SERVICES AND COST-SHARING AGREEMENT
This Services and Cost-Sharing 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, Phoenix is providing, directly or indirectly,
certain administrative, financial, management and other services to
inSilicon, its wholly owned subsidiary and shares certain costs with
inSilicon;
WHEREAS, inSilicon is issuing shares of its common stock,
$0.001 par value per share ("Common Stock"), to the public in an offering
(the "Initial Public Offering") registered under the Securities Act of 1933,
as amended, and will no longer be a wholly owned subsidiary of Phoenix;
WHEREAS, on the terms and subject to the conditions set
forth in this Agreement, inSilicon desires to retain Phoenix as an
independent contractor to continue to provide, directly or indirectly,
certain of these services to inSilicon effective on the date of this
Agreement (the "Effective Date") and to continue to share certain costs with
Phoenix for the period set forth herein; and
WHEREAS, on the terms and subject to the conditions set
forth in this Agreement, Phoenix desires to provide, directly or indirectly,
such services to inSilicon and to continue to share such costs.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SERVICES
Section 1.1 PURCHASE AND SALE OF SERVICES. On the terms and
subject to the conditions of this Agreement and in consideration of the
payments to be made by inSilicon under Section 2.1, Phoenix agrees to provide
to inSilicon, and inSilicon agrees to purchase from Phoenix, the services
described in Schedule I (the "Services"). At its option, Phoenix may cause
any Service it is required to provide under this Agreement to be provided by
any of Phoenix or its Subsidiaries (other than inSilicon)(each, a "Phoenix
Entity" and collectively, the "Phoenix Entities") or, subject to Section 1.3,
a qualified third party. Unless otherwise specifically agreed by Phoenix and
inSilicon, the Services to be provided by Phoenix under this Agreement shall
be substantially similar in scope, quality and nature to those provided by
Phoenix to inSilicon prior to the Effective Date and shall be performed by
the same or similarly qualified personnel; PROVIDED, HOWEVER, that the
selection of personnel to perform the Services shall be at the sole
discretion of Phoenix; and PROVIDED, FURTHER, that Phoenix shall not be
required to significantly increase the volume, scope or quality of the
Services provided to inSilicon beyond that which has
been provided to inSilicon prior to the Effective Date, however small
increases based on the growth of inSilicon as can be reasonably foreseen
shall be provided.
Section 1.2 ADDITIONAL SERVICES. In addition to the
Services to be provided by Phoenix pursuant to Section 1.1, if requested by
inSilicon, and to the extent that Phoenix and inSilicon may mutually agree,
Phoenix shall provide additional services (including services not provided by
Phoenix to inSilicon prior to the Effective Date) to inSilicon. The scope of
any such services, as well as the term, costs and other terms and conditions
applicable to such services, shall be set forth in writing as an addendum to
this Agreement at a cost determined in accordance with Section 2.2(b). Each
such addendum shall be executed on behalf of both Phoenix and inSilicon,
shall be effective as of its date and shall, upon such effective date, be
incorporated into and made an integral part of this Agreement.
Section 1.3 SERVICES PERFORMED BY THIRD PARTIES. At its
option, Phoenix may cause any Service it is required to provide under this
Agreement to be provided by any qualified third party that is providing, or
may from time to time provide, the same or similar services for Phoenix (an
"Outsourced Service"). Phoenix shall remain responsible, in accordance with
the terms of this Agreement, for performance of any Service it causes to be
so provided.
Section 1.4 COST-SHARING. On the terms and subject to the
conditions of this Agreement, Phoenix and inSilicon also agree to share the
costs described in Schedule II (the "Shared Costs"). Such shared costs shall
initially be paid for by Phoenix subject to reimbursement by inSilicon for
its allocable portion thereof as provided in Section 2.2(b).
