<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Award Software International, Inc.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
054531 10 8
(CUSIP Number)
Theodor L. Lieven Dennis R. DeBroeck
Vobis Microcomputer AG Fenwick & West
Carlo-Schmidt-Stra(beta)e 12 Two Palo Alto Square
42146 Wuerselen Suite 700
Germany Palo Alto, CA 94306
(011)(49)(2405) 444-0 (415) 494-0600
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 27, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 88.
The Exhibit Index is located at page 16.
<PAGE> 2
SCHEDULE 13D
- --------------------------------- --------------------------------
CUSIP NO. 054531 108 PAGE 2 OF 88 PAGES
- -------------------------------- --------------------------------
- -------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
VOBIS MICROCOMPUTER AG
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
2 (b) |_|
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
FEDERAL REPUBLIC OF GERMANY
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER
OF 913,596(1)
------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED
------------------------------------------------------------
BY 9 SOLE DISPOSITIVE POWER
EACH
REPORTING 913,596(1)
------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
913,596(1)
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.4%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
(1) In addition, Reporting Person has a catch-up right, described in Item 4
below, which can only be exercised to the extent Issuer issues certain
additional equity securities.
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<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This statement relates to the Common Stock, no par value ("Common
Stock"), of Award Software International, Inc., a California corporation
("Issuer"). The principal executive offices of Issuer are located at 777 East
Middlefield Road, Mountain View, California 94043.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of Vobis Microcomputer AG, a stock
company organized under the laws of Germany ("Vobis"). Vobis manufacturers,
sells and services computers and computer equipment and creates and sells
computer software products. The address of Vobis' principal business and
principal office is Carlo-Schmidt-Stra(beta)e 12, 42146 Wuerselen, Germany.
Metro AG, a stock company organized under the laws of Germany, owns
90.0% of the capital stock of Vobis. Metro AG's business involves the following:
(i) trading activities in connection with department stores and other retail
companies; (ii) mail ordering; (iii) manufacturing of products that are subject
of trading activities; (iv) activities on the catering and restaurant section;
(v) real estate business; (vi) financial services; (vii) agency fund and
acquisition, administration and disposition of investments and shareholdings in
national and international companies. The address of Metro AG's principal
business and principal office is Lenard Tietz Stra(beta)e 1, 50676 Koeln,
Germany. Metro AG is a publicly-held company whose shares are listed on various
stock exchanges.
Metro Vermoegensverwaltung GmbH & Co. KG, a company organized under
the laws of Germany, owns 60.7% of the capital stock of Metro AG. Metro
Vermoegensverwaltung GmbH & Co. KG's business involves the administration of
assets, including the administration and management of associated companies. The
address of Metro Vermoegensverwaltung GmbH & Co. KG's principal business and
principal office is Schlueterstr. 3, 40235 Duesseldorf, Germany.
The attached Schedule I is a list of the members of the management
boards and the members of the supervisory boards of Vobis, Metro AG and Metro
Vermoegensverwaltung GmbH & Co. KG (under the German legal system, members of
the management board have positions that are analogous to executive officers,
and members of the supervisory board have positions analogous to directors).
During the last five years, neither Vobis nor, to the best of Vobis'
knowledge, any person named in Schedule I has been: (a) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); or (b) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which it was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, U.S. federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
In January 1996, Metro AG loaned to Vobis $7,005,453.12 of its
working capital, which loan bore interest at a monthly rate of 3.73%. In January
1996, Vobis used those loan proceeds to acquire 570,033 shares of Common Stock
and a warrant exercisable for up to 272,394 shares of Common Stock (the
"Warrant"). This loan has been repaid.
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<PAGE> 4
In July 1996, Metro AG loaned to Vobis $411,690 of its working
capital, which loan bore interest at a monthly rate of 3.52%. In July 1996,
Vobis used those loan proceeds to exercise a certain catch-up right (described
below in Item 4) to acquire 41,169 shares of Common Stock. This loan has been
repaid.
In November 1996, Metro AG loaned to Vobis $240,000 of its working
capital, which loan bears interest at a monthly rate of 3.48%. In December 1996,
Vobis used those loan proceeds to exercise the catch-up right to acquire 30,000
shares of Common Stock.
No amount of these loans by Metro AG to Vobis in January 1996, July
1996 and November 1996 consisted of funds or other consideration borrowed or
otherwise obtained from other sources specifically for the purpose of making
such loans.
ITEM 4. PURPOSE OF TRANSACTION
Vobis made the investments described herein for the purpose of
investment and to maintain the right, pursuant to certain contractual rights
described below, to designate one person to be elected to Issuer's Board of
Directors. The transactions pursuant to which Vobis made such investments are
summarized below.
