Exhibit 4.1
STOCKHOLDER RIGHTS AGREEMENT
January 31, 2001
TABLE OF CONTENTS
Page
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1. Registration Rights................................................ 1
1.1 Definitions............................................. 1
1.2 Company Registration.................................... 2
1.3 Demand Registration..................................... 3
1.4 Obligations of the Company.............................. 5
1.5 Information from Nokia.................................. 6
1.6 Expenses of Registration................................ 6
1.7 Delay of Registration................................... 7
1.8 Rights of Certain Requesting Holders.................... 7
1.9 Indemnification......................................... 7
1.10 Reports Under Securities Exchange Act of 1934........... 9
1.11 Assignment of Registration Rights....................... 10
1.12 "Market Stand-Off" Agreement............................ 10
1.13 Termination of Registration Rights...................... 10
2. Covenants of the Company........................................... 11
2.1 Right to Maintain Percentage Ownership.................. 11
2.2 Board Representation.................................... 12
2.3 Observer and Information Rights......................... 12
3. Miscellaneous...................................................... 13
3.1 Pooling of Interests Obligation......................... 13
3.2 Standstill.............................................. 13
3.3 Prohibition on Resale................................... 13
3.4 Subsequent Financing Participation...................... 13
3.5 Successors and Assigns.................................. 14
3.6 Governing Law........................................... 14
3.7 Counterparts............................................ 15
3.8 Titles and Subtitles.................................... 15
3.9 Notices................................................. 15
3.10 Expenses................................................ 15
3.11 Entire Agreement; Amendments and Waivers................ 16
3.12 Severability............................................ 16
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STOCKHOLDER RIGHTS AGREEMENT
THIS STOCKHOLDER RIGHTS AGREEMENT is made as of January 31, 2001, by
and among InterTrust Technologies Corporation, a Delaware corporation (the
"Company") and Nokia Finance International B.V., a company organized under the
laws of The Netherlands ("Nokia"). This Agreement shall be effective upon the
consummation of the sale of shares of Common Stock by the Company to Nokia
pursuant to the terms of the Purchase Agreement (as hereinafter defined).
RECITALS
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WHEREAS, the Company and Nokia are parties to that certain Common
Stock Purchase Agreement of even date herewith (the "Purchase Agreement")
pursuant to which Nokia will purchase shares of Common Stock of the Company;
WHEREAS, the shares of Common Stock of the Company issued to Nokia
will be granted certain registration and other rights as set forth herein.
NOW, THEREFORE, in consideration of the respective covenants and
agreements herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged by each party), the
parties hereby covenant and agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
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1.1 Definitions. For purposes of this Section 1:
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(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "1934 Act" means the Securities Exchange Act
of 1934, as amended.
(d) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means the shares of
Common Stock sold to Nokia pursuant to the Purchase Agreement or pursuant to
Section 2.1 and
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3.4 hereunder. As to any particular Registrable Securities that have been
issued, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of under such registration statement, (ii) such securities shall have
been distributed to the public pursuant to Rule 144 of the SEC under the
Securities Act, (iii) such securities shall have been otherwise transferred or
disposed of, and the subsequent transfer or disposition of such securities shall
not require their registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have ceased to be
outstanding.
(f) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Company Registration.
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(a) If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than Nokia) any of its stock or other securities
under the Act in connection with the public offering of such securities (other
than a registration relating solely to the sale of securities to participants in
a Company stock option, purchase or benefit plan, a registration relating to a
corporate reorganization or other transaction under Rule 145 of the Act, or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered), the
Company shall, at such time, promptly give Nokia written notice of such
registration. Upon the written request of Nokia given within twenty (20) days
after mailing of such notice by the Company in accordance with Section 3.9, the
Company shall, subject to the provisions of Section 1.2(c), use all reasonable
efforts to cause to be registered under the Act all of the Registrable
Securities that Nokia has requested to be registered. The Company shall be
entitled to appoint the underwriters and to designate their respective roles in
any offering under this Section 1.2 as well as to approve the syndicate
structure for any such offering.
(b) Right to Terminate Registration. The Company shall have
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the right to terminate or withdraw any registration initiated by it under this
Section 1.2 prior to the effectiveness of such registration whether or not Nokia
has elected to include securities in such registration. The expenses of such
withdrawn registration shall be borne by the Company in accordance with Section
1.6 hereof.