Section 1.5 IMPRACTICABILITY AND FORCE MAJEURE. Phoenix
shall not be required to provide any Service to the extent the performance of
such Service becomes impracticable as a result of a cause or causes outside
the reasonable control of Phoenix or to the extent the provision of such
Service would require Phoenix to violate any applicable laws, rules or
regulations or would result in the breach of any applicable contract or
contracts. Phoenix shall have no obligation to perform or cause the services
to be performed if its failure to do so is caused by or results from any act
of God, governmental action, natural disaster, strike, failure of essential
equipment or any other cause or circumstance beyond the control of Phoenix
or, if applicable, third party providers of services to Phoenix (an "Event of
Force Majeure"). Phoenix will notify inSilicon of any Event of Force Majeure
affecting its services to inSilicon. Phoenix agrees that following any Event
of Force Majeure, inSilicon shall have no obligation to pay for the services
affected thereby and Phoenix will use its reasonable best efforts to restore
such services.
ARTICLE II
SERVICE CHARGES
Section 2.1 SERVICE CHARGES; SHARED COSTS. (a) The charge
to inSilicon for each Service provided to inSilicon pursuant to this
Agreement by Phoenix or any Phoenix Entity or for any Outsourced Service
shall be equal to the amount indicated on Schedule I for such Service, or
determined in accordance with the formula provided on such Schedule I.
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(b) The reimbursement to Phoenix for each Shared Cost
pursuant to this Agreement shall be equal to the amount indicated on Schedule
II for such Shared Cost, or determined in accordance with the formula
provided on such Schedule II.
(c) Phoenix shall apply usual and accepted accounting
conventions in determining the amounts due hereunder and/or the basis on
which a formula is to be applied and Phoenix or its agents shall keep and
maintain such books and records as may be reasonably necessary to support the
charges and reimbursements. Phoenix shall make copies of such books and
records available to inSilicon upon request and upon reasonable prior notice.
Section 2.2 INVOICING AND SETTLEMENT OF COSTS. (a) Phoenix
shall invoice inSilicon for all Service Charges and Shared Cost
reimbursements for each calendar month within thirty (30) days following the
end of such month, provided that any failure by Phoenix to provide an invoice
within such time period shall not relieve inSilicon of its obligation to pay
such amounts following receipt of an invoice therefor. All invoices shall
reflect in reasonable detail a description of the Service performed or the
Shared Cost incurred.
(b) inSilicon shall pay within thirty (30) days following
its receipt of any invoice from Phoenix pursuant to paragraph (a), by wire
transfer of immediately available funds payable to the order of Phoenix, all
amounts invoiced by Phoenix during the preceding calendar month. If inSilicon
fails to pay any monthly payment within 30 days following its receipt of any
invoice from Phoenix pursuant to Section 2.2(a), inSilicon shall pay, in
addition to the amount indicated in such invoice, interest on such amount 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.
Notwithstanding the foregoing, under the terms of the Contribution Agreement
of even date herewith between Phoenix and inSilicon (the "Contribution
Agreement"), Phoenix shall credit inSilicon for Service charges and Shared
Cost reimbursements for the month of December 1999 in a fixed amount of
$550,000.
(c) In the event of a dispute as to the propriety of the
amount invoiced, inSilicon shall pay all undisputed amounts, but shall be
entitled to withhold payment of any amount in dispute (and shall not be
obligated to pay interest on the amount so withheld) and shall notify Phoenix
within ten (10) business days from receipt of any disputed invoice of the
disputed amount and the reasons each such charge is disputed by inSilicon.
Phoenix shall provide to inSilicon, or shall cause its subsidiaries to so
provide, records relating to the disputed amount so as to enable the parties
to resolve the dispute. The parties shall use reasonable efforts to resolve
any such dispute promptly.
(d) Any invoice or payment not disputed in writing by
either party within 90 days of such invoice or payment, as the case may be,
shall be considered final and no longer subject to adjustment.
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ARTICLE III
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 3.1 LIMITATION OF LIABILITY. inSilicon agrees that
none of Phoenix and its affiliates and their respective directors, officers,
agents, and employees (each, a "Phoenix Indemnified Person") shall have any
liability, whether direct or indirect, in contract or tort or otherwise, to
inSilicon for or in connection with the Services rendered or to be rendered
by any Phoenix Indemnified Person pursuant to this Agreement, the
transactions and other activities contemplated hereby that result in the
Shared Costs or any Phoenix Indemnified Person's actions or inactions in
connection with any such Service, transaction or activity except for damages
which have resulted from such Phoenix Indemnified Person's gross negligence
or willful misconduct in connection therewith.