1. TRANSACTIONS IN JANUARY 1996.
SECURITIES PURCHASE AGREEMENT.
Pursuant to a Securities Purchase Agreement entered into as of
January 12, 1996, Vobis purchased from Issuer 570,033 shares of Common Stock for
$7,000,005.24 ($12.28 per share) and the Warrant for $5,447.88 ($0.02 per share
of Common Stock purchasable thereunder). The Warrant is exercisable for up to
272,394 shares of Common Stock at $12.28 per share up to and including the
earlier of the closing of Issuer's initial public offering of Common Stock, of
which the aggregate offering price and per share price to the public are at
least $10,000,000 and $13.60, respectively (a "Qualified Public Offering"),
pursuant to a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), if certain warrants to purchase Common Stock
held by other parties terminate at the closing of the Qualified Public Offering,
or (ii) September 30, 2000. Issuer closed in October 1996 its initial public
offering of Common Stock pursuant to a registration statement under the
Securities Act (the "IPO"), which did not qualify as a Qualified Public
Offering. The Warrant contains a net exercise provision.
INVESTORS' RIGHTS AGREEMENT.
In connection with entering into the Securities Purchase Agreement,
Issuer, Vobis and certain other parties entered into an Investors' Rights
Agreement as of January 12, 1996, which provides, among other things, the
following rights.
(a) Registration Rights.
If Issuer proposes to register any of its securities under the
Securities Act either for its own account or for the account of other security
holders exercising registration rights, holders of shares entitled to
registration rights under the Investors' Rights Agreement, which include Vobis,
are entitled to notice of such registration and are entitled, subject to certain
limitations, to include shares therein. Those holders may also require Issuer to
file a registration statement under the
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<PAGE> 5
Securities Act with respect to their shares, subject to certain limitations.
Further, those holders may require Issuer to register their shares on Form S-3
(or successor or similar form) when use of such form becomes available to
Issuer. Issuer is required to bear all registration expenses in connection with
all registrations, except that any Form S-3 (or successor or similar form)
registration expenses incurred after the first two such registrations shall be
borne by the selling shareholders on a pro rata basis in proportion to the
number of shares sold by each. The selling shareholders in each registration are
required to bear all selling expenses on a pro rata basis in proportion to the
number of shares so registered. These rights are subject to certain conditions
and limitations, among them the right of the underwriters of an offering to
limit the number of shares included in such registration.
(b) Right of First Refusal.
Each of Vobis and certain other parties has the right of first
refusal (the "Right of First Refusal"), subject to certain limitations, to
purchase its pro rata share of all equity securities that Issuer may from time
to time propose to sell.
(c) Catch-Up Right.
Vobis may elect in respect of each future issuance of Issuer's
equity securities to purchase that number of shares as is necessary to maintain
its ownership interest (in no event to exceed 17.5%) in Issuer existing
immediately prior to such future issuance, subject to certain restrictions (the
"Catch-Up Right"). The Catch-Up Right expires and terminates in accordance with
its terms upon the earlier of (i) the date upon which Vobis owns less than 8% of
Issuer's outstanding shares of Common Stock or (ii) completion of a Qualified
Public Offering.
VOTING AGREEMENT.
In connection with entering into the Securities Purchase Agreement,
Issuer, Vobis and certain shareholders of Issuer entered into a Voting Agreement
as of January 12, 1996, pursuant to which Vobis and such shareholders agreed to
vote their shares to maintain the number of directors on Issuer's Board of
Directors at no less than five and to elect one person designated by Vobis to
Issuer's Board of Directors. This agreement will terminate upon the earlier of
(i) January 12, 1999, (ii) a change of control of Issuer, (iii) the date upon
which Vobis owns less than 8% of Issuer's outstanding shares of Common Stock or
(iv) completion of a Qualified Public Offering.
2. TRANSACTION IN JULY 1996.
In July 1996, Vobis exercised the Catch-Up Right, in respect of
certain issuances by Issuer of options to purchase shares of Common Stock, to
purchase 41,169 shares of Common Stock at $10.00 per share for a total purchase
price of $411,690.
3. TRANSACTION IN NOVEMBER/DECEMBER 1996.
In November 1996, Vobis exercised the Catch-Up Right, in respect of
the issuance by Issuer of shares of Common Stock in the IPO, to purchase on
December 27, 1996 30,000 shares of Common Stock at $8.00 per share for a total
purchase price of $240,000.
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<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date of this statement, Vobis beneficially owns a total of
913,596 shares of Common Stock, consisting of 641,202 shares of
Common Stock and the Warrant to purchase 272,394 shares of Common
Stock. Vobis also has the Catch-Up Right, which, as described above
in Item 4, is exercisable to the extent Issuer issues certain
additional equity securities.