(c) Underwriting Requirements. In connection with any
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offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1.2 to include any of Nokia's
securities in such underwriting unless Nokia accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enters into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
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offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned first to
the Company, then second pro rata among the selling holders of Common Stock
previously issued upon conversion of the Company's Series A Preferred Stock
according to the total amount of Common Stock previously issued upon conversion
of the Company's Series A Preferred Stock held by each selling holder, then
third pro rata among the selling holders of Common Stock previously issued upon
conversion of Preferred Stock other than Series A Preferred Stock according to
the total amount of Common Stock previously issued upon conversion of Preferred
Stock other than Series A Preferred Stock owned by each selling holder, then
fourth pro rata among all other selling stockholders, or in such other
proportions as shall mutually be agreed to by all such parties), it being
understood that all Registrable Securities may be excluded from the registration
on this basis. The affiliates through which Nokia may directly or indirectly own
any Registrable Securities and any trusts for the benefit of any of the
foregoing entities shall be deemed to be a single "selling stockholder," and any
pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of Registrable Securities owned by all entities
included in such "selling stockholder," as defined in this sentence.
1.3 Demand Registration. At any time following nine (9) months
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from the date hereof, if the Company shall receive from Nokia a written request
or requests that the Company effect a registration and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by Nokia, the Company shall:
(a) use all reasonable efforts to effect, in accordance
with the provision of Section 1.4 below, such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of Nokia's
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other stockholders joining in
such request as are specified in a written request given within fifteen (15)
days after receipt of such written notice from the Company, provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.3:
(i) within ninety (90) days of a public offering of
the Company's securities;
(ii) if Nokia, together with the holders of any other
securities of the Company entitled to inclusion in such registration, proposes
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $5,000,000;
(iii) if the Company shall furnish to Nokia a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would (because of the existence of, or in anticipation of, any
acquisition or financing activity, or the unavailability for
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reasons beyond the Company's control of any required financial statements, or
any other event or condition of significance to the Company) be significantly
disadvantageous (a "Disadvantageous Condition") to the Company for such
registration statement to be maintained effective or to be filed and become
effective, the Company shall be entitled to cause such registration statement to
be withdrawn and the effectiveness of such registration statement to be
terminated, or, in the event no registration statement has yet been filed, shall
be entitled not to file any such registration statement, in each case for up to
90 consecutive days, following which the Company shall be required to deliver a
new certificate of the Chief Executive Officer to extend such period for up to
two additional periods of 30 days each, or, if sooner, until such
Disadvantageous Condition no longer exists (notice of which the Company shall
promptly deliver to Nokia) (provided, however, that the Company shall not
utilize this right more than once in any twelve month period) and, upon receipt
of any such notice of a Disadvantageous Condition, Nokia will forthwith
discontinue use of the prospectus contained in such registration statement and,
if so directed by the Company, Nokia will deliver to the Company all copies,
other than permanent file copies then in Nokia's possession, of the prospectus
then covering such Registrable Securities current at the time of receipt of such
notice, and, in the event no registration statement has yet been filed, all
drafts of the prospectus covering such Registrable Securities. Upon termination
of such Disadvantageous Condition, the Company will, if requested by Nokia, use
all reasonable efforts to file such registration statement as promptly as
practicable, but in any event within 60 days of such termination. If the Company
declines to file a registration statement in accordance with this Section or
withdraws such registration statement, then the submission of a Registration
Request, or the election to participate in the proposed offering shall not
constitute the exercise of a Registration Request by Nokia. The six-month period
referred to in Section 1.4(a), during which the registration statement must be
kept current after its effective date, shall be extended for an additional
number of business days equal to the number of business days during which the
right to sell Registrable Securities was suspended pursuant to this Section);
(iv) if the Company has already effected three (3)
registrations at the request of Nokia (and/or its permitted tranferees) pursuant
to this Section 1.3 or more than one (1) such registration on Form S-1 or more
than two (2) other such registrations in any twelve (12) month period;
(v) unless such Registrable Securities are sold
pursuant to a firmly underwritten offering;
(vi) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a consent to
general service of process in effecting such registration, qualification or
compliance;
(b) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable, but in any event within 60
days after receipt of the request.
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(c) The Company and Nokia shall in mutual agreement appoint
the underwriters and designate their respective roles in any offering under this
Section 1.3 as well as approve the syndicate structure for any such offering.