Section 3.2 INDEMNIFICATION OF PHOENIX BY INSILICON.
inSilicon agrees to indemnify and hold harmless each Phoenix Indemnified
Person from and against any damages, and to reimburse each Phoenix
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, pursuing, or defending any claim, action,
proceeding, or investigation, whether or not in connection with pending or
threatened litigation and whether or not any Phoenix Indemnified Person is a
party (collectively, "Actions"), arising out of, relating to or resulting
from the Services rendered or to be rendered by any Phoenix Indemnified
Person pursuant to this Agreement, the transactions and other activities
contemplated hereby that result in the Shared Costs or any Phoenix
Indemnified Person's actions or inactions in connection with any such
Service, transaction or activity; PROVIDED that inSilicon will not be
responsible for any damages of any Phoenix Indemnified Person that are
allocable to the Phoenix portion of such Services or transactions or
activities that result in the Shared Costs or that have resulted from such
Phoenix Indemnified Person's gross negligence or willful misconduct in
connection therewith.
Section 3.3 INDEMNIFICATION OF INSILICON BY PHOENIX.
Phoenix agrees to indemnify and hold harmless inSilicon and its Subsidiaries
and their respective directors, officers, agents, and employees (each, an
"inSilicon Indemnified Person") from and against any damages, and will
reimburse each inSilicon Indemnified Person for all reasonable expenses as
they are incurred in investigating, preparing, pursuing or defending any
Action, arising out of the gross negligence or willful misconduct of any
Phoenix Indemnified Person in connection with the Services rendered or to be
rendered pursuant to this Agreement and the transactions and other activities
contemplated hereby that result in the Shared Costs.
ARTICLE IV
TERM AND TERMINATION
Section 4.1 TERM. Except as otherwise provided in this
Article IV or as otherwise agreed in writing by the parties, this Agreement
shall have an initial term (the "Initial Term") that extends until June 30,
2000 for all Shared Costs and for all Services other than Services labeled as
"accounting services" on Schedule I and an initial term that extends to
September 30, 2000 with respect to Services labeled as "accounting services"
on Schedule I.
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This Agreement will automatically renew with respect to the applicable Shared
Costs and Services on a month-to month basis after such dates unless
terminated in accordance with Section 4.2.
Section 4.2 TERMINATION. (a) Notwithstanding the Initial
Term of this Agreement, inSilicon may at any time terminate this Agreement
with respect to one or more of the Services or Shared Costs, by giving at
least 30 days' prior written notice to Phoenix.
(b) After the Initial Term of this Agreement, Phoenix may
at any time terminate this Agreement with respect to one or more of the
Services or by giving at least 30 days' prior written notice to inSilicon.
(c) Phoenix may terminate any affected Service or Shared
Cost at any time if inSilicon shall have failed to perform any of its
material obligations under this Agreement relating to any such Service or
Shared Cost, Phoenix has notified inSilicon in writing of such failure, and
such failure is not cured and shall have continued for a period of 60 days
after inSilicon's receipt of notice of such failure.
(d) Each of inSilicon and Phoenix agrees that before
exercising its rights under this Section 4.2 it will consult for a reasonable
period with the other party in advance of such termination as to its
implementation.
Section 4.3 EFFECT OF TERMINATION. Other than as required
by law, upon termination of any Service or Shared Cost pursuant to Section
4.1 or Section 4.2, and upon termination of this Agreement in accordance with
its terms, Phoenix will have no further obligation to provide the terminated
Service or share the cost of any transaction or activity (or any Service or
Shared Cost, in the case of termination of this Agreement) and inSilicon will
have no obligation to pay any amounts relating to such Service or Shared Cost
or make any other payments under this Agreement and no further obligations
under Article III shall accrue following such termination; PROVIDED that
notwithstanding such termination, inSilicon shall remain liable to Phoenix
for amounts owed and payable in respect of Services or Shared Costs actually
provided and not in dispute provided before the effective date of the
termination and the parties shall remain liable for indemnification
obligations under Article III arising out of, relating to or resulting from
the period prior to such termination.
