functions solely under the SSG Trademarks, and solely in
cases in which SSG performs and controls such Clearinghouse Functions in
Compliance with InterTrust Specifications. Such Clearinghouse Functions may
be performed solely: (i) to service Rights User Nodes, each such node
having been provided by (1) an SSG Product and/or Cooperative Application,
and solely in connection with such SSG Product and/or Cooperative
Application, or (2) such Compliant products for which InterTrust has
expressly granted a license to have Authorized Clearinghouse Providers
service Rights User Nodes thereof, and/or (ii) pursuant to a sublicense
from an Authorized Clearinghouse Provider having an express, written
license from InterTrust allowing such Authorized Clearinghouse Provider to
enter into such sublicense.
(c) License to InterTrust Trademarks. Subject to the terms and
--------------------------------
conditions of this Agreement, InterTrust grants to SSG during the term of
this Agreement a limited, nonexclusive, nontransferable, worldwide license
to use and display the InterTrust Trademarks solely: (i) on SSG Products,
Cooperative Applications, and with respect to associated services to
indicate that such products, applications and services are in Compliance
with InterTrust Specifications; (ii) on related Distributable Documentation
and marketing materials to identify that InterTrust Technology is being
utilized by SSG; and (iii) as set forth herein or otherwise reasonably
stipulated in writing by InterTrust. InterTrust shall have the right to
approve all uses of InterTrust Trademarks, including use thereof on SSG
Products and Cooperative Applications, in connection with services
(including performance of Clearinghouse Functions) provided by SSG relating
to
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products and applications employing InterTrust Technology and/or Modified
Technology, and in related documentation and marketing materials.
5.2 Sublicense Rights. In accordance with the terms of this Section 5.2,
-----------------
SSG may enter into sublicense agreements pursuant to which SSG may authorize
certain other entities to perform portions of the actions licensed to SSG under
Sections 5.1(a) and 5.1(b) hereof. Sublicense agreements relating to SSG's
rights under: (i) Sections 5.1(a)(i), 5.1(a)(ii), 5.1(a)(iii) and 5.1(a)(iv)
shall be governed by Section 5.2(a), below; and (ii) Section 5.1(b) shall be
governed by Section 5.2(b), below. All sublicensees must enter into a written
sublicense agreement with SSG, the form and content of which agreement (or
agreements, as appropriate) are fully consistent with the provisions of this
Section 5.2 and have been previously approved by InterTrust in writing (such
approval not to be withheld unless such form agreements do not reasonably
protect InterTrust's rights as set forth in this Agreement or its Intellectual
Property Rights). Upon approval, each sublicense form shall be attached as an
Exhibit hereto and may be used by SSG as appropriate under the circumstances,
unless and until InterTrust reasonably requires that one or more approved
sublicense forms be modified, to accommodate, for example, modified provisions
or additional provisions reasonable under the circumstances. Such sublicense
form agreement shall, at minimum, require each sublicensee to agree in writing:
(a) to be subject to SSG's obligations under this Agreement; (b) to perform
obligations identical to the obligations of SSG under Sections 5.1, 5.3, 5.4,
6.1, 6.2, 6.3, 6.4, 6.5 (to the extent any sublicensee marks may be used in
connection with products), 6.6 and 10.2, and Articles 7, 8, 11, 12, 13, 15 and
16 of this Agreement to the extent of their activities under the sublicense, and
(c) to agree to provisions substantially as set forth in Sections 8.4 and 10.2.
In addition, each sublicensee shall enter into a written agreement with
InterTrust, in the form of a certification form to be attached as an Exhibit to
the sublicense agreement, pursuant to which such sublicensee agrees that
InterTrust shall have the right to enforce the terms of the sublicense agreement
between SSG and such sublicensee. Prior to granting any such sublicense, SSG
shall provide InterTrust with the name of the proposed sublicensee and a
certification that the proposed sublicense agreement includes all of the
provisions contained in the approved sublicense form. Where the proposed
sublicensee is not a SSG and/or SOFTBANK Affiliate, InterTrust shall have thirty
(30) days to authorize such proposed sublicensee. InterTrust's decision to
authorize or refuse to authorize a proposed sublicensee that is not a SSG and/or
SOFTBANK Affiliate shall be in InterTrust's sole discretion, and can be
exercised on any basis. If InterTrust fails to authorize the sublicensee, the
sublicense agreement shall not take effect. Any sublicense granted to an
Affiliate of SSG or SOFTBANK shall remain effective only so long as such
sublicensee remains an Affiliate of SSG or SOFTBANK. SSG shall guarantee and
remain liable to InterTrust for all sublicensees' performance of such
obligations. Sublicensees shall have no further right to sublicense any right
received. SSG agrees and acknowledges that SSG's performance of its obligations
hereunder is necessary for InterTrust to adequately protect its Intellectual
Property Rights made available hereunder, and such performance shall constitute
a condition precedent to the granting of other licenses under Article 5 hereof.
(a) Non-Clearinghouse Sublicenses. SSG may enter into sublicense
-----------------------------
agreements pursuant to which SSG may grant sublicensees some or all of the
rights licensed to SSG under Sections 5.1(a)(i), 5.1(a)(ii), 5.1(a)(iii),
5.1(a)(iv) and 5.1(c). In addition to other terms set forth in this Section
5.2 above, such sublicenses shall be subject to the following terms and
conditions:
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(i) SSG shall grant sublicenses only to SOFTBANK or its
Affiliates (and only while SSG is a SOFTBANK Affiliate);
(ii) Products distributed to, and/or services performed by,
Persons other than SSG must be performed and branded solely under SSG
Trademarks or, as applicable, other SSG Affiliate or SOFTBANK
Affiliate trademarks as set forth herein (except where use of
InterTrust Trademarks is required herein), but in the case of a SSG or
SOFTBANK Affiliate, only for so long as such SSG or SOFTBANK Affiliate
remains such an Affiliate;
(iii) Activities authorized under the sublicense shall be
limited to the development of SSG Products or Cooperative
Applications.
(b) Clearinghouse Function Sublicenses. SSG may enter into sublicense
----------------------------------
agreements pursuant to which SSG may authorize performance of some or all
of the activities licensed to SSG under Section 5.1(b) by any Person, but
solely to perform Clearinghouse Functions on behalf of SSG, and solely
under SSG Trademarks or, as applicable hereunder, any other SSG or SOFTBANK
Affiliate trademarks as set forth herein and in accordance with Section
5.1(b) hereof.
5.3 No Additional Licenses. SSG understands and acknowledges that
----------------------
InterTrust is licensing to SSG only certain limited rights to use InterTrust
Technology (including performing Clearinghouse Functions and sublicensing
certain rights granted SSG) as described herein. Thus, notwithstanding the
generality of any other provision herein, SSG acknowledges and agrees that the
licenses granted under Sections 5.1 and 5.2 are the only licenses granted to
SSG, and that no other licenses are granted, expressly, or by implication or
estoppel, now or in the future. All rights not expressly granted to SSG under
this Agreement are reserved and retained by InterTrust.
5.4 General Restrictions. SSG covenants that it shall not: (i) during
--------------------
the term of this Agreement, reverse engineer any technology that has been
supplied to SSG in Object Code form only, or emulate the functionality of,
and/or modify any portion of the Core Technology; or (ii) after the term of this
Agreement, use or exploit the InterTrust Technology for any purpose whatsoever.
Any use by SSG of any portion of the InterTrust Technology and/or Modified
Technology outside the scope of the licenses granted by InterTrust hereunder
shall constitute a material breach of this Agreement.
ARTICLE 6. SSG SUPPORT AND ADDITIONAL COVENANTS.
6.1 SSG Support of InterTrust Technology.
------------------------------------
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(a) SSG Use of InterTrust Technology. In accordance with the
--------------------------------
licenses granted to SSG and the other terms hereunder, SSG agrees to
develop, produce, and generally distribute, or use for commercial purposes,
a SSG Product and/or a Cooperative Application as soon as commercially
reasonable and practicable, and in any case within eighteen (18) months
following the date InterTrust makes available to SSG the System Developer
Kit 1.0 in beta format. Such time period shall be extended by any period in
which: (i) there exists a Material Defect in the InterTrust Technology that
materially impedes SSG's development efforts as relevant, but only from the
date that SSG documents such defect as provided in Section 3.3(b) hereof to
the date InterTrust has reasonably corrected or removed such Material
Defect as provided hereunder; or (ii) InterTrust materially fails to
provide any of the support services required in Section 3.3 (other than
Section 3.3(b)) and such material failure actually impedes SSG's
development efforts, as relevant, but only to the extent of any delay
reasonably and solely attributable to such material failure.
(b) Compliance with InterTrust Specifications. SSG shall not commence
-----------------------------------------
the distribution, sale or other transfer of any specific SSG Product or
Cooperative Application, or perform any service directly relating to such
products or applications, unless such SSG Product, Cooperative Application
and/or service is in Compliance with InterTrust Specifications. InterTrust
may, from time to time in its sole discretion, modify InterTrust
Specifications to accommodate changes in InterTrust Technology, and any
related InterTrust product development, for purposes of, for example,
improving architectural integrity, functional capability, standardization,
security capability, efficiency, and/or interoperability of InterTrust
Commerce-based technology, components, products and services (a "New
---
Specification"). InterTrust shall use commercially reasonable efforts to
-------------
maintain compatibility between a New Specification and the then-preceding
Specification, unless considerations of security, interoperability,
performance, or functionality enhancement indicate that such compatibility
is not commercially appropriate. To the extent InterTrust releases a New
Specification that applies to any portion of a Cooperative Application, SSG
Product and/or service then being performed or distributed by SSG (as
applicable), SSG shall bring any further such products delivered to
customers, and/or any services for any such products (as applicable), into
Compliance with such New Specification as of the earliest to occur of: (i)
the next version, release, or production cycle of such Cooperative
Application, SSG Product and/or service (the "Next Version"), as earlier
------------
applicable, but only to the extent that SSG receives notice of such New
Specification within a reasonably sufficient time of such Next Version to
accommodate new aspects of such New Specification; and (ii) [*] ([*])
months after SSG receives a released copy of such New Specification.
InterTrust and SSG further agree that SSG shall, within [*] ([*]) months
after receiving a released copy of such New Specification, implement such
new aspects of such New Specification for all applicable services
supporting and/or employing SSG Products and Cooperative Applications
and/or any other products employing InterTrust Technology provided to
customers and not meeting such New Specification. Notwithstanding the
foregoing, should serious technical interoperability and/or security
requirements commercially necessitate more prompt action, SSG and
InterTrust will confer and agree upon the most aggressive, practical
schedule feasible to ensure Compliance with the New Specification for all
SSG Products, Cooperative Applications, and any services relating to such
products or applications. Under such conditions, SSG shall take whatever
commercially
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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appropriate steps are reasonable and required under the circumstances to
minimize or eliminate a continuation of such interoperability and/or
security problems.
(c) Compliance Testing. SSG acknowledges that: (i) in support of
------------------
InterTrust Technology, InterTrust may implement one or more certification
programs designed to ensure that licensed products and/or associated
services (including SSG Products and any Cooperative Applications) use
InterTrust Technology and/or Modified Technology in Compliance with
InterTrust Specifications in accordance with this Agreement (the
"Certification Program(s)"); and (ii) such a Certification Program(s) is
------------------------
important to maintaining the reliability of products and services employing
InterTrust Technology and/or Modified Technology, and in maintaining public
confidence in the integrity of InterTrust brands as the resource for
interoperable electronic commerce. Such Certification Programs may, in
InterTrust's sole discretion, require, for example, SSG: (a) to use a suite
of test software provided by InterTrust for use by SSG to test and verify
that Cooperative Applications and SSG Products (and/or associated services)
are in Compliance with InterTrust Specifications; (b) to submit samples of
Cooperative Applications and SSG Products and associated programs,
parameter data, and other information (in object code form unless source
code is necessary or reasonably appropriate) that may be technically
material to Compliance with InterTrust Specifications, prior to first
commercial distribution, sale, other transfer to, or use by, a customer or
SSG service, as applicable, so as to allow InterTrust (or an InterTrust
delegate) to perform confidential testing ("Certification Testing"); and
---------------------
(c) to the extent that options (a) or (b) immediately above do not, or can
not reasonably be anticipated to, provide sufficient information to verify
Compliance, to provide InterTrust with full and detailed specifications and
documentation related to SSG's use of InterTrust Technology and Modified
Technology for SSG Products, Cooperative Applications, and any associated
services, but only to the extent that any such specifications and
documentation may be material to Certification Testing. SSG shall comply
with any Certification Program established by InterTrust in accordance
herewith, and all specifications and documentation provided shall be
certified by an authorized representative of SSG. In connection with any
such Certification Testing, particularly the testing of products and/or
services, as applicable, InterTrust (or an InterTrust delegate) will
respond in a reasonably prompt manner following receipt of submitted
products and access to, or receipt of technology supporting, such service,
unless commercially reasonable factors prolong such testing. Such response
shall be in the form of: (1) a written approval that the product or service
is certified (such SSG Products and Cooperative Applications not being
Compliant until such certification has been granted); or (2) if not
approved, a detailed summary of problems and, where feasible, suggested
solutions. InterTrust (or an InterTrust delegate) will apply the
Certification Program, as applicable, in a non-discriminatory and
consistent manner with respect to similar products and/or services.
InterTrust's rights under this Section 6.1 shall not be affected in any
manner by an InterTrust decision not to perform such Certification Testing.
(d) Costs. To defray costs associated with the performance and
-----
administration of the Certification Program, in connection with the
certification of any product or service SSG shall be charged a reasonable
fee not to exceed industry norms for similar testing activities (and, if
conducted by InterTrust, the full cost incurred by InterTrust in performing
and administering such tests). An estimate of such fee shall be provided to
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CONFIDENTIAL
SSG, as applicable, as soon as reasonably practical upon SSG's submission
of samples, or documentation for and access to services, for testing, and
such fee shall be paid by SSG in accordance with standard industry
practices, as available.
(e) Translation of Material in Foreign Languages. InterTrust shall
--------------------------------------------
have the right to receive and approve (to the extent referencing InterTrust
Technology or capabilities and/or functions enabled by InterTrust
Technology) any non-English translations made by or for SSG of
documentation provided by SSG concerning SSG Products, and Cooperative
Applications, and any related services (including Distributable
Documentation), legends and Notices required pursuant to Section 6.3 hereof
and other required notices, and all versions of InterTrust Technology.
6.2 Customer Agreements. SSG shall not distribute any Cooperative
-------------------
Application or SSG Product to any Person unless SSG shall have first notified
and required such Person to execute a form of customer agreement (the "Customer
--------
Agreement(s)") provided by SSG, such Customers Agreement forms having: (i)
------------
terms relating to InterTrust Technology and InterTrust's rights and interests
consistent with and reflective of the terms of this Agreement; and (ii) been
previously approved in writing by InterTrust (such approval not to be withheld
unless such Customer Agreement(s) does not reasonably protect InterTrust's
rights under this Agreement or sufficiently protect InterTrust's Intellectual
Property Rights. Once approved by InterTrust, the Customer Agreement(s) shall be
set forth as an Exhibit to this Agreement and may be used, as applicable, by SSG
as a form agreement unless and until: (a) SSG modifies such agreement (provided
that InterTrust has approved such modification in writing); or (b) InterTrust
reasonably requires that SSG alter the Customer Agreement to protect
InterTrust's rights under this Agreement or to protect its Intellectual Property
Rights, for example in view of court decisions and/or applicable regulations
under the circumstances. At a minimum, the Customer Agreement forms will: (i)
prohibit customers from disassembling, modifying or reverse engineering any
portion of the InterTrust Technology incorporated in the SSG Product or
Cooperative Application; (ii) stipulate that such customer has no right to use
the SSG Product or Cooperative Application to engage in or perform any
Clearinghouse Functions whatsoever unless such customer is an Authorized
Clearinghouse Provider or an authorized sublicensee under Section 5.2 hereof;
(iii) grant such customer only a limited license to use the Cooperative
Application or SSG Product, and, as applicable, to (A) incorporate Authorized
Application Software into such customer's software product to provide a Rights
User Node that is Compliant with InterTrust Specifications or (B) develop and
incorporate software components that provide the interface for and support
operation in conjunction with a Rights User Node provided by InterTrust Commerce
Technology; (iv) permit such customer to engage SSG and/or an Authorized
Clearinghouse Provider to perform Clearinghouse Functions with respect to such
software product; (v) provide that if such customer is permitted to modify any
portion of InterTrust Technology, such customer shall grant to InterTrust a
license on substantially the same terms as Section 8.4; (vi) provide that the
Customer Agreement is to and for InterTrust's benefit and may be enforced by
InterTrust at its discretion; and (vii) contain such other provisions as
stipulated herein. SSG agrees that to the extent any form of Customer Agreement
might be deemed to be unenforceable or otherwise ineffective in any
jurisdiction, SSG shall, upon notification by InterTrust, substitute other forms
of Customer Agreements, or take other actions, as reasonably specified by
InterTrust, including, for example, specifying other generally accepted, legally
effective forms of Customer Agreement, if such exists for a given jurisdiction,
in order to provide InterTrust with legally enforceable protection contemplated
hereunder. SSG agrees and acknowledges that SSG's
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performance of its obligations hereunder is necessary for InterTrust to
adequately protect its Intellectual Property Rights made available hereunder,
and such performance shall constitute a condition precedent to the licenses
granted under Article 5 hereof. SSG shall not be obligated to file any claim in
litigation to enforce the terms of Customer Agreement(s); provided that SSG
-------- ----
shall, if requested by InterTrust, terminate such Customer Agreement(s) upon a
material breach by such customer(s).
6.3 Legends and Notices.
-------------------
(a) Product Legends and Notices. SSG shall, in accordance with
---------------------------
InterTrust's instructions and/or approved exemplars and samples provided
from time to time by InterTrust to SSG, place Notices (as hereinafter
defined) on all Cooperative Applications, SSG Products, documentation,
marketing and advertising materials therefor, and for associated services,
on all packaging for any physical media containing any such products, and
on all initialization and/or start-up screens of any stand-alone software
developed by or for SSG using or incorporating InterTrust Technology and/or
Modified Technology. For purposes of this Agreement, the term Notices shall
include: (i) Intellectual Property Rights, warranty, and disclaimer
notices; (ii) any symbols or marks stipulating Compliance with InterTrust
Specifications; (iii) a notice stating that SSG Products and Cooperative
Applications are "InterTrustworthy" and are being delivered using
InterTrust Technology (as such notices may be amended by InterTrust from
time to time); and (iv) other field of use and product notices stipulated
by InterTrust, so long as such notices (a) in the opinion of InterTrust's
counsel, assist in protecting InterTrust intellectual property and other
InterTrust rights under the laws of any relevant jurisdiction, (b) are
commercially reasonable means to protect InterTrust rights without being
overly intrusive or unreasonably costly to SSG's sales and marketing
efforts, and (c) in InterTrust's reasonable opinion or upon written opinion
of InterTrust's outside legal counsel, cannot be adequately addressed in
the Customer Agreement. Before any Notices are omitted pursuant to
subsections (b) and (c) immediately above, SSG shall advise InterTrust in
writing of the circumstances and the Parties' Project Managers shall
directly discuss the issue. SSG shall not, and shall not permit any Person
to, remove, alter, cover, obfuscate or otherwise deface any InterTrust
Trademarks or Notices on any InterTrust Technology or associated
documentation, marketing and advertising materials therefor. Compliance
with subsections (i) and (iv) above shall constitute conditions precedent
to the licenses granted under Article 5 hereof.
(b) Network Notices. SSG shall, in accordance with InterTrust's
---------------
instructions or approved exemplars and samples provided from time to time
by InterTrust to SSG: (i) place Notices specified by InterTrust, which
Notices shall not unreasonably detract from, or interfere with, SSG content
or branding, on all of SSG's start-up screens or initial user interface
menus of any server host environment generated by or referencing the
Cooperative Applications and/or the SSG Products or any associated
services; and (ii) include a link from any home pages or any Web page of
SSG, any other SOFTBANK Affiliate, and any SSG customer or licensee (who
does not object to such link), that uses InterTrust Commerce Technology in
its products or in connection with its services, which materially promotes
or otherwise supports SSG Products, Cooperative Applications and associated
services, to a home page that InterTrust may provide for such purpose on
the World Wide Web or the equivalent thereof on any other electronic
network.
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Notwithstanding the foregoing, neither SSG nor any SOFTBANK Affiliate shall
have any obligation to provide any such link to the extent that
InterTrust's home page: (a) references any software distributor other than
SSG, SOFTBANK, or a SOFTBANK Affiliate as an InterTrust provider of
software distribution clearinghouse transaction services; or (b) contains
materials, or points to another website that contains materials, directly
and substantially in conflict with SSG's material commercial interests.
Before any such link is removed or not established for the reasons set
forth in subsection (a) and (b) immediately above, SSG shall provide
InterTrust with four (4) days prior written notice describing any such
material conflict and afford InterTrust the opportunity to comment upon
and, if appropriate, correct such conflict. InterTrust shall be afforded
the opportunity to have a link re-established promptly upon any
rectification of a material conflict.
(c) Prospective Notice. The Notices shall be effective beginning on
------------------
the date InterTrust gives SSG written notice thereof and SSG shall as soon
as reasonably commercially practicable implement and/or comply with
applicable portions thereof.
6.4 InterTrust Trademarks.
---------------------
(a) Standards. SSG expressly recognizes the importance of
---------
InterTrust's reputation and goodwill, and of maintaining high, uniformly
applied standards of quality in connection with SSG's use and distribution
of products, applications, and services pursuant hereto bearing InterTrust
Trademarks. Consequently, to maintain InterTrust's interest in and rights
to the InterTrust Trademarks, products, and associated services, and to
maintain in the mind of the public and customers that InterTrust Technology
and its components represent sufficient levels of quality, trust and
reliability, SSG shall utilize the InterTrust Trademarks in accordance with
trademark guidelines (including approved samples and exemplars) as provided
herein and as may be provided to SSG by InterTrust. Such trademark
guidelines shall: (i) include a list of InterTrust trademarks that have
been registered, or applied for, and shall specify restrictions on use, if
any, including permitted and prohibited countries and jurisdictions; and
(ii) may be revised from time to time by InterTrust. InterTrust Trademarks,
as listed on Exhibit C attached hereto, may be reasonably modified by
InterTrust from time to time upon InterTrust's provision to SSG of
reasonable prior written notice. Any such modification shall not include
any names, logos or marks that substantially conflict with any then-
existing trademark rights of SSG.
(b) Trademark Ownership; Contestability. SSG acknowledges and agrees
-----------------------------------
that all uses of InterTrust Trademarks as permitted hereunder, and the
goodwill associated therewith, shall inure solely to the benefit of
InterTrust. SSG agrees that it shall not contest the validity of any
InterTrust Trademarks or registrations thereof or applications with respect
thereto, or InterTrust's exclusive ownership of the InterTrust Trademarks
or their associated goodwill. SSG agrees to make available to InterTrust,
upon request, copies of SSG's records and such other documentary evidence
as is/are retained in the ordinary course of business regarding its use of
the InterTrust Trademarks, and information regarding first use of the
InterTrust Trademarks by SSG in each country.
(c) Confusing Similarity. SSG shall not use any marks identical with
--------------------
or confusingly similar to any of the InterTrust Trademarks, shall not
register or attempt to
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register any marks identical with or confusingly similar to InterTrust's
Trademarks, and shall not permit any SOFTBANK Affiliate to use or affix any
trademark of such Affiliate on any SSG Product supplied to such Affiliate,
to the extent such Affiliate distributes, provides services for, or
transfers to others any product other than a product incorporating
InterTrust Technology, using Secure Containers that bears a trademark of
such Affiliate.
(d) Prospective Notice. Changes in the InterTrust Trademarks and such
------------------
standards of quality shall be effective beginning on the date InterTrust
gives SSG written notice thereof and SSG shall, as soon as reasonably
commercially practicable thereafter, implement and/or comply with such
respective portions thereof.
6.5 SSG's Use of SSG Trademarks on Cooperative Applications and SSG
---------------------------------------------------------------
Products. To promote the branded and distinct identity of any InterTrust
--------
Compliant Cooperative Application, SSG Products, associated services or any
other such products used in commerce by SSG and/or distributed, sold or
otherwise transferred by SSG to Customers as provided hereunder, SSG
acknowledges and agrees that any trademark or logo used by SSG in commerce to
specifically identify, label or market a Cooperative Application, SSG Product,
or services associated therewith (other than trademark or logos that serve to
generally identify SSG or SOFTBANK, or any Affiliate or sublicensee thereof)
shall not, concurrently or thereafter, be used to identify any product or
services other than such SSG Products, Cooperative Applications and associated
services, whether by SSG or pursuant to license or sublicense from SSG.
6.6 SSG Trademarks. Subject to the terms and conditions of this
--------------
Agreement, SSG grants to InterTrust during the term of this Agreement a limited,
nonexclusive, royalty-free, worldwide license, without the right of sublicense
except to InterTrust's Affiliates, to use the SSG Trademarks solely in
connection with any publicity pursuant to Article 8 hereof, unless otherwise
agreed by SSG. InterTrust shall obtain permission from SSG for any further use
of SSG's Trademarks and shall comply with SSG instructions provided in writing
by SSG concerning such further use of any SSG Trademarks. InterTrust shall
comply with any reasonable guidelines provided in writing by SSG concerning such
use of any SSG Trademarks and shall comply with the provisions of Section 6.4 as
reasonably applied to the use of SSG Trademarks. Such SSG Trademark guidelines
shall include a list of SSG Trademarks that have been registered, applied for,
or used in interstate commerce and shall specify restrictions on use, including
permitted countries and jurisdictions. SSG Trademarks, as listed on Exhibit C
attached hereto, may be reasonably modified by SSG from time to time upon SSG's
provision to InterTrust of reasonable prior written notice thereof. Any such
modification will not include any names, logos or marks that substantially
conflict with then-existing trademark rights of InterTrust.
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ARTICLE 7. LICENSE FEES AND PAYMENT TERMS.
