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