ARTICLE V
MISCELLANEOUS
Section 5.1 INTERNAL REFERENCES. Unless the context
indicates otherwise, references to Articles, Sections and paragraphs shall
refer to the corresponding articles, sections and paragraphs in this
Agreement and references to the parties shall mean the parties to this
Agreement.
Section 5.2 PERFORMANCE UNDER THE CONTRIBUTION AGREEMENT.
Notwithstanding anything to the contrary contained in this Agreement,
inSilicon shall not be charged anything under this Agreement for any services
that are specifically required to be performed or costs required to be
assumed under the Contribution Agreement.
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Section 5.3 NO AGENCY. Nothing in this Agreement shall
constitute or be deemed to constitute a partnership or joint venture between
Phoenix and inSilicon or constitute or be deemed to constitute any party the
agent or employee of the other party for any purpose whatsoever and neither
party shall have authority or power to bind the other or to contract in the
name of, or create a liability against, the other in any way or for any
purpose.
Section 5.4 INSILICON AS SOLE BENEFICIARY. inSilicon
acknowledges that the Services shall be provided only with respect to the
business of inSilicon as currently operated or as mutually agreed upon by
Phoenix and inSilicon. inSilicon shall not request performance of any Service
for the benefit of any entity other than inSilicon. inSilicon represents and
agrees that inSilicon will use the Services only in accordance with all
applicable federal, state and local laws and regulations, and in accordance
with the reasonable conditions, rules, regulations and specifications which
may be set forth in any manuals, materials, documents and instructions
furnished from time to time by Phoenix to inSilicon. Phoenix reserves the
right to take all actions, including termination of any particular Service,
that Phoenix reasonably believes to be necessary to assure compliance with
applicable laws and regulations. Phoenix will notify inSilicon of the reasons
for any such termination of Services.
Section 5.5 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. Nothing contained in this Agreement, express or implied, is intended
to confer any benefits, rights or remedies upon any Person other than Phoenix
and inSilicon.
Section 5.6 EXHIBITS AND SCHEDULES. The 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 5.7 INFORMATION. Subject to applicable law and
privileges, each party covenants and agrees to provide the other party with
all information regarding itself and transactions under this Agreement that
the other party reasonably believes is required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes.
Section 5.8 CONFIDENTIAL INFORMATION. inSilicon and Phoenix
hereby covenant and agree to hold in trust and maintain confidential all
Confidential Information relating to the other party. "Confidential
Information" shall mean all information disclosed by either party to the
other in connection with this Agreement whether orally, visually, in writing
or in any other tangible form, and includes, but is not limited to, economic,
business, legal and technical data, business plans, and the like, but shall
not include (i) information which becomes publicly available other than by
release in violation of the provisions of this Section 5.7, (ii) information
which becomes available on a nonconfidential basis to a party from a source
other than the other party to this Agreement provided the party in question
or was not bound to hold such information confidential, (iii) information
acquired or developed independently as evidenced by competent written proof
by a party without violating this Section 5.7 or any other confidentiality
agreement with the other party and (iv) information that any party to this
Agreement is required to disclose by law, provided that it first notifies the
other party of such requirement and allows such party a
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reasonable opportunity to seek a protective order or other appropriate remedy
to prevent such disclosure. Without prejudice to the rights and remedies of
either party to this Agreement, a party disclosing any Confidential
Information to the other party in accordance with the provisions of this
Agreement shall be entitled to equitable relief by way of an injunction if
the other party breaches or threatens to breach any provision of this Section
5.7. The obligations of confidentiality hereunder shall, after termination of
this Agreement, survive for a period of 5 years. Upon termination, all
confidential material of one party related to the other party will be
returned to such party along with all copies thereof.
Section 5.9 DISPUTES. All disputes arising out of, related
to or resulting from this Agreement, including the interpretation hereof
shall be resolved in accordance with the procedures set forth in that certain
Initial Public Offering Agreement between inSilicon and Phoenix dated as of
November 30, 1999, as the same may be amended from time to time.
Section 5.10 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:
000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to inSilicon, to:
000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
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 5.11 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 laws rules of such state.
Section 5.12 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 5.13 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, such
satisfaction shall be provided in writing and not unreasonably withheld.