7.1 Fees and Royalties.
------------------
(a InterTrust Technology Fees and Royalties. In consideration of
----------------------------------------
the licenses granted to SSG herein and the other terms and conditions
hereof, SSG shall pay to InterTrust the following amounts, net of any
withholding tax; provided that no fees or royalties shall be due hereunder
-------- ----
for any set-up, interfacing, or development fees paid to SSG and associated
with the initial establishment of commercial services by SSG, but not in
lieu of any fees or royalties for commercial services:
(i) Nonrefundable license fees totaling in the aggregate [*]
dollars (US$[*]), which shall be [*] InterTrust as set forth in
Sections 7.1(a)(ii) and 7.1(a)(iii) below, in accordance with Section
7.1(b) hereof (the [*]), and payable in the following amounts:
(1 [*] dollars (US$[*]), payable concurrently with the
execution hereof;
(2 [*] dollars (US$[*]), payable within seven (7) days
after InterTrust has made available the beta version of
the SDK 1.0 to SSG; and
(3 [*] dollars (US$[*]), payable upon the earlier of such
time that SSG first transfers, distributes or uses for
commercial purposes a SSG Product or Cooperative
Application, or first performs for commercial purposes
any Clearinghouse Function;
(ii) based at least in part on the performance of Clearinghouse
Functions:
(1) a royalty of six-tenths of one percent (0.6%) of the
Gross Commercial Value of each Content Transaction;
(2) a royalty of two percent (2%) of all revenue and/or
other consideration received pursuant to this Agreement for
performance of such Clearinghouse Functions, but not
including Content Transactions as set forth in Section
7.1(a)(ii)(1) above (an "Alternative Transaction"); or
(3) where a single instance of the performance of
Clearinghouse Functions includes at least one aspect
involving a Content Transaction and at least one other
aspect involving an Alternative Transaction, a royalty
consisting of the sum of a royalty calculated pursuant to
section 7.1(a)(ii)(1) for such Content Transaction aspect
and a royalty calculated pursuant to section
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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CONFIDENTIAL
7.1(a)(ii)(2) for such Alternative Transaction aspect.
The Alternative Transaction aspect will be calculated
only on any value received above and beyond the Gross
Commercial Value of the Content Transaction.
(iii) for all revenue or other consideration, if any, derived
by SSG in connection with the sale, distribution or other use of
Cooperative Applications and/or SSG Products:
a royalty of [*] percent ([*]%) of all such revenue and
consideration.
(b [*] and [*]. Commencing on January 1, 1998
-----------
and continuing until December 31, 2002, SSG shall be entitled to [*] of
all [*] under Sections [*] and [*] in a calendar quarter [*]; provided
--------
that the total amount of all such [*] during such period shall not exceed
----
[*] ($[*]) in the aggregate.
(c Support Fee. In partial consideration of InterTrust's provision
-----------
of the Assistance and other technical support set forth in Section 3.3
hereof, SSG shall pay to InterTrust the amount of [*] dollars (US$[*]) per
year during the Support Period (the "Support Fee"). Such fee shall be
-----------
adjusted from year to year, in proportion with changes in the consumer
price index published by the Bank of America, or its equivalent in the
absence of the availability thereof. SSG shall pay the Support Fee in four
quarterly installments within thirty (30) days after each calendar quarter
in accordance with Section 7.2 hereof. Such Support Fee will no longer be
payable if InterTrust discontinues the support and Assistance set forth in
Section 3.3 for any reason.
(d) [*]. If InterTrust [*] to such Core Partner than those granted
---
SSG hereunder, and pursuant to such agreement: (i) [*] of the type in [*] are
[*] than the [*] set forth in such sections hereof; and/or (ii) the [*] or any
[*] is [*] than that set forth in Section [*] hereof, then, from the effective
date of such [*] and for so long as SSG is entitled to receive certain favorable
treatment as set forth in Section 3.2(b), as applicable, the [*] set forth in
Sections [*] hereof shall henceforth be reduced to such lower [*] to such Core
Partner, and/or SSG shall thereafter be accorded such [*].
7.2 Payment Procedure. Except as otherwise expressly provided in this
-----------------
Agreement, within [*] ([*]) days after the end of each calendar quarter, SSG
shall pay InterTrust all amounts due and/or payable pursuant to the licenses
granted hereunder, and received during such calendar quarter. SSG shall make all
payments hereunder by corporate check (except corporate checks shall not be used
for payments due under Section 7.1(a)(i)(1) and (2)) or by wire transfer to such
account as designated by InterTrust in writing. Concurrently with each royalty
payment, SSG shall provide to InterTrust a written royalty report, certified to
be accurate by an officer of
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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Upgrade Corporation of America and/or SOFTBANK Internet Services, Inc., as
applicable, specifying: (i) the revenues derived by SSG that are subject to
royalties during each calendar month of such quarter; (ii) the basis for
calculation of the amounts due and payable; and (iii) summaries of business
records employed by SSG to arrive at the information set forth in (i) and (ii)
immediately above. The manner of calculation of the amounts due and payable to
InterTrust hereunder shall be determined in accordance with recognized and
generally accepted U.S. accounting procedures and principles that shall be
consistently applied to all such payments.
7.3 Currency. Gross Commercial Value and all consideration received by
--------
SSG pursuant to Sections 7.1(a)(ii) or 7.1(a)(iii) in a currency other than U.S.
dollars shall be converted by SSG to U.S. dollars on a monthly basis for
purposes of payment to InterTrust on a quarterly basis (unless otherwise
specified by InterTrust in its sole discretion to be paid in another single
alternative currency upon providing ninety (90) days prior written notice
thereof) according to the official rate of exchange for such currency, as
published by the Marine Midland Bank on the last business day during each
calendar month of a calendar quarter for which such royalties are due. If the
Marine Midland Bank ceases or fails to publish such official rate of exchange at
any time during the term of this Agreement, the official rate of exchange during
any such period of cessation shall be such rate as published by the Bank of
America (San Francisco, California) or its legal successor on the last working
day of such calendar quarter for which such royalties are due.
7.4 Taxes. SSG shall pay taxes, including but not limited to withholding
-----
taxes, imposed by any foreign government or any other jurisdictions outside of
the United States, as applicable, on all fees and royalties payable to
InterTrust under this Agreement. SSG shall be responsible for payment of all
sales, use, value-added and other taxes, duties and other charges that may fall
due with respect to the transfer to or licensing, reproduction, distribution,
and/or use by SSG of the Cooperative Applications and the SSG Products, and with
respect to SSG's activities with respect to the Clearinghouse Functions.
InterTrust shall be responsible for payment of all sales, use, value-added and
other taxes that may be imposed by the United States government on InterTrust
with respect to the transfer to or licensing to SSG of the InterTrust Technology
hereunder or with respect to the payments received hereunder.
7.5 Interest. SSG agrees that all sums owed or payable to InterTrust
--------
hereunder shall bear interest (compounded daily) at the rate of [*] percent
([*]%) per month or [*] ([*]) points above the U.S. Prime Rate on an annualized
basis as published at the end of a calendar quarter for which such royalties are
due, whichever is higher, or such lower rate as may be the maximum rate
permitted under applicable law, from the date upon which payment of the same
shall first become due up to and including the date of payment thereof whether
before or after judgment, and that SSG shall be additionally liable for all
costs and expenses of collection, including, without limitation, reasonable fees
for attorneys and court costs. Notwithstanding the foregoing, such specified
rate of interest shall not excuse or in any way whatsoever be construed as a
waiver of SSG's express obligation to timely provide any and all payments due to
InterTrust hereunder.
7.6 Audit. SSG shall maintain at its principal place of business during
-----
the term of this Agreement and for a period of five (5) years thereafter all
books, records, accounts, and technical materials regarding SSG's activities in
connection herewith sufficient to determine and confirm SSG's royalty
obligations and other material obligations hereunder. Upon InterTrust's request,
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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CONFIDENTIAL
SSG will permit an auditor or agent of InterTrust's choice (subject to SSG's
consent, which shall not be unreasonably withheld or delayed) to examine and
audit, during a reasonable time (but no more than once every six (6 months),
such books, records, accounts, documentation and materials, and take extracts
therefrom or make copies thereof for the purpose of verifying the correctness of
SSG's reported royalty statements and payments provided by SSG or compliance
with the license terms and other material obligations hereunder. SSG shall pay
any unpaid delinquent amounts within ten (10) days of InterTrust's request. To
the extent such examination: (a) discloses an underpayment of more than [*]
dollars ($[*]) and such underpayment represents a sum greater than [*] percent
([*]%) of the sums paid to InterTrust by SSG during the applicable period
subject to such audit; or (b) discloses an underpayment of more than [*] dollars
($[*]), SSG shall fully reimburse InterTrust, promptly upon demand, for the fees
and disbursements due the auditor for such audit; provided that such prompt
payment shall not be in lieu of any other remedies or rights available to
InterTrust hereunder. If an audit reveals an overpayment, InterTrust shall
notify SSG of such overpayment and SSG will apply the amount of such overpayment
against future royalties due and payable to InterTrust. Notwithstanding the
foregoing, within thirty (30) days of a request by SSG, InterTrust shall
reimburse SSG up to [*] dollars ($[*]) of any such overpayment amount; provided
that InterTrust posted a profit in accordance with GAAP in the calendar year
preceding such request. Any balance will be paid from future royalties as
provided for above.
ARTICLE 8. PROPRIETARY INFORMATION AND OWNERSHIP.
8.1 InterTrust Ownership. SSG acknowledges and agrees that, as between
--------------------
InterTrust and SSG, InterTrust is the sole and exclusive owner of, and shall
retain and hereby reserves (and nothing herein shall alter InterTrust's
reservation of) all right title and interest in: (i) the InterTrust Technology,
enhancements and modifications thereto, and derivative works thereof created by
or for InterTrust, and all Intellectual Property Rights embodied therein; (ii)
all Intellectual Property Rights created, or embodied in any works (whether
tangible or intangible) created, independently by InterTrust in connection with
its performance of this Agreement, including participation in any Cooperative
Application Project Plan; and (iii) Modified Technology not owned by SSG
pursuant to Section 8.2 hereof, and all Intellectual Property Rights embodied
therein (collectively, the "InterTrust Property"). No provision contained in
-------------------
this Agreement shall be construed to transfer to SSG or any other Person any
title or ownership interest in any InterTrust Property.
8.2 SSG Ownership. Subject to InterTrust's ownership rights under Section
-------------
8.1, as between SSG and InterTrust, SSG shall be the sole and exclusive owner of
the portions of the following created solely by SSG hereunder: (i) any SSG
Products; (ii) Modified Technology (except such Modified Technology that merely
reimplements the existing functionality of InterTrust Technology provided to
SSG, including, for example, porting or translation thereof); (iii) all
Intellectual Property Rights created, or embodied in any works (whether tangible
or intangible) created, independently by SSG in connection with its performance
of this Agreement, including participation in any Cooperative Application
Project Plan to the extent permitted under its licenses hereunder; and (iv)
modifications or derivative works that are created by SSG and/or incorporated by
SSG into products unless prior to creation and/or incorporation SSG knows that
such modifications or derivative works fall outside the scope of its licenses
hereunder. SSG further agrees that with respect to any technology subject to
Section (iv) immediately above or
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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any Intellectual Property Rights in such technology, SSG shall have no right to
use, transfer, assign, license or otherwise exploit in any manner any portion
thereof for any purpose whatsoever unless SSG shall have first negotiated and
obtained on terms acceptable to InterTrust and SSG in their discretion a
cooperative use agreement with InterTrust therefor.
8.3 Joint Ownership. The Parties may from time to time discuss and
---------------
mutually agree in writing upon the division of ownership rights appropriate for
a Cooperative Application as to be set forth in the applicable Cooperative
Application Project Plan in accordance with Section 4.1 hereof. Except as
otherwise set forth in a Cooperative Application Project Plan or otherwise
expressly provided herein, to the extent any Intellectual Property or tangible
embodiment thereof (the "Joint Intellectual Property") is deemed by applicable
---------------------------
law to be jointly created by the Parties under this Agreement, InterTrust and
SSG shall jointly own such Joint Intellectual Property and neither Party shall
be required to account to the other Party for profits from any exploitation
thereof.
8.4 SSG License to InterTrust. In consideration of the licenses granted,
-------------------------
and other consideration provided, by InterTrust to SSG under this Agreement,
during the term of this Agreement, SSG hereby grants to InterTrust, its
Affiliates, and their successors, assigns, and direct and indirect customers a
nonexclusive, royalty-free and worldwide license under the Intellectual Property
Rights of SSG (i) to make, have made, use, sell, offer for sale, import,
distribute and/or otherwise exploit any products or perform any services
directly relating to the InterTrust and/or DigiBox Technology, but solely to the
extent that such activities would, but for such license, infringe any patent
rights of SSG, or its sublicensees; (ii) to use Cooperative Applications and SSG
Products solely in connection with InterTrust's internal development of any
product or performance of any services; and (iii) to make, have made, use, sell,
offer for sale, import, distribute and/or otherwise exploit any products or
perform any services directly relating to electronic rights management,
distributed electronic event management, or distributed operating system
technology, but solely to the extent that, but for such license, such products
or services would infringe any claims of a patent disclosing and/or claiming any
Modified Technology.
ARTICLE 9. PROMOTION AND MARKETING
9.1 Joint Press Release. Promptly after the Effective Date, the Parties
-------------------
shall work together to publicly issue one or more mutually agreeable press
releases disclosing the existence of this Agreement (but excluding any reference
to either Party's partnering commitments set forth in Article 10 hereof),
describing the Parties' intentions to develop important electronic commerce
industry standards, services, and technology and generally promoting the
InterTrust Technology and the InterTrust secure, general purpose interoperable
commerce environment, SSG Products, and InterTrust related services of SSG (the
"Joint Press Releases").
--------------------
Unless otherwise agreed in writing, all further public disclosures by either
Party concerning the subject matter of the Joint Press Releases shall be
consistent with the content of the Joint Press Releases. All other public
disclosures with respect to the terms hereof shall be made in accordance with
Section 11.5.
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9.2 Promotion and Marketing. The Parties shall jointly participate in
-----------------------
and, in addition to the Marketing Program commitments set forth in Section 9.3,
from time to time (as they may agree) fund, promotional, marketing, and sales
activities designed to: (i) increase industry awareness of both InterTrust and
InterTrust Technology, including in particular InterTrust, and SSG, SSG Products
and any associated services, any other InterTrust Compliant products or services
marketed and labeled under a SOFTBANK or SOFTBANK Affiliate trademark as
provided herein, and Cooperative Applications and any services associated
therewith; (ii) attract content developers and users; (iii) encourage the
development of tools and applications that employ InterTrust Technology, SSG
Products and Cooperative Applications; (iv) identify potential InterTrust
related development and/or licensing partners for InterTrust and/or SSG and/or
other SOFTBANK Affiliates, as appropriate; and (v) encourage broad adoption of
InterTrust Technology in the industry. At no time shall SSG make any
representation or warranty to any Person materially inconsistent with: (a)
InterTrust Specifications or Documentation; or (b) the efforts of the Parties
with respect to promotion, marketing or other matters under this Agreement.
9.3 Marketing Program. SSG shall conduct a marketing program, commencing
-----------------
promptly following the Effective Date and continuing through the period six (6)
months after SSG's first commercial distribution or use of any SSG Product or
related service (the "Marketing Project Period") to promote InterTrust Commerce
------------------------
Technology-based products and services as follows:
(a) Prior to October 1, 1996, SSG, with InterTrust's assistance,
shall develop a detailed outline for the marketing program (the "Marketing
---------
Outline"), which shall be subject to each Party's reasonable approval. The
-------
Marketing Outline will set forth, at a minimum, detailed proposed Marketing
Activities (as defined below) on a quarterly basis, and a proposed
schedule, budget, and expense allocation (the "Allocated Expenses") for
--------- --------
SSG's cooperative marketing efforts in connection with the Marketing
Activities (such allocation to include, as mutually and reasonably agreed
by the Parties, pro rata portions of overhead and expenses as appropriate).
(b) The Marketing Outline shall include, at minimum, the following
activities, and other activities as the Parties may agree (collectively,
the "Marketing Activities"): (i) advertisement of InterTrust prominently
--------------------
in conjunction with SSG-advertised electronic commerce activities of SSG
products and/or services; (ii) prominent placement on SSG's, and, as
relevant, SOFTBANK Affiliates' primary world wide web page(s) of the
InterTrust logo and such other reasonable, limited marketing statements
that InterTrust may provide to SSG and that are mutually agreeable to both
Parties; and (iii) such other activities as the Parties may mutually agree
in order to feature InterTrust, such as utilization of the marketing and
promotional means of certain SSG and/or SOFTBANK Affiliates (such as, for
example, Phoenix Publishing Systems, Inc., SOFTBANK COMDEX Inc., and Ziff
▇▇▇▇▇ Publishing Company)
(c) During the Marketing Project Period, SSG shall directly expend at
least one million dollars (US$1,000,000) in Allocated Expenses to carry out
the activities set forth in the Marketing Outline. Such expenditure shall
be deemed to be a material obligation of SSG hereunder. If at the end of
the Marketing Project Period SSG has spent less than one million dollars
(US$1,000,000) pursuant to the marketing program (the
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amount so spent subtracted from $1,000,000 constituting the "Deficit
-------
Amount"), SSG shall pay the entirety of such Deficit Amount directly to
------
InterTrust within thirty (30) days of the end of the Marketing Project
Period.
9.4 Technology Advisory Committee. To further strategic opportunities
-----------------------------
among the Parties and to encourage feedback concerning InterTrust Technology,
InterTrust currently intends to establish a committee limited to representatives
of: (i) leading companies chosen from certain technology, financial and/or
content industry companies that have close technology strategic relationships
with InterTrust; and (ii) certain leading experts in technology or business
applicable to information and electronic commerce (the "Technology Advisory
-------------------
Committee"). The Technology Advisory Committee will meet regularly at a forum
---------
to be selected by InterTrust for the purpose of discussing and exchanging ideas
for improving the functionality, interoperability, and market acceptability of
InterTrust Technology and related issues pertaining to the electronic commerce
industry. Upon the establishment of the Technology Advisory Committee: (a)
InterTrust shall grant SSG the right to have one seat as a member thereof for a
period of three (3) years; and (b) SSG shall promptly elect and notify
InterTrust of its designation of an executive (who may be an employee of SSG,
SOFTBANK, or an Affiliate) to serve on such committee. SSG shall: (1) be
responsible for all acts and omissions of the representative in connection with
the Technology Advisory Committee; and (2) pay for all expenses incurred by SSG
in connection with participation on such Committee. SSG and its representative
shall abide by all commercially reasonable rules and policies established by
InterTrust for the Technology Advisory Committee. Notwithstanding the foregoing
portion of this Section 9.4, SSG membership on the Technology Advisory Committee
shall be subject to termination (in InterTrust's sole discretion) in the event
that: (A) SSG's representative materially fails to comply with any of the rules
established by InterTrust for the Technology Advisory Committee; (B) SSG
materially breaches any of its representations, warranties or obligations under
this Agreement; (C) SOFTBANK and/or UCA sells or transfers all or any portion of
InterTrust securities obtained pursuant to the Stock Purchase Warrant Agreements
to an initial public offering of InterTrust's securities); (D) SSG engages in
any activities that materially conflict with InterTrust's interests; or (E)
InterTrust, in its discretion, dissolves or discontinues the Technology Advisory
Committee.
ARTICLE 10. Partnering Commitments.
10.1 InterTrust Partnering Commitment. In consideration for SSG's obligations
--------------------------------
hereunder, its commitment pursuant to Section 10.2, and the funds to be spent by
SSG to develop SSG Products and related services, InterTrust agrees to the
following partnering commitment (the "InterTrust Partnering Commitment").
--------------------------------
Without obtaining the express prior written consent of SSG, which consent SSG
may grant or deny in its sole discretion, commencing on the Effective Date and
continuing until six months after the date on which InterTrust provides its SDK
1.0 (beta version) product to SSG (the "First Period"), InterTrust shall refrain
------------
from granting to any of the entities listed on Exhibit H hereto a license under
the Licensed Rights to perform financial and usage information Clearinghouse
Function services in connection with the administration of the distribution and
use of software executables (i.e., personal and business productivity software
applications and applets) ("Software Executables"). The InterTrust Partnering
--------------------
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Commitment shall not in any way be construed to extend beyond the narrow scope
herein provided, including, but not limited to, any of the excluded areas
("Excluded Areas") set forth on Exhibit H hereto. Such First Period may be
--------------
extended for a period of time ending eighteen (18) months from the Effective
Date (the "Additional Period"), to the extent that SSG executes an agreement
-----------------
with [*] or three (3) of UCA's five (5) largest ISV/OEM customers (as determined
on a UCA-received revenue basis), whereby [*] or such ISV/OEM customers adopt,
as a primary means of electronic distribution of its software products or as its
transaction system, InterTrust Technology in the form of SSG Products, SSG
Application Products and/or Cooperative Applications or wherein each such
applicable company commits to incorporate InterTrust packaging and/or viewing
capabilities in such companies' software application products (including update
and update releases, as well as product reconfigurations and modifications
thereof) that in the aggregate exceed six (6) million units (including
application products and client software) shipped annually (based on annualized
volumes measured in the highest volume quarter for such units within the
previous five (5) calendar quarters preceding such agreement, or reasonably
projected for such units in the next four (4) calendar quarters if such
application product has not been shipped in each of the previous five (5)
quarters). The Additional Period shall cease immediately (i) upon a failure by
SSG to spend four million dollars ($4,000,000) in the aggregate in the technical
development and/or promotion and sale of SSG Products or Cooperative Application
Products directly related to supporting Clearinghouse Function services on or
before the first anniversary of SSG's receipt of InterTrust's SDK 1.0 (beta
version) (such amount to be calculated in accordance with generally accepted US
accounting principles consistently applied (GAAP) and excluding any fees or
royalties paid to InterTrust pursuant to this Agreement) or (ii) should SSG fail
to commercially release a SSG Product on or before twelve (12) months after
InterTrust has provided SSG with its SDK 1.0 (beta version). InterTrust may, at
any time, relieve itself of all of the obligations set forth in this Section
10.1 by, at its discretion, either: (a) paying to SSG an amount equal to twice
SSG's direct expenses (the "Direct Expenses") incurred, limited to the amount of
---------------
money that SSG can demonstrate through financial records (kept in accordance
with GAAP) that it has directly expended in connection with the technical
development or promotion and sale of SSG Products or Cooperative Applications as
contemplated hereunder, provided that such payment amount shall not exceed ten
million dollars ($10,000,000) in the aggregate; or (ii) transferring to SSG (at
no cost) 174,947 shares of InterTrust's equity securities, such type of equity
securities being Class A Common Stock or a more senior security, and otherwise
the type of security being within InterTrust's sole reasonable commercial
discretion, and the method of transfer being such method as upon which the
Parties may agree in the exercise of their discretion. Notwithstanding the
foregoing, in the event that InterTrust chooses to transfer such 174,947 shares
to SSG and the fair market value of such shares, as determined by InterTrust's
board of directors in the exercise of good faith, is less than the Direct
Expenses, InterTrust shall pay to SSG an amount equivalent in cash and/or the
value of additional shares equal to the difference between the amount of the
Direct Expenses and such fair market value of such shares. To the extent
InterTrust complies with this Section 10.1, InterTrust shall not be restricted
from working with or licensing any technology or Intellectual Property to any
Person.
10.2 SSG Partnering Commitment. In partial consideration for: (i)
-------------------------
InterTrust's performance of its obligations hereunder, including providing to
SSG material access to confidential InterTrust Technology and Intellectual
Property; (ii) the rights granted to SSG hereunder; and (iii) InterTrust's
partnering commitment to SSG as set forth in Section 10.1 hereof, SSG agrees to
the following partnering commitment (the "SSG Partnering Commitment"). Without
-------------------------
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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obtaining the express prior written consent of a Designated Officer of
InterTrust (as defined in Section 11.2(b) hereof), which consent InterTrust may
grant or deny in its sole discretion, during the First Period, SSG shall: (a)
exclusively use the InterTrust Technology as its Secure Container and rights
management technology solution and refrain from performing any transactions or
engaging in the creation of any business relationships relating to Secure
Containers other than those employing the InterTrust Technology; and (b) not
participate in, assist, or promote the development, use or exploitation of any
technology or products (other than the InterTrust Technology) that contain or
include any material portion of the capabilities set forth in the "Special
-------
Advanced Technologies" as described in Exhibit F attached hereto. With respect
---------------------
to the subject matter of subparagraph (b) immediately above, the First Period
shall automatically (and without any further action) be extended for a period
ending eighteen (18) months from the Effective Date. Notwithstanding the
foregoing: (1) any obligation pursuant to this Section 10.2 shall immediately
cease, at SSG's option (upon the agreement of both UCA and SIS), if InterTrust
has not provided the SDK 1.0 to SSG by the end of the second quarter (Q2) 1997;
and (2) after such First Period, SSG may participate in, assist, or promote the
development, use or exploitation of (A) any technology or products, so long as
such technology or products do not include, and are not specially adapted to
enable, any material portion of the Special Advanced Technologies and (B) any
technology or products that include, or are specially adapted to enable, any
material portion of the Special Advanced Technologies to the extent that such
Special Advanced Technologies may be incorporated by InterTrust in InterTrust
Technology or rightfully provided to SSG by another InterTrust licensee, and
whereby such right to use said Special Advanced Technologies is derived
exclusively from and used solely pursuant to this Agreement, or from such other
InterTrust licensee as expressly allowed in its license agreement with
InterTrust. To the extent SSG complies with this Section 10.2, SSG shall not be
restricted from developing or pursuing any business models or activities
consistent with its licenses hereunder with any Person.
10.3 Additional Provisions. Any material breach of the foregoing
---------------------
provisions by a Party shall be subject to the specific remedies set forth in
Section 13.3, in addition to other remedies available to thee other party under
this Agreement, at law, or in equity. If one Party has been relieved of its
Partner Commitment as set forth in this Article 10, the other Party shall be
relieved of its Partnering Commitment as well. In all events (except pursuant
to Section 15.4 hereof), neither Party's Partnering Commitment to the other
shall extend beyond eighteen (18) months after the Effective Date.
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ARTICLE 11. CONFIDENTIALITY.
11.1 Classification of Technology and Documents For Confidentiality
--------------------------------------------------------------
Purposes. For ease in complying with the terms of this Article 11, information
--------
and documents to be exchanged by the Parties shall be marked, as appropriate, to
identify the confidential or nonconfidential nature of the information. As
regards InterTrust Technology (including Documentation) and other documents or
information provided by InterTrust to SSG hereunder, such information shall be
marked or indicated as: (i) "Unclassified"; (ii) "Confidential"; or (iii) "Top
Secret." SSG information shall be marked as: (a) "Unclassified" or (b)
"Confidential." A Party and its authorized personnel shall exercise careful
judgment when they are in possession of information of the other Party that has
not been marked or indicated with one of the above-described classifications.
If any information provided by one Party has not been marked or indicated as
above and is not known with certainty by the receiving Party to have been either
publicly released or otherwise classified as "Unclassified," then such other
Party, its employees and any other person authorized to possess such information
shall treat such information as "Confidential" except information provided by
InterTrust relating to security capabilities, trustedness, and architecture (or
design) integrity of the InterTrust Technology, which shall be considered to be
"Top Secret" and shall be handled as provided by Section 11.2(b) hereof.