1.4 Obligations of the Company. Whenever required under this
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Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities within the time period specified in
Section 1.3(b) above and use all reasonable efforts to cause such registration
statement to become effective, and, upon the request of the holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to ninety (90) days or, if
earlier, until the distribution contemplated in the Registration Statement has
been completed;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to Nokia such numbers of copies of the
registration statement and each amendment and/or supplements thereto and the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by it;
(d) use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by Nokia,
provided that the Company 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 states or jurisdictions;
(e) enter into customary agreements, including in the event
of any underwritten public offering, an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities;
(f) after the filing of the registration statement,
promptly notify Nokia of any stop order issued or threatened by the SEC and take
all reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
(g) notify Nokia at any time when a prospectus relating to
Registrable Securities covered by a registration statement is required to be
delivered under the Act of 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
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not misleading in the light of the circumstances then existing and at the
request of Nokia prepare and furnish to Nokia 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 such Registrable Securities or
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 the light of the circumstances
then existing;
(h) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(i) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, but in no event more than eighteen
months after the effective date of such registration statement, an earnings
statement covering a period of at least twelve months after the effective date
of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(k) in case of a demand registration pursuant to Section
1.3 hereof, furnish to the underwriters, and use reasonable commercial efforts
to furnish to Nokia, the following letters:
(A) a signed counterpart of an opinion of counsel for
the Company, dated the date of the closing under the underwriting agreement,
covering such matters as the managing underwriters of such offering may
reasonably request; and
(B) a letter signed by the independent public accounts
who have certified the Company's financial statements included in the
registration statement, covering such matters as the managing underwriters of
such offering may reasonably request;
such letters shall be in the form as is customary for similar letters, so long
as such form is acceptable to the managing underwriters of such offering.
1.5 Information from Nokia. It shall be a condition precedent to
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the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities that Nokia shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of Registrable Securities.
1.6 Expenses of Registration. All expenses other than
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underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2 and 1.3,
including (without limitation) all registration, filing and
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qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company shall be borne by the Company. Notwithstanding the
foregoing, the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.3 if the registration
request is subsequently withdrawn at the request of the holders of a majority of
the Registrable Securities to be registered (in which case all participating
holders shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be requested in the withdrawn registration).
1.7 Delay of Registration. Nokia shall not have any right to
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obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.8 Rights of Certain Requesting Holders. The Company will not
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file any registration statement pursuant to Section 1.3 hereof under the
Securities Act unless it shall first have given to Nokia as long as it owns
shares of its Common Stock constituting 10% or more of the Common Stock at the
time outstanding or is otherwise deemed to be a control person under the
Securities Act at least 15 days' prior written notice thereof and, if so
requested by Nokia within 5 days after such notice, Nokia shall have the right,
if Nokia, based on an opinion of legal counsel, concludes that it will be deemed
to be a controlling person of the Company within the meaning of the Securities
Act, (a) to participate in the preparation and filing of each such registration
statement, each prospectus included therein or filed with the SEC, and each
amendment thereof or supplement thereto; (b) to receive the documents specified
in Section 1.4 and the notice specified in Section 1.4, and to make the requests
specified in Section 1.4; and (c) to retain counsel to assist Nokia in such
participation. If any such registration statement refers to Nokia by name or
otherwise as the holder of any securities of the Company, then Nokia shall have
the right (in addition to any other rights it may have under this Section 1.8)
to require, in the event that such reference to Nokia by name or otherwise is
not, based on an opinion of legal counsel, required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
Nokia.
1.9 Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless Nokia, the
officers, directors and stockholders of Nokia, legal counsel and accountants for
Nokia, any underwriter (as defined in the Act) for Nokia and each person, if
any, who controls Nokia or such underwriter within the meaning of the Act or the
1934 Act, against any losses, claims, damages or liabilities (joint or several)
to which they may become subject under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged
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violation by the Company of the Act, the 1934 Act, any state securities laws or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities laws; and the Company will reimburse Nokia, and each such underwriter
or controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation that occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by Nokia, any underwriter or any controlling person; provided
further, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of Nokia or any
underwriter, or any person controlling Nokia or any underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of Nokia or underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the shares to such person, and if the prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
(b) Nokia will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act, legal counsel and accountants for the Company,
any underwriter, any other holder selling securities in such registration
statement and any controlling person of any such underwriter or other holder,
against any losses, claims, damages or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Act, the 1934 Act or
any state securities laws, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Nokia expressly for use in the preparation of such registration
statement, preliminary or final prospectus, amendment or supplement; and to
reimburse any person intended to be indemnified pursuant to this subsection
1.8(b), for any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.8(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of Nokia (which consent shall not be unreasonably withheld),
provided that in no event shall any indemnity under this subsection 1.8(b)
exceed the gross proceeds from the offering received by Nokia.