Excluding the Catch-Up Right (which can only be exercised to the
extent Issuer issues certain additional equity securities), the
913,596 shares of Common Stock beneficially owned by Vobis on the
date of this statement represent a beneficial ownership of
approximately 13.4% of Issuer's outstanding shares of Common Stock
based upon Issuer's representations to Vobis that 6,507,754 shares
of Common Stock were outstanding on November 21, 1996.
(b) Vobis has sole power to vote and to direct the vote of, and sole
power to dispose or to direct the deposition of, all 913,596 shares
of Common Stock which it beneficially owns on the date of this
statement.
(c) Except as set forth herein, Vobis has not effected any transaction
in Common Stock during the past 60 days, and, to the best of its
knowledge, no person named in Schedule I has effected any
transactions in Common Stock during the past 60 days.
(d) No other person is known to Vobis to have the right to receive or
the power to direct the receipt of dividends from or proceeds from
the sale of any shares of Common Stock beneficially owned by Vobis
on the date of this statement.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Except as set forth in Items 1-5 above, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among Vobis
and any of the persons named in Item 2, or between Vobis and any other person,
with respect to any of the securities of Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as an exhibit hereto:
Exhibit A: Securities Purchase Agreement, dated as of January
12, 1996, between Vobis and Issuer
Exhibit B: Investors' Rights Agreement, dated as of January 12,
1996, between Vobis, Issuer and certain other
parties
Exhibit C: Voting Agreement, dated as of January 12, 1996,
between Vobis, Issuer and certain other parties
Exhibit D: Warrant, dated as of January 12, 1996, issued by
Issuer to Vobis
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<PAGE> 7
SCHEDULE I
VOBIS MICROCOMPUTER AG
MANAGEMENT BOARD
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP
----- ---------------- ---------- -----------
<S> <C> <C> <C>
Chairman Theodor Lieven Chairman of German
Carlo-Schmidt-Stra(beta)e Management Board
12, 54146 Wuerselen, Germany and Chief Executive
Officer of Vobis
Microcomputer AG
Vice Chairman Dr. Gert Huegler Vice Chairman of German
Hohenstaufenallee 41 Management Board
52072 Wuerselen, Germany and Sales Director
of Vobis
Microcomputer AG
Member Willy Weck Member of German
Roermondestr. 411 Management Board
527072 Aachen, Germany and Chief Financial
Officer of Vobis
Microcomputer AG
</TABLE>
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<PAGE> 8
VOBIS MICROCOMPUTER AG
SUPERVISORY BOARD
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP
----- ---------------- ---------- -----------
<S> <C> <C> <C>
Chairman Wolfgang Urban Chairman of German
Leonard-Titz-Str. 1 Supervisory Board
50676 Koeln, Germany of Vobis AG;
Member of
Management Board of
Metro AG
Member Rainer Fraling Member of German
AM Kupferofen 35 Supervisory Board
52066 Aachen, Germany of Vobis AG
Member Klaus Dannenfeld Head of the German
Hechelscheid 13 internal audit
52152 Simmerath, Germany department of Vobis
AG;
Member of
Supervisory Board
of Vobis AG
Member Spyridon Goelden Works council at German
Harscampstr. 58 Vobis AG;
52062 Aachen, Germany Member of
Supervisory Board
of Vobis AG
Member Gerhard Schulmeyer Chairman of German
Otto-Hahn-Ring 6 Management Board of
81739 Muenchen, Germany Siemens Nixdorf
Informationssysteme
AG;
Member of
Supervisory Board
of Vobis AG
Member Erwin Conradi Chairman of German
Schlueterstr. 3 Supervisory Board
40235 Duesseldorf, Germany of Metro AG;
Member of
Supervisory Board
of Vobis AG
</TABLE>
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<PAGE> 9
METRO AG
MANAGEMENT BOARD
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP
----- ---------------- ---------- -----------
<S> <C> <C> <C>
Chairman Wolfgang Urban Chairman of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
Chairman Klaus Wiegandt Chairman of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
Member Dr. Hans-Joachim Koerber Member of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
Member Dr. Wolf-Dietrich Loose Member of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
Member Joachim Suhr Member of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
Member Siegfried Kaske Member of German
Leonard-Titz-Str. 1 Management Board of
50676 Koeln, Germany Metro AG
</TABLE>
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<PAGE> 10
METRO AG
SUPERVISORY BOARD
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP
----- ---------------- ---------- -----------
<S> <C> <C> <C>
Chairman Erwin Conradi President of German
Schluterstr. 3 Metro Holding AG;
40235 Duesseldorf, Germany Chairman of
Management Board
of Metro
Vermoegens-verwaltung
GmbH & Co. KG;
Chairman of
Supervisory Board
of Metro AG;
Member of
Supervisory Board
of Vobis AG
Vice-Chairman Hans Dieter Cleven Vice President of German
Neihofstr. 4 Metro Holding AG;
