Entrust, Inc. One Hanover Park, Suite 201 Addison, TX 75001
CONFIDENTIAL
Exhibit 2
Entrust, Inc.
Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
November 24, 2008
Empire Capital Partners, L.P.
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Letter Agreement
Ladies and Gentlemen:
This letter agreement confirms the understanding and agreement between Entrust, Inc., a
Maryland corporation (the “Company”), on the one hand, and Empire Capital Partners, L.P.
(together with affiliated funds under common management with Empire Capital Partners, L.P. who now
or in the future beneficially own shares of the Company’s common stock referred to herein as the
“Empire Parties”), on the other hand, following the discussions among the Company and the
Empire Parties regarding the Company’s business. In consideration of these discussions, the
parties hereby agree as follows:
1. Deadline for Including Stockholder Proposals in the Company’s 2009 Annual Meeting Proxy
Statement.
(a) Notwithstanding the November 24, 2008 deadline (the “Rule 14a-8 Deadline”) that would
otherwise apply under Rule 14a-8 promulgated under the Exchange Act of 1934, as amended (“Rule
14a-8”) for the submission of stockholder proposals for inclusion in the Company’s proxy
statement (the “2009 Proxy Statement”) for its 2009 annual meeting of stockholders (the
“2009 Annual Meeting”), the Company hereby agrees that the Rule 14a-8 Deadline will be
deemed to be the earlier to occur of (i) the date that is fourteen (14) days immediately prior to
the date on which the Company initially files the 2009 Proxy Statement with the Securities and
Exchange Commission (the “SEC”) and (ii) the date that is 60 days prior to the date of the
2009 Annual Meeting (provided that if less than 70 days’ notice or prior public disclosure of the
date of the 2009 Annual Meeting is given to stockholders, the date referred to in this subsection
(ii) will be 10 days following the date on which such notice was mailed or public disclosure was
made). In addition, the Company will (x) provide the Empire Parties with written notice of the
filing date for the 2009 Proxy Statement with the SEC thirty (30) days prior to such date and (y)
will not file the 2009 Proxy Statement with the SEC before the filing date set forth in such
notice.
(b) Subject to the terms of this letter agreement, the Company and the Empire Parties hereby
agree and acknowledge that the Empire Parties may submit stockholder proposals for inclusion in the
2009 Proxy Statement for the 2009 Annual Meeting after the Rule 14a-8 Deadline but prior to the
date set forth in Section 1(a) above. Notwithstanding anything to the contrary set forth herein,
the Rule 14a-8 Deadline is being effectively delayed pursuant to the terms of Section 1(a) hereof
solely for the Empire Parties and solely with respect to stockholder proposals submitted by the
Empire Parties that are otherwise permissible under Rule 14a-8 and not excludable by the Company
under Rule 14a-8.
(c) Except as specifically set forth herein, nothing in this letter agreement shall be deemed
in any way to operate as a waiver or limitation of any of the Company’s rights under Rule 14a-8 or
other applicable law.
2. Chairman of the Board. Mr. F. Xxxxxxx Xxxxxx will submit to the Board of Directors
for consideration at the next scheduled meeting of the Board of Directors (currently scheduled for
Tuesday, November 25, 2008) his resignation of as Chairman of the Board of Directors and the
nomination of Xxxxxxx XxXxxxx for election as the new Chairman of the Board of the Directors. Xx.
Xxxxxx will support the election at such meeting of Xxxxxxx XxXxxxx for election as the new
Chairman of the Board of Directors.
3. Observer Rights.
(a) As long as the Empire Parties in the aggregate beneficially own at least 10% of the
Company’s outstanding common stock, the Company shall invite a representative of the Empire Parties
to attend all meetings of the Company’s Board of Directors in a nonvoting observer capacity and, in
this respect, shall give such representative copies of all notices, minutes, consents, and other
materials that it provides to its directors; provided however, that the Company reserves the right
to withhold any information and to exclude such representative from any meeting or portion thereof
if (i) access to such information or attendance at such meeting would be reasonably expected to
adversely affect the attorney-client privilege between the Company and its counsel; (ii) access to
such information or attendance at such meeting would be reasonably expected to result in a conflict
of interest between the Empire Parties or their representative and the Company or its counsel;
(iii) such representative is a direct competitor of the Company; or (iv) necessary to fulfill the
Company’s obligations with respect to confidential or proprietary information of third parties.
(b) The Empire Parties agree, and any representative of the Empire Parties will agree, to hold
in confidence and trust all information provided to it or learned by it in connection with its
observer rights under Section 3(a) this letter, except to the extent otherwise required by law and
any other regulatory process to which the Empire Parties are subject. The Empire Parties further
agree that they will not (i) disclose to any third party (other than employees and advisors who are
bound by similar confidentiality restrictions) or (ii) use either (A) in connection with the
purchase or sale of any security if such use would violate United States securities laws applicable
to xxxxxxx xxxxxxx, or (B) in connection with the preparation of any analyst reports or published
research if such use would require public disclosure by the Company under Regulation FD of the
United States securities laws, any information they gain pursuant to this letter agreement.
Notwithstanding the foregoing, the following information shall not be subject to the restrictions
of this letter agreement: (i) information which was publicly known and generally available prior to
the time of disclosure to the Empire Parties by the Company; (ii) information which becomes
publicly known and generally available after disclosure to the Empire Parties by the Company
through no action or inaction of the Empire Parties; (iii) information which is in the possession
of the Empire Parties, without confidentiality restrictions, at the time of disclosure by the
Company; or (iv) information which comes into the possession of the Empire Parties, without
confidentiality restrictions, from a third party that does not, to the Empire Parties’ knowledge,
owe a duty of confidentiality to the Company with respect to the information.