(c) Promptly after receipt by an indemnified party
under this Section 1.9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9,
deliver to the indemnifying party a written notice of the
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commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section
1.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Nokia under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view
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to making available to Nokia the benefits of Rule 144 promulgated under the Act
and any other rule or regulation of the SEC that may at any time permit Nokia to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144;
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(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to Nokia, so long as Nokia owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Act and the 1934 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 the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing Nokia of any rule or regulation of
the SEC that permits the selling of any such securities without registration or
pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the
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Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by Nokia to a transferee or
assignee of such securities that is a subsidiary, parent, or affiliate, of
Nokia, provided: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.12 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
1.12 "Market Stand-Off" Agreement. Nokia hereby agrees that
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during the 90 day period following the effective date of each registration
statement of the Company filed under the Act in connection with any public
offering, it shall not (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are then owned by Nokia or are thereafter acquired), or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise, at any time during such period except to the extent Nokia
participates as a selling stockholder in such registrations and except to any
carve-outs set forth in the underwriting documents. To enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of Nokia (and the shares or securities of every other
person subject to the foregoing restriction) until the end of such period. Nokia
agrees to execute the form of such market stand-off agreement as may be
reasonably requested by the underwriters.
1.13 Termination of Registration Rights. Nokia shall not be
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entitled to exercise any right provided for in this Section 1 at such time at
which all Registrable Securities held by Nokia (and any affiliate of Nokia with
whom Nokia must aggregate its sales under Rule 144) can be sold in any three
(3)-month period without registration in compliance with Rule 144 of the Act.
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2. Covenants of the Company.
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2.1 Right to Maintain Percentage Ownership. Subject to the
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terms and conditions specified in this Section 2.1 and compliance with all
applicable U.S. federal and state securities laws and the rules and regulations
promulgated thereunder, the rules and regulations promulgated by the National
Association of Securities Dealers, Inc. and other such self-regulating or quasi-
public regulatory organizations, including the SEC, the Company hereby grants to
Nokia the right to maintain its percentage ownership of the Company following
future issuances and sales by the Company of any shares of capital stock
("Additional Capital Stock"). For purposes of this Section 2.1, Nokia includes
affiliates of Nokia ("Affiliates"). Nokia shall be entitled to apportion the
right of first offer hereby granted it among itself and Affiliates in such
proportions as it deems appropriate.
Each time the Company issues and sells Additional Capital Stock, the
Company shall issue and sell shares of its Common Stock to Nokia in accordance
with the following provisions.
(a) The Company shall deliver to Nokia a notice in
accordance with Section 3.9 ("Notice") stating the number of shares of
Additional Capital Stock issued and sold or proposed to be issued and sold, and
the proposed price and date of such sale.
(b) By written notification received by the Company within
(i) thirty (30) calendar days after receipt of the Notice, or (ii) if the sale
of Additional Capital Stock is pursuant to a public offering, fourteen (14)
calendar days after receipt of the Notice, Nokia may elect to purchase or obtain
up to a number of shares of Common Stock that equals the shares of Additional
Capital Stock issued by the Company multiplied by the proportion that the number
of shares of Common Stock issued and held by Nokia immediately prior to the
issuance and sale of Additional Capital Stock bears to the total number of
shares of Common Stock of the Company outstanding immediately prior to the
issuance and sale of the Additional Capital Stock (the "Additional Shares"). In
the event that the sale of Additional Capital Stock is pursuant to a public
offering, any election hereunder shall be irrevocable and the sale of Additional
Shares in connection therewith shall occur in a separate transaction exempt from
the registration requirements of the Securities Act. Without prejudice to the
other provisions of this agreement, Nokia shall not have the right under this
Section 2.1 to purchase any shares of Common Stock that would result in Nokia
holding five percent (5%) or more of the total number of shares of Common Stock
of the Company outstanding.