CH 6340 Baar/Zug, Germany Member of
Management Board of
Metro
Vermoegens-verwaltung
GmbH & Co. KG;
Member of
Supervisory Board
of Metro AG
Member Prof. Erich Greipl Member of German
Schluterstr. 3 Supervisory Board
40235 Duesseldorf, Germany of Metro AG;
Member of
Management Board of
Metro
Vermoegensver-waltung
GmbH & Co. KG
Member Dr. Hermann Kraemer Member of German
Benningplatz. 1 Management Board of
40474 Duesseldorf, Germany Veba AG;
Member of
Supervisory Board
of Metro AG
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C> <C> <C>
Member Dr. Klaus Liesen Chairman of German
Huttropstr. 60 Supervisory Board
46138 Essen, Germany of Rhurgas AG;
Member of
Supervisory Board
of Metro AG
Member Prof. Dr. Helmut Schlesinger Member of German
Wilhelm-Epatein Str. 14 Supervisory Board
60431 Frankfurt/Main, of Metro AG
Germany
Member Dr. Manfred Schneider Chairman of German
51368 Leverkusen, Management Board of
Germany Bayer AG;
Member of
Supervisory Board
of Metro AG
Member Hans-Peter Schreib Member of the German
Humboldt-Stra(beta)e 9 German Association
40237 Duesseldorf, Germany of Security
Holdings;
Member of
Supervisory Board
of Metro AG
Member Dr. H. Schulte-Noelle Chairman of German
Koeniginstr. 28 Management Board of
80802 Muenchen, Germany Allianz AG;
Member of
Supervisory Board
of Metro AG
Member Dr. Joachim Theye Lawyer; German
Marktstr. 3 Member of
28195 Bremen, Germany Supervisory Board
of Metro AG
Employees' Klaus Bruns Employee of Kaufhof German
Representative Postfach 100840 Warenhaus;
46008 Oberhausen, Germany Employee
Representative in
Supervisory Board
of Metro AG
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C> <C>
Employees' Holger Grape Employee of German
Representative Karl-Muck-Platz1 Deutsche
20355 Hamburg, Germany Angestellten
Gewerkschaft;
Employee
Representative in
Supervisory Board
of Metro AG
Employees' Hubert Hasselhoff Employee of German
Representative Am Teinkamp 7 DSBK-Handels AG;
31157 Sarstedt, Germany Employee
Representative in
Supervisory Board
of Metro AG
Employees' Hanns-Juergen Hengst Employee of Kaufhof German
Representative Hohe Stra(beta)e 41-53 Warenhaus AG;
50662 Koeln, Germany Employee
Representative in
Supervisory Board
of Metro AG
Employees' Gerhard Herbst Employee of German
Representative Wilhelm Lauscher Str. 69-77 Gewerkschaft
60329 Frankfurt/Main, Nahrung-Genu(beta)
Germany -Gaststatten;
Representative in
Supervisory Board
of Metro AG
Employees' Hermann Hesse Employee of Kaufhof German
Representative Koenigsalle 1 Warenhaus AG;
40212 Duesseldorf, Germany Employee
Representative in
Supervisory Board
of Metro AG
Employees' Ingeborg Janz Employee of Real German
Representative Gutenbergstr. 2 Warenhaus GmbH;
38640 Gosler, Germany Employee
Representative in
Supervisory Board
of Metro AG
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C> <C>
Employees' Dr. Karheinz Marth Employee of German
Representative Kanzlerstr. 8 Gewerkschaft HBV;
40472 Duesseldorf, Germany Employee
Representative in
Supervisory Board
of Metro AG
Employees' Gustav-Adolf Munkert Employee of Kaufhof German
Representative Leonard-Tietz-Str. 1 Warenhaus AG;
50676 Koeln, Germany Employee
Representative in
Supervisory Board
of Metro AG
Employees' Peter Sauberling Employee of German
Representative Am Tannenwald 2 Praktiker Bau-und
66459 Kiel, Germany Heimwerke AG;
Employee
Representative in
Supervisory Board
of Metro AG
</TABLE>
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<PAGE> 14
METRO VERMOEGENSVERWALTUNG GMBH & CO. KG
MANAGEMENT BOARD
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP
----- ---------------- ---------- -----------
<S> <C> <C> <C>
Chairman Erwin Conradi President of German
Schluterstr. 3 Metro Holding AG;
40235 Duesseldorf, Germany Chairman of
Management Board
of Metro
Vermoegens-verwaltung
GmbH & Co. KG;
Chairman of
Supervisory Board
of Metro AG;
Member of
Supervisory Board
of Vobis AG
Member Hans Dieter Cleven Vice President of German
Neihofstr. 4 Metro Holding AG;
CH 6340 Baar/Zug, Germany Member of
Management Board of
Metro
Vermoegens-verwaltung
GmbH & Co. KG;
Member of
Supervisory Board
of Metro AG
Member Prof. Erich Greipl Member of German
Schluterstr. 3 Management Board of
40235 Duesseldorf, Germany Metro
Vermoegens-verwaltung
GmbH & Co. KG;
Member of
Supervisory Board
of Metro AG
</TABLE>
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<PAGE> 15
SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: December 27, 1996
Vobis Microcomputer AG
By: /s/ Willy Weck
-----------------------------------------
Willy Weck, Chief Financial Officer and
Member of Management Board
By: /s/ Dr. Gert Huegler
-----------------------------------------
Dr. Gert Huegler, Sales Director and
Member of Management Board
[SIGNATURE PAGE TO SCHEDULE 13D]
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Document Description
------- --------------------
<S> <C>
4.1 Securities Purchase Agreement, dated as
of January 12, 1996, between Vobis and
Issuer.
4.2 Voting Agreement, dated as of January
12, 1996, between Vobis, Issuer and