4. Securities Laws. The Empire Parties are aware, and will advise their
representatives who are informed of the matters that are the subject of this letter agreement, of
the restrictions imposed by the United States securities laws on the purchase or sale of securities
by any person who has received material, non-public information from the issuer of such securities
and on the communication of such information to any other person when it is reasonably foreseeable
that such other person is likely to purchase or sell such securities in reliance upon such
information.
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5. Public Disclosure. Each of the parties hereto agrees that he or it shall not issue
a press release or otherwise make any public statement or disclosure regarding the matters set
forth in this letter agreement without the prior consent of the other party hereto; provided,
however, that notwithstanding the foregoing, (i) the Company may issue a press release and file a
Current Report on Form 8-K to announce and report this letter agreement and the subject matter
hereof, provided that the Company affords a designated representative of the Empire Parties an
opportunity to review and provide comments on any such press release or Current Report prior to the
issuance or filing thereof, and considers in good faith any comments of the Empire Parties thereto,
and (ii) the Empire Parties may issue a press release and file an amendment to the Empire Parties’
most recent filing on Schedule 13D in respect of the Company’s common stock to report this letter
agreement and the subject matter hereof (and any related matters), provided that the Empire Parties
afford the Company an opportunity to review and provide comments on any such press release or
amendment prior to the issuance or filing thereof, and considers in good faith any comments of the
Company thereto.
6. Entire Agreement. This letter agreement contains the entire agreement between and
among the parties concerning the subject matter of this letter agreement and supersedes all prior
agreements and understandings with respect to such subject matter.
7. Governing Law. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland, without regard to conflict of law principles.
8. Assignment. This letter agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assignees. This letter agreement
may not be assigned by the Company without the written consent or other written approval of the
Empire Parties. This letter agreement may not be assigned by the Empire Parties (or any of them)
without the prior written consent of the Company.
9. Amendment. Except as expressly provided herein, neither this letter agreement nor
any term hereof may be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
10. Termination.
(a) This letter agreement shall automatically terminate and be of no further force or effect,
without any action on the part of any of the parties hereto, upon the earlier to occur of (i) the
date on which the Empire Parties cease to beneficially own at least 10% of the Company’s
outstanding common stock and (ii) consummation of a change of control of the Company, which shall
be defined to mean (x) any transaction or series of related transactions pursuant to which the
stockholders of the Company prior to such transaction or series of transactions hold less than a
majority of the voting power of the Company or any successor in interest thereto or less than a
majority in interest of all or substantially all of the assets of the Company, and (y) any
transaction or series of related transactions pursuant to which the members of the Board prior to
such transaction or series of transactions constitute less than a majority of the members of the
Board or the board of directors of any successor in interest thereto; provided, however, that the
Empire Parties may at any time terminate all rights and obligations under Section 3(a) hereof (but
not the remainder of this letter agreement) by sending written notice thereof to the Company.
(b) Notwithstanding anything to the contrary set forth herein, in the event the rights and
obligations under Section 3(a) hereof are terminated by the Empire Parties, or if this letter
agreement otherwise terminates pursuant to its terms, the confidentiality and use restrictions set
forth in Section 3(b)
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of this letter agreement (i) will continue to apply to any information learned by the Empire
Parties and their representative pursuant to the observer rights set forth in Section 3(a) prior to
such termination and (ii) will not apply to any information learned by the Empire Parties and their
representative after such termination.
11. Facsimile; Counterparts. This letter agreement may be executed by facsimile and
in two or more counterparts, each of which may be executed by fewer than all of the parties hereto,
each of which shall be fully enforceable against each of the other parties hereto actually
executing such counterparts, and all of which together shall constitute one and the same
instrument, enforceable against all of the parties hereto.
12. Severability. In the event that any term or provision of this letter agreement
shall become, or is declared by a court of competent jurisdiction to be, illegal, unenforceable or
void, this letter agreement shall continue in full force and effect without said term or provision
as close as possible to the intent of the parties hereto.
13. Headings. The article and section headings set forth in this letter agreement are
included for convenience of reference only and shall not affect the meaning or interpretation of
this letter agreement or any provision hereof.
14. Authority. Each of the Company and the Empire Parties hereby represents and
warrants to the other parties that:
(a) it has full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, all of which have been duly authorized by all requisite corporate,
partnership or limited liability company action, as the case may be and in the case of the Company,
that the Board has authorized and approved this letter agreement; and
(b) this letter agreement has been duly and validly executed and delivered by such party and
constitutes the legal, valid and binding obligation of such party, enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by
general principles of equity (regardless of whether considered in a proceeding in equity or at
law).
[Remainder of Page Intentionally Left Blank]
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If the foregoing is acceptable, kindly sign and return a duplicate copy of this letter
agreement to the undersigned.
| Very truly yours, ENTRUST, INC. |
||||
| By: | /s/ F. Xxxxxxx Xxxxxx | |||
| Name: | F. Xxxxxxx Xxxxxx | |||
| Title: | Chairman, President and Chief Executive Officer | |||
| Agreed to by: | ||||
| EMPIRE CAPITAL PARTNERS, L.P. | ||||
By:
|
/s/ Xxxxx X. Xxxxxxxx | |||
Name:
|
||||
Title:
|
Member of Empire G.P., L.L.C., general partner of Empire Capital Partners, L.P. |
|||
| /s/ F. Xxxxxxx Xxxxxx | ||||
| F. Xxxxxxx Xxxxxx, individually (for purposes of Section 2 hereof) | ||||
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