11.2 InterTrust Information.
----------------------
(a) Confidential Information. To the extent that SSG receives from
------------------------
InterTrust under this Agreement any InterTrust Technology or any other
information or technology that is marked "Confidential" when disclosed in
written form, or indicated as "Confidential" when disclosed orally
("InterTrust Confidential Information"), SSG shall hold such InterTrust
-------------------------------------
Confidential Information in strict confidence and in a manner that: (i) is
sufficiently secure for the character and content of the InterTrust
Confidential Information; and (ii) is not less secure than procedures used
by SSG to protect its comparably important information and technology. SSG
shall not, without InterTrust's prior written consent, use, disclose,
provide or otherwise make available any InterTrust Confidential Information
to any person, except to any employee, director, consultant, agent or
professional consultant ("Agents") of SSG or one or more of SSG's permitted
------
sublicensees as authorized under the terms and conditions of this
Agreement, and their Agents of which each shall operate under the same
restrictions as SSG. Furthermore, in each case of disclosure to an Agent
of SSG or an authorized sublicensee, access to such InterTrust Confidential
Information shall be allowed only to Agents who have a reasonable need to
know such InterTrust Confidential Information, and then only to the extent
necessary to enable SSG or any such authorized sublicensee to use
InterTrust Confidential Information solely to exercise its license (or
sublicense) hereunder and/or as expressly allowed hereunder. SSG and any
such sublicensees, as the case may be, shall: (a) require their Agents
having access to any portion of InterTrust Confidential Information to
strictly maintain its confidentiality; and (b) ensure that each such Agent
shall have executed with SSG and/or an authorized sublicensee (as
applicable) a written non-disclosure/non-use agreement in the form set
forth on Exhibit G at all hereto or as subsequently provided by InterTrust,
or SSG's or such sublicensee's applicable form agreement which shall
effectively and comparably bind such Agent to the same scope as
InterTrust's form agreement, and which SSG's or sublicensee's form
agreement shall be subject to InterTrust's reasonable prior written
approval. SSG shall notify InterTrust
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promptly in writing of any unauthorized disclosure or other misuse or
misappropriation of any portions of the InterTrust Confidential
Information. SSG and any sublicensee (as appropriate) shall be fully
responsible for any breach of SSG's or sublicensees' obligations under this
Agreement by any Agent to whom such InterTrust Confidential Information has
been disclosed. Any obligation of SSG to keep InterTrust Confidential
Information in confidence shall expire thirty-six (36) months after
disclosure of such information by InterTrust to SSG.
(b) Top Secret Information. In order to protect InterTrust's rights,
----------------------
the rights of InterTrust licensees, and the secure interoperability and
reputation of InterTrust implementations, SSG shall treat any InterTrust
Technology or other confidential information that is either marked "Top
Secret" when disclosed in written form, or indicated as "Top Secret" when
disclosed orally ("Top Secret Information") in a manner not less secure
----------------------
than SSG's most secret information and, in all events in a manner
sufficient to reasonably ensure the security of such Top Secret
Information, given such great sensitivity of such Top Secret Information.
SSG shall allow disclosure of such Top Secret Information to no more than
six (6) designated individual employees of SSG at any time (and to no
sublicensee Agents), each of whom has a direct need to know such
information or be exposed to such Top Secret Information (as agreed in each
case by InterTrust) and then only to the extent necessary for SSG to use
Top Secret Information solely to exercise its rights and perform its
obligations under this Agreement. SSG shall not substitute any employee
designated to receive Top Secret Information with another employee, unless
such designated employee's employment with SSG has been terminated and such
person is no longer able to serve the intended role. None of such employees
shall receive a disclosure of any such Top Secret Information until: (i)
such employee becomes bound by personally executing an InterTrust Top
Secrecy Agreement (in the form set forth in Exhibit G hereto or as
subsequently provided by InterTrust) covering such information and
exposure; and (ii) an original executed copy of such agreement is received
by InterTrust, with return receipt provided to SSG, which such receipt may
be provided by fax communication if so requested in writing.
Notwithstanding the foregoing, SSG and SSG employees described above shall
make no physical embodiments (for example, any reproduction or copy,
including descriptive notes) whatsoever of Top Secret Information, without
the prior express written authorization from InterTrust's Chairman of
Board, President or any other InterTrust Officer designated in a written
communication to SSG signed by InterTrust's Chairman of the Board (the
"Designated Officers"), nor shall SSG or such SSG employees disclose any
--------------------
Top Secret Information to any Person, except as described in this Section
11.2(b). If SSG becomes aware that any Top Secret Information has been
disclosed or treated other than as set forth in this Section 11.2(b),
and/or as specified in a Top Secrecy Agreement, SSG shall immediately
inform InterTrust of such occurrence and take immediate steps to correct
such compromise. SSG shall maintain a log of the employees accessing and
location of all originals and other tangible embodiments of all Top Secret
Information. SSG shall be fully responsible for any breach by any SSG
employee of this Agreement related to the unauthorized use or disclosure of
Top Secret Information.
11.3 SSG Information. To the extent that InterTrust receives SSG
---------------
confidential information that is either marked "confidential" when disclosed in
written form or indicated as "confidential" when disclosed orally ("SSG
---
Confidential Information"), under this Agreement,
------------------------
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InterTrust shall hold said SSG Confidential Information in confidence in a
manner that is sufficiently secure for the character and content of the
information and under no circumstances shall such SSG Confidential Information
be held in a manner that is less secure than procedures used by InterTrust in
connection with its comparably important information. Except as to the
disclosure by SSG of the Modified Technology or such disclosures inherent in the
Certification Testing of SSG Products, Cooperative Applications and/or any
associated services pursuant hereto and only to the extent expressly specified
by InterTrust Specifications, SSG shall not disclose or otherwise provide or
make available any SSG Confidential Information which is directly related to
InterTrust Technology and InterTrust's business activities, without first
acquiring written approval from a Designated Officer of InterTrust. InterTrust
shall not use, disclose, provide or otherwise make available any SSG
Confidential Information it has received in any form to any person except an
Agent of InterTrust. In a disclosure to Agents of InterTrust, access to SSG
Confidential Information shall be allowed only to Agents who have a reasonable
need to know such confidential information and only to the extent necessary to
enable InterTrust to use confidential information to exercise its rights and
perform its obligations hereunder. InterTrust shall: (a) require its Agents
having access to any portion of confidential information to strictly maintain
its confidentiality; and (b) ensure that each such Agent shall have executed
with InterTrust a written non-disclosure/non-use agreement provided by SSG, or
InterTrust's applicable form agreement which shall effectively and comparably
bind such Agent to the same scope as SSG's form agreement, and which InterTrust
form agreement shall be subject to SSG's reasonable prior written approval. Upon
such approval the SSG form agreement will be attached as an Exhibit hereto.
InterTrust agrees to notify SSG promptly in writing of any unauthorized
disclosure or other misuse or misappropriation of SSG Confidential Information
provided to InterTrust which may come to the attention of an InterTrust officer.
InterTrust shall be fully responsible for any breach of InterTrust's obligations
under this Agreement by any Agent to whom such SSG Confidential Information has
been disclosed. Any obligation of InterTrust to keep SSG information in
confidence shall expire thirty-six (36) months after disclosure of such
information by SSG to InterTrust.
11.4 Exceptions. Notwithstanding the provisions of Sections 11.2 and 11.3
----------
above, and except as to "Top Secret" information as provided in Section 11.2(b),
the confidentiality restrictions herein shall not apply to information that the
recipient thereof can demonstrate: (i) is or becomes generally known to the
public through no breach of any of these obligations, as of the date such
information becomes so known; (ii) is or shall have been independently developed
by such recipient by employees who had no access to such information; or (iii)
is or shall have been rightfully received, with no obligation of confidentiality
or non-use, by such recipient from any Person (other than as a result of another
Person's breach of an obligation of confidentiality to the discloser of such
information), as of the date such information is so received. In the event any
Party is required by law, regulation or order of a court or other authority of
competent jurisdiction to disclose the other Party's Confidential Information,
such Party shall notify such other Party as promptly as possible, and shall,
upon such other Party's request, reasonably assist in challenging or restricting
the scope of such required disclosure. Top Secret information may be disclosed
only upon InterTrust's prior written approval. In all events, a Party subject
to such required disclosure shall disclose only such information that is
strictly required pursuant thereto and no further information.
11.5 Confidentiality of Agreement and Publicity. Except as otherwise
------------------------------------------
provided in Sections 9.1 and 11.4 hereof, neither Party hereto shall at any
time, without the prior written
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consent of the other Party, disclose the specific details of the terms and
conditions of this Agreement to any Person, other than: (i) Agents having a
substantial need to know; (ii) as required by law in connection with any initial
public offering of securities pursuant to a registration under the Securities
Act of 1933, as amended (an "IPO") (iii) investors holding approximately one
percent (1%) or more of the outstanding equity shares of such Party prior to an
IPO and having no reasonably anticipated conflict of interest with the
disclosing party; (iv) potential investors who may purchase approximately one
percent (1%) or more of the outstanding equity shares of such Party prior to an
IPO and having no reasonably anticipated conflict of interest with the
disclosing party; and/or (v) financial institutions, professional advisors
and/or other consultants having a reasonable need to know and having no
reasonably anticipated conflict of interest with the disclosing party. In each
and every case set forth above, the receiving Person shall be bound by a
confidentiality agreement sufficient in scope to protect the Parties' rights and
interests hereunder. Notwithstanding the foregoing provisions of this Section
11.5: (a) either Party may publicly discuss or otherwise disclose that an
agreement exists between the Parties to develop InterTrust Compliant electronic
commerce industry standards, products and services, but may provide no further
material details as to the specific activities or commitments of the other Party
without the prior written consent of the other Party; and (b) either Party may
make such disclosures to the extent permitted under this Section 11.5 in order
to comply with its obligations or enforce its rights under this Agreement.
11.6 Confidentiality of Payments, Audit and Certification Testing. All
------------------------------------------------------------
information received during an audit or pursuant to a Certification Program as
provided herein, all information concerning Certification Testing (including any
results thereof and any information received pursuant to any Certification
Testing), and all payment information received pursuant to this Agreement, shall
be treated as confidential information pursuant to Sections 11.2(a), 11.3 and
11.4 hereof. Notwithstanding the foregoing, information concerning whether a
SSG Product, Cooperative Application or an associated services being
disseminated or used in commerce is Compliant with InterTrust Specifications
shall not be treated as confidential information under any provision of this
Agreement.
11.7 NDA. Subject to the provisions of this Article 11, upon the Effective
---
Date of this Agreement, information relating to the subject matter of this
Agreement, when disclosed after the Effective Date shall be covered by the
confidentiality provisions of this Article 11. Any information disclosed
relating to the subject matter of this Agreement when disclosed prior to the
Effective Date or relating to subject matter outside of this Agreement shall be
covered under the Non-Disclosure/Non-Use Agreement between InterTrust and
SOFTBANK dated March 6, 1996.
ARTICLE 12. REPRESENTATIONS AND WARRANTIES.
12.1 Representations and Warranties of Both Parties. Each Party hereto
----------------------------------------------
represents and warrants to the other Party that as of the Effective Date:
(a) such Party is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized, with full corporate power and authority to carry on its business
as it is now being conducted;
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(b) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by such Party. No other corporate or shareholder action or other
proceeding on the part of such Party or its shareholders is necessary to
authorize this Agreement and the consummation of the transactions
contemplated hereby;
(c) this Agreement constitutes a valid and binding obligation of
such Party, enforceable against such Party in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or hereafter in effect
relating to creditors' rights; and
(d) neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of the charter or organizational documents of such
Party.
12.2 Representations and Warranties of InterTrust. In addition to Section
--------------------------------------------
12.1 above, InterTrust represents and warrants to SSG that as of the Effective
Date:
(a) InterTrust owns or has the right to grant the licenses hereunder
with respect to the InterTrust Technology and the Licensed Rights; and
(b) to InterTrust's knowledge, neither the InterTrust Technology nor
the Licensed Rights infringe any Person's valid U.S. patent, copyright, or
trade secret right, and no claims or allegations of any such infringement
have been made (except as disclosed by InterTrust to SSG), PROVIDED THAT
-------- ----
INTERTRUST MAKES NO WARRANTY WITH RESPECT TO THE INFRINGEMENT OF ANY
TRADEMARK RIGHTS, OR ANY PATENT RIGHTS OTHER THAN THE FOREGOING
REPRESENTATION THAT IT IS UNAWARE OF ANY SUCH INFRINGEMENT.
12.3 Limitation. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT TO THE
----------
CONTRARY: (i) THE INTERTRUST TECHNOLOGY PRODUCTS ARE PROVIDED "AS IS" WITHOUT
WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT; AND (ii) THE ENTIRE RISK AS TO THE QUALITY, ACCURACY,
INFRINGEMENT AND PERFORMANCE OF THE INTERTRUST TECHNOLOGY PRODUCTS IS WITH SSG.
INTERTRUST DOES NOT WARRANT THAT INTERTRUST TECHNOLOGY OR THE INTERTRUST
TECHNOLOGY PRODUCTS WILL MEET SSG'S PRODUCTS OR THOSE OF ANY THIRD PARTY AND, IN
PARTICULAR, INTERTRUST DOES NOT WARRANT THAT THE INTERTRUST TECHNOLOGY PRODUCTS
WILL BE ERROR FREE OR WILL OPERATE WITHOUT INTERRUPTION.
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ARTICLE 13. INDEMNIFICATION AND REMEDIES.
13.1 Indemnification.
---------------
(a) InterTrust Indemnification. InterTrust shall indemnify and hold
--------------------------
SSG and its employees, officers and directors (the "SSG Parties") harmless
-----------
from any and all liability, judgments, costs, damages, claims, suits,
actions, proceedings, expenses and/or other losses, including reasonable
attorneys' fees (collectively, "Claims") or portions thereof, to the extent
------
awarded by a court of competent jurisdiction or pursuant to a settlement as
provided hereunder, resulting from controversies or litigation asserted by
any Person against the SSG Parties arising directly or indirectly from:
(i) InterTrust's breach of any of its obligations under this Agreement, or
its representations and warranties set forth in Article 12; and (ii) SSG's
proper use of InterTrust Trademarks as set forth herein; provided, however,
-------- -------
that, with respect to InterTrust's representations under Section 12.2(b),
----
12.2(b) hereof, this indemnity does not extend to any Claim relating to:
(1) any Modified Technology or other modifications thereto made by SSG or
any Person or combinations of the InterTrust Technology with any product,
technology or service of SSG or of any Person where such Claim would have
been avoided in the absence of such modification or combination; or (2) the
use of any InterTrust Technology in any manner inconsistent with InterTrust
Specifications or Documentation (collectively, the "Indemnification
---------------
Exclusions").
----------
(b) SSG Indemnification. Each of UCA and SIS shall jointly and
-------------------
severally indemnify and hold InterTrust, its employees, officers and
directors (the "InterTrust Parties") harmless from any and all Claims or
------------------
portions thereof to the extent awarded by a court of competent jurisdiction
or pursuant to a settlement as provided hereunder, resulting from
controversies or litigation asserted by any Person against the InterTrust
Parties arising directly or indirectly from: (i) SSG's or any of its
sublicensees' breach of any of its obligations, representations or
warranties hereunder; (ii) InterTrust's proper use of SSG Trademarks as set
forth herein; (iii) the design, manufacture, use, distribution and/or
disposition by or for SSG of Modified Technology, Cooperative Applications
or SSG Products, or performance of any service associated therewith, that
would not have otherwise arisen out of SSG's use of the InterTrust
Technology alone, except to the extent SSG is indemnified by InterTrust
under Section 13.1(a) hereof; (iv) any Claim relating to the
Indemnification Exclusions; and (v) any exercise by SSG or any of its
sublicensees of the licenses hereunder that would not have otherwise arisen
out of SSG's use of the InterTrust Technology alone, except to the extent
SSG is indemnified by InterTrust under Section 13.1(a) hereof.
(c) Third Party Claims. In case any Claim is brought by a third
party for which Claim indemnification is or may be provided hereunder the
indemnified Party shall provide prompt written notice thereof to the other
Party. Where obligated to indemnify such Claim, the indemnifying Party
shall, upon the demand and at the option of the indemnified Party, assume
the defense thereof (at the expense of the indemnifying Party) within
thirty (30) days or at least ten (10) days prior to the time a response is
due in such case, whichever occurs first, or, alternatively upon the demand
and at the option of the indemnified Party, pay to such Party all
reasonable costs and expenses, including reasonable attorneys' fees,
incurred by such Party in defending itself. The Parties shall
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cooperate reasonably with each other in the defense of any Claim,
including making available (under seal if desired, and if allowed) all
records reasonably necessary to the defense of such Claim, and the
indemnified Party shall have the right to join and participate actively
in the indemnifying Party's defense of the Claim. Notwithstanding the
foregoing (and any other section of this Agreement), it is understood and
acknowledged that InterTrust need not under any circumstance provide Top
Secret Information related to the security capabilities of InterTrust
Technology to any Person. Each Party shall be entitled to prior notice of
any settlement of any Claim to be entered into by the other Party and to
reasonable approval of a settlement to the extent such Party's rights
would be directly and materially impaired. Without limiting the
foregoing, in the event of any Claim or threatened Claim of [*] involving
a portion of the [*]: (a) upon SSG's request and at SSG's expense,
InterTrust will attempt to [*] the [*] or [*] SSG to continue to [*] and
[*] in accordance with the terms hereof such portion of [*] on [*] to
InterTrust (except that SSG may reasonably approve any terms relating to
payment of any fees or royalties); or (b) at InterTrust's sole
discretion, InterTrust may [*], [*] or [*] any [*] of the [*], as the
case may be, so as to make [*] of the [*] while maintaining [*] of [*] or
[*] of the [*] that are material to SSG's then-current or demonstrably
anticipated use of such technology. If options (a) and (b) are not [*] as
to such portion: (1) SSG may terminate the licenses granted hereunder in
its sole discretion; and (2) to the extent InterTrust used reasonable
commercial efforts to obtain a license or modify the technology as set
forth in subsections (a) or (b), and InterTrust is reasonably exposed to
liability from SSG's or its sublicensee's continued use of such portion
of InterTrust Technology, InterTrust may in its discretion terminate the
licenses granted hereunder with respect to such portion.
13.2 Cumulative Remedies. Except as expressly provided herein to the
-------------------
contrary, no remedy made available to a Party by any of the provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
13.3 Equitable Remedies. Each Party agrees that it may be impossible or
------------------
inadequate to measure and calculate a Party's damages from any breach of the
covenants set forth in Sections 5.3, 5.4, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 7.6,
10.1, 10.2, 15.3, 16.5 and 16.8 and Articles 8 and 11 hereof. Accordingly, each
Party agrees that if it or any of such Party's Agents thereof breach or threaten
a breach or anticipatory repudiation of any of such provisions, in addition to
any other right or remedy available, the other Party shall be entitled: (i) to
obtain an injunction against the breaching Party and such Party's Agents
thereof, from a court of competent jurisdiction restraining such breach or
threatened breach; and (ii) to specific performance of any such provision of
this Agreement. In addition, each Party agrees that, in the event a Party
breaches any of its Partnering Commitments under Article 10 to the other Party,
the non-breaching Party shall be entitled, in addition to any other remedies
available at law or in equity, to extend the Partnering Commitment by the
amount of time left on such period (measured from the later of the date such
breach is admitted by breaching Party or established by a final judgment
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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pursuant to which all appeal rights have been exhausted), and each Party hereby
irrevocably agrees to an award of specific performance of such provision in the
other Party's favor.
ARTICLE 14. EXCLUSION OF DAMAGES.
EXCEPT AS SET FORTH IN THE IMMEDIATELY FOLLOWING SENTENCE, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER PARTY, ITS AGENTS, AFFILIATES, CUSTOMERS, OR ANY
OTHER PERSONS, FOR ANY LOST PROFITS, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES, ARISING OUT OF THE BREACH OF THIS AGREEMENT OTHER THAN UNDER ARTICLES
5, 8 AND 10. NOTWITHSTANDING THE IMMEDIATELY PRECEDING SENTENCE, A PARTY SHALL
BE LIABLE TO THE OTHER PARTY FOR ALL DAMAGES, INCLUDING LOST PROFITS,
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES SUFFERED OR INCURRED BY THE OTHER
PARTY IN THE FOLLOWING CIRCUMSTANCES: (i) THE MISAPPROPRIATION OF TRADE SECRETS
OF THE DAMAGED PARTY BY THE LIABLE PARTY, OR ITS AGENTS; (ii) THE GROSS
NEGLIGENCE OF THE LIABLE PARTY, OR ITS AGENTS; (iii) THE WILLFUL MISCONDUCT OR
MATERIAL BREACH OF THIS AGREEMENT IN BAD FAITH BY THE LIABLE PARTY, OR ITS
AGENTS; OR (iv) THE BREACH OF ARTICLES 5, 8 OR 10 HEREOF. IN ANY DISPUTE AS TO
DAMAGES, THE LIABLE PARTY SHALL BE REQUIRED TO PROVE THE ABSENCE OF MATERIAL
NEGLIGENCE, WILLFUL MISCONDUCT AND/OR INTENTIONAL MATERIAL BREACH OF THIS
AGREEMENT IN BAD FAITH, AS THE CASE MAY BE, REFERRED TO IN THE IMMEDIATELY
PRECEDING SENTENCE.
ARTICLE 15. TERM AND TERMINATION.
15.1 Agreement. This Agreement shall commence on the Effective Date and
---------
shall continue for a period of twenty-five (25) years therefrom unless and until
terminated earlier pursuant to Section 15.2. At the end of such twenty-five (25)
year term, this Agreement shall automatically renew for subsequent one (1) year
periods unless and until a Party notifies the other in writing of its intent not
to renew this Agreement prior to sixty (60) days before the beginning of the
next such one (1) year period.
15.2 Events of Termination. This Agreement, the licenses granted
---------------------
hereunder, and/or all Cooperative Application Project Plans shall be subject to
termination upon the occurrence of any of the following events and such other
provisions hereof expressly so stating (each, an "Event of Termination"):
--------------------
(a) If either Party, or, as relevant, any of its permitted
sublicensees, materially defaults on any of its material obligations under
this Agreement, the non-defaulting Party shall have the right, exercisable
in its sole discretion, to initiate a termination procedure under this
Agreement by written notice (sent in accordance with the provisions of
Section 16.6 hereof) describing with reasonable specificity the nature of
the default and requiring that such default be cured, wherein such
termination notice shall automatically result in termination unless: (i)
within sixty (60) calendar days of receiving such written notice of such
default (the "Cure Period"), the defaulting Party (or such sublicensee)
-----------
remedies the default; or (ii) in the case of a default that cannot with
▇▇▇▇▇▇▇ due diligence
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be cured within the Cure Period, the defaulting Party or such sublicensee
institutes, by the date upon which one half of the Cure Period shall have
expired, steps necessary to remedy the default and thereafter employs best
efforts to diligently prosecute the same to completion. Notwithstanding the
foregoing, the Cure Period associated with SSG's breach of its payment
obligations in accordance with Section 7.1 shall be five (5) business days.
Notwithstanding any of the foregoing, a Party shall have the right both to
immediately terminate this Agreement and to obtain injunctive relief in the
event the other Party or any of its Agents or authorized sublicensees
engages in any: (a) intentional, material unauthorized use of technology
outside of the rights granted hereunder (or, in the case of SSG, any
unauthorized disclosure of InterTrust Top Secret Information) and/or (b)
willful, material unauthorized disclosure of Confidential Information.
Further notwithstanding the foregoing, in the event the Closing fails to
occur on or before August 19, 1996 pursuant to Section 2.1 hereof, SSG
shall be in material breach of this Agreement and InterTrust may
immediately, upon providing written notice to SSG and without opportunity
to cure, terminate this Agreement.
(b) By a Party at its option, effective immediately upon written
notice to the other Party, in the event of: (i) the filing by the other
Party of a petition in bankruptcy or insolvency; (ii) the appointment of a
receiver for the other Party for all or substantially all of its property
relevant to the business activities under this Agreement; (iii) the making
by the other Party of any assignment or attempted assignment for the
benefit of creditors for all or substantially all of its properties
relevant to its business activities under this Agreement; or (iv) the
institution of any proceedings for the liquidation or winding up of the
other Party's business or for the termination of its corporate charter, if
any such proceeding is not dismissed within one hundred and twenty (120)
days of institution;
(c) Upon written notice to SSG, InterTrust may immediately terminate
this Agreement in its sole discretion in the event SSG fails: (i) to
distribute SSG Products and/or Cooperative Applications within sixty (60)
months from the date InterTrust first delivers the SDK 1.0 to SSG, subject
to any extension permitted under Section 6.1(a); (ii) to comply with the
terms of Section 10.2 hereof; (iii) to terminate any sublicense pursuant to
which the sublicensee thereunder materially defaults its obligations under
this Agreement for a period of sixty (60) days after the date of written
notice thereof from InterTrust or SSG, whichever is earlier; or (iv) fails
to timely make payments due under this Agreement on two or more occasions
over a twelve (12) month period. Upon written notice to InterTrust, SSG may
immediately terminate this Agreement in its sole discretion in the event
InterTrust fails to comply with the terms of Section 10.1 hereof.
(d) A party to a Cooperative Application Project Plan shall have the
right to terminate such plan if the other party thereto materially breaches
any of its material obligations thereunder.
15.3 Effect of Termination. Upon the expiration or termination hereof: (i)
---------------------
all licenses granted hereunder, all sublicenses granted by SSG pursuant to
Section 5.2, and all cooperative development efforts then being conducted
pursuant to all Cooperative Application Project Plans shall automatically
terminate; (ii) InterTrust shall have the right to retain all sums already paid
by SSG (and all SSG sublicensees) hereunder, and SSG (and all SSG sublicensees)
shall pay to
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InterTrust all sums accrued but unpaid within thirty (30) days thereafter; and
(iii) SSG (and all SSG sublicensees) shall immediately discontinue use of
InterTrust Technology and/or the use of any portion of such InterTrust
Technology in any Modified Technology, and discontinue making, using, selling or
otherwise transferring or exploiting any product or service that in the absence
of a license hereunder would infringe any InterTrust Intellectual Property
Rights (including termination of distribution of Cooperative Applications and
SSG Products and any associated services); provided, however, that all licenses
-------- ------- ----
granted to end-users pursuant to the then-existing Customer Agreements solely
for Applications Products shall continue in full force and effect in accordance
with the terms thereof (provided that such licenses do not provide any rights to
such end-users with respect to Clearinghouse Functions, other than as expressly
provided hereunder). Each Party shall deliver to the other Party within ten (10)
days from the date of termination of this Agreement all copies of all materials
protected as confidential information or Top Secret Information under this
Agreement, including all copies under its control of its sublicensees or their
Agents. Return of confidential information shall be by commercially secure means
as reasonably specified by the receiving Party. Return of Top Secret Information
shall be made, at InterTrust's option as designated by a Designated Officer by
written instruction to SSG: (a) by physical and secure pickup at SSG's offices
by an InterTrust officer designated in writing by such Designated Officer; or
(b) as otherwise may be determined by InterTrust in its discretion, as
commercially reasonable. Such delivery shall be during normal business hours and
in each instance to the hands of an InterTrust officer who receives a listing of
the contents of such delivery certified by an officer of SSG and audited and
countersigned by such InterTrust officer. Within one (1) month after the
termination of this Agreement, each Party will certify in writing to the other
Party that, to the best of its knowledge, all such materials and tangible
embodiments have been delivered to the other Party.