certain other parties.
4.3 Investors' Rights Agreement, dated as
of January 12, 1996, between Vobis,
Issuer and certain other parties.
4.4 Warrant, dated as of January 12, 1996,
issued by Issuer to Vobis.
</TABLE>
<PAGE> 1
Exhibit 4.1
AWARD SOFTWARE INTERNATIONAL, INC.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is
entered into as of January 12, 1996 between AWARD SOFTWARE INTERNATIONAL, INC.,
a California corporation (the "Company"), and VOBIS MICROCOMPUTER AG, a
corporation incorporated under the laws of the Federal Republic of Germany
("Vobis" or "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of
an aggregate of 1,140,066 shares of its Common Stock (the "Shares") and a
warrant to purchase up to 544,788 shares of its Common Stock in the form
attached hereto as Exhibit E (the "Warrant").
WHEREAS, Purchaser desires to purchase the Shares and Warrant
on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares and
the Warrant to Purchaser on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES AND THE WARRANT. On or prior to
the Closing (as defined in Section 2 below), the Company has authorized the sale
and issuance to Purchaser of the Shares and the Warrant.
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at the Closing the Company hereby agrees to issue and sell to Purchaser,
and Purchaser agrees to purchase from the Company, the Shares at an aggregate
purchase price of $7,000,005.24, six dollars fourteen cents ($6.14) per share,
and the Warrant at an aggregate purchase price of $5,447.88, one cent ($.01) per
warrant, which Warrant purchase price has been paid by Purchaser to the Company
prior to the Closing.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the
Shares and Warrants under this
<PAGE> 2
Agreement (the "Closing") shall take place at 5:00 p.m., California time, on the
date hereof or at such time or place as the Company and Purchaser may mutually
agree (such date is hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser certificates
representing the Shares and the Warrant to be purchased at the Closing against
payment of the purchase price therefor by wire transfer or certified check made
payable to the order of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached
hereto as Exhibit A, the Company hereby represents and warrants to Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Company has all requisite corporate power
and authority to own and operate its properties and assets, to execute and
deliver this Agreement and the Investors' Rights Agreement in the form attached
hereto as Exhibit B (the "Investors Rights Agreement"), to issue and sell the
Shares, the Warrant and the shares of Common Stock issuable upon exercise of the
Warrants (the "Underlying Shares"), to carry out the provisions of this
Agreement and the Investors' Rights Agreement, and to carry on its business as
presently conducted and as presently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business. The Company owns
no equity securities of any other corporation, limited partnership or similar
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
3.2 CAPITALIZATION; VOTING RIGHTS. Immediately after the
Closing, the authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, (i) 10,230,449 shares of which will be issued and
outstanding, (ii) 2,500,000 shares of which are reserved for future issuance to
key employees pursuant to the Company's 1995 Stock Option Plan (under which
options to purchase 1,472,311 shares are outstanding and options to purchase
1,012,689 shares remain available for issuance) and (iii) 1,251,455 shares of
which are reserved for issuance upon exercise of certain warrants to purchase
shares of Common Stock (the "Existing Warrants"). All issued and outstanding
shares of the Company's Common Stock (i) have been duly authorized and validly
issued to the persons listed on Exhibit C hereto, and (ii) are fully paid and
<PAGE> 3
nonassessable. Except as may be granted pursuant to the Investors' Rights
Agreement, the Company's 1995 Stock Option Plan and the Existing Warrants, there
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or shareholder agreements, or
agreements of any kind for the purchase or acquisition from the Company of any
of its securities. When issued in compliance with the provisions of this
Agreement, the Shares will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances; provided, however, that the Shares
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time a
transfer is proposed. The Underlying Shares have been duly and validly reserved
for issuance and, when issued in compliance with the Warrant, will be validly
issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Underlying Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of the Company, its officers, directors and shareholders necessary
for the authorization of this Agreement and the Investors' Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares and the
Warrant pursuant hereto has been taken or will be taken prior to the Closing.
