EXHIBIT D
PHOENIX TECHNOLOGIES LTD.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
July __, 1996, by Phoenix Technologies Ltd., a Delaware corporation
("Parent"), for the benefit of shareholders of Virtual Chips, Inc., a
California corporation (the "Company"), acquiring shares of Parent Common
Stock pursuant to that Agreement and Plan of Reorganization, dated as of July
__, 1996 (the "Reorganization Agreement"), among Parent, Company and Spud
Acquisition Corp., a California corporation and wholly-owned subsidiary of
Parent ("Merger Sub"), and pursuant to the related Agreement of Merger (the
"Agreement of Merger") between the Company and Merger Sub and in
consideration of such shareholders approving the Reorganization Agreement and
the transactions contemplated thereby.
1. DEFINITIONS. As used in this Declaration:
a. "Effective Time" means the time of acceptance by the
California Secretary of State of the Agreement of Merger.
b. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
c. "Form S-3" means such form under the Securities Act as is in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents
filed by Parent with the SEC.
d. "Holder" means: (i) a shareholder of the Company to whom
shares of Common Stock of Parent are issued pursuant to the Reorganization
Agreement and the Agreement of Merger (including shares of Parent Common
Stock issued upon the exercise of Company Options assumed by Parent pursuant
to Section 1.6 of the Reorganization Agreement), or (ii) the Escrow Agent (as
defined in the Reorganization Agreement), or (iii) a transferee to whom
registration rights granted under this Declaration are assigned pursuant to
Section 10 of this Declaration.
e. "Registrable Securities" means for each Holder the number of
shares of Parent Common Stock issued to such Holder pursuant to the
Reorganization Agreement (including shares of Parent Common Stock issued upon
the exercise of Company Options assumed by Parent pursuant to Section 1.6 of
the Reorganization Agreement and shares issued to the Escrow Agent pursuant
to Sections 1.6 and 8.2 thereof), in each case rounded to the nearest
integral amount, and for all Holders the sum of the Registrable Securities
held by them.
f. "Securities Act" means the Securities Act of 1933, as amended.
g. "SEC" means the Securities and Exchange Commission.
Terms not otherwise defined herein have the meanings given to them in
the Reorganization Agreement.
2. REGISTRATION. Parent shall use its best efforts to cause the
Registrable Securities held by each Holder to be registered under the
Securities Act so as to permit the sale thereof, and in connection therewith
shall prepare and file with the SEC within ninety (90) days following the
Effective Time a registration statement in such form as is then available
under the Securities Act covering the Registrable Securities; provided,
however, that each Holder shall provide all such information and materials
and take all such action as may be required in order to permit Parent to
comply with all applicable requirements of the Securities Act, the Exchange
Act, and of the SEC, and to obtain any desired acceleration of the effective
date of such registration statement, such provision of information and
materials to be a condition precedent to the obligations of Parent pursuant
to this Declaration. Parent shall not be required to effect more than one
(1) registration pursuant to this Declaration. The offerings made pursuant
to such registration shall not be underwritten.
3. OBLIGATIONS OF PARENT. Parent shall (i) prepare and file with the
SEC the registration statement in accordance with Section 2 hereof with
respect to the Registrable Securities and shall use its best efforts to cause
such registration statement to become effective as promptly as practicable
after filing and to keep such registration statement effective until two (2)
years after the Effective Time; (ii) prepare and file with the SEC such
amendments to such registration statement and amendments or supplements to
the prospectus used in connection therewith as may be necessary to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities registered by such registration statement until
two (2) years after the Effective Time; (iii) furnish to each Holder such
number of copies of any prospectus (including any preliminary prospectus and
any amended or supplemented prospectus) in conformity with the requirements
of the Securities Act, and such other documents, as each Holder may
reasonably request in order to effect the offering and sale of the
Registrable Securities to be offered and sold, but only while Parent shall be
required under the provisions hereof to cause the registration statement to
remain effective; (iv) use its commercially reasonable efforts to register or
qualify the Registrable Securities covered by such registration statement
under the securities or blue sky laws of such jurisdictions as each Holder
shall reasonably request (provided that Parent shall not be required in
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such jurisdiction
where it has not been qualified), and do any and all other acts or things
which may be necessary or advisable to enable each Holder to consummate the
public sale or other disposition of such Registrable Securities in such
jurisdictions; (v) notify each Holder upon the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing; (vi) so long as the registration statement remains effective,
promptly prepare, file and furnish to each Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of the
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
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light of the circumstances then existing; (vii) notify each Holder, promptly
after it shall receive notice thereof, of the date and time the registration
statement and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement
has been filed; (viii) notify each Holder promptly of any request by the SEC
for the amendment or supplement of such registration statement or prospectus
or for additional information; and (ix) advise each Holder, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of the registration statement
or the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued. In connection
with any offering of Registrable Securities registered pursuant to this
Declaration, Parent shall (x) furnish each Holder, at Parent's expense, with
unlegended certificates representing ownership of the Registrable Securities
being sold, in such denominations as each Holder shall request and (y)
instruct the transfer agent and registrar of the Registrable Securities to
release any stop transfer orders with respect to the Registrable Securities
being sold.