15.4 Survival. The respective rights and obligations of InterTrust and SSG
--------
under the provisions of Sections 5.4, 6.5, 7.6 (but only for a period of five
years), 8.1, 8.2, 8.3, 8.4 (but only provision (i) thereof), 15.3, this Section
15.4, and Articles 11, 13 and 16 hereof shall survive expiration or termination
of this Agreement. Section 10.1 shall survive termination to the extent the
Agreement is properly terminated by SSG due to a material breach of the
Agreement by InterTrust pursuant to Section 15.2(a) hereof. Sections 9.3(c) and
10.2 shall survive termination to the extent the Agreement is properly
terminated by InterTrust due to a material breach of the Agreement by SSG
pursuant to Section 15.2(a) hereof. In the event that such a termination
pursuant to Section 15.2(a) occurs prior to delivery of SDK 1.0, such Partnering
Commitment as set forth in Sections 10.1 and 10.2, as applicable, shall run from
the Estimated date for delivery of such SDK as set forth on Exhibit B hereto as
of the Effective Date.
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ARTICLE 16. MISCELLANEOUS.
16.1 Governing Law. This Agreement, any and all actions arising out of or
-------------
in any manner affecting the interpretation of this Agreement, and any actions
between the Parties involving the InterTrust Technology, any InterTrust Property
and/or any Confidential or Top Secret Information ("Party Disputes") shall be
--------------
governed solely by, and construed solely in accordance with, the laws of the
United States of America and the Commonwealth of Virginia, excluding that body
of law relating to conflict of laws. The Parties hereby acknowledge and agree
that the Convention on Contracts for the International Sale of Goods shall not
apply to this Agreement. To the extent permitted by law, the provisions of this
Agreement shall supersede any provisions of the Uniform Commercial Code as
adopted or made applicable to this Agreement in any competent jurisdiction.
16.2 Venue and Jurisdiction. In connection with any litigation between the
----------------------
Parties involving a Party Dispute, each Party hereby unconditionally and
irrevocably consents to the exclusive jurisdiction and venue, as relevant, in
the Courts of the Commonwealth of Virginia and in the U.S. Federal District
Court, located in the City of Alexandria, Virginia (or any direct successor
thereto), and irrevocably: (i) waives any objection whatsoever (including any
objection with respect to venue) that any Party may now or hereafter have to the
jurisdiction or venue of said courts; and (ii) irrevocably consents to the
service of process of said courts in any matter relating to this Agreement by
the mailing of process by registered or certified mail, postage prepaid, at the
addresses specified in this Agreement. If necessary, SSG shall appoint a
registered agent in the State of Virginia for acceptance of service of process
and/or other notices provided for under this Agreement and shall notify
InterTrust of the identity of such registered agent within thirty (30) days
after the Effective Date.
16.3 Compliance with Law and Export Controls. The Parties shall at all
---------------------------------------
times comply with all applicable U.S. and foreign federal, state, and local
laws, rules and regulations relating to the execution, delivery and performance
of this Agreement and to the InterTrust Technology Products and Modified
Technology. Additionally, SSG acknowledges that because one or more aspects of
the InterTrust Technology Products is likely to be subject to the export control
laws, regulations and requirements of the United States and other jurisdictions,
SSG Products and Cooperative Applications likely will require export and other
approvals as well. InterTrust shall use reasonable efforts at InterTrust's
expense, and SSG shall at InterTrust's request reasonably assist InterTrust at
SSG's expense, to obtain any license or other approval, if any, that may be
required for InterTrust to make the InterTrust Technology Products and/or
Documentation or information relating thereto available to and SSG or SOFTBANK
Affiliates. SSG shall, at SSG's expense, comply with all applicable laws
(including applicable U.S. export control laws and regulations) and obtain all
necessary governmental consents and approvals in connection with any sublicense
or with respect to the distribution of or export or re-export of the SSG
Products and Cooperative Applications (as well as other technology as expressly
permitted hereunder) that contain any part of the InterTrust Technology Products
or Modified Technology in accordance herewith. The Parties expressly agree that
any failure to obtain or any delay in obtaining such approval as to InterTrust
Technology or in connection with any SSG Product or Cooperative Application
shall not relieve SSG from its obligations under this Agreement. As relevant and
applicable, SSG and InterTrust shall: (a) promptly deliver to the other, as
available, documentation reasonably confirming that it has complied with its
responsibilities under this Section 16.3; and (b) obtain such consents and
approvals from appropriate governmental entities
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as reasonably determined to be necessary for such further distribution,
exportation or re-exportation.
16.4 Amendment or Modification. This Agreement may not be amended,
-------------------------
modified or supplemented by the Parties in any manner, except by an instrument
in writing signed by the President or Chairman of InterTrust and a duly
authorized officer of SSG.
16.5 No Assignment. Except as expressly provided in Section 5.2, SSG shall
-------------
not assign or transfer its rights or obligations hereunder, without InterTrust's
prior written consent, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, SSG shall be entitled to assign or transfer such
rights or obligations hereunder to a SOFTBANK Affiliate in connection with any
merger or sale of substantially all of SSG's assets or business related to this
Agreement to such SOFTBANK Affiliate without such InterTrust consent; provided
--------
that such SOFTBANK Affiliate does not own, control, or is not developing,
----
promoting, licensing or acquiring any Competitive Technology. InterTrust shall
not assign or transfer this Agreement or its rights or obligations hereunder to
any Person without SSG's prior written consent, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, InterTrust shall be
entitled to assign or transfer such rights or obligations hereunder in
connection with any merger or sale of substantially all of assets or business
related to this Agreement without such SSG consent. Subject to the foregoing,
this Agreement will benefit and bind the successors and permitted assigns of the
Parties. Any attempted transfer or assignment without such approval shall be
null and void ab initio and of no force or effect.
-- ------
16.6 Notices. Any notice or other communication to be given hereunder
-------
shall be in writing and shall be (as elected by the Party giving such notice):
(i) personally delivered; (ii) transmitted by postage prepaid registered or
certified airmail, return receipt requested; or (iii) by facsimile with a
confirmation copy deposited prepaid with an internationally recognized express
courier service. Unless otherwise provided herein, all notices shall be deemed
to have been duly given on: (a) the date of receipt (or if delivery is refused,
the date of such refusal) if delivered personally or by express courier; or (b)
ten (10) days after the date of posting if transmitted by mail. Notwithstanding
the foregoing, communication of Confidential Information or Top Secret
Information shall be governed by practices adequate to appropriately protect
such information regarding Top Secret Information or as may be specified herein
or in the future by InterTrust. Either Party may change its address for purposes
hereof on not less than three (3) days prior notice to the other Party. Notice
hereunder shall be directed:
If to SSG, to:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to InterTrust, to:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
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VP, Corporate Development and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
16.7 Waiver. Any provision of this Agreement may be waived by the Party
------
entitled to the benefit thereof. Neither Party shall be deemed, by any act or
omission, to have waived any of its rights or remedies hereunder unless such
waiver is in writing and signed by, in the case of InterTrust, InterTrust's
President or Chairman, and in the case of SSG, a SSG authorized officer, and
then only to the extent specifically set forth in such writing. A waiver with
reference to one event shall not be construed as continuing or as a bar to or
waiver of any right or remedy as to a subsequent event.
16.8 No Third Party Beneficiaries. Nothing express or implied in this
----------------------------
Agreement is intended to confer, nor shall anything herein confer, upon any
Customer or any Person other than the Parties and any respective successors or
permitted assigns of the Parties, any rights, remedies, obligations or
liabilities whatsoever. Notwithstanding the foregoing, to the extent permitted
by law, SSG grants InterTrust the right to enforce against any of SSG's
sublicenses the terms of the applicable sublicenses or agreements between SSG
and its sublicensees for the purpose of asserting SSG's rights in order to
protect and enforce InterTrust's rights to InterTrust Property and any other
InterTrust rights under this Agreement.
16.9 No Agency. Nothing herein contained shall be construed to constitute
---------
the Parties hereto as partners or joint venturers or the agent of the other
Party in any sense of those terms whatsoever. Neither Party assumes any
liability of the other Party nor shall have any authority to enter into any
binding obligation on behalf of the other Party.
16.10 Recovery of Costs and Expenses. If any Party to this Agreement
------------------------------
brings an action against the other Party to enforce its rights under this
Agreement, the prevailing Party shall be entitled to recover its costs and
expenses, including without limitation, reasonable attorneys' fees and costs
incurred in connection with such action, including any appeal of such action.
16.11 Severability. If the application of any provision or provisions of
------------
this Agreement to any particular facts or circumstances shall be held to be
invalid or unenforceable by any court of competent jurisdiction, then: (i) the
validity and enforceability of such provision or provisions as applied to any
other particular facts or circumstances and the validity of other provisions of
this Agreement shall not in any way be affected or impaired thereby; and (ii)
such provision or provisions shall be reformed without further action by the
Parties hereto and only to the extent necessary to make such provision or
provisions valid and enforceable when applied to such particular facts and
circumstances.
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16.12 Counterparts; Facsimiles. This Agreement may be executed in any
------------------------
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one and the
same instrument. Each Party shall receive a duplicate original of the
counterpart copy or copies executed by it. For purposes hereof, a facsimile copy
of this Agreement, including the signature pages hereto, shall be deemed to be
an original. Notwithstanding the foregoing, the Parties shall deliver original
execution copies of this Agreement to one another as soon as practicable
following execution thereof.
16.13 Force Majeure. Except as provided herein to the contrary, if, by
-------------
reason of labor dispute, strike, inability to obtain labor or materials, fire or
other action of the elements, accident, administrative or governmental
restriction or appropriation or other causes, whether like or unlike the
foregoing, beyond the reasonable control of a Party hereto, such Party is unable
to perform in whole or in part its obligations set forth in this Agreement, then
such Party shall be relieved of those obligations to the extent it is so unable
to perform, and such inability to perform, so caused, shall not make such Party
liable to the other Party. Notwithstanding the foregoing, in the event any such
cause delays either Party's performance of any of its material obligations under
this Agreement, the other Party may suspend its performance under this Agreement
for the period such delay continues. This Agreement may be terminated by notice
by the Party not seeking excuse from performance, if such event shall prevent
performance for longer than one hundred and twenty (120) days. The Party subject
to an event of force majeure shall use good faith efforts to comply as closely
as possible with the provisions of this Agreement and to avoid the effects of
such event to the extent possible.
16.14 Entire Agreement. This Agreement represents the entire agreement of
----------------
the Parties with respect to the subject matter hereof and supersedes all prior
and/or contemporaneous agreements and understandings, written or oral between
the Parties with respect to the subject matter hereof (except as set forth in
Section 11.7 hereof).
[The following space is intentionally omitted]
-46-
CONFIDENTIAL
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first written above by the undersigned duly authorized.
INTERTRUST TECHNOLOGIES UPGRADE CORPORATION OF
CORPORATION AMERICA
By:_________________________ By:_________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Title: Co-Chief Executive Officer
Officer
SOFTBANK HOLDINGS, INC., solely for the purposes
Of Section 2.1 hereof:
By:_________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
-47-
CONFIDENTIAL
EXHIBIT A
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
WARRANT & STOCK PURCHASE AGREEMENTS
-----------------------------------
A-1
Execution Copy
--------------
INTERTRUST TECHNOLOGIES CORPORATION
SERIES B PREFERRED
STOCK PURCHASE AGREEMENT
August 1, 1996
TABLE OF CONTENTS
-----------------
Page
----
1. Purchase and Sale of Stock........................................... 1
1.1 Sale and Issuance of Series B Preferred Stock.................. 1
1.2 Closing........................................................ 1
1.3 Subsequent Sale of Series B Preferred Stock.................... 1
2. Representations and Warranties of the Company........................ 1
2.1 Organization, Good Standing and Qualification.................. 2
2.2 Capitalization and Voting Rights............................... 2
2.3 Subsidiaries................................................... 3
2.4 Authorization.................................................. 3
2.5 Valid Issuance of Preferred and Common Stock................... 3
2.6 Governmental Consents.......................................... 3
2.7 Offering....................................................... 4
2.8 Litigation..................................................... 4
2.9 Patents and Other Intangible Assets............................ 4
2.10 No Violations; Compliance with Other Instruments............... 4
2.11 Agreements; Action............................................. 4
2.12 Related-Party Transactions..................................... 5
2.13 Permits........................................................ 5
2.14 Financial Statements........................................... 5
2.15 Taxes.......................................................... 6
2.16 Employee Benefits.............................................. 6
2.17 Proprietary Information and Inventions Assignment Agreements... 6
3. Representations and Warranties of the Purchasers..................... 6
3.1 Authorization.................................................. 6
3.2 Purchase Entirely for Own Account.............................. 6
3.3 Disclosure of Information...................................... 7
3.4 Investment Experience.......................................... 7
3.5 Accredited Purchaser........................................... 7
3.6 Restricted Securities.......................................... 7
3.7 Further Limitations on Disposition............................. 7
3.8 Legends........................................................ 8
4. Additional Covenants................................................. 8
4.1 Registration Rights............................................ 8
4.2 Restriction on Transfer; Right of First Refusal................ 18
4.3 Mergers and Other Extraordinary Transactions................... 19
4.4 Financial Information.......................................... 20
4.5 Confidentiality................................................ 21
-i-
5. California Commissioner of Corporations............................. 21
5.1 Corporate Securities Law...................................... 21
6. Conditions of Purchaser's Obligations at Closing.................... 21
6.1 Representations and Warranties................................ 21
6.2 Performance................................................... 21
6.3 Compliance Certificate........................................ 21
6.4 Qualifications................................................ 21
6.5 Proceedings and Documents..................................... 22
6.6 Certificate of Designations, Preferences and Rights........... 22
6.7 Opinion of Company Counsel.................................... 22
6.8 No Injunction................................................. 22
7. Conditions of the Company's Obligations at Closing.................. 22
7.1 Representations and Warranties................................ 22
7.2 Payment of Purchase Price..................................... 22
7.3 Qualifications................................................ 22
8. Miscellaneous....................................................... 22
8.1 Survival of Representations, Warranties and Covenants......... 22
8.2 Successors and Assigns........................................ 22
8.3 Governing Law................................................. 23
8.4 Counterparts.................................................. 23
8.5 Titles and Subtitles.......................................... 23
8.6 Notices....................................................... 23
8.7 Finder's Fee.................................................. 23
8.8 Amendments and Waivers........................................ 24
8.9 Entire Agreement.............................................. 24
8.10 Severability.................................................. 24
8.11 Aggregation of Stock.......................................... 24
8.12 No Third Party Beneficiaries.................................. 24
-ii-
INTERTRUST TECHNOLOGIES CORPORATION
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT is made as of the 1st
day of August 1996, by and between InterTrust Technologies Corporation, a
Delaware corporation (the "Company"), and the purchasers listed on Schedule A
----------
hereto, each of whom is herein referred to as a "Purchaser."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Sale and Issuance of Series B Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of
State of Delaware on or before the Closing (as defined below) the Certificate of
Designations, Preferences and Rights in the form attached hereto as Exhibit A
---------
(the "Certificate of Designations, Preferences and Rights").
(b) Subject to the terms and conditions of this Agreement,
each Purchaser agrees, severally, to purchase at the Closing and the Company
agrees to sell and issue to each Purchaser at the Closing that number of shares
of the Company's Series B Preferred Stock set forth opposite each Purchaser's
name on Schedule A hereto at a purchase price of $8.57 per share, for an
----------
aggregate purchase price set forth on Schedule A.
----------
1.2 Closing. The purchase and sale of the Series B Preferred
-------
Stock shall take place at the offices of the Company at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, concurrently with the execution and delivery of
this Agreement or at such other time and place as the Company and Purchasers
acquiring in the aggregate more than half the shares of Series B Preferred Stock
sold pursuant hereto mutually agree upon orally or in writing (which time and
place are designated the "Closing"). At the Closing the Company shall deliver to
each Purchaser a certificate representing the Series B Preferred Stock that such
Purchaser is purchasing against payment of the purchase price therefor by check
or wire transfer.
1.3 Subsequent Sale of Series B Preferred Stock. The Company may
-------------------------------------------
sell up to the balance of the authorized number of shares of Series B Preferred
Stock not sold at the Closing to such purchasers as it shall select, at a price
not less than $8.57 per share, in one or more subsequent closings.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") attached hereto as Exhibit
-------
B, which exceptions shall be deemed to be representations and warranties as if
-
made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its financial
condition, business, prospects or results of operations.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists, or will consist immediately prior to the Closing, of:
(a) Preferred Stock. 10,000,000 shares of Preferred Stock (the
---------------
"Preferred Stock"), 2,500,000 of which shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock") and 1,399,575 of which shares
have been designated Series B Preferred Stock (the "Series B Preferred Stock").
1,983,333 shares of Series A Preferred Stock are issued and outstanding. The
rights, privileges and preferences of the Series A Preferred Stock are as stated
in the Company's Restated Certificate of Incorporation. The rights, privileges
and preferences of the Series B Preferred Stock will be as stated in the
Certificate of Designations, Preferences and Rights.
(b) Common Stock. 50,000,000 shares of Common Stock ("Common
------------
Stock"), 30,000,000 of which are designated Class A Voting Common Stock, and
20,000,000 of which are designated Class B Non-Voting Common Stock. 6,384,059
shares of Class A Voting Common Stock are issued and outstanding. 379,170 shares
of Class B Non-Voting Common Stock are issued and outstanding.
(c) The outstanding shares of Common Stock and the outstanding
shares of Series A Preferred Stock are all duly and validly authorized and
issued, fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act of 1933, as
amended (the "Act") and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(d) Except for the conversion privileges of the Series A
Preferred Stock, the conversion privileges of the Series B Preferred Stock to be
issued under this Agreement, outstanding options issued to directors, employees
and consultants to purchase 653,500 shares of Class A Voting Common Stock and
1,570,564 shares of Class B Non-Voting Common Stock, warrants outstanding which
are exercisable for 176,000 shares of Class A Voting Common Stock and 155,508
shares of Class B Non-Voting Common Stock, there are no outstanding options,
warrants, rights (including conversion or, except as set forth on the Schedule
of Exceptions, any preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the foregoing, the Company has reserved 516,500 shares of its Class A Voting
Common Stock for issuance upon exercise of additional options to be granted
under the Company's 1995 Stock Plan. The Company is not a party or subject to
any agreement or understanding, and, to the best of the Company's knowledge,
there is no agreement or understanding between any persons and/or entities,
which
-2-
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of the Company,
-------------
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder, and the authorization, issuance (or reservation for
issuance), sale and delivery of the Series B Preferred Stock being sold
hereunder and the Class A Voting Common Stock issuable upon conversion of the
Series B Preferred Stock has been taken or will be taken prior to the Closing,
and this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.5 Valid Issuance of Preferred and Common Stock. The Series B
--------------------------------------------
Preferred Stock that is being purchased by the Purchasers hereunder, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly authorized and validly issued,
fully paid, and nonassessable, and will be free of restrictions on transfer
other than restrictions on transfer under this Agreement and under applicable
state and federal securities laws. The Class A Voting Common Stock issuable
upon conversion of the Series B Preferred Stock purchased under this Agreement
has been duly authorized and validly reserved for issuance and, upon issuance in
accordance with the terms of the Certificate of Designations, Preferences and
Rights, will be duly authorized and validly issued, fully paid, and
nonassessable and free of any liens or encumbrances created by the Company and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and under applicable state and federal securities laws.
2.6 No Violation; Governmental Consents.
-----------------------------------
(a) The Company has complied with all federal, state, local and
foreign laws, regulations and orders applicable to its business except where the
failure to so comply would not have a material adverse effect on its financial
condition, business, prospects or results of operations. The execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby will not violate or be in conflict with any provision of
law, any order, rule or regulation of any court or other agency of government.
(b) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for the filing pursuant to Section 25102(f)
-3-
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder and the filing under Regulation D under the Act.
2.7 Offering. Subject in part to the truth and accuracy of each
--------
Purchaser's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Series B Preferred Stock as contemplated by this
Agreement are exempt from the registration requirements of the Act.
2.8 Litigation. Except as set forth on the Schedule of Exceptions,
----------
there is no action, suit, proceeding or investigation pending or, to the
knowledge of the Company, currently threatened against the Company that
questions the validity of this Agreement or the right of the Company to enter
into this Agreement, or to consummate the transactions contemplated hereby, or
that would result, either individually or in the aggregate, in any material
adverse changes in the financial condition or results of operations of the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 Patents and Other Intangible Assets. The Company owns all of its
-----------------------------------
granted, pending or common law rights in its patents, trademarks, tradenames and
copyrights. The Company has a license under any and all patents, patent
applications, trademarks, trade names, brand names, inventions, processes,
formulae or copyrights not owned by it to the extent that the Company knows to
be necessary for the operation of the business of the Company as now conducted
and as proposed to be conducted (the "Necessary Intellectual Property").
Without having conducted any special infringement or patent search, except as
set forth on the Schedule of Exceptions the Company is unaware of any
infringement of or conflict with the rights of others with respect to the
Necessary Intellectual Property.
2.10 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default in any respect of any provision of its Restated Certificate
of Incorporation or Bylaws, or any instrument, judgment, order, writ, decree or
material contract to which it is a party or by which it is bound. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or an event that results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval applicable to the Company, its business or
operations or any of its assets or properties.
2.11 Agreements; Action. Except as set forth in the Financial
------------------
Statements (defined below) and the Schedule of Exceptions:
(a) There are no instruments, judgments, orders, writs, decrees
or contracts to which the Company is a party or by which it is bound that may
involve (i) obligations (contingent or otherwise) of, or payments to the Company
in excess of $50,000, or
-4-
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, or (iii) provisions restricting the development or
distribution of the Company's products or services.
(b) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred or guaranteed any indebtedness for money
borrowed individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of $100,000 in the
aggregate, (iii) made any loans or advances in excess of $10,000 to any person,
other than ordinary advances for travel expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.12 Related-Party Transactions. Except as set forth in the Schedule
--------------------------
of Exceptions, no officer or director of the Company or member of his or her
immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
best of the Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that officers or directors of
the Company and members of their immediate families may own stock in publicly
traded companies that may compete with the Company. No member of the immediate
family of any officer or director of the Company is directly or indirectly
interested in any material contract with the Company.
2.13 Permits. The Company has all franchises, permits, licenses, and
-------
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
financial condition or results of operations of the Company, and the Company
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
2.14 Financial Statements. The Company has furnished to each
--------------------
Purchaser its audited balance sheet and related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1994 and
1995 and its unaudited balance sheet and related unaudited statements of
operations, stockholders' equity and cash flows for the quarters ended March 31,
1996 and June 30, 1996 (the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted accounting principles
(except for the omission of footnotes, and subject to year-end adjustments as
may be required under generally accepted accounting principles in the case of
the unaudited statements) and fairly present the
-5-
financial position of the Company as of the date thereof and the results of its
operations and cash flows for the period then ended. Except as disclosed or
provided for in the balance sheets as of December 31, 1995 or June 30, 1996 or
in the Schedule of Exceptions, there are no material liabilities of the Company
of any kind whatsoever, whether accrued, contingent or otherwise, other than
liabilities incurred in the ordinary course of business consistent with past
practice since the date of such balance sheets. Since June 30, 1996, there has
not been any material adverse change in the financial position or the earnings
or operations of the Company.
2.15 Taxes. The Company has prepared and timely filed all income tax
-----
returns and other material tax returns which are required to be filed, and has
paid, or made provision for the payment of, all taxes which have or may have
become due pursuant to said returns or pursuant to any assessment which has been
received by it. No federal or state income or sales tax returns of the Company
have been audited, and no deficiency assessment or proposed adjustment of the
Company's United States income tax, state or municipal taxes or sales taxes is
pending.
2.16 Employee Benefit Plans. Except as set forth in the Schedule of
----------------------
Exceptions, the Company does not have any "Employee Benefit Plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). No officer, director or employee of the Company has committed a
material breach of any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Employee Benefit Plan. Each Employee
Benefit Plan has at all times prior hereto been maintained in accordance with
its terms and all applicable laws, except where the failure to do so would not
have a material adverse effect upon the Company. With respect to each Employee
Benefit Plan, other than ordinary claims for benefits pursuant to the terms of
such plan, there is no claim pending or, to its knowledge, threatened against or
involving such plan by any person or governmental authority.
2.17 Proprietary Information and Inventions Assignment Agreements.
------------------------------------------------------------
Each employee, officer and consultant of the Company has executed a Company
Proprietary Information and Inventions Assignment Agreement. The Company is not
aware that any of its employees, officers or consultants are in violation
thereof.
3. Representations and Warranties of the Purchasers. Each Purchaser
------------------------------------------------
hereby represents and warrants, severally, that:
3.1 Authorization. Such Purchaser has full power and authority to
-------------
enter into this Agreement and each such Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except as
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, and (ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Purchaser in reliance upon such Purchaser's representation to the Company,
which by such Purchaser's execution of this Agreement such Purchaser hereby
confirms, that the Series B
-6-
Preferred Stock to be received by such Purchaser and the Class A Voting Common
Stock issuable upon conversion thereof (collectively, the "Securities") will be
acquired for investment for such Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that such Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, such Purchaser further represents that such Purchaser does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Securities.
3.3 Disclosure of Information. Such Purchaser represents that it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series B Preferred Stock. Such Purchaser further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series B Preferred Stock and the business, properties, prospects, financial
condition and results of operations of the Company.
3.4 Investment Experience. Such Purchaser is an investor in
---------------------
securities of companies in the development stage and acknowledges that he is
able to fend for himself, can bear the economic risk of his investment, and has
such knowledge and experience in financial or business matters that he is
capable of evaluating the merits and risks of the investment in the Series B
Preferred Stock. If other than an individual, Purchaser also represents either
(i) that it has not been organized for the purpose of acquiring the Series B
Preferred Stock or (ii) that if such Purchaser has been organized for the
purpose of acquiring the Series B Preferred Stock, that each of the equity
owners of such Purchaser is an investor of companies in the development stage
who is able to fend for himself, bear the economic risk of his investment in the
Purchaser and has such knowledge and experience in financial or business matters
that he is capable of evaluating the merits and risks of his investment in such
Purchaser.
3.5 Accredited Investor. Such Purchaser is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D under the Act, as presently in effect.
3.6 Restricted Securities. Such Purchaser understands that the
---------------------
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, such
Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Purchaser further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and:
-7-
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Such Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company, if reasonably
requested by the Company, with an opinion of counsel, reasonably satisfactory to
the Company that such disposition will not require registration of such shares
under the Act.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Purchaser that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to a shareholder of an investment corporation, or to the estate of
any such partner or retired partner or shareholder or the transfer by gift, will
or intestate succession of any such partner or shareholder to his or her spouse
or to the siblings, lineal descendants or ancestors of such partner or
shareholder or his or her spouse, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he or she were an original
Purchaser hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) "The sale or transfer of these securities is restricted under
the terms of a Series B Preferred Stock Purchase Agreement dated as of August 1,
1996 between the Company and the purchasers listed on Schedule A thereto, a copy
of which agreement is on file at the principal office of the Company."