The Agreement, and the Investors' Rights Agreement and the Warrant, when
executed and delivered, will be valid and binding obligations of the Company
enforceable in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii) general principles
of equity that restrict the availability of equitable remedies; and (iii) to the
extent that the enforceability of the indemnification provisions in Section 2.8
of the Investors' Rights Agreement may be limited by applicable laws. The sale
of the Shares and Warrants (and the Underlying Shares issuable upon exercise of
the Warrant) is not and will not be subject to (a) any rights of first refusal
that have not been properly waived or (b) any preemptive rights.
3.4 FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser (i) its audited balance sheet as at December 31, 1994 and audited
statement of income for the twelve months ending December 31, 1994 and (ii) its
unaudited balance sheet as at September 30, 1995 (the "Statement Date") and
unaudited consolidated statement of income for the nine-month period ending on
the Statement Date (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except as disclosed therein,
<PAGE> 4
and present fairly the financial condition and position of the Company as of
December 31, 1994 and the Statement Date; provided, however, that the unaudited
financial statements are subject to normal recurring year-end audit adjustments
(which are not expected to be material), and do not contain all footnotes
required under generally accepted accounting principles.
3.5 LIABILITIES. The Company has no material liabilities and,
to the best of its knowledge, knows of no material contingent liabilities not
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to the Statement Date which have not
been, either individually or in the aggregate, materially adverse.
3.6 AGREEMENTS; ACTION.
a) Except for agreements explicitly contemplated hereby
and agreements between the Company and its employees with respect to the sale of
the Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
b) There are no agreements, understandings, instruments,
contracts, proposed transactions, proposed transactions, judgments, orders,
writs or decrees to which the Company is a party or to its knowledge by which it
is bound which may involve (i) obligations (contingent or otherwise) of, or
payments to, the Company in excess of $100,000 (other than obligations of, or
payments to, the Company arising from purchase or sale agreements entered into
in the ordinary course of business), or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company (other
than licenses entered into in the ordinary course of the Company's business a
standard form of which have been made available to Purchaser or Purchaser's
counsel or arising from the purchase of "off the shelf" or other standard
products), or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services, or (iv)
indemnification by the Company with respect to infringements of proprietary
rights (other than indemnification obligations arising from purchase or sale
agreements entered into in the ordinary course of business).
c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to redemption of
Common Stock referred to in the Schedule of Exceptions and indebtedness incurred
in the ordinary course of business or as disclosed in the Financial Statements)
individually in excess of $100,000, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
<PAGE> 5
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
d) For the purposes of subsections (b) and (c) above,
all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated.
e) Except as set forth in Section 3.6(e) of the Schedule
of Exceptions, the Company is not aware of any material agreements to which it
is a party or by which its assets are bound. For purposes of this Section
3.6(e), "material" shall mean agreements that involve revenues payable to the
Company in excess of $200,000, or obligations payable by the Company in excess
of $100,000.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations
of the Company to officers, directors, shareholders, or employees of the Company
other than a) for payment of salary for services rendered, b) reimbursement for
reasonable expenses incurred on behalf of the Company and c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or shareholders of
the Company, or any members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or shareholders of the Company may
own stock in publicly traded companies which may compete with the Company. No
officer, director or shareholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with the Company
(other than such contracts as relate to any such person's ownership of capital
stock or other securities of the Company). Except as may be disclosed in the
Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.8 CHANGES. Since the Statement Date, there has not been to
the Company's knowledge:
a) Any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is expected to have a material
adverse effect on such assets, liabilities, financial condition or operations of
the Company;
<PAGE> 6
b) Any resignation or termination of any key officers of
the Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
d) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
business or prospects or financial condition of the Company;
e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
f) Any direct or indirect loans made by the Company to
any shareholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
g) Any material change in any compensation arrangement
or agreement with any employee, officer, director or stockholder;
h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
i) Any labor organization activity;
j) Any debt, obligation or liability incurred, assumed
or guaranteed by the Company, except those for immaterial amounts and for
current liabilities incurred in the ordinary course of business;
k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
l) Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company, including compensation agreements with the Company's
employees; or
m) Any other event or condition of any character that,
either individually or cumulatively, has materially and adversely affected the
business,
<PAGE> 7
assets, liabilities, financial condition or operations of the Company.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company
has good and marketable title to its properties and assets, including the
properties and assets reflected in the most recent balance sheet included in the
Financial Statements, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(i) those resulting from taxes which have not yet become delinquent, (ii) minor
liens and encumbrances which do not materially detract from the value of the
property subject thereto or materially impair the operations of the Company, and
(iii) those that have otherwise arisen in the ordinary course of business. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used.