(c) The rights in this Section 2.1 shall not be applicable
to (i) the issuance or sale of shares of Common Stock (or options therefor) to
employees, directors and consultants for the primary purpose of soliciting or
retaining their services or pursuant to any employee stock option or purchase
plan, or other employee benefit plan, (ii) any dividends or securities issued
pursuant to a stockholder rights plan or other anti-takeover plan adopted by the
Company; (iii) the issuance of Common Stock pursuant to the conversion of
Preferred Stock of the Company (provided, however, that the issuance of the
Preferred Stock shall be subject to the rights in this Section 2.1) (iv) the
issuance of warrants, convertible debt securities, or other convertible or
exercisable securities other than shares of Preferred Stock (provided, however,
11
that the issuance, upon the exercise or conversion of such securities, of
Additional Capital Stock underlying such securities shall be subject to the
rights in this Section 2.1); (v) the issuance of securities in connection with a
bona fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise; and (vi)
the issuance of securities pursuant to Section 3.4 of this Agreement.
(d) Subject to the provisions of subsection 2.1(c) above,
the Company shall effect the sale of Additional Shares to Nokia: (i) in the
event of a public offering of Additional Capital Stock or of an other offering
of Additional Capital Stock where the sole consideration payable by the
purchaser is cash (and there are no contemporaneous or related business
relationship between the Company and the purchaser) , at the same price per
share as such Additional Capital Stock, or (ii) in the event of any other
offering of Additional Capital Stock, at the closing sale price per share of
shares of the Company's Common Stock on the date of sale of such Additional
Capital Stock,
(e) The covenant set forth in this Section 2.1 shall
terminate and be of no further force or effect upon the earlier of (i) eighteen
(18) months from the date hereof, (ii) such time that Nokia sells any of the
shares of the Company's Common Stock purchased pursuant to the Purchase
Agreement, or (iii) a Change in Control (as hereinafter defined).
2.2 Board Representation. The Company shall cause the Company's
--------------------
Board of Directors (i) to elect a representative of Nokia that is reasonably
acceptable to the Company (the "Representative") to the Board of Directors and
(ii) nominate and recommend the Representative to the stockholders of the
Company for election to the Board of Directors solely at the next Annual Meeting
of Stockholders of the Company; provided, however, that after 180 days from the
date hereof and upon request of the Company, Nokia covenants and agrees that it
will effect the resignation of the Representative from the Board of Directors.
Notwithstanding the foregoing, if and in the event of a reorganization of the
Company within such 180 day period involving a division of the Company's
technology assets from certain other assets and functions to be held by two
corporations (which may be affiliates of the Company), the Company shall use all
reasonable efforts to cause the Representative to be elected to the Board of
Directors of the corporation which holds the technology assets for an additional
180 day period; provided, that the Representative resigns from the Board of
Directors of the Company.
2.3 Observer and Information Rights. In the event that a
-------------------------------
representative of Nokia is not elected to the Board of Directors pursuant to
Section 2.2, for a period equal to the earlier of 180 days from the date hereof
and a Change in Control (as hereinafter defined), the Company shall invite a
representative of Nokia to attend all meetings of its Board of Directors in a
nonvoting observer capacity and, in this respect, shall give such representative
copies of all notices, minutes, consents, management reports and other materials
that it provides to its directors; provided, however, that such representative
shall agree to hold in confidence and trust and to act in a fiduciary manner
with respect to all information so provided; and, provided further, that the
Company reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to such information
or attendance at such meeting could adversely affect the attorney-client
privilege between the
12
Company and its counsel, or pose a material conflict of interest (including, but
not limited to, disclosure of confidential or proprietary information relating
to a direct competitor of Nokia).
3. Miscellaneous.
-------------
3.1 Pooling of Interests Obligation. In the event of a proposed
-------------------------------
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company or a sale
of all or substantially all of the assets of the Company (a "Change in Control")
that requires, as a condition to closing, that the transaction shall be treated
as a pooling of interests under generally accepted accounting principles, Nokia
shall refrain and shall cause its parent company, Nokia Corporation, and any
party controlled by Nokia Corporation (collectively, "Affiliates") to refrain
from taking any action that would prevent a Change in Control of the Company
from being accounted for under the pooling of interests accounting method or
that would prevent the Change in Control from constituting a transaction
qualifying under Section 368(a) of the Code, including but not limited to, (i)
exercising any right of appraisal and (ii) selling or otherwise reducing its
risk relative to any securities received in such combination before such time as
financial results covering at least 30 days of post-transaction combined
operations have been published.