(c) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
4. Additional Covenants.
--------------------
4.1 Registration Rights.
-------------------
(a) Definitions. The following terms shall have the following
-----------
respective meanings:
(i) "Expenses of Registration" shall have the meaning
specified in Section 4.1(e).
-8-
(ii) "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the 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.
(iii) "Holder" or "Holders" means any holder of
outstanding Registrable Securities.
(iv) "Holder or Holders of Series A Registrable
Securities" means any holder of outstanding Series A Registrable Securities.
(v) "Holder or Holders of Series B Registrable
Securities" means any holder of outstanding Series B Registrable Securities.
(vi) "Initiating Holders" means any Holder or Holders who
individually or in the aggregate hold not less than 25% of the Registrable
Securities.
(vii) "Initial Public Offering" means the Company's sale
of its Common Stock in a bona fide underwriting pursuant to a registration
statement under the Act, the public offering price of which is not less than
$7.50 per share (as adjusted for stock dividends, stock splits or
recapitalizations) and for an aggregate offering price, net of underwriters'
discounts and commissions, of more than $10,000,000.
(viii) "Lead Series A Investor" means ATGF II, a fund
organized under the laws of Panama, its affiliates, or its transferees permitted
under Section 4.1(i) of the Series A Preferred Stock Agreement.
(ix) "register", "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
(x) "Other Series Registrable Securities" means the
Registrable Securities described in clauses (ii) and (iii) of the definition of
Registrable Securities in Section 4.1(a)(xi).
(xi) "Registrable Securities" means (i) the shares of
Class A Voting Common Stock issuable or issued upon conversion of the
outstanding Series A Preferred Stock and any other shares of the Common Stock
issued as (or issuable upon conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to or exchange for or replacement of, the outstanding Series A Preferred Stock,
(ii) the shares of Class A Voting Common Stock issuable or issued upon
conversion of the outstanding Series B Preferred Stock and any other share of
the Common Stock issued as (or issuable upon conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to or exchange for or replacement of the outstanding
Series B Preferred Stock, and (iii) the shares of the Common Stock issuable or
issued upon conversion of any series of Preferred Stock that may from time to
time come into existence as to
-9-
which the Company may grant rights to have such shares of the Common Stock
registered and any other shares of the Common Stock issued as (or issuable upon
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to or exchange for or
replacement of such series of Preferred Stock, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which a Holder's
rights under this Agreement, under the Series A Preferred Stock Agreement or
under the agreement(s) pursuant to which any series of Preferred Stock that may
from time to time come into existence may be purchased are not assigned;
provided, however, that Registrable Securities shall only be treated as
-------- -------
Registrable Securities if, and so long as, they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Act under Section 4(1)
thereof so that all transfer restrictions and restrictive legends with respect
thereto may legally be removed upon the consummation of such sale.
(xii) "Series A Preferred Stock Agreement" means that
certain Series A Preferred Stock Purchase Agreement dated March 15, 1996 between
the Company and the purchasers listed on Schedule A thereto and all amendments
and supplements thereto.
(xiii) "Series A Registrable Securities" means the
Registrable Securities described in clause (i) of the definition of Registrable
Securities in Section 4.1(a)(xi) hereof.
(xiv) "Series B Registrable Securities" means the
Registrable Securities described in clause (ii) of the definition of Registrable
Securities in Section 4.1(a)(xi) hereof.
(b) Demand Registration.
-------------------
(i) Request for Registration. In case the Company shall
------------------------
receive from Initiating Holders a written request (the "Request") that the
Company effect any registration with respect to not less than 25% of the
Registrable Securities then outstanding, or any lesser percentage of Registrable
Securities if the anticipated aggregate offering price, net of underwriters'
discounts and commissions, would exceed $3,000,000, the Company wil l
(1) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders in accordance
with Section 8.6; and
(2) as soon as practicable, use its reasonable efforts
to effect such registration (including, without limitation, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Act and any
other governmental requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in the Request, together with all
or such portion of the Registrable Securities of any Holder or Holders joining
in the Request as are specified in a written notice received by the Company
within twenty (20) days after such Holder's receipt of written notice provided
by the Company pursuant to Section 4.1(b)(i)(1); provided, however, that
-10-
the Company shall not be obligated to take any action to effect any such
registration pursuant to this Section 4.1(b):
A. In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act;
B. Prior to 270 days following the effective date of
the Initial Public Offering;
C. During the period starting with the date of filing
of, and ending on the date 180 days immediately following the effective date of,
any general form of registration statement pertaining to sale by the Company of
Common Stock or securities which are immediately convertible at the option of
the holder or convertible within twelve (12) months from the date of issuance
into Common Stock, provided that the Company is actively employing in good faith
all reasonable efforts to cause such registration statement to become effective;
D. After the Company has effected one (1) such
registration pursuant to this Section 4.1(b) provided that if the first
--------
registration pursuant to this Section 4.1(b) shall be underwritten and if less
than 50% of the Series B Registrable Securities then outstanding held by the
Initiating Holder and all Holders who join in the Request in the manner, and at
the time, specified in Section 4.1(b)(i)(2) shall be, or shall have been,
included in such underwriting and in any underwriting described in Section
4.1(c)(ii) which has been consummated prior to the date of such underwriting,
then the Company shall be obligated to effect an additional registration
pursuant to this Section 4.1(b); or
E. If the Company shall furnish to such Initiating
Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Company's Board of Directors it
would be seriously detrimental to the Company or its stockholders for a
registration statement to be filed at the date filing would be required, in
which case the Company's obligation to use its reasonable efforts to register
under this Section 4.1(b) shall be deferred for a period not to exceed 120 days
from the date of receipt of the Request, provided that the Company may not
exercise this deferral right more than once during any twelve (12) month period.
(ii) Underwriting. If any registration pursuant to Section
------------
4.1(b) shall be underwritten, the right of any Holder to registration pursuant
to Section 4.1(b) shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in such
underwriting as prescribed herein (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and each such Holder). The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected by the Company for such
underwriting (the "Managing Underwriter"). Notwithstanding any other provision
of this Section 4.1(b), if the Managing Underwriter advises
-11-
the Initiating Holders or the Company in writing that the number of Registrable
Securities proposed to be registered by such Initiating Holder or Holders
exceeds the maximum number of such shares which the Managing Underwriter
considers, in good faith, to be appropriate based upon market conditions and
other relevant factors (the "Maximum Number"), then (1) the Company shall so
advise all Holders, (2) the Lead Series A Investor shall be entitled to include
Registrable Securities in such underwriting up to the Maximum Number, (3) if the
Lead Series A Investor elects to include in such underwriting a number of its
Registrable Securities which is less than the Maximum Number (the "Series A
Portion"), the Initiating Holders of Series A Registrable Securities (if
different than the Lead Series A Investor) and those Holders of Series A
Registrable Securities (other than the Lead Series A Investor) joining in the
Request shall be entitled to include in such underwriting their pro-rata share
of Series A Registrable Securities up to that number of shares equal to the
difference between the Maximum Number and the Series A Portion and (4) if the
Holders of Series A Registrable Securities (including the Lead Series A
Investor) elect to include in such underwriting a number of their Registrable
Securities which is less than the Maximum Number, the Holders of Other Series
Registrable Securities joining in the Request shall be entitled to include in
such underwriting their pro-rata share of Other Series Registrable Securities up
to that number of shares equal to the difference between the Maximum Number and
the total number of shares that the Holders of Series A Registrable Securities
(including the Lead Series A Investor) elect to include in such underwriting.
For purposes of the preceding sentence, (x) a Holder's "pro-rata share of Series
A Registrable Securities" shall mean the quotient obtained by dividing the
number of Series A Registrable Securities held by such Holder by the sum of all
of the Series A Registrable Securities held by the Initiating Holders (if
different than the Lead Series A Investor) and those Holders of Series A
Registrable Securities (other than the Lead Series A Investor) joining in the
Request and (y) a Holder's "pro-rata share of the Other Series Registrable
Securities" shall mean the quotient obtained by dividing the number of Other
Series Registrable Securities held by such Holder by the sum of all of the Other
Series Registrable Securities held by the Initiating Holders and those Holders
of Other Series Registrable Securities joining in the Request. No Registrable
Securities excluded from the underwriting by reason of the Managing
Underwriter's marketing limitation shall be included in such underwriting. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares. If any Holder declines to participate upon
review of the terms of the underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company, the Managing Underwriter and the
Initiating Holders. The Registrable Securities and/or other securities so
withdrawn shall also be withdrawn from registration, and such Registrable
Securities shall not be transferred in a public distribution prior to 180 days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require. If the underwriter has not limited the
number of Registrable Securities to be underwritten, or if Holders have elected
to include less than the Maximum Number in such underwriting, the Company may
include securities for its own account (or for the account of other
stockholders) in such registration if the Managing Underwriter so agrees and if
the number of Registrable Securities that would otherwise have been included in
such registration and underwriting will not thereby be limited.
-12-
(iii) The Company shall pay the Expenses of Registration
for one (1) registration requested pursuant to this Section 4.1(b).
Notwithstanding the immediately preceding sentence, in the event that the
Company is obligated to effect an additional registration pursuant to the
proviso to Section 4.1(b)(2)(D), then the Company shall pay the Expenses of
Registration for two (2) registrations requested pursuant to this Section
4.1(b).
(c) Company Registration.
--------------------
(i) Notice of Registration. If (but without any obligation
----------------------
to do so) at any time after the Initial Public Offering the Company proposes to
register any of its Common Stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating either to the sale of securities to participants in a
Company stock option, stock purchase or similar plan or to an SEC Rule 145
transaction, or a registration on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successors to such
forms, the Company shall, at such time, promptly give each Holder written notice
of such registration. Upon the written request of any Holder given within twenty
(20) days from receipt of such notice by the Company in accordance with Section
8.6, the Company shall, subject to the provisions of Section 4.1(c)(ii) and
4.1(d), cause to be registered under the Act all of the Registrable Securities
that each such Holder has requested to be registered.
(ii) Underwriting Requirements. In connection with any
-------------------------
offering pursuant to this Section 4.1(c), the Company shall not be required to
include any of the Holders' securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the underwriters, adversely affect the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters reasonably
believe would not adversely affect the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters believe
will not adversely affect the success of the offering (the securities so
included to be apportioned first to the Company, then second pro rata among the
selling Holders of Series A Registrable Securities according to the total amount
of Series A Registrable Securities owned by each selling Holder, then third pro
rata among the selling Holders of Other Series Registrable Securities according
to the total amount of Other Series Registrable Securities owned by each selling
Holder and then fourth to all other selling stockholders, or in such other
proportions as shall mutually be agreed to by all such parties), it being
understood that all Registrable Securities may be excluded from the registration
on this basis. For any selling stockholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders 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 "selling stockholder," and
any pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of Registrable Securities owned by all entities and
individuals included in such "selling stockholder," as defined in this sentence.
-13-
(iii) The Company shall pay the Expenses of
Registration for two (2) registrations requested pursuant to this Section
4.1(c).
(d) Furnish Information. It shall be a condition precedent
-------------------
to the obligations of the Company to take any action pursuant to this Section
4.1 with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
(e) Expenses of Registration. The term "Expenses of
------------------------
Registration" means all expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or qualifications
pursuant to this Section 4.1, including (without limitation), all registration,
filing and qualification fees, printers and accounting fees, fees and
disbursements of counsel for the Company. Expenses of Registration does not
include the fees and disbursements of counsel for the selling Holders.
(f) No Delay of Registration No Holder shall have any right
------------------------
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 4.1.
(g) Indemnification In the event any Registrable Securities
---------------
are included in a registration statement under this Section 4.1:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder of Series B Registrable Securities, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the 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 Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) that arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any 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 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will pay, as incurred, to each such Holder, underwriter or
controlling person, to the extent (and only to the extent) that such losses,
claims, damages, or liabilities arise out of a Violation, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 4.1(g) in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 4.1(g) shall not apply to amounts paid in
settlement of any such loss, claim, damage,
-14-
liability, or action if such settlement is effected without the consent of the
Company, 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 any such Holder, underwriter or controlling person.
(ii) To the extent permitted by law, each selling Holder
of Series B Registrable Securities will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
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 information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 4.1(g)(ii), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 4.1(g)(ii) 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. Nothing contained in
this Section 4.1(g)(ii) is intended to preclude the underwriters in any offering
from requiring broader indemnities from the Holders participating in such
offering.
(iii) Promptly after receipt by an indemnified party under
this Section 4.1 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 4.1, deliver to
the indemnifying party a written notice of the commencement 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 separate counsel of its own, with the reasonable 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 differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding; provided further that the indemnifying party shall not be
responsible for the fees and expenses of more than one separate counsel for all
indemnified parties. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
4.1 (to the extent of such prejudicial effect), 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 4.1.
-15-
(iv) No indemnifying party, in the defense of any claim
arising out of a Violation shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation and, in the event the terms of such judgment or
settlement include any term other than the payment by the indemnifying party of
money damages, the indemnifying party shall not so consent or enter into such a
settlement without the consent of each indemnified party (which will not be
unreasonably withheld) whether or not the terms thereof include such a release.
(v) The obligations of the Company and Holders under this
Section 4.1 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 4.1, and otherwise.
(h) Form S-3 Registration. In case the Company shall receive
---------------------
from any Holder or Holders a written request 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, the Company will:
(i) Promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(ii) 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 receipt of such written notice from the
Company in accordance with Section 8.6; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 4.1(h):
(1) If Form S-3 is not available for such offering
by the Holders;
(2) Unless the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell either (x) Registrable Securities having an aggregate price to
the public (net of any underwriters' discounts and commissions) in excess of
$2,000,000; or (y) not less than 15% of the Registrable Securities then
outstanding;
(3) If the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such Form S-3 registration to be
effected at such time, in which event the Company shall have the right to defer
the filing of the Form S-3 registration statement for a period of not more than
120 days after receipt of the request of the Holder or Holders under this
-16-
Section 4.1(h); provided, however, that the Company shall not utilize this right
more than once in any twelve (12) month period;
(4) If the Company has completed its Initial Public
Offering within 180 days of the Company's receipt of the request for the Form S-
3 registration; 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.
(iii) Notwithstanding anything to the contrary herein, the
Company shall not be obligated to effect more than two (2) registrations
pursuant to this Section 4.1(h), and no more than one (1) such registration in
any twelve (12) month period.
(iv) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. The Company shall pay the Expenses of
Registration for two (2) registrations requested pursuant to this Section
4.1(h). Registrations effected pursuant to this Section 4.1(h) shall not be
counted as registrations effected pursuant to Sections 4.1 (b) or (c).
(i) Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 4.1 may only
be assigned by a Holder to a transferee who acquires all of such Holder's
shares, provided the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee; and
provided, further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act. Notwithstanding the
immediately preceding sentence, a Purchaser may assign the rights to cause the
Company to register Registrable Securities pursuant to this Section 4.1 to an
investment fund or funds managed by it (a "Permitted Fund Transferee") which
acquires less than all of the Purchaser's shares if prior to such assignment and
transfer, the Purchaser submits to the Company an irrevocable, joint and several
undertaking for the benefit of the Company executed by the Purchaser and the
Permitted Fund Transferee(s) to exercise all of their rights to register
Registrable Securities pursuant to this Section 4.1 in tandem, in a manner
consistent with holding such rights as a group and exclusively represented on
all matters arising under this Agreement by a single Purchaser or Permitted Fund
Transferee appointed in such undertaking by the other parties thereto.
(j) "Market Stand-Off" Agreement. Each Purchaser hereby agrees
---------------------------
that during the 180 day period following the effective date of each of (i) a
registration statement of the Company filed under the Act in connection with the
Initial Public Offering and (ii) the registration statement filed under the Act
with respect to an underwritten offering of Common Stock (or securities which
are immediately convertible at the option of the holder or convertible within
twelve (12) months from the date of issuance into Common Stock) after the
Initial Public Offering, it shall not sell, offer to sell, or otherwise transfer
or dispose of any capital stock of the
-17-
Company held by it at any time during such period except to the extent such
Purchaser participates as a selling stockholder in such registrations. To
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of the Purchaser (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period. Each Holder agrees to execute the
form of such market stand-off agreement as may be reasonably requested by the
underwriters.
(k) Termination or Amendment of Registration Rights. The
-----------------------------------------------
registration rights granted under this Section 4.1 may be terminated, waived or
amended with the written consent of the Company and the Holders of 66% of the
Series B Registrable Securities then outstanding. In addition, no Holder of
Series B Registrable Securities shall be entitled to exercise any right provided
for in this Agreement (a) after four (4) years following the closing of the
Initial Public Offering or (b) at such time following the Initial Public
Offering and for so long as such Holder may sell all of such Holder's Series B
Registrable Securities in any ninety (90) day period pursuant to Rule 144(k) (or
such successor rule as may be adopted).
(l) Registration Rights of Holders of Series A Registrable
------------------------------------------------------
Securities. The rights granted to the Holders of Series B Registrable Securities
----------
in Sections 4.1(b), 4.1(c) and 4.1(h) of this Agreement to have Series B
Registrable Securities owned by them registered shall be subject to the rights
granted to the Holders of Series A Registrable Securities in Sections 4.1(b),
4.1(c) and 4.1(h) of the Series A Preferred Stock Agreement to have Series A
Registrable Securities owned by them registered.
4.2 Restriction on Transfer; Right of First Refusal.
-----------------------------------------------
(a) Restriction on Transfer. Neither any Purchaser nor any
-----------------------
transferee of any Purchaser shall sell or transfer in any manner any shares of
Series B Preferred Stock purchased hereunder (or any shares of the Class A
Voting Common Stock into which such shares of Series B Preferred Stock may be
converted) to any person or entity engaged in, or reasonably anticipated by the
Company to become engaged in, the business of providing electronic commerce
solutions or related technology (a "Restricted Party"). A Purchaser or any
transferee of any Purchaser may request that the Company waive the restriction
on the sale or transfer of shares described in the preceding sentence to a
Restricted Party as to a particular, proposed sale or transfer, but the Company
shall have no obligation to waive such restriction on the sale or transfer of
any such shares to any Restricted Party.
(b) Right of First Refusal. In the event, at any time after the
----------------------
date of this Agreement, any Purchaser or its transferee desires to sell or
transfer in any manner any shares of Series B Preferred Stock purchased
hereunder (or any shares of the Class A Voting Common Stock into which such
shares of Series B Preferred Stock have been converted) to a person or entity
which is not a Restricted Party, it shall first offer such shares for sale to
the Company at substantially the same price, and upon substantially the same
terms (or terms as similar as reasonably possible) upon which it is proposing or
is to dispose of such shares; provided that a Purchaser may transfer all or part
of its shares of Series B Preferred Stock (or any shares of the Class A Voting
Common Stock into which such shares of Series B Preferred Stock
-18-
have been converted) to a Permitted Fund Transferee or Transferees without first
making such offer to the Company. Said right of first refusal shall be provided
to the Company for a period of fifteen (15) days following receipt by the
Company of written notice (the "Proposed Transfer Notice") by the Purchaser of
the terms and conditions of said proposed sale or transfer and the name, address
and phone number of each proposed buyer or transferee. The Company may exercise
such right of first refusal as to all, or some portion which is less than all,
of the shares proposed to be transferred by notifying the Purchaser in writing
within such fifteen day period, and paying such Purchaser within thirty (30)
days following receipt by the Company of the Proposed Transfer Notice the
relevant consideration therefor. If the Company and its assigns do not complete
the purchase of shares of Series B Preferred Stock (or any shares of the Class A
Voting Common Stock into which such shares of Series B Preferred Stock have been
converted) identified in the Proposed Transfer Notice within thirty (30) days
following receipt by the Company of the Proposed Transfer Notice, the Purchaser
may sell or transfer such shares in accordance with the terms and conditions set
forth in the Proposed Transfer Notice to the person or entity identified in the
Proposed Transfer Notice. If the Purchaser desires to sell or transfer in any
manner such shares either (i) upon terms and conditions which are different than
those specified in the Proposed Transfer Notice or to a person or entity other
than the person or entity identified in the Proposed Transfer Notice or (ii)
more than sixty (60) days after the Company's receipt of the Proposed Transfer
Notice, then the Purchaser shall comply with the provisions of this Section
4.2(b) again prior to effecting any such sale or transfer.
(c) Assignment. The Company may assign the rights granted to it
----------
pursuant to this Section 4.2 in whole or in part to any stockholder or
stockholders of the Company or other persons or organizations.
(d) Restrictions Binding on Transferees. All transferees of
-----------------------------------
shares purchased pursuant to this Agreement, shares of the Class A Voting Common
Stock issued upon the conversion of such shares or any interest therein will
receive and hold such shares or interest subject to the provisions of this
Section 4.2.
(e) Termination of Right of First Refusal. The right of first
-------------------------------------
refusal granted the Company in Section 4.2(b) shall terminate upon consummation
of the Initial Public Offering, with such termination retroactive to the
effectiveness of the registration statement relating to the Initial Public
Offering.
4.3 Mergers and Other Extraordinary Transactions.
--------------------------------------------
(a) Agreement. Each Purchaser shall either (i) take all actions
---------
necessary to vote all shares of the Series B Preferred Stock (and all shares of
the Class A Voting Common Stock into which such shares of Series B Preferred
Stock may be converted) owned or held of record by such Purchaser at any annual
or special meeting of the Company (or by written consent in lieu of such
meeting) held for the approval of any merger, consolidation or sale or exchange
of all or substantially all of the Company's assets which has been approved by
the Board of Directors in favor of any such merger, consolidation or sale or
exchange of all or substantially all of the Company's assets and all
transactions and other matters incident thereto
-19-
or (ii) refrain from taking any action with respect to any merger, consolidation
or sale or exchange of all or substantially all of the Company's assets which
has been approved by each of the Board of Directors and the majority of the
outstanding stock of the Company entitled to vote thereon which prevents,
restricts or otherwise inhibits such merger, consolidation or sale or exchange
of all or substantially all of the Company's assets from being accorded pooling
accounting treatment. Without limiting the generality of clause (ii) of the
preceding sentence, the Purchaser agrees to refrain from asserting any appraisal
rights that it may have as a consequence of any transaction described in the
immediately preceding sentence if such assertion of appraisal rights would
prevent, restrict or otherwise inhibit such transaction from being accorded
pooling accounting treatment.
(b) Agreement Binding on Transferees. All transferees of shares
--------------------------------
purchased pursuant to this Agreement, shares of the Class A Voting Common Stock
issued upon the conversion of such shares or any interest therein will receive
and hold such shares or interest subject to the provisions of this Section 4.3.
(c) Termination of Agreement. The agreement of this Section 4.3
------------------------
shall terminate at the earlier of (i) consummation of the Initial Public
Offering or (ii) ten (10) years from the Closing Date.
4.4 Financial Information.
---------------------
(a) Annual and Quarterly Information. The Company will mail the
--------------------------------
following reports to each Purchaser for so long as such Purchaser is a holder
(or such Purchaser and a Permitted Fund Transferee or Transferees are the
collective holders) of at least eighty (80%) percent of shares of Series B
Preferred Stock purchased by such person hereunder (or shares of Class A Voting
Common Stock issued upon conversion of shares of Series B Preferred Stock):
(i) As soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter, audited consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of income, consolidated statements of changes
in financial position and consolidated statements of stockholders' equity of the
Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles ("GAAP") and setting forth in each case
in comparative form the figures for the previous fiscal year; and
(ii) As soon as practicable after the end of each fiscal
quarter in each fiscal year of the Company and in any event within 60 days
thereafter, an unaudited consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of each such quarter, and unaudited
consolidated statements of income, unaudited consolidated statements of cash
flow and unaudited consolidated statements of stockholders' equity of the
Company and its subsidiaries, if any, for such period and for the current fiscal
year to date, prepared in accordance with GAAP (subject to normal year-end audit
adjustments).
-20-
(b) Termination of Covenants. The covenants set forth in
------------------------
this Section 4.4 shall terminate upon consummation of the Initial Public
Offering, with such termination retroactive to the effectiveness of the
registration statement relating to the Initial Public Offering.
4.5 Confidentiality. Each Purchaser shall maintain in strictest
---------------
confidence all financial information furnished to it by the Company pursuant to
Section 4.4 or otherwise and shall not use any of such financial information for
any purpose other than monitoring its equity investment in the Company. All
transferees of shares purchased pursuant to this Agreement, shares of the Class
A Voting Common Stock issued upon the conversion of such shares or any interest
therein will receive and hold such shares or interest subject to the provisions
of this Section 4.5.
5. California Commissioner of Corporations.
---------------------------------------
5.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
6. Conditions of Purchaser's Obligations at Closing. The obligations of
------------------------------------------------
each Purchaser under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
6.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
6.3 Compliance Certificate. The Chief Executive Officer or the Vice
----------------------
President, Corporate Development of the Company shall deliver to each Purchaser
at the Closing a certificate stating that the conditions specified in Sections
6.1 and 6.2 have been fulfilled.
6.4 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
-21-
6.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Purchasers or to the Purchasers' special counsel, and they
shall have received all such counterpart original and certified or other copies
of such documents as they may reasonably request.
6.6 Certificate of Designations, Rights and Preferences. The Company
---------------------------------------------------
shall have filed the Certificate of Designations, Rights and Preferences with
the Secretary of State of Delaware.
6.7 Opinion of Company Counsel. Each Purchaser shall have received
--------------------------
from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an
opinion, dated as of the Closing, in the form attached hereto as Exhibit C.
---------
6.8 No Injunction. No preliminary or permanent injunction or other
-------------
binding order, decree or ruling issued by a court or governmental agency shall
be in effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement.
7. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Purchaser:
7.1 Representations and Warranties. The representations and
------------------------------
warranties of the Purchaser contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
7.2 Payment of Purchase Price. The Purchaser shall have delivered
-------------------------
the purchase price specified in Section 1.2.
7.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
8. Miscellaneous.
-------------
8.1 Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations and warranties made by the Company in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Closing Date
for a period of two (2) years. All representations and warranties made by any
Purchaser in this Agreement shall survive the Closing Date for a period of two
(2) years. All covenants made by the parties in this Agreement shall survive
the Closing Date.
8.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective
-22-
successors and assigns of the parties (including transferees of any Securities).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
8.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
8.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile signature, which signature shall be deemed an original.
8.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices.
-------
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the respective parties as follows:
To the Company: InterTrust Technologies Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice President, Corporate Development
To a Purchaser: At such Purchaser's address (or facsimile) as set forth on
Schedule A, as applicable, hereto.
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, overnight mail,
or by telex or telecopy (facsimile) with confirmation of delivery, and shall be
deemed to be given or made when delivery is so confirmed.
(c) Any party may, by written notice (in accordance with this
Section 8.6) to the other, alter its address.