3.10 PATENTS AND TRADEMARKS. To the Company's knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information and other
proprietary rights and processes necessary for its business as now conducted and
as proposed to be conducted, without any infringement of the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements entered into in the ordinary course of the Company's
business, or arising from the purchase of "off the shelf" or standard products.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees
<PAGE> 8
made prior to their employment by the Company, except for inventions, trade
secrets or proprietary information that have been assigned to the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Articles of Incorporation or Bylaws, or
of any provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which would materially and adversely affect the
business, assets, liabilities, financial condition or operations of the Company.
The execution, delivery, and performance of and compliance with this Agreement
and the Investors' Rights Agreement, and the issuance and sale of the Shares and
the Warrant (and the Underlying Shares issuable upon exercise of the Warrant)
hereto will not, with or without the passage of time or giving of notice, result
in any such material violation, or be in conflict with or constitute a default
under any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
3.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened against
the Company that questions the validity of this Agreement, the Investors' Rights
Agreement or the Warrant, or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which might result, either individually or in the aggregate, in any material
adverse change in the business, assets, liabilities, financial condition or
operations of the Company, financially or otherwise, or any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis for the foregoing. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
3.13 TAX RETURNS AND PAYMENTS. The Company has timely filed
all tax returns (federal, state and local) required to be filed by it. All taxes
shown to be due and payable on such returns have been paid or will be paid prior
to the time they become delinquent. The Company has not been advised (i) that
any of its returns, federal, state or other, have been or are being audited as
of the date hereof, or (ii) of any deficiency in assessment or proposed judgment
to its federal, state or other taxes. The Company has no knowledge of any
liability of any tax to be imposed upon its properties or assets
<PAGE> 9
as of the date of this Agreement that is not adequately provided for.
3.14 EMPLOYEES. The Company has no collective bargaining
agreements with any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened with respect to the
Company. No employee has any agreement or contract, written or verbal, regarding
his employment. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no former or current
employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company; and to the
Company's knowledge, the continued employment by the Company of its present
employees, and the performance of the Company's contracts with its independent
contractors, will not result in any such violation. The Company has not received
any notice alleging that any such violation has occurred. No employee of the
Company has been granted the right to continued employment by the Company or to
any material compensation following termination of employment with the Company.
The Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company, nor does
the Company have a present intention to terminate the employment of any officer,
key employee or group of key employees. All former or current employees of, or
consultants to, the Company have entered into nondisclosure and proprietary
rights agreements in the form as attached as Exhibit F, and the Company is not
aware of the breach of any such agreement.
3.15 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his business time to the
conduct of the business of the Company. The Company is not aware of any officer
or key employee of the Company planning to work less than full time at the
Company in the future.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the
Investors' Rights Agreement, the Company is presently not under any obligation,
and has not granted any rights, to register (as defined in Section 1.1 of the
Investors' Rights Agreement) any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued.
3.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the
<PAGE> 10
ownership of its properties which violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares, except such as has
been duly and validly obtained or filed, or with respect to any filings that
must be made after the Closing, as will be filed in a timely manner. The Company
has all franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which
could materially and adversely affect the business, properties, prospects or
financial condition of the Company and believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted.
3.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation.
3.19 MINUTE BOOKS. The minute books of the Company provided to
the Purchaser contain a complete summary of all meetings of directors and
shareholders since the time of incorporation in all material respects.