(b) Except as expressly provided in paragraph (a), neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assignable, directly or indirectly, by any party without
the prior written consent of the other party, and any attempt to so assign
without such consent shall be void.
Section 5.14 SUCCESSORS AND ASSIGNS. Subject to Section
5.12, this Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors and permitted assigns.
Section 5.15 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 of the Initial Public Offering without the
affirmative vote or written consent of a majority of the directors of
inSilicon who are not affiliates of Phoenix.
Section 5.16 COUNTERPARTS. This Agreement may be executed
in counterparts each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same Agreement.
Section 5.17 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 5.18 CONFLICTING AGREEMENTS. In the event of
conflict between this Agreement and the Contribution Agreement, the
provisions of this Agreement shall prevail.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
PHOENIX TECHNOLOGIES LTD.
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: VP, General Counsel & Secretary
INSILICON CORPORATION
By: /s/ Xxxxx X. Power
--------------------------------------
Name: Xxxxx X. Power
Title: Vice President, General Counsel
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Schedule I
NOTE: AS USED HEREIN, "EMPLOYEES" REFERS TO COMMON-LAW EMPLOYEES PLUS
FULL-TIME EQUIVALENT CONTRACTORS.
SERVICE DESCRIPTION CHARGE OR BILLING FORMULA
------- ----------- -------------------------
Depreciation of Depreciation related to all assets jointly used by Total joint asset depreciation costs
common assets (*) Phoenix and inSilicon, such as networking equipment, multiplied by the percentage of
furniture and leasehold improvements. inSilicon employees to total
employees.
IT (*) IT costs dedicated to both Phoenix and inSilicon, Total joint IT costs multiplied by
such as networking, telecommunications, help desk the percentage of inSilicon
support and applications services. employees to total employees.
Corporate Top executive costs incurred by Phoenix that benefit Total joint corporate administration
Administration (*) both Phoenix and inSilicon, such as the cost of the costs multiplied by the percentage
CEO and his or her administrative support. of inSilicon employees to total
employees.
Corporate Marketing Corporate marketing costs incurred by Phoenix that Total joint corporate marketing
(*) benefit both Phoenix and inSilicon. costs multiplied by the percentage
of inSilicon employees to total
employees.
Accounting Services All accounting and finance services incurred by Total joint accounting and finance
(**) Phoenix that benefit both Phoenix and inSilicon, costs multiplied by the percentage
including xxxxxxxx, collections, payables of inSilicon employees to total
processing, general ledger, revenue accounting, employees.
financial planning, treasury and tax functions.
Legal, Human All other administrative functions incurred by Phoenix Total joint other administrative
Resources and that benefit both Phoenix and inSilicon, including costs multiplied by the
Other legal, human resources, purchasing, facilities percentage of inSilicon
Administrative management and operations functions. employees to total employees.
Services (**)
(*) It is estimated that these costs will be billable by Phoenix to inSilicon
until inSilicon moves into a separate facility, at which time no such costs
will be billable.(**) It is estimated that these costs will be billable by
Phoenix to inSilicon for so long as services continue to be provided.
Schedule II
NOTE: AS USED HEREIN, "EMPLOYEES" REFERS TO COMMON-LAW EMPLOYEES PLUS
FULL-TIME EQUIVALENT CONTRACTORS.
SHARED COST DESCRIPTION CHARGE OR BILLING FORMULA
----------- ----------- -------------------------
Facilities (*) Rent, utilities and maintenance costs associated with On a facility-by-facility basis,
any facility that one or more inSilicon employee(s) total costs incurred by Phoenix
occupies. multiplied by the percentage of
inSilicon employees to total
employees in the facility.
Insurance (**) Insurance costs that include inSilicon coverage, Total costs incurred by Phoenix
including General Corporate Liability, Directors' and multiplied by the percentage of
Officers' Liability and Workers' Compensation. inSilicon employees to total
employees.
(*) It is estimated that these costs will be billable by Phoenix to inSilicon
until inSilicon moves into a separate facility, at which time no such costs
will be billable.
(**) It is estimated that these costs will be billable by Phoenix to
inSilicon for so long as inSilicon continues to be covered under the Phoenix
insurance policies.