8.7 Finder's Fee. Each Purchaser represents solely on its own behalf
------------
that it neither is nor will be obligated for any finders' fee or commission in
connection with this transaction. The Company represents that, with the
possible exception set forth on the Schedule
-23-
of Exceptions, it neither is or will be obligated for any finders' fee or
commission in connection with this transaction. Each of the Company and the
Purchaser agrees to indemnify and to hold harmless the other party from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or the Purchaser, as the case may be, or any of
its officers, partners, employees, or representatives is responsible.
8.8 Amendments and Waivers. Except as provided elsewhere herein, any
----------------------
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of a majority of the Class A Voting Common Stock issued or
issuable upon conversion of the Series B Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company.
8.9 Entire Agreement. This Agreement, the Schedule and Exhibits
----------------
hereto and the certificate delivered pursuant hereto constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior written or oral negotiations, commitments,
representations and agreements.
8.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
8.12 No Third Party Beneficiaries. This Agreement is intended and
----------------------------
agreed to be solely for the benefit of the parties hereto, and no third party
shall accrue any benefit, claim or right of any kind whatsoever pursuant to,
under, by or through this Agreement. Without limiting the generality of the
preceding sentence, the Holders of Series A Registrable Securities shall not
accrue any rights to have Series A Registrable Securities registered which are
greater than, or in addition to, the rights granted the Holders of Series A
Registrable Securities in the Series A Preferred Stock Agreement to have Series
A Registrable Securities owned by them registered.
-24-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INTERTRUST TECHNOLOGIES CORPORATION
By:_____________________________________
Name:
Title:
SOFTBANK HOLDINGS INC.
By:_____________________________________
Name:
Title:
-25-
SCHEDULE A
PURCHASERS
----------
Number of Aggregate Purchase
Purchaser Shares Price
--------- ------ -----
SOFTBANK Holdings Inc. 583,431 $ 5,000,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------------------
TOTAL 583,431 $ 5,000,000
-26-
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES B PREFERRED STOCK
OF
INTERTRUST TECHNOLOGIES CORPORATION
Pursuant to the provisions of Section 151 of the General Corporation Law of
the State of Delaware.
INTERTRUST TECHNOLOGIES CORPORATION, a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority conferred in Article
IVB of its Amended and Restated Certificate of Incorporation, and in accordance
with the provisions of Section 151 of the General Corporation Law of the State
of Delaware, its Board of Directors has adopted the following resolution
creating a series of 1,399,575 shares of Preferred Stock designated as Series B
Preferred Stock:
RESOLVED, that a series of the Corporation's Preferred Stock consisting of
1,399,575 shares of Preferred Stock, be and hereby is designated as "Series B
Preferred Stock," par value $.001 per share, and that the Series B Preferred
Stock shall have the designations, powers, preferences and relative,
participating, optional or other rights and such qualifications, limitations and
restrictions as set forth in the Certificate of Designations, Preferences and
Rights of Series B Preferred Stock.
This Certificate states that the Board of Directors does hereby fix and
herein state and fix such designations, powers, preferences, rights,
qualifications, limitations and restrictions thereof as follows:
1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series B Preferred Stock" and the number of shares constituting
such series shall be 1,399,575.
2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of Series A Preferred Stock of the
Corporation, par value $0.001 per share (the "Series A Preferred Stock") and any
other series of Preferred Stock of the Corporation, par value $0.001 per share
(the "Preferred Stock") that may from time to time come into existence, the
holders of outstanding Series B Preferred Stock shall be entitled to receive the
same per share dividend as declared or paid on shares of Common Stock of the
Corporation, par value $0.001 per share (the "Common Stock") (other than
dividends on shares of Common Stock payable solely in shares of the Common
Stock). Such dividends will be in an amount determined by the Board of
Directors of this Corporation (the "Board of Directors") and shall be payable,
when, as and if declared by the Board of Directors out of funds legally
available therefor. Subject to the rights of Series A Preferred Stock and the
rights of other series of Preferred Stock that may from time to time come into
existence, dividends or distributions (other than dividends payable solely in
shares of Common Stock) may
be declared and paid upon Common Stock in any fiscal year of this Corporation
only if dividends shall have been paid on or declared and set apart upon all
shares of Series B Preferred Stock on the same per share basis. The right to
such dividends on shares of Series B Preferred Stock shall not be cumulative and
no right shall accrue to holders of Series B Preferred Stock by reason of the
fact that dividends on such shares are not declared in any prior year, nor shall
any undeclared or unpaid dividend bear or accrue interest.
(b) In the event this Corporation shall declare a distribution to
the holders of Common Stock (other than distributions payable solely in shares
of Common Stock) payable in cash, securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets or options or
rights to purchase any such securities or evidences of indebtedness, then, in
each such case the holders of the Series B Preferred Stock shall be entitled to
a proportionate share of any such distribution as though the holders of the
Series B Preferred Stock were the holders of the number of shares of Class A
Voting Common Stock of the Corporation, par value $0.001 per share (the "Class A
Voting Common Stock") into which their respective shares of Series B Preferred
Stock are convertible as of the record date fixed for the determination of the
holders of Common Stock of this Corporation entitled to receive such
distribution.
3. Liquidation Preference.
----------------------
(a) For purposes hereof, the original purchase price (the
"Original Series B Purchase Price") of the Series B Preferred Stock is $8.57 per
share of Series B Preferred Stock.
(b) In the event of the liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of the Series A Preferred Stock will be entitled to receive out of the
assets of this Corporation, as a first preference prior and in preference to any
distribution of any of the assets or surplus funds of this Corporation to the
holders of Series B Preferred Stock and Common Stock by reason of their
ownership thereof, an amount per share equal to $5.11 per share (the "Original
Series A Purchase Price"), as appropriately adjusted for stock splits and
combinations, plus all declared and unpaid dividends with respect thereto. If
upon the occurrence of such event the assets and funds thus distributed among
the holders of the Series A Preferred Stock are insufficient to permit the
payment to such holders of the full amount of the first preference, then,
subject to the rights of series of Preferred Stock that may from time to time
come into existence, the entire assets and funds of the Corporation legally
available for distribution will be distributed ratably among the holders of the
Series A Preferred Stock (so that each holder receives for each share of Series
A Preferred Stock the same percentage of the applicable amount of the first
preference). Upon completion of the first preference distributions and any other
distribution that may be required with respect to any series of Preferred Stock
that may from time to time come into existence, the remaining assets of the
Corporation available for distribution to shareholders shall be distributed as a
second preference among the holders of Series A Preferred Stock, Series B
Preferred Stock and Common Stock pro rata based on (i) the number of shares of
Class A Voting Common Stock into which the then outstanding shares of Series A
Preferred Stock may be converted (assuming conversion into Class A Voting Common
Stock of all such Series A Preferred Stock at the then effective conversion
price as specified in the Corporation's Certificate of Incorporation) (the
"Series A Conversion Shares"), (ii) three times the number of shares of Class A
Voting Common Stock into which the then outstanding shares of Series B Preferred
Stock may be converted (assuming
-2-
conversion into Class A Voting Common Stock of all of such Series B Preferred
Stock at the then effective Conversion Price, as defined in Section 5(a)) (the
"Series B Conversion Shares") and (iii) the number of the then outstanding
shares of Common Stock until the holders of the Series B Preferred Stock shall
have received an aggregate of the Original Series B Purchase Price; provided,
--------
that upon the holders of Series A Preferred Stock receipt of an aggregate of
$15.33 per share (including any other amounts paid pursuant to this Section
3(b)), the holders of the Series A Preferred Stock shall not be entitled to any
further distribution of the remaining assets of the Corporation available for
distribution to shareholders and such remaining assets shall be distributed
among the holders of Series B Preferred Stock and Common Stock pro rata based on
(m) three times the number of Series B Conversion Shares and (n) the sum of the
number of the then outstanding shares of Common Stock and the number of Series A
Conversion Shares until the holders of the Series B Preferred Stock shall have
received an aggregate amount per share equal to the Original Series B Purchase
Price, as appropriately adjusted for stock splits and combinations. Upon
completion of such second preference distributions and any other distribution
that may be required with respect to any series of Preferred Stock that may from
time to time come into existence, the remaining assets of the Corporation
available for distribution to shareholders shall be distributed as a third
preference among the holders of Series A Preferred Stock and Common Stock pro
rata based on (q) the number of Series A Conversion Shares and (r) the number of
shares of Common Stock then outstanding until the holders of Common Stock shall
have received an aggregate amount per share equal to the Original Series B
Purchase Price (including any other amounts paid pursuant to this Section 3(b)),
as appropriately adjusted for stock splits and dividends; provided, that upon
--------
the holders of Series A Preferred Stock receipt of an aggregate of $15.33 per
share (including any other amounts paid pursuant to this Section 3(b)), the
holders of Series A Preferred Stock shall not be entitled to any further
distribution of the remaining assets of the Corporation available for
distribution to shareholders. Thereafter, subject to the rights of series of
Preferred Stock that may from time to time come into existence, if any assets or
funds remain in this Corporation, all such remaining assets or funds shall be
distributed as a fourth preference among the holders of Series A Preferred
Stock, Series B Preferred Stock and Common Stock pro rata based on (v) the
number of Series A Conversion Shares, (w) the number of Series B Conversion
Shares and (x) the number of the then outstanding shares of Common Stock;
provided, that upon the holders of Series A Preferred Stock receipt of an
--------
aggregate of $15.33 per share (including any other amounts paid pursuant to
Section 3(b)), the holders of Series A Preferred Stock shall not be entitled to
any further distribution of the remaining assets of the Corporation available
for distribution to shareholders and such remaining assets shall be distributed
among the holders of Series B Preferred Stock and Common Stock pro rata based on
(y) the number of Series B Conversion Shares and (z) the number of shares of
Common Stock then outstanding.
(c) For purposes of this Section 3 neither (i) an acquisition of
this Corporation by means of merger, consolidation or other form of corporate
reorganization nor (ii) a sale, lease or other transfer of all or substantially
all of the assets of this Corporation, shall
-3-
be treated as a liquidation, dissolution or winding up of this Corporation
within the meaning of this Section 3 unless such sale, lease or other transfer
shall be in connection with a plan of liquidation, dissolution or winding up of
the Corporation.
(d) Any securities to be delivered to the holders of the Preferred
Stock and/or Common Stock pursuant to this Section 3 shall be valued as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability:
(A) If traded on a securities exchange or The Nasdaq
National Market or its successor or equivalent, the value shall be deemed to be
the average of the closing prices of the securities on such exchange over the
30-day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending three (3) days prior to the closing; and
(C) If there is no active public market, the value shall
be the fair market value thereof, as determined in good faith by the Board of
Directors.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (i) (A),
(B) or (C) to reflect the approximately fair market value thereof, as determined
in good faith by the Board of Directors.
4. Voting Rights. Except as otherwise expressly provided in Section
-------------
6 or as required by law, the holder of each share of Series B Preferred Stock
shall be entitled to the number of votes equal to the number of shares of Class
A Voting Common Stock into which such share of Series B Preferred Stock could
then be converted, and with respect to such share, shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common Stock
(except as otherwise expressly provided herein or as required by law), voting
together with the Common Stock as a single class, and shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of this
Corporation. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series B Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
-4-
5. Conversion Rights.
-----------------
(a) Right to Convert.
----------------
(i) Optional Conversion. Each share of Series B Preferred
-------------------
Stock will be convertible, at the option of the holder thereof, at the office of
this Corporation or any transfer agent for the Preferred Stock, into Class A
Voting Common Stock. The number of shares of Class A Voting Common Stock into
which each share of Series B Preferred Stock will be converted will be equal to
the Original Series B Purchase Price of such Series B Preferred Stock divided by
the Conversion Price (as hereafter defined) for such Series B Preferred Stock,
such conversion ratio being referred to as the "Conversion Rate" for such Series
B Preferred Stock. The initial Conversion Price for the Series B Preferred Stock
will be the Original Purchase Price of such Series B Preferred Stock. The
initial Conversion Price for the Series B Preferred Stock will be subject to
adjustment as provided herein and the term "Conversion Price" shall mean, as of
any date, the initial Conversion Price as the same has been adjusted from time
to time pursuant to the provisions of Sections 5(c) and 5(d).
(ii) Automatic Conversion of Preferred Stock. Each share of
---------------------------------------
Series B Preferred Stock will be converted automatically into shares of Class A
Voting Common Stock at the then effective Conversion Rate for such Series B
Preferred Stock (i) upon the written approval of a majority of the holders of
the shares of Series B Preferred Stock then outstanding, voting together as a
series or (ii) immediately prior to the closing of a public offering pursuant to
a registration statement (other than a registration statement relating either to
the sale of securities to employees of the Corporation pursuant to a stock
option, stock purchase or similar plan or a transaction pursuant to Rule 145
under the Securities Act of 1933, as amended (the "Act")) under the Act covering
the Common Stock with a price per share in excess of $7.50 and aggregate
proceeds to the Corporation, net of underwriting discounts and commissions, in
excess of $10,000,000 (the "Initial Public Offering").
(iii) Fractional Shares Upon Conversion. No fractional shares
---------------------------------
of Class A Voting Common Stock will be issued upon conversion of the Series B
Preferred Stock and any fractional share which otherwise would result from
conversion by a holder of all of his or her shares of Series B Preferred Stock
(with all the shares of a series taken together as a group) will be redeemed by
payment in an amount equal to the fair market value thereof as determined by the
Board of Directors for such series as promptly as funds are legally available
therefor. If more than one share of Series B Preferred Stock is surrendered for
conversion at any one time by the same holder, the number of full shares of
Class A Voting Common Stock to be issued upon conversion shall be computed on
the basis of the aggregate number of shares of Series B Preferred Stock so
surrendered.
(b) Mechanics of Conversion. Before any holder of Series B
-----------------------
Preferred Stock will be entitled to convert the same into shares of Class A
Voting Common Stock, such holder will surrender the certificate or certificates
therefor, duly endorsed, at the office of this Corporation or of any transfer
agent for the Preferred Stock, and he will give written notice to the
Corporation stating the name or names in which the certificate or certificates
for shares of Class A Voting Common Stock are to be issued. This Corporation, as
soon as reasonably practicable
-5-
thereafter, will issue and deliver at such office to such holder or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Class A Voting Common Stock to which such holder will be entitled
as aforesaid. Such conversion will be deemed to have been made immediately prior
to the close of business on the date of notice of conversion provided by the
holder to this Corporation, and the person or persons entitled to receive the
shares of Class A Voting Common Stock issuable upon conversion will be treated
for all purposes as the record holder or holders of such shares of Class A
Voting Common Stock on such date. If the conversion is in connection with the
Initial Public Offering, the conversion will be conditioned upon the closing
with the underwriter of the sale of securities pursuant to such offering, in
which event the persons entitled to receive the Class A Voting Common Stock
issuable upon such conversion of the Series B Preferred Stock shall not be
deemed to have converted such Series B Preferred Stock until immediately prior
to the closing of such sale of securities.
(c) Adjustment for Subdivisions or Combinations of Common Stock.
-----------------------------------------------------------
In the event this Corporation at any time or from time to time after the
effective date of the initial sale of Series B Preferred Stock (in each case,
the "Original Issue Date" for such series) effects a subdivision or combination
of its outstanding Common Stock into a greater or lesser number of shares
without a proportionate and corresponding subdivision or combination of its
outstanding shares of Series B Preferred Stock, then the existing Conversion
Price for such Series B Preferred Stock will be decreased or increased
proportionately.
(d) Adjustment for Dividends, Distributions and Common Stock
--------------------------------------------------------
Equivalents. In the event this Corporation at any time or from time to time
-----------
after the Original Issue Date for the Series B Preferred Stock, as applicable,
makes or issues, or fixes a record date for the determination of holders of
Common Stock (but not holders of such Series B Preferred Stock) entitled to
receive a dividend or other distribution payable in additional shares of Common
Stock or other securities or rights (hereinafter referred to as "Common Stock
Equivalents") convertible into or entitling the holder thereof to receive
additional shares of Common Stock without payment of any consideration by such
holder for such Common Stock Equivalents or the additional shares of Common
Stock, for the purpose of protecting the holders of Series B Preferred Stock
from any dilution in connection therewith, then and in each such event the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent adjustment
of such number) of Common Stock issuable in payment of such dividend or
distribution or upon conversion or exercise of such Common Stock Equivalents
will be deemed to be issued and outstanding as of the time of such issuance or,
in the event such a record date has been fixed, as of the close of business on
such record date. In each such event the then existing Conversion Rate for
Series B Preferred Stock will be increased as of the time of such issuance or,
in the event such a record date has been fixed, as of the close of business on
such record date, by multiplying the Conversion Rate for such Series B Preferred
Stock by a fraction,
-6-
(1) the numerator of which will be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution or upon
conversion or exercise of such Common Stock Equivalents; and
(2) the denominator of which will be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; provided, however,
(i) if such record date has been fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed therefor, the Conversion
Rate for the Series B Preferred Stock will be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Rate for the
Series B Preferred Stock will be adjusted pursuant to this Section as of the
time of actual payment of such dividends or distribution; (ii) if such Common
Stock Equivalents provide, with the passage of time or otherwise, for any
decrease in the number of shares of Common Stock issuable upon conversion or
exercise thereof, the Conversion Rate for the Series B Preferred Stock shall,
upon any such decrease becoming effective, be recomputed to reflect such
decrease insofar as it affects the rights of conversion or exercise of the
Common Stock Equivalents then outstanding, and (iii) upon the expiration of any
conversion rights or exercise under any unexercised Common Stock Equivalents,
the Conversion Rate for the Series B Preferred Stock computed upon the original
issue thereof shall, upon such expiration, be recomputed as if the only
additional shares of Common Stock issued were the shares of such stock, if any,
actually issued upon the conversion or exercise of such Common Stock
Equivalents.
(e) No Impairment. This Corporation, whether by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of assets,
merger, dissolution, issue or sale of securities or any other voluntary action,
will not avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by this Corporation, but at all
times in good faith will assist in the carrying out of all of such action as may
be necessary or appropriate in order to protect the conversion rights pursuant
to this Section 5(e) of the holders of the Series B Preferred Stock against
impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Rate for the Series B Preferred
Stock pursuant to this Section 5, the Corporation at its expense promptly will
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of such Series B Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. This
Corporation, upon the written request at any time of any holder of Series B
Preferred Stock, will furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Rate for the Series B Preferred Stock at the time in effect, and
(iii) the number of shares of Class A Voting Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of the Series B Preferred Stock held by such holder.
-7-
(g) Notices of Record Date. In the event of any taking by this
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any Common Stock
Equivalents or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Corporation will mail to each holder of Series B Preferred
Stock at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or rights, and the amount and character of such
dividend, distribution or right.
(h) Reservation of Stock Issuable Upon Conversion. This
---------------------------------------------
Corporation at all times will reserve and keep available out of its authorized
but unissued shares of Class A Voting Common Stock solely for the purpose of
effecting the conversion of the shares of Series B Preferred Stock such number
of its shares of Class A Voting Common Stock as from time to time will be
sufficient to effect the conversion of all then outstanding shares of Series B
Preferred Stock; and if at any time the number of authorized but unissued shares
of Class A Voting Common Stock is not sufficient to effect the conversion of all
then outstanding shares of Series B Preferred Stock, in addition to such other
remedies as may be available to the holders of Series B Preferred Stock for such
failure, the Corporation will take such corporate action as, in the opinion of
its counsel, may be necessary to increase its authorized but unissued shares of
Class A Voting Common Stock to such number of shares as will be sufficient for
such purpose.
(i) Notices. Any notices required by the provisions of this
-------
Section 5 to be given to the holders of shares of Series B Preferred Stock shall
be given in writing and shall be conclusively deemed effectively given to
persons located in the United States five days after deposit in the United
States mail, by registered or certified mail postage prepaid, or upon actual
receipt if given by any other method or to persons located outside of the United
States, addressed to such holder at his address appearing on the books of the
Corporation. To persons located outside of the United States, such notice will
be sent by telex or facsimile in cases where the corporation has notice of a
telex or facsimile number for such person.
(j) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision or
combination provided for in Section 5(d)), provision shall be made so that the
holders of the Series B Preferred Stock shall thereafter be entitled to receive
upon conversion of such shares of such Series B Preferred Stock the number of
shares of stock or other securities or property of the Corporation or otherwise,
to which a holder of Common Stock deliverable upon conversion of such Series B
Preferred Stock would have been entitled on such recapitalization.
6. Protective Provisions. So long as any shares of Series B
---------------------
Preferred Stock are outstanding, this Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of a majority of the then outstanding shares of Series B Preferred
Stock;
-8-
(a) take any action that reclassifies any outstanding shares of
this Corporation's capital stock into shares of capital stock having preferences
or priority as to assets senior to the preferences and priority of the Series B
Preferred Stock;
(b) authorize or issue, or obligate itself to issue, any equity
security other than the Series A Preferred Stock, including any other security
convertible into or exercisable for any equity security, having a preference or
priority as to assets senior to the preferences and priorities of the Series B
Preferred Stock;
(c) amend or repeal Section 4 in any manner adversely affecting
the voting rights granted to the Series B Preferred Stock; or
(d) amend this Section 6.
IN WITNESS WHEREOF, INTERTRUST TECHNOLOGIES CORPORATION has caused this
Certificate of Designations, Preferences and Rights of Series B Preferred Stock
to be executed by its Chairman and Chief Executive Officer and attested by its
Secretary, this 1st day of August, 1996.
INTERTRUST TECHNOLOGIES CORPORATION
By:
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and
Chief Executive Officer
ATTEST:
By:______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary
-9-
EXHIBIT B
SCHEDULE OF EXCEPTIONS
Set forth below are exceptions to the representations and warranties of the
Company made in Sections 2 and 8.7 of the Agreement. All disclosures and
exceptions set forth below modify all of the Company's representations and
warranties and a disclosure in one section of this Schedule shall modify the
representation and warranty set forth in another section of this Schedule even
if such disclosure is not repeated in the other section.
2.2 Capitalization and Voting Rights.
--------------------------------
The Company has granted the following preemptive rights with respect
to its capital stock:
1. Four of the Company's eight outstanding Common Stock Purchase
Warrants provide their respective holders with a right of first
offer with respect to certain issuances by the Company of its
equity securities. The Company has made a written request that such
holders waive their right of first offer with respect to the
transactions contemplated by this Agreement. All of such holders
have waived their rights of first offer with respect to the
transactions contemplated by this Agreement.
2. The Company has granted certain holders of shares of Series A
Preferred Stock a right of first offer with respect to certain
sales by the Company of certain of its securities in Section 4.2 of
the Series A Preferred Stock Agreement. The Company has made a
written request that such holders waive their right of first offer
with respect to the transactions contemplated by this Agreement.
All but one of such holders have waived their rights of first offer
with respect to the transactions contemplated by this Agreement;
the holder which did not waive did not exercise its right of first
offer within the time period prescribed by the Series A Preferred
Stock Agreement.
2.08 Litigation.
----------
1. On February 28, 1996 the Company received a letter from E-Data
Corp. drawing the Company's attention to Patent No. 4,528,643 and
alleging the need for the Company to obtain a license with respect
to such patent. Upon review of the materials submitted with the
February 28, 1996 letter, the Company believes that the claims made
therein are based upon incorrect assumptions and premature and the
Company so advised E-Data Corp. by letter dated March 12, 1996. As
of July 17, 1996, the Company has not received any response to its
March 12, 1996 letter to E-Data Corp.
2. On June 26, 1996 the Company received a letter from ▇▇▇▇▇▇ &
Whitney LLP, counsel to Digi International, Inc. ("DI"), drawing
the Company's attention to U.S. Trademark Reg. No. 1,666,495 of DI
for DIGIBOARD (R) and, among other things, requesting that the
Company cease any planned use of the name DIGIBOX. The
-36-
Company has initiated a dialogue with counsel to DI and believes
that the demand and claims in the June 26, 1996 letter are
unjustified.
2.09 Patents and Other Intangible Assets.
-----------------------------------
1. Item 1 of Section 2.08 of this Schedule is incorporated by this
reference.
2. Item 2 of Section 2.08 of this Schedule is incorporated by this
reference.
2.11 Agreements; Action.
------------------
1. The Company has an agreement with Personal Library Software, Inc.
that upon the sale, lease or license to a third party of United
States Patent Nos. 5,050,213, 4,977,594, 4,827,508 or 5,410,598,
European Patent Application No. 87907181.9, or hardware products
directly related to the foregoing patents, the Company will pay to
Personal Library Software, Inc. a fee ranging from 3% - 6% of
license fees up to a total aggregate payment which shall not exceed
$250,000.00
2. On March 28, 1994 the Company entered into an agreement with
National Semiconductor, Inc. pursuant to which the Company granted
National certain licenses to manufacture and sell certain products
incorporating the Company's technology or covered by certain of the
Company's patents. To date the Company has received non-refundable
license fees totaling $850,000. The license is subject to
termination should National fail to tender additional amounts to
the Company promptly following the Company's delivery of certain
technology to National.
3. On August __, 1996, the Company entered into an agreement with
SOFTBANK Group Services, Inc. ("SGS") pursuant to which the Company
granted SGS certain licenses to use and incorporate the Company's
InterTrust technology in products and services made, used, sold and
otherwise transferred by SGS, subject to certain terms and
conditions. This agreement contains certain restrictions applicable
to the Company with respect to licenses granted to third parties
for clearing transactions.
4. On October 24, 1995 the Company's Board of Directors approved a
resolution allowing the officers of the Company to offer warrants
to certain service providers in consideration of services rendered
by such service providers. The Company is currently negotiating
with certain of its service providers to issue such service
providers warrants for the purchase of Class A Voting Common Stock
and/or Class B Non-Voting Common Stock in lieu of services
rendered, and anticipates that it will be necessary to issue
warrants for the purchase of no more than an aggregate of 25,000 of
such shares to such service providers.
5. The Company has entered into an agreement with ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
& Co. for the purposes of raising capital and pursuing strategic
relationships. The fees structure for this agreement ranges from 4%
to 6% with stipulated minimums and other terms and conditions.
-37-
2.12 Related-Party Transactions.
--------------------------
1. The Company is indebted to ▇▇▇▇▇▇ ▇▇▇▇▇ in an amount approximating
$50,000 for travel and miscellaneous corporate expenses.
2. On March 1, 1996, the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Micropro
Trust (the "Trust"), a trust controlled by director ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, entered into a Modification Agreement pursuant to which
the Class A Common Stock Purchase Warrant held by the Trust was
amended to terminate a right of first refusal held by the Trust and
to provide that a private equity financing would not require such
warrant to be exercised or terminated.
3. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the Company's Chief Financial Officer and a
director of the Company, can be considered to have a beneficial
ownership interest in Electronic Ventures, L.C., a Texas limited
liability corporation, which owns shares of the Class A Voting
Common Stock and has an option to purchase shares of the Class B
Non-Voting Common Stock.
2.16 Employee Benefit Plans.
----------------------
The Company provides a health insurance plan and a non-contributory
401(k) plan for its employees.