4. SUSPENSION OF PROSPECTUS. Each Holder will be required to notify
Parent in writing at least five (5) business days prior to a disposition of
Registrable Securities pursuant to the registration statement of his intent
to dispose of such Registrable Securities. At any time within such five (5)
business day period, Parent may restrict disposition of such Registrable
Securities, in which event such Holder will not be able to dispose of such
Registrable Securities, provided that: (i) Parent shall have delivered a
notice in writing to such Holder stating that a delay in the disposition of
such Registrable Securities is necessary because Parent, in its reasonable
judgment, has determined that such sales would require public disclosure by
Parent of material nonpublic information that Parent deems it advisable not
to disclose; PROVIDED, HOWEVER, that no such delay shall be imposed unless
Parent shall equally prohibit during the period of such delay any sale of
Parent's securities by all executive officers and directors of Parent; (ii)
in the event of the delivery of the notice described in (i) above by Parent,
Parent shall use its best efforts to amend the registration statement and/or
amend or supplement the related prospectus if necessary and to take all other
actions necessary to allow the proposed sale to take place as promptly as
possible after the conditions referred to in the notice have ceased to exist
or have been disclosed; and (iii) Parent shall not restrict dispositions
under (i) above for a period exceeding forty-five (45) days during any
calendar quarter.
5. AVAILABILITY OF FORM S-3. Parent represents that if Form S-3 (or a
successor form) is not available for use by Parent, Parent shall file a
registration statement on Form S-1 to satisfy its obligations under Section 2
hereof. Parent further represents that it believes it is currently eligible
to utilize Form S-3 and currently believes that there is no material
nonpublic information which would preclude it from filing a registration
statement on Form S-3.
6. REGISTRATION ON FORM S-8. Parent will use commercially reasonable
efforts to file with the SEC within fifteen (15) business days of the Closing
Date, a registration statement on Form S-8 covering all shares of Parent
Common Stock issuable upon exercise of Company Options assumed by Parent.
7. EXPENSES. Parent shall pay all of the out-of-pocket expenses
incurred, other than underwriting discounts and commissions, in connection
with any registration of Registrable Securities
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pursuant to this Declaration, including, without limitation, all SEC, Nasdaq
National Market and blue sky registration and filing fees, printing expenses,
transfer agents' and registrars' fees, and the reasonable fees and
disbursements of Parent's outside counsel and independent accountants and a
single counsel for all of the Holders.
8. INDEMNIFICATION. In the event of any offering registered pursuant
to this Declaration:
a. Parent will indemnify each Holder, each of its officers,
directors and partners and such Holder's legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Declaration,
and each underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment
or supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading, or any violation by Parent of any rule or regulation promulgated
under the Securities Act, or state securities laws, or common law, applicable
to Parent in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers,
directors and partners and such Holder's legal counsel and independent
accountants, and each person controlling such Holder, each such underwriter
and each person who controls any such underwriter, for any legal and any
other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that Parent will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based
in any untrue statement or omission or alleged untrue statement or omission,
made in reliance upon and in conformity with written information furnished to
Parent in an instrument duly executed by such Holder or underwriter and
stated to be specifically for use therein.
b. Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify Parent, each of its
directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of Parent's securities covered by such a
registration statement, each person who controls Parent or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse Parent, such
Holders, such directors, officers, legal counsel, independent accountants,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
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statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to Parent by an
instrument duly executed by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of such Holders hereunder
shall be limited to an amount equal to the gross proceeds before expenses and
commissions to each such Holder of Registrable Securities sold as
contemplated herein.
c. Each party entitled to indemnification under this Section 8
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Declaration, except to
the extent, but only to the extent, that the Indemnifying Party's ability to
defend against such claim or litigation is impaired as a result of such
failure to give notice. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnified Party of a release from all liability in respect
to such claim or litigation.
d. The obligations of Parent and each Holder under this Section 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Declaration and otherwise.
9. REPORTS UNDER EXCHANGE ACT. Parent agrees to:
a. use its commercially reasonable efforts to file with the SEC
in a timely manner all reports and other documents required of Parent under
the Securities Act and the Exchange Act; and
b. furnish to each Holder, forthwith upon request (i) a written
statement by Parent that it has complied with the reporting requirements of
the Securities Act and the Exchange Act, or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of
Parent and (iii) such other information as may be reasonably requested in
availing each Holder of any rule or regulation of the SEC which permits the
selling of any such securities pursuant to Form S-3.
10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause Parent to
register Registrable Securities pursuant to this Declaration may be assigned
by a Holder to a transferee of Registrable Securities only if: (a) Parent is,
within a reasonable time after such transfer, furnished with written notice
of the name and address of such transferee and the Registrable Securities
with respect to which such registration rights are being assigned and a copy
of a duly executed written instrument in form reasonably
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satisfactory to Parent by which such transferee assumes all of the
obligations and liabilities of its transferor hereunder and agrees itself to
be bound hereby; and (b) immediately following such transfer the disposition
of such Registrable Securities by the transferee is restricted under the
Securities Act.
11. AMENDMENT OF REGISTRATION RIGHTS. Holders of a majority of the
Registrable Securities from time to time outstanding may, with the consent of
Parent, amend the registration rights granted hereunder.
12. TERMINATION. The registration rights set forth in this Declaration
shall terminate with respect to a Holder at such time as all of the
Registrable Securities then held by such Holder can be sold by such Holder in
a three-month period in accordance with Rule 144 under the Securities Act.
13. THIRD PARTY BENEFICIARIES. It is intended that the shareholders of
the Company be third party beneficiaries to this Declaration.
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