3.20 REAL PROPERTY HOLDING CORPORATION. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3.21 INSURANCE. The Company has obtained and will maintain
fire and casualty insurance policies with coverage customary for companies
similarly situated to the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby represents
and warrants to the Company as follows (such representations and warranties do
not lessen or obviate the representations and warranties of the Company set
forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Investors' Rights Agreement and to carry out
their provisions. All action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Investors' Rights Agreement
have been or will be effectively taken prior to the Closing. Upon their
execution and delivery,
<PAGE> 11
this Agreement and the Investors' Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(ii) general principles of equity that restrict the availability of equitable
remedies, and (iii) to the extent that the enforceability of the indemnification
provisions of Section 2.8 of the Investors' Rights Agreement may be limited by
applicable laws.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of Purchaser required in
connection with the consummation of the transactions contemplated in the
Agreement or the Investors' Rights Agreement have been or shall have been
obtained prior to and be effective as of the Closing.
4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the
Shares, the Warrants and Underlying Shares have not been registered under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants as follows:
a) PURCHASER BEARS ECONOMIC RISK. Purchaser is capable
of evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares, the Warrant, or Underlying
Shares are registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser understands that the Company has no present
intention of registering the Shares, the Warrant, or Underlying Shares, or any
shares of its Common Stock. Purchaser also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Purchaser to
transfer all or any portion of the Shares, the Warrant or Underlying Shares
under the circumstances, in the amounts or at the times Purchaser might propose.
b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares and the Warrant (and Underlying Shares upon exercise of the Warrant)
for Purchaser's own account for investment only, and not with a view towards
their distribution.
c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or financial
experience, Purchaser has the capacity to protect its own interests in
<PAGE> 12
connection with the transactions contemplated in this Agreement and the
Investors' Rights Agreement. Further, Purchaser is aware of no publication of
any advertisement in connection with the transactions contemplated in this
Agreement.
d) ACCREDITED INVESTORS. Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
e) COMPANY INFORMATION. Purchaser has received and read
the Financial Statements and certain other information provided by the Company
and has had an opportunity to discuss the Company's business, management and
financial affairs with directors, officers and management of the Company and has
had the opportunity to review the Company's operations and facilities. Purchaser
has also had the opportunity to ask questions of and receive answers from, the
Company and its management regarding the terms and conditions of this
investment.
f) RULE 144. Purchaser acknowledges and agrees that the
Shares, the Warrants and the Underlying Shares must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
4.4 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees
that the Shares, the Warrants and Underlying Shares are subject to restrictions
on transfer as set forth in the Investors' Rights Agreement.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
Purchaser's obligations to purchase the Shares and Warrant at the Closing are
subject to the satisfaction, at or prior to the Closing, of the following
conditions:
a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be
<PAGE> 13
true and correct in all material respects as of the Closing Date with the same
force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
b) CONSENTS, PERMITS, AND WAIVERS. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by this Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
c) CORPORATE DOCUMENTS. The Company shall have delivered
to Purchaser or its counsel, copies of all corporate documents of the Company as
Purchaser shall reasonably request.
d) COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchaser a Compliance Certificate, executed by the President and
the Chief Financial Officer of the Company, dated the date of the Closing, to
the effect that the conditions specified in subsections (a), (b), and (c) of
this Section 5.1 have been satisfied.
e) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement substantially in the form attached hereto as Exhibit B shall have been
executed and delivered by the parties thereto.
f) OPINION OF COUNSEL. The Purchaser shall have received
from legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit D.
g) BOARD OF DIRECTORS. Upon the Closing, the authorized
size of the Board of Directors of the Company shall be increased to seven (7)
members consisting of George C. Huang, David S. Lee, Masami Maeda, Cheng Ming
Lee, William P. Tai (or a representative of the Walden Group reasonably
agreeable to the Company), Anthony Sun (or a representative of Venrock
Associates reasonably agreeable to the Company) and a representative of
Purchaser reasonably agreeable to the Company.
h) VOTING AGREEMENT. A Voting Agreement substantially in
the form attached hereto as Exhibit G shall have been executed and delivered by
the parties thereto.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares and Warrants at Closing is subject to
the satisfaction, on or prior to the Closing, of the following conditions:
<PAGE> 14
a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by Purchaser in Section 4 hereof shall be
true and correct in all material respects at the date of the Closing, with the
same force and effect as if they had been made on and as of said date.
b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by Purchaser on or before the Closing.
c) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement substantially in the form attached hereto as Exhibit B shall have been
executed and delivered by Purchaser.
d) CONSENTS, PERMITS, AND WAIVERS. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely in
California.
6.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares and/or the Warrant from time to time.
6.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto, the Investors' Rights Agreement, the Warrant and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and no
party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
6.5 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or
<PAGE> 15
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6.6 AMENDMENT AND WAIVER.
a) This Agreement may be amended or modified only upon
the written consent of the Company and Purchaser.
b) The obligations of the Company and the rights of