8.7 Finder's Fee.
------------
Item 5 of Section 2.11 of this Schedule is incorporated by this
reference.
-38-
EXHIBIT C
FORM OF LEGAL OPINION OF COUNSEL TO THE COMPANY
-----------------------------------------------
August , 1996
SOFTBANK Holdings Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to InterTrust Technologies Corporation, a
Delaware corporation (the "Company"), in connection with the sale by the Company
of 583,431 shares of Series B Preferred Stock, $.001 par value, of the Company
(the "Series B Preferred Shares" ) pursuant to the Series B Preferred Stock
Purchase Agreement dated as of August 1, 1996 (the "Purchase Agreement") between
the Company and SOFTBANK Holdings Inc., a Delaware corporation (the
"Purchaser"). This opinion is being delivered pursuant to Section 6.7 of the
Purchase Agreement. Capitalized terms used and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Purchase
Agreement.
In connection with this opinion, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
the Purchase Agreement and such other documents (including, without limitation,
corporate records of the Company and certificates of public officials) as we
have deemed necessary or appropriate as a basis for the opinions set forth
below. In our examination we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, and the conformity to authentic original documents
of all documents submitted to us as certified or photostatic copies. In
rendering the opinions set forth below, we have relied solely on certificates
from public officials as to the matters stated in such certificates. As to
questions of fact material to this opinion, we have relied upon representations
(including, without limitation, representations set forth in the Purchase
Agreement) and certificates of the Company and its officers and of public
officials, and we have not inquired of third parties or searched the records or
files of any governmental authority.
Further, we have assumed that: (a) the Purchaser is duly organized
and validly existing under the laws of its jurisdiction of incorporation and has
full power, authority and legal right to enter into and perform its obligations
under the Purchase Agreement; (b) the Purchase Agreement has been duly
authorized, executed and delivered by the Purchaser; (c) the Purchase Agreement
is the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms; and (d) the Purchaser has received,
or will receive by the time required, and will, to the extent required by
applicable law, maintain in force and elect, all governmental approvals required
for the due execution, delivery and performance by the Purchaser of the Purchase
Agreement, and that such execution, delivery and performance by the Purchaser
does not conflict with any provision of applicable law.
Members of this firm are admitted to the bar of the District of
Columbia. We express no opinion as to the laws of any jurisdiction other than
(i) the present Federal laws of the
SOFTBANK Holdings Inc.
August , ▇▇▇▇
▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ and the District of Columbia, and to the extent
required by the opinions expressed below, the General Corporation Law of the
State of Delaware, and our opinion is limited to and applies only insofar as
such laws may be concerned.
Based upon and subject to the foregoing, and subject to the other
qualifications, exceptions, limitations and assumptions set forth below, we are
of the opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
has the requisite corporate power and authority to execute, deliver and perform
the Purchase Agreement, to issue, sell and deliver the Series B Preferred Shares
and to issue and deliver the shares of Class A Voting Common Stock, $.001 par
value per share, of the Company issuable upon conversion of the Series B
Preferred Shares (the "Conversion Shares").
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
3. The execution and delivery by the Company of the Purchase
Agreement, the performance by the Company of its obligations thereunder, the
sale of the Series B Preferred Shares to the Purchaser and, upon conversion
thereof in accordance with the Certificate of Designations, Preferences and
Rights, the issuance and delivery of the Conversion Shares will not violate any
provision of the Certificate of Designations, Preferences and Rights, the
Restated Certificate of Incorporation or By-laws of the Company.
4. To our knowledge, there are no actions, suits, proceedings or
investigations pending or threatened against the Company before any court or
governmental agency that, either in any individual case or in the aggregate,
could reasonably be expected to result in any material adverse change in the
business or financial condition of the Company and none that questions the
validity of the Agreement or any action to be taken in connection therewith.
5. The Series B Preferred Shares and the Conversion Shares have been
duly authorized. Upon issuance and delivery of the Series B Preferred Shares,
against payment of the consideration provided in the Purchase Agreement, the
Series B Preferred Shares will be validly issued and fully paid and
nonassessable. The issuance and delivery of the Conversion Shares, upon
conversion of the Series B Preferred Shares in accordance with the Certificate
of Designations, Preferences and Rights, have been duly authorized by all
requisite corporate action, the Conversion Shares have been duly reserved for
issuance upon conversion of the Series B Preferred Shares in accordance with the
Certificate of Designations, Preferences and Rights and, when so issued, will be
duly authorized, validly issued, fully paid and nonassessable. Neither the
issuance, sale or delivery of the Series B Preferred Shares nor the issuance or
delivery of the Conversion Shares is subject to any preemptive right of
stockholders of the Company arising under law or the Certificate of
Designations, Preferences and Rights, the
SOFTBANK Holdings Inc.
August , 1996
Page 4
Restated Certificate of Incorporation or Bylaws of the Company or, to our
knowledge, any contractual right of first refusal or other right which has not
heretofore either been waived or not exercised by the holder thereof.
6. Assuming the accuracy of the representations and warranties of the
Purchaser set forth in Section 3 of the Purchase Agreement, no registration or
filing by the Company with, and no consent or approval of, or other action by
any Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution and delivery by the Company of the Purchase
Agreement, the sale of the Series B Preferred Shares, or, upon conversion
thereof in accordance with the Certificate of Designations, Preferences and
Rights, the issuance and delivery of the Conversion Shares, other than the
filing pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder.
7. Assuming the accuracy of the representations and warranties of the
Purchaser set forth in Section 3 of the Purchase Agreement, the sale of the
Series B Preferred Shares to the Purchaser on the Closing Date, under the
circumstances contemplated by the Purchase Agreement, is exempt from the
registration requirements of the Securities Act of 1933, as amended, and the
issuance and delivery of the Conversion Shares, upon conversion of such Series B
Preferred Shares in accordance with the Certificate of Designations, Preferences
and Rights, will be exempt from such registration requirements.
The opinions set forth above are subject to the following limitations
and qualifications:
(A) We express no opinion as to (i) compliance with applicable
antifraud provisions of Federal or state securities laws or, except to the
extent set forth in paragraph 6, any matters arising under or relating to state
securities laws or "blue sky" laws; (ii) the validity, binding effect or
enforceability of any provision of the Purchase Agreement relating to
indemnification, contribution or exculpation in connection with violations of
any securities laws or statutory duties or public policy, or in connection with
willful, reckless or criminal acts or gross negligence of the indemnified or
exculpated party or the party to receive contribution; and (iii) the
enforceability of any provision or term of the Purchase Agreement which may be
found by a court to be rendered unenforceable due to the indefinite or
incomplete nature of such provision or term.
(B) Our opinion with respect to enforceability set forth in
paragraph 2 above is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally; (ii) general equitable principles (regardless of whether such
principles are considered in a proceeding at law or in equity); and (iii) the
effect of judicial decisions which have held that certain provisions are
unenforceable when their enforcement would violate the implied covenant of good
faith and fair dealing, or would be commercially unreasonable, or where their
breach is not material. We have assumed with your permission in providing our
opinion with respect to enforceability set forth in paragraph 2 above that the
laws
SOFTBANK Holdings Inc.
August , 1996
Page 5
of the District of Columbia are the same as the laws of the State of California
(the laws governing the construction of the Purchase Agreement).
This opinion is rendered solely for your benefit in connection with
the transaction referred to in the first paragraph of this opinion, and may not
be relied upon in any manner or for any purpose by any other person or entity
without our prior written consent. This opinion is based on our knowledge of
the law and the facts as of the date hereof, and we undertake no obligation to
update or supplement this opinion after the date hereof
Very truly yours,
CONFIDENTIAL
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND AS SUCH MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO SUCH WARRANT OR SECURITIES, OR DELIVERY OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
WITH THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144
PROMULGATED UNDER THE ACT.
INTERTRUST TECHNOLOGIES CORPORATION
Class B Common Stock Warrant
August ____, 1996
THIS CERTIFIES THAT for value received, and subject to the provisions
and upon the terms and conditions hereinafter set forth, Upgrade Corporation of
America (the "Holder") is entitled to subscribe for and purchase shares (the
"Shares") of Class B Common Stock of InterTrust Technologies Corporation, a
Delaware corporation (the "Company"), at a price per share of $50.00, which
price may be reduced to $12.86 per share pursuant to the terms below (such price
and such other price as shall result, from time to time, from adjustments
specified below is referred to herein as the "Warrant Price"). The term "Grant
Date" shall mean the date set forth above.
1. Voluntary Exercise. This Warrant may be exercised in full or in
------------------
part at any time or from time to time after the seven-year anniversary of the
Grant Date (the "Exercise Date") at a per share price of $50.00; provided,
however, that this Warrant may be exercised prior to the Exercise Date upon the
earlier to occur of the following events: (i) the Holder (alone or in
combination with other affiliates of Softbank Holding Ltd.) expends an aggregate
of $3,000,000 to develop, promote and market compliant electronic clearinghouse
technology and services using the Company's technology pursuant to the
Technology Development and License Agreement dated as of the date hereof (the
"Technology License") whereby such development, promotion or marketing activity
is specifically directed toward clearinghouse transactions involving the
original equipment manufacturer ("OEM") and independent software vendor ("ISV")
markets, and such aggregate amount is expended by the Holder within twenty-four
(24) months of the date the Company provides its SDK 1.0 product to the Holder
under the Technology License; or (ii) the Holder executes agreements with ten
(10) of its largest thirty (30) ISV and/or OEM customers (measured, consistent
with the Holder's practices, according to the
CONFIDENTIAL
Holder's revenue generated by such customers) to incorporate capabilities that
enable DigiBox creation and use within software programs produced by such
customers (and wherein such agreements can be publicly announced by the Holder
and the Company) (each of (i) and (ii) of this Paragraph 1 being referred to
herein as an "Early Exercise Event"). Upon the occurrence of an Early Exercise
Event, this Warrant shall be exercisable (a) at a price per share of $12.86
(subject to adjustment provided herein), and (b) for a period of 24 months after
the later of (x) the Early Exercise Event or (y) the consummation by the Company
of an IPO (as hereinafter defined) after which time this Warrant shall
terminate and be of no further force and effect. Notwithstanding the foregoing,
Holder's right to exercise this Warrant at the Warrant Price of $12.86 is
subject to Holder's continued commitment to the exploitation of the InterTrust
Technology, by Holder: (i) performing clearing services primarily for
transactions related to and/or derived from use of SSG Products (as defined in
the Technology License) or performed pursuant to the Clearinghouse Function
license granted in the Technology License; and (ii) refraining from: (a)
developing, promoting, or acquiring any technology directly competitive with
InterTrust Special Advanced Technologies or InterTrust Secure Container
technology (as such terms are defined in Exhibit F and Article 1, respectively,
of the Technology License) (the "Competitive Technology"); and (b) licensing
Competitive Technology, other than as necessary for clearing transactions
(collectively the "InterTrust Commitment").
2. Termination. Notwithstanding paragraph 1 above, this Warrant
-----------
shall terminate and be of no further force and effect upon the earlier of: (i)
the ten (10) year anniversary of the Grant Date; (ii) at the sole discretion of
the Company, upon the consummation of an underwritten public offering of the
Company's equity securities pursuant to a registration statement (an "IPO")
under the Securities Act of 1933, as amended (the "Act"), in which case this
Warrant shall be exercisable immediately prior to the consummation of the IPO at
a Warrant Price equal to the lower of $12.86 or the IPO Price (the "IPO Price"
shall be the initial "Price to Public" specified in the final prospectus with
respect to the IPO); and (iii) at the sole discretion of the Company, upon the
closing of (a) a sale of all or substantially all of the Company's assets or (b)
the merger or consolidation of the Company with another corporation whereby the
Company's stockholders immediately prior to such merger or consolidation will
hold less than 50% of the outstanding securities of the surviving corporation
immediately following such merger or consolidation (such sale, merger or
consolidation shall be referred to herein as a "Sale of the Company"), in which
case this Warrant shall be exercisable immediately prior to the consummation of
the Sale of the Company at a Warrant Price equal to the lower of $12.86 or the
value received for each share of Class B Common Stock in the Sale of the Company
(the "Sale Price"); provided, however that holder's right to exercise this
Warrant under subparagraphs 2(ii) and 2(iii) above at either Warrant Price is
subject to Holder's prior continuous InterTrust Commitment. If Holder (i)
exercises this Warrant at either the IPO Price or the Sale Price and (ii) has
not previously satisfied either Early Exercise Event, or within twenty-four (24)
months of the date the Company provides its SDK 1.0 product to the Holder under
the Technology License fails to satisfy either Early Exercise Event, then Holder
shall immediately remit to the Company or, in the case of the Sale of the
Company, to the successor company, an amount equal to the following:
If this Warrant is exercised in connection with an IPO, the amount
equal to the product of multiplying (x) and (y) where:
CONFIDENTIAL
(x)=the number of shares received upon exercise of this Warrant; and
(y)=the difference between $12.86 and the IPO Price.
If this Warrant is exercised in connection with a Sale of the Company,
the amount equal to the product of multiplying (x) and (y) where:
(x)=the number of shares received upon exercise of this Warrant; and
(y)=the difference between $12.86 and the Sale Price.
3. Number of Shares. Subject to the terms and conditions hereinafter
----------------
set forth, the Holder is entitled, upon surrender of this Warrant, to purchase
One Hundred Fifty-Five Thousand Five Hundred Eight (155,508) shares of Class B
Common Stock from the Company.
4. Method of Exercise; Net Issue Exercise.
--------------------------------------
a. Method of Exercise; Payment; Issuance of New Warrant. The
----------------------------------------------------
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part, from time to time at the election of the Holder, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
---------
payment to the Company, by check, of an amount equal to the then applicable
Warrant Price per share multiplied by the number of Shares then being purchased.
A new warrant for the remaining purchase rights will be issued if the Warrant is
exercised in part. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the shares represented thereby (and such
shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the
event of any exercise of the rights represented by this Warrant, certificates
for the shares of stock so purchased shall be delivered to the Holder as soon as
possible and in any event within thirty (30) days of receipt of such notice and,
unless this Warrant has been fully exercised or expired, a new warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder as
soon as possible and in any event within such thirty (30)-day period.
b. Net Issue Exercise. In lieu of exercising this Warrant
------------------
pursuant to subparagraph 4(a) above and subject to the Company's prior written
consent, the Holder may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election in
which event the Company shall issue to the Holder a number of Shares computed
using the following formula:
X=Y(A-B)
------
A
Where: X= The number of Shares to be issued to the Holder.
3
CONFIDENTIAL
Y= the number of Shares purchasable under this Warrant (or the
portion thereof being canceled) at the time of such
exercise.
A= the fair market value of one share of Class B Common Stock
at the time of such exercise.
B= Warrant Price (as adjusted to the date of such calculation).
For purposes of this subparagraph 4(b), the fair market value of the Class B
Common Stock shall be determined as follows:
(i) if this Warrant is exercised prior to an initial
public offering of the Company's Common Stock, the fair market value of the
Class B Common Stock shall be determined by the Company's Board of Directors;
(ii) if the exercise is in connection with an initial
public offering of the Company's Common Stock, and if the Company's registration
statement relating to such public offering has been declared effective by the
Securities and Exchange Commission ("SEC"), then the fair market value per share
shall be the initial "Price to Public" specified in the final prospectus with
respect to the offering; or
(iii) if this Warrant is exercised after, and not in
connection with, the Company's initial public offering, and:
(a) if traded on a securities exchange, the fair
market value shall be deemed to be the average of the closing
prices over the ten (10) day trading period immediately preceding
three days before the day the current fair market value of the
securities is being determined; or
(b) if actively traded over-the-counter, the fair
market value shall be deemed to be the average of the closing bid
and asked prices quoted on the Nasdaq system (or similar system)
over the ten (10) day trading period immediately preceding three
days before the day the current fair market value of the
securities is being determined.
5. Stock Fully Paid; Reservation of Shares. All Shares that may be
---------------------------------------
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
rights represented by the Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of shares of
Class B Common Stock to provide for their exercise of the right represented by
this Warrant.
6. Adjustment of Warrant Price and Number of Shares. The number and
-----------------------------------------------
kind of securities purchasable upon the exercise of the Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events as follows:
CONFIDENTIAL
a. Reclassification. In case of any reclassification, change or
----------------
conversion of Class B Common Stock issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), the Company
shall execute a new Warrant (in form and substance satisfactory to the Holder,
as the holder of this Warrant) providing that the Holder shall have the right to
exercise such new Warrant and upon such exercise to receive, in lieu of each
share of Class B Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change by a holder of one
share of Class B Common Stock. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Paragraph 6. The provisions of this subparagraph 6(a)
shall similarly apply to successive reclassifications or changes.
b. Subdivisions or Combination of Shares. If the Company at any
-------------------------------------
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Class B Common Stock, the Warrant Price and the number of shares of
Class B Common Stock issuable upon exercise hereof shall be proportionately
adjusted such that the aggregate exercise price of this Warrant shall at all
times remain equal.
c. Dividends. If the Company at any time prior to the
---------
expiration of this Warrant shall pay a dividend with respect to the Company's
Class B Common Stock payable in shares of Class B Common Stock, or make any
distribution with respect to the Company's Class B Common Stock, then the
purchase price per share shall be appropriately decreased, and the number of
Shares shall be appropriately increased in proportion to such dividend.
d. Merger or Consolidation. Subject to Paragraph 2 above, upon
-----------------------
a Sale of the Company, the Company, or such successor or purchasing corporation,
as the case may be, shall execute a new Warrant (in form and substance
satisfactory to the Holder) providing that the HOlder shall have the right to
exercise such new Warrant and upon such exercise to receive, in lieu of each
share of Class B Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such merger or consolidation by a holder of one share
of Class B Common Stock. Such new Warrant shall provide for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Paragraph 6. The provisions of this subparagraph 6(d) shall
similarly apply to successive mergers and consolidations.
e. No Impairment. The Company will not, by amendment of its
-------------
Restated Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Paragraph 6 and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder as the holder of this Warrant against impairment.
CONFIDENTIAL
f. Notices of Record Date. In the event of any taking by the
----------------------
Company of a record of its stockholders for the purpose of determining
stockholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or any proposed liquidation, dissolution or winding
up of the Company, the Company shall mail to the Holder, as the holder of the
Warrant, at least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
g. Automatic Conversion. Upon the consummation of an IPO, each
---------------------
share issued upon exercise of this Warrant shall automatically convert into one
share (subject to stock splits and combinations as permitted by this Warrant) of
the securities issued in the IPO.
7. Notice of Adjustments. Whatever the Warrant Price shall be
---------------------
adjusted pursuant to the provisions hereof, the Company shall within twenty (20)
days of such adjustment deliver a certificate signed by its chief financial
officer to the Holder as the registered holder hereof setting forth, in a
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Warrant
Price after giving effect to such adjustment.
8. Right of First Refusal: Restriction on Transfer.
------------------------------------------------
▇. ▇▇▇▇▇. The Company is hereby granted the right of first
-----
refusal (the "First Refusal Right"), exercisable in connection with any proposed
transfer of the shares. For purposes of this Paragraph 8, the term "transfer"
shall include any sale, assignment, pledge, encumbrance or other disposition for
value of the shares intended to be made by the Holder; provided, however, that
the Holder may transfer any Shares to an investment fund or funds managed by
Holder or an affiliate of Holder (a "Permitted Transferee"), and provided that
Holder submits to the Company an irrevocable joint and several undertaking for
the benefit of the Company executed by the Holder or an affiliate of Holder and
the Permitted Transferee(s) that Holder or an affiliate of Holder may represent
the Permitted Transferee(s) on all matters related to the Shares, without first
making such an offer to the Company.
b. Notice of Intended Disposition. In the event the Holder
-----------------------------
desires to accept a bona fide third-party offer for any or all of the shares
(the shares subject to such offer to be hereinafter call the "Target Shares"),
Holder shall promptly deliver to the Corporate Secretary of the Company written
notice (the "Disposition NOtice") in accordance with this Warrant of the terms
and conditions of the offer, including the purchase price and the identity of
the third-party offeror.
c. Exercise of Right. The Company (or its assignees) shall, for
-----------------
a period of thirty (30) days following receipt of the Disposition Notice, have
the right to repurchase all but not less than all of the Target Shares specified
in the Disposition Notice upon substantially the same terms and conditions
specified therein. Such right shall be exercisable by delivery of written
notice (the "Exercise Notice") in accordance with this Warrant to Holder prior
to the
CONFIDENTIAL
expiration of the thirty (30) day exercise period. If the First Refusal Right
is exercised with respect to the Target Shares specified in the Disposition
Notice, then the Company (or its assignees) shall effect the repurchase of the
Target Shares, including payment of the purchase price, not more than fifteen
(15) business days after delivery of the Exercise Notice; and at such time
Holder shall deliver to the Company the certificates representing the Target
Shares to be repurchased, each certificate to be properly endorsed for transfer.
d. Non-Exercise of Right. In the event that Exercise Notice is not
---------------------
given to Holder within thirty (30) days following the date of the Company's
receipt of the Disposition Notice, Holder shall have a period of forty-five (45)
days thereafter in which to sell or otherwise dispose of the Target Shares to
the third-party offeror identified in the Disposition Notice upon terms and
conditions (including the purchase price) no more favorable to such third-party
offeror than those specified in the Disposition Notice. The third-party offeror
shall acquire the Target Shares subject to the Company's First Refusal Right
hereunder. In the event Holder does not effect such sale or disposition of the
Target Shares within the specified forty-five (45) day period, the Company's
First Refusal Right shall continue to be applicable to any subsequent
disposition of the Target Shares by Holder until such right lapses in accordance
with subparagraph 8(f).
e. Restriction on Transfer. Except with the Company's prior written
-----------------------
consent, neither the Holder nor any transferee of Holder shall sell or transfer
in any manner (the "Transfer Restriction") any Shares purchased hereunder to any
person or entity engaged in, or reasonably anticipated by the Company to become
engaged in, the business of providing electronic commerce solutions or related
technology (a "Restricted Party"). The Holder or any transferee of Holder may
request that the Company waive the restriction on the sale or transfer of Shares
described in the preceding sentence to a Restricted Party as to a particular
proposed sale or transfer, but the Company shall have no obligation to waive
such restriction on the sale or transfer, but the Company shall have no
obligation to waive such restriction on the sale or transfer of any such Shares
to any Restricted Party.
f. Lapse. The First Refusal Right and Transfer Restriction under
-----
this Paragraph 8 shall lapse and cease to have effect upon the closing of an
IPO.
9. Fractional Shares. No fractional shares of Class B Common Stock shall
-----------------
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Warrant Price then in effect.
10. Transfers and Exchanges. This Warrant may only be transferred to a
-----------------------
Permitted Transferee.
11. Rights as Stockholder. The Holder, as the holder of the Warrant, shall
---------------------
not be entitled to vote or receive dividends and shall not be deemed the holder
of Class B Common Stock, nor shall anything contained herein be construed to
confer upon the Holder as the holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until
7
CONFIDENTIAL
this Warrant shall have been exercised and the shares of Class B Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
12. Representations and Warranties of the Company. This Warrant is
---------------------------------------------
issued and delivered on the basis of the following:
a. Due Authorization. This Warrant has been duly authorized and
-----------------
executed by the Company and when delivered will be the valid and binding
obligation of the Company enforceable in accordance with its terms.
b. Due Issuance. The shares of Class B Common Stock purchasable
------------
upon the exercise hereof have been duly authorized and reserved for issuance by
the Company and when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable.
13. Representations and Warranties of the Holder.
--------------------------------------------
a. Investment Intent. Holder hereby warrants and represents
-----------------
that Holder is acquiring this Warrant, and any Shares issued upon exercise of
this Warrant, for Holder's own account and not with a view to their resale or
distribution.
b. Exempt from Registration. Holder acknowledges that this
------------------------
Warrant has not been registered under the Act on the ground that the issuance
of this Warrant is exempt from registration pursuant to Section 4(2) of the Act,
and that the Company's reliance on such exemption is predicated on the
representations of Holder set forth herein.
c. Investment Experience. In connection with the investment
---------------------
representations made herein Holder represents that it is able to fend for itself
in the transactions contemplated by this Warrant, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, has the ability to bear the economic risks
of its investment, and has been furnished with and has had access to such
information as it has requested and deemed appropriate to its investment
decision.
d. Restricted Securities. Holder hereby confirms that Holder
---------------------
has been informed that this Warrant, and the Shares issued upon exercise of this
Warrant, are restricted securities under the Act and may not be resold or
transferred unless this Warrant, and the Shares issued upon exercise of this
Warrant, are first registered under the federal securities laws or unless an
exemption from such registration is available. Accordingly, Holder hereby
acknowledges that Holder is prepared to hold this Warrant, and the Shares issued
upon exercise of this Warrant, for an indefinite period and that Holder is aware
that Rule 144 of the Securities and Exchange Commission issued under the Act is
not presently available to exempt the issuance of this Warrant from the
registration requirements of the Act.
e. Disposition of Shares. Holder hereby agrees that Holder
---------------------
shall make no disposition of this Warrant, and the Warrant Shares issued upon
exercise of this Warrant, unless and until:
8
CONFIDENTIAL
(a) Holder shall have notified the Company of the proposed
disposition and provided a written summary of the terms and
conditions of the proposed disposition;
(b) Holder shall have complied with all requirements of
this Agreement applicable to the disposition; and
(c) Holder shall have provided the Company with written
assurances, in form and substance satisfactory to the Company,
that (i) the proposed disposition does not require registration
of the Purchased Shares under the Act, or (ii) all appropriate
action necessary for compliance with the registration
requirements of the Act or of any exemption from registration
available under the Act (including Rule 144) has been taken.
f. Restrictive Legends. In order to reflect the restrictions on
-------------------
disposition of the Shares issued upon exercise of this Warrant, the stock
certificates for the Shares will be endorsed with the following restrictive
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF (a) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER SUCH ACT, (b) A 'NO ACTION' LETTER OF
THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SALE OR
OFFER, OR (c) SATISFACTORY ASSURANCES TO ELECTRONIC PUBLISHING
RESOURCES, INC. THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR OFFER."
g. Market Stand-Off. Holder hereby agrees that, during the
----------------
period of duration (not to exceed 180 days) specified by the Company and an
underwriter of Common Stock or other securities of the Company, following the
effective date of any registered underwritten public offering of Company
securities, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the COmpany held by it at any time during such period
except Common Stock included in such registration; provided, however, that all
officers and directors of the COmpany, and all other persons with registration
rights (whether or not pursuant to this Agreement) enter into similar
agreements.
14. Modification and Waiver. This Warrant and any provision hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
9
CONFIDENTIAL
15. Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
such Holder's address as shown on the books of the Company or to the Company at
the address indicated on the signature page of this Warrant.
16. Successors and Assigns. The terms and provisions of this
-----------------------
Warrant shall be binding upon the Company, the Holder, and their respective
successors and assigns, subject at all times to the restrictions set forth in
this Warrant.