3.2 Standstill. For a period of one (1) year from the date
----------
hereof, Nokia, covenants and agrees that it will not, and Nokia will ensure that
the Affiliates will not, without the prior written consent of the Company,
directly or indirectly acquire or agree, offer, seek or propose to acquire,
cause to be acquired or commence any tender or exchange offer seeking to acquire
beneficial ownership of any additional shares of the Company's capital stock so
as to increase its percentage ownership of the Company's capital stock. This
Section 3.2 shall not prevent Nokia from the exercise of its rights pursuant to
Sections 3.4.
3.3 Prohibition on Resale. Until the earlier of (i) nine (9)
---------------------
months from the date hereof or (ii) a Change in Control, Nokia covenants and
agrees that it shall not and will ensure that the Affiliates shall not, without
the prior written consent of the Company, (i) lend, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock acquired pursuant to the Purchase Agreement, or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock acquired pursuant to the
Purchase Agreement, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock acquired pursuant to the
Purchase Agreement or such other securities, in cash or otherwise.
3.4 Subsequent Financing Participation. Subject to the terms and
----------------------------------
conditions specified in this Section 3.4 and compliance with all applicable U.S.
federal and state securities laws and the rules and regulations promulgated
thereunder, the rules and regulations promulgated by the National Association of
Securities Dealers, Inc. and other such self-regulating or quasi-public
regulatory organizations, including the SEC, the Company hereby
13
grants to Nokia a participation right with respect to the sale by the Company of
Additional Capital Stock to Qualified Investors (as hereinafter defined). In the
event within twelve (12) months from the date hereof, Nokia and the Company have
mutually identified, negotiated with, and the Company has sold Additional
Capital Stock to two or more companies generally recognized as industry-leading
technology providers mutually approved by Nokia and the Company (each, a
"Qualified Investor") in a transaction or series of related transactions not
involving a public offering pursuant to which the Qualified Investors purchase a
percentage of the capital stock of the Company that the Company and Nokia
mutually agree as significant, the Company shall concurrently make an offering
of Additional Shares to Nokia in accordance with the following provisions:
(a) The Company shall deliver a notice in accordance with
Section 3.9 ("Notice") to Nokia stating (i) its bona fide intention to offer
such shares of Additional Capital Stock, (ii) the number of such shares of
Additional Capital Stock to be offered, and (iii) the price and terms upon which
it proposes to offer such shares of Additional Capital Stock.
(b) By written notification received by the Company prior
to the sale of the shares of Additional Capital Stock to the Qualified Investors
which shall in no event be less than 30 days from the date the Company delivers
its notice to Nokia, Nokia may elect to purchase or obtain, at the price and on
the terms specified in the Notice, up to that number of shares of the Company's
Common Stock that equals an additional five percent (5%) of the total number of
shares of Common Stock of the Company outstanding immediately after the sale of
the shares to Nokia and the Qualified Investors.
Nothing contained herein shall obligate the Company to undertake or consummate
any sale of shares of Additional Capital Stock or other securities to any
Qualified Investor.
(c) The rights set forth in this Section 3.4 shall
terminate upon a Change in Control.
3.5 Successors and Assigns. Except as otherwise provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.6 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California. Each Party hereby unconditionally and irrevocably consents to the
exclusive jurisdiction of and venue in the U.S. District Court for the Northern
District of California (or any direct successor thereto), unless jurisdiction
does not properly lie in Federal Court, in which case exclusive jurisdiction and
venue shall be in the state Courts located in Santa Xxxxx County. Each party
hereby unconditionally
14
and irrevocably waives the rights it may now or in the future have to a trial by
jury in any proceedings before such courts.
3.7 Counterparts. This Agreement may be executed by facsimile
------------
and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
3.8 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.9 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission or nationally recognized overnight
courier service.
3.10 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY OMITTED]
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3.11 Entire Agreement: Amendments and Waivers. This Agreement
----------------------------------------
constitutes the full and entire understanding and agreement among the parties
with regard to the subjects hereof and thereof. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Nokia.
3.12 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTERTRUST TECHNOLOGIES CORPORATION
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Title: SVP Corporate Development
--------------------------------------
NOKIA FINANCE INTERNATIONAL B.V.
By: /s/ [signature illegible]
--------------------------------------
Title: Vice President, General Counsel
--------------------------------------
NOKIA FINANCE INTERNATIONAL B.V.
By: /s/ [signature illegible]
--------------------------------------
Title: Director
--------------------------------------
16