17. Lost Warrants or Stock Certificates. The Company covenants to
-----------------------------------
the holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of any indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
18. Descriptive Headings. The descriptive headings of the several
--------------------
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
19. Governing Law. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws
of the State of California.
20. Entire Agreement. This Warrant and the exhibits hereto embody
----------------
the entire agreement and understanding of Holder and Company with respect to the
subject matter hereof, and supersede all prior and contemporaneous agreements
and understandings, oral or written, relative to said subject matter.
21. Attorney's Fees. If any action at law or in equity is necessary
---------------
to enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
22. No Impairment. The Company, whether by amendment of its
-------------
Certificate of Incorporation, a copy of which is attached hereto as Exhibit B,
---------
or through any recapitalization, split, reverse split, subdivision, merger,
consolidation or combination, will not seek to impair the rights of shares of
Class B Common Stock acquired hereunder relative to the Company's Class A Common
Stock, other than differences currently existing between the two classes of
stock.
23. Registration Rights. The Company agrees that the Shares issued
-------------------
or issuable upon exercise of this Warrant shall be deemed "Registrable
Securities" as such term is defined in the Company's Series B Preferred Stock
Purchase Agreement of even date herewith (the "Series B Agreement") solely for
purposes of granting "piggyback" registration rights under subSection 4.1 (c) of
the Series B Agreement and the right to participate, but not demand
registration, under Section 4.1(b) of the Series B Agreement; provided, however,
that in the event
10
CONFIDENTIAL
of any cutback of securities requested by the underwriters, the Shares shall be
subject to cutback prior to any cutbacks on any holders of Common Stock issued
or issuable upon conversion of the Company's Preferred Stock and then only on a
pro rata basis with other holders of Common Stock.
IN WITNESS WHEREOF, InterTrust Technologies Corporation has caused
this Warrant to be executed by its officers hereunto duly authorized effective
as of the date first above written.
INTERTRUST TECHNOLOGIES
CORPORATION
By: _______________________________
▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and
Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AGREED AND ACKNOWLEDGED:
UPGRADE CORPORATION OF AMERICA
By: ____________________________
_________________________________
Please Print Name
_________________________________
Title, if applicable
11
CONFIDENTIAL
EXHIBIT A
---------
NOTICE OF EXERCISE
To: InterTrust Technologies Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and Chief Executive Officer
1. The undersigned hereby elects to purchase
_____________ shares of Class B Common Stock of InterTrust
Technologies Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.
2. Please issue a certificate or certificates
representing said shares in the name of the undersigned or
in such other name or names as are specified below:
Name: ______________________________________
Address: ______________________________________
______________________________________
______________________________________
3. The undersigned represents that the foregoing
shares being acquired for the account of the undersigned
are for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the
undersigned has no present intention of distributing or
reselling such shares.
___________________________________________
Signature
____________________________
(Date)
EXHIBIT B
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
INTERTRUST TECHNOLOGY PRODUCTS AND RELATED MATTERS
--------------------------------------------------
I. INTERTRUST TECHNOLOGY PRODUCTS
A. Systems Developer's Kit (SDK) 1.0, 1.1, 2.0
B. Tools Developer's Kit (TDK) 1.0
C. Content Developer's Kit (CDK) 2.0
II. INTERTRUST CORE TECHNOLOGY
III. INTERTRUST AUTHORIZED APPLICATION SOFTWARE
IV. INTERTRUST AUTHORIZED CLEARINGHOUSE SOFTWARE
V. INTERTRUST DOCUMENTATION
B-1
I. InterTrust Technology Products
I.A.1 InterTrust Systems Developer's Kit (SDK) Release 1.0
----------------------------------------------------------
The SDK technology will provide support for the following functionality:
Content-vending infrastructure, including support for interfacing with at
least one payment and metering infrastructure
Ability to integrate the InterTrust commerce architecture with customer-
specific services, such as: payment, financial and usage
clearinghouses, multiple network protocols, database systems, etc.
Ability to build application suites or tools that integrate support for
InterTrust Commerce Technology viewing, packaging, and control
Ability to create DigiBox containers for existing text-based and simple
image-and video- based content
Support of single-tier controls (i.e. for a single-point distribution
system)
Client and server support for Windows 95 and NT
Ability to integrate with at least one financial clearinghouse
Deployment services for installation, registration
. Documented APIs
Note: Source Code and Object Code available for Win95 and WinNT operating
systems; additional platforms, such as Unix, to be supplied as they become
available, and at InterTrust's discretion.
SDK 1.0 Deliverables:
---------------------
Core Technology Software--Object Code Format:
Node Server: includes DigiBox container library and other core
services
Systems Services: e.g. time, cryptographic services
----
. Node database and database access routines
Node Client Interface DLLs
Deployment Services - used to deploy and initialize the set of nodes
in an InterTrust Commerce Technology deployment
Clearinghouse Prototype Components--Source Code and Object Code Format:
Usage clearinghouse application--sample software for performing
specific clearinghouse functions in the area of usage auditing,
profiling, etc.
Financial clearinghouse application--sample software for performing
specific, prototypical clearinghouse functions in the area of
financial clearing
Sample Applications--Source Code and Object Code Format:
InterTrust Packager--places content into DigiBox containers with
user-specified controls
InterTrust Plug-in for InterTrust-supported browsers (Netscape,
Microsoft Explorer)--browser plug-in that controls viewing,
storing, and printing of content in a DigiBox.
InterTrust Administrator--configures and manages an InterTrust node
B-2
InterTrust HTML Daemon--automatically creates HTML pages referring to
content in DigiBox containers
SDK 1.0 Estimated Schedule:
---------------------------
Beta: October 1996
First Commercial Shipment (FCS): Q1 1997
IA. InterTrust Systems Developer's Kit (SDK) Release 1.1
--------------------------------------------------------
SDK 1.1 will add the following functionality:
Application of one InterTrust control set template to multiple new DigiBox
containers Automation of deployment and installation of InterTrust nodes
SDK 1.1 Deliverables:
---------------------
Additional functionality (as described above)
SDK 1.1 Estimated Schedule:
---------------------------
Beta: None
FCS: Q2 1997
I.A.2 InterTrust Systems Developer's Kit (SDK) Release 2.0
----------------------------------------------------------
SDK 2.0 will add system level value chain management and independent delivery of
control functionality tools to InterTrust SDK 1.1 to support the following
functionality:
Persistent, trusted value-chain management, enabling support of chain of
control models directly within InterTrust
Deliver controls independently of controlled digital information, enabling
complex updatable, control models for usage/advertising, trading
systems, and other rights management for digital information value
chains
Note: Source Code and Object Code will be initially available for Win95 and
WinNT operating systems; additional platforms, such as Unix, to be supplied as
they become available, and at InterTrust's discretion.
SDK 2.0 Deliverables:
---------------------
Updated SDK Object Code and Source Code, as applicable
SDK 2.0 Estimated Schedule:
---------------------------
Beta: Calendar Q3 1997
FCS: Calendar Q4 1997
B-3
I.B. InterTrust Tool Developer's Kit (TDK) Release 1.0
-------------------------------------------------------
The TDK product is specifically aimed at tool developers. It will facilitate
creation of software-development and content-development tools that integrate
InterTrust packaging and viewing support.
Note: Source Code and Object Code will be initially available for Win95 and
WinNT operating systems; additional platforms, such as Unix, to be supplied as
they become available, and at InterTrust's discretion.
TDK 1.0 Deliverables:
---------------------
Core Technology Software--Object Code Format:
InterTrust APIs and libraries--for integration of InterTrust
technology into software and content development tools.
Test Environment--Object Code Format:
Facilitates testing of tools developed with TDK API's and libraries
Sample Applications--Source Code:
Sample packaging, viewing applications
Other:
Standard InterTrust control set templates--a set of model business
rules
TDK 1.0 Estimated Schedule:
---------------------------
Beta: Calendar Q1 1997
FCS: Calendar Q2 1997
I.C. InterTrust Content Developer's Kit (CDK) Release 2.0 Deliverables
----------------------------------------------------------------------
The CDK is aimed at large and medium-sized content developers. It will simplify
packaging of content into DigiBox containers, encompass embedded value chain
management and independent delivery of controls.
Note: Object Code will be initially available for Win95 and WinNT operating
systems; additional platforms, such as Unix, to be supplied as they become
available, and at InterTrust's discretion.
CDK 2.0 Deliverables:
---------------------
Client Application--Object Code Format:
InterTrust viewing and packaging applications, including the control
set editor
Other:
Standard InterTrust control set templates
B-4
CDK 2.0 Estimated Schedule:
---------------------------
Beta: Calendar Q4 1997
FCS: Calendar Q1 1998
II. INTERTRUST CORE TECHNOLOGY
Object Code Format:
. Node Server
. Systems Services for Node Utilization
. Node database and database access routines
. Node Client Interface DLLs
. Node Deployment Services
InterTrust may provide other such applications at its discretion.
III. INTERTRUST AUTHORIZED APPLICATION SOFTWARE
Only the following InterTrust Technology may be distributed to any Person, and
such technology may be distributed only in Object Code form.
Sample Applications:
InterTrust Packager
InterTrust Plug-in for InterTrust-supported browsers
. InterTrust Administrator
. InterTrust HTML Daemon
Core Technology Application:
Node Server:
Systems Services
Node database and database access routines
Node Client Interface DLLs
B-5
IV. INTERTRUST AUTHORIZED CLEARINGHOUSE SOFTWARE
Only the following Authorized Clearinghouse Software may be distributed to an
Authorized Clearinghouse Provider or a sublicense under Section 5.2, and such
technology may be distributed only in Object Code form.
Usage Clearinghouse Application
Financial Clearinghouse Application
V. DOCUMENTATION
IV.A. SDK Documentation:
------------------------
User documentation
. InterTrust Application Programmer's Guide and Reference
IV.B. TDK Documentation:
------------------------
User documentation
. InterTrust Application Programmer's Guide and Reference
. Source material for end-user documentation
IV.C. CDK Documentation:
------------------------
User documentation
B-6
CONFIDENTIAL
EXHIBIT C
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
TRADEMARKS
----------
InterTrust Trademarks
---------------------
InterTrust
The InterTrust Logo
InterTrust Commerce Architecture
InterTrust Commerce Node
InterTrustworthy
DigiBox
NetTrust
Virtual Process Control
Electronic Value Chain Management
SSG Trademarks
--------------
C-1
EXHIBIT D
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
SIGNATURE PAGE
--------------
By executing this SIGNATURE PAGE, the undersigned entity agrees to be a Party in
accordance with, and as such term is defined in, the TECHNOLOGY DEVELOPMENT AND
LICENSE AGREEMENT of _______________, 1996 (the "Agreement") to which this
SIGNATURE PAGE is attached, and to be bound by all the terms and conditions
thereof applicable to SSG, to and for the benefit of itself and the other
Parties thereto.
Entity: SOFTBANK Internet Services, Inc.
By:
--------------------------------------------
Printed Name:
----------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
D-1
CONFIDENTIAL
EXHIBIT E
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
COOPERATIVE APPLICATION PROJECT PLAN
------------------------------------
As a general matter, a Cooperative Application Project Plan will: (i) set forth
terms and conditions (such as development milestones, cost estimates,
development fees, special licensing arrangements (if any), etc.) for the
development of a Cooperative Application; and (ii) outline and embody a staged
approach for the entire development process, from project planning through
quality and acceptance testing of generated code.
It is contemplated that Cooperative Application Project Plan will incorporate,
as agreed to by the Parties, the following terms:
. a schedule for completion of various targets and stages (as further set
forth below) for development of a Cooperative Application;
. a definition of the tasks for which each participating Party shall be
responsible with respect to the Cooperative Application project;
. acceptance testing procedures and criteria for determining that the
Cooperative Application conforms to the specifications therefor and to
InterTrust Specifications;
. a business plan, including one or more businesses and associated
marketing analyses and marketing plans for the exploitation of the
Cooperative Application;
. an estimate of the costs for the project, a development plan containing
budgets and milestones and specification of a formula for calculating
any cost and expense sharing related to the project SSG may pay to
InterTrust, including any development fees consistent with Section 3.3
hereof;
. provisions concerning ownership of Intellectual Property Rights and
other rights relating to the Cooperative Application, if terms and
conditions related to such rights differ in any way from this Agreement;
and
. provisions concerning revenue sharing relationships, if any, and
additional licensing or other fees, as applicable and as agreed,
concerning the licensing, use or other exploitation, a Cooperative
Application and/or directly related services.
E-1
CONFIDENTIAL
EXHIBIT F
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
SPECIAL ADVANCED TECHNOLOGIES
-----------------------------
"Special Advanced Technologies" means technology, systems and/or
-----------------------------
applications that enable at least one of the following rights management and/or
distributed event management advanced capabilities: (i) Dynamic Rules and
Controls; (ii) Independent Rules and Controls; (iii) Chain of Handling and
Control; (iv) Rights Operating System; (v) Traveling Objects; and (vi) Event
Nodes.
The foregoing capitalized terms are defined below. All capitalized terms
not defined on this Exhibit E, shall have the meaning set forth in the
Agreement.
"Chain of Handling and Control" means technology that at least in part
-----------------------------
allows or enables the persistence of all or any portion of Dynamic Rules and
Controls as such Dynamic Rules and Controls are provided for use to one or more
sequences of Persons.
"Dynamic Rules and Controls" means technology that, at least in part,
--------------------------
supports the use of control structures to: (i) Manage (for example, govern
access to or other use of) Content in accordance with Rules and Controls
associated with such Content; and (ii) accept the (a) modification and/or
replacement of at least a portion of any such Rules and Controls, and/or (b)
addition of Rules and Controls, all in a manner consistent with pre-existing
Rules and Controls.
"Event Nodes" means distributed and fully or partially interoperable
-----------
electronic nodes, each of which employs Rules and Controls to Manage events
based at least in part upon plural nodal activity relating to Content; Event
Nodes may be used in systems that support inter-nodal electronic process
management.
"Independent Rules and Controls" means technology enabling the independent
------------------------------
and separate provision of Rules and Controls, whether or not said Rules and
Controls are, for example, delivered in the same cryptographic container, or at
the same time, as related Content.
"Rights Operating System" means one or more general purpose computer
-----------------------
control programs that, independently or in combination with a host operating
system, contributes to rights-related interoperability among plural nodes and
enables application of Dynamic Rules and Controls and/or Independent Rules and
Controls.
"Traveling Objects" means technology supporting the use and/or re-use of
-----------------
Content subject to persistent Rules and Controls which Manage Content, so that,
when such Content is passed from one user to another such Content does not
require a specific authorization by a remote authority in each instance to
enable a first use by a new user when such Content is passed to such new user.
F-1
CONFIDENTIAL
EXHIBIT G
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
FORM OF INTERTRUST CONFIDENTIALITY AGREEMENTS
---------------------------------------------
G-1
TOP SECRECY AGREEMENT
---------------------
FOR CERTAIN INTERTRUST INFORMATION
----------------------------------
THIS AGREEMENT (this "Agreement") is made effective as of 1996
between INTERTRUST TECHNOLOGIES CORPORATION ("InterTrust"), a Delaware
corporation, having a place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ________________________ ("Recipient"), an individual
citizen of the United States, residing at ____________________, and an employee
of SOFTBANK Services Group, a Delaware corporation.
These parties agree as follows:
1. Purpose.
(a) Pursuant to a Technology Development and License Agreement dated
__________ between InterTrust and SSG (the "License Agreement"), InterTrust may
disclose to SSG certain information including load module related, encryption
related, document manager related and/or other information considered Top Secret
and proprietary by InterTrust (hereinafter referred to as the "InterTrust Top
Secret Information") and which shall conspicuously be marked with a notice or
legend with the phrase "Top Secret", as provided in the License Agreement. In
consideration for said information being provided to Recipient, Recipient agrees
to be bound by the terms of this Agreement.
(b) InterTrust wishes to protect the InterTrust Top Secret Information
from unauthorized use and disclosure. Disclosure of InterTrust Top Secret
Information to Recipient, and use and disclosure of Top Secret Information
received by Recipient shall occur only in accordance with the terms and
conditions of this Agreement.
2. Non-Disclosure and Restrictions on Use of InterTrust Extremely
--------------------------------------------------------------
Confidential.
------------
(a) Except as otherwise provided in an express written agreement signed by
InterTrust's Chairman or President, or other such person designated in writing
by the Chairman or President (a "Designated InterTrust Officer"), Recipient
agrees that he or she shall: (i) hold in strictest confidence and not disclose
any InterTrust Top Secret Information to any person or entity either within or
outside SSG except as expressly permitted in writing by a Designated InterTrust
Officer; (ii) use InterTrust Top Secret Information solely for purposes
authorized by the License Agreement: (iii) use said Top Secret Information in no
other way whatsoever; (iv) apply the strictest feasible measures to protect the
secrecy of, and prevent unauthorized disclosure or use of, InterTrust Top Secret
information (which such measures shall not be less stringent than in SSG uses to
protect its own most highly sensitive and secret information); and (v) shall
produce no physical embodiments of any portion of the Top Secret Information
without the express written authorization of a Designated InterTrust Officer.
Recipient agrees to notify InterTrust promptly in writing of any unauthorized
disclosure or other misuse or misappropriation of the InterTrust Top Secret
Information which may come to Recipient's attention.
(b) Notwithstanding the foregoing, Recipient shall be entitled to disclose
Top Secret Information pursuant to a court order issued by a court of competent
jurisdiction or as otherwise required by law; provided that Recipient shall
provide prompt advance notice thereof to InterTrust to enable InterTrust to seek
a protective order or otherwise prevent such disclosure and shall disclose no
more than the minimum information required by such court order or by law.
3. Return of Materials. Upon request of a Designated InterTrust Officer,
-------------------
Recipient shall immediately return to InterTrust all tangible embodiments of
InterTrust Top Secret Information in Recipient's possession or otherwise under
Recipient's control.
4. Equitable Remedies. Recipient agrees that unauthorized disclosure or use
------------------
of InterTrust Top Secret Information will cause InterTrust substantial damage.
Recipient further agrees that it may be impossible or inadequate to measure and
calculate InterTrust's damages from any breach of the covenants set forth in
Sections 2 and/or 3 hereof. Accordingly, Recipient agrees that if he or she
breaches or threatens breach of any of such sections, InterTrust will have
available, in addition to any other right or remedy available, the right to
obtain an injunction against him or her, from a court of competent jurisdiction
restraining such breach or threatened breach and to specific performance of any
such provision of this Agreement, and Recipient hereby consents to the issuance
of such injunction and to the ordering of specific performance under such
circumstances.
5. Governing Law: Jurisdiction and Venue. This Agreement shall be governed by
-------------------------------------
and construed under the laws of the State of Virginia, without reference to
conflict of law principles. All disputes arising out of or relating to the
subject matter of this Agreement shall be subject to the exclusive jurisdiction
and venue of the United States District Court for the Eastern District of
Virginia, Alexandria Division Virginia, or if jurisdiction does not properly lie
in such court, the Commonwealth courts in Alexandria, Virginia. The parties
consent to the personal and exclusive jurisdiction and venue of such court and
waive any argument that jurisdiction or venue in such court is improper or
inconvenient.
6. Severability. If any provision or portion thereof in this Agreement shall
be found or be held to be illegal, invalid or unenforceable in any jurisdiction
in which this Agreement is being performed, then this Agreement shall
nevertheless be given full force and effect without said provision or portion.
7. Entire Agreement. This Agreement constitutes the entire agreement between
----------------
Recipient and InterTrust regarding the InterTrust Top Secret Information
disclosed hereunder and supersedes all oral or written agreements, either
entered prior to or contemporaneously with this Agreement, concerning the
InterTrust Top Secret Information, except the provision, of the License
Agreement or the Non-Disclosure Agreement between InterTrust and Softbank
Holdings Limited dated March 6, 1996, the provisions of which shall be deemed to
be supplemented hereby as of the date first written above. This Agreement may
not be modified except by written agreement dated subsequent to the date of this
Agreement and signed by both parties.
8. Successors. Subject to the limitations set forth in this Agreement, this
----------
Agreement will inure to the benefit of and be binding upon the parties, their
successors and assigns.
9. Notices. For all purposes hereof, any notice pursuant hereto shall be
deemed given upon receipt by the Party at the address indicated above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INTERTRUST TECHNOLOGIES RECIPIENT
CORPORATION ---------
-----------------------
By:__________________________ By:____________________________
Name:________________________ Name:__________________________
SSG
Title:_______________________ Title:_________________________
NON-DISCLOSURE AGREEMENT
------------------------
FOR INTERTRUST CONFIDENTIAL INFORMATION
---------------------------------------
THIS AGREEMENT (this "Agreement") is made effective as of________1996
between INTERTRUST TECHNOLOGIES CORPORATION ("InterTrust"), a Delaware
corporation, having a place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and _______________________ ("Recipient"), an individual
citizen of the United States, residing at_____________________________________,
and an employee of SOFTBANK Services Group, a Delaware corporation.
The parties agree as follows:
1. Pursuant to a Technology Development and License Agreement dated__________
between InterTrust and SSG (the "License Agreement"), InterTrust may disclose to
SSG certain confidential information including technical information embodied
in and/or associated with InterTrust's InterTrust Technology including, without
limitation, software products and/or other developments related to distributed,
secure rights and/or event management, associated designs, inventions, plans,
and other information (the "Confidential Information"), all of which such
information shall conspicuously be marked with a notice or legend with the
phrase "Confidential", as provided in the License Agreement. In consideration
for such Confidential Information being provided to Recipient, Recipient agrees
to be bound by the terms of this Agreement. Disclosure of InterTrust
Confidential Information to Recipient, and use and disclosure of Confidential
Information received by Recipient, shall occur only in accordance
with the terms and conditions of this Agreement.
2. Recipient will retain such Confidential Information in confidence, and will
discuss such Confidential Information only with other SSG employees, and/or with
other individuals who are under the direct control of SSG and work full time on
SSG premises (an "Individual Consultant"), who have a need to know said
Confidential Information and who have executed a copy of this Agreement.
Recipient shall not, without the prior written permission of InterTrust's
Chairman, President, or such other InterTrust Officer as who has been designated
in writing by InterTrust's Chairman (a "Designated InterTrust Officer"),
disclose Confidential Information to any non-SSG employee other than an
Individual Consultant. Furthermore, without express written authorization of a
SSG officer who is empowered by SSG to provide such an authorization, the
Recipient will not make copies, in whole or in part, of the Confidential
Information into another language and/or shipping the Confidential Information,
in whole or in part, or any direct product thereof, to any country foreign to
the United States of America. The undersigned will not use the Confidential
Information in any manner that is not authorized by SSG and in accordance with
the License Agreement and the undersigned will use the Confidential Information
solely in the exercise of SSG's rights as provided by the License Agreement.
3. The undersigned will not use Confidential Information except in fulfillment
of the undersigned's employee's and/or other individual's obligations with SSG,
and for no other purposes whatsoever. The undersigned understands and
acknowledges that the unauthorized use of Confidential Information may cause
InterTrust very substantial damage, for which damages may be impossible to
measure or inadequate to compensate. Accordingly, Recipient agrees that if he or
she breaches or threatens breach of any of such sections, InterTrust will have
available, in addition to any other right or remedy available, the right to
obtain an injunction against him or her, from a court of competent jurisdiction
restraining such breach or threatened breach and to specific performance of any
such provision of this Agreement, and Recipient hereby consents to the issuance
of such injunction and to the ordering of specific performance under such
circumstances.
4. The undersigned will return all physical embodiments of Confidential
Information in the undersigned's possession to SSG promptly upon request by SSG,
and in no event later than fifteen (15) days thereafter.
5. Notwithstanding any thing else in this Agreement, the confidentiality
restrictions of this Agreement shall not apply to information that: (i) is
or becomes known to the public through no breach of any of the undersigned's
obligations under this Agreement, or SSG's or any other SSG employee's,
Individual Consultant's or other SSG consultant's, and/or agent's
obligations of confidentiality to SSG and/or to InterTrust; (ii) was known to
Recipient prior to its disclosure by InterTrust, as evidenced through written
documentation; (iii) shall have been independently developed by the Recipient
without any reliance on or use of any InterTrust Confidential Information, as
demonstrated through written documentation; or (iv) shall have been
rightfully supplied to Recipient with no obligation of confidentiality or
non-use. In addition, the Recipient, shall be entitled to disclose Confidential
Information pursuant to a court order issued by a court of competent
jurisdiction or as otherwise required by law; provided that the undersigned
-------------
shall provide prompt advance notice thereof to InterTrust to enable InterTrust
to seek a protective order or otherwise prevent such disclosure and shall
disclose no more than the minimum information required by such court order or by
law.
6. If any provision or portion thereof in this Agreement shall be found or be
held by a court of competent jurisdiction to be illegal, invalid or
unenforceable in any jurisdiction in which this Agreement is being performed,
then this Agreement shall nevertheless be given full force and effect without
said provision or portion. This Agreement may not be modified except by written
agreement dated subsequent to the date of this Agreement and signed by both
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
InterTrust Technologies Corporation Recipient
By:___________________________________ Employee: _______________________
Title:________________________________ By:______________________________
Date:_________________________________ Title:___________________________
Date:____________________________
CONFIDENTIAL
EXHIBIT H
TO THE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
List of Restricted Companies and
--------------------------------
Exclusions From InterTrust Partnering Commitment
------------------------------------------------
Restricted Companies
--------------------
. U.S.-based: (i) Independent Software Vendors ("ISVs"), whose primary business
----
is the development or distribution of Software Executables; or (ii) computer
hardware Original Equipment Manufacturers ("OEMs"), other than OEMs solely to
----
the extent of developing, manufacturing, distributing and/or licensing
semiconductor-based solutions supporting any form of rights management,
electronic commerce and/or security activity. Such semiconductor-based
solutions shall not include performance of central clearinghouse services by
such OEM.
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
. [*]
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. [*]
. [*]
Excluded Areas
--------------
The InterTrust Partnering Commitment shall not be construed as extending
to (or otherwise limiting InterTrust's intended rights with regard to granting
licenses to perform Clearinghouse Functions with respect to:
(i) financial or usage Clearinghouse Functions for any form of digital
information other than the Software Executables. For example, digital
information resources, or games or other entertainment, education,
training, or interactive software products, or any other digital
products containing software executables whose principal purpose is not
to function as business or personal productivity software applications
or applets);
---------- * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
H-1
CONFIDENTIAL
(ii) uses of Clearinghouse Functions for EDI systems, trading system
applications, financial infrastructure tools other than desktop
financial productivity tools, electronic advertising applications, or
any large scale or custom special purpose software systems or
applications, for example, large scale or custom special purpose
systems, that are not normally distributed as retail or shareware
software products.
Under no circumstances shall the InterTrust Partnering Commitment be construed
to include any obligation to refrain from: (a) licensing entities other than
those listed on this Exhibit H immediately above to perform any Clearinghouse
Functions whatsoever; and/or (b) licensing any entity that is listed on this
Exhibit H immediately above to perform any Clearinghouse Functions other than in
connection with financial and usage Clearinghouse Function services for such
Software Executables.
H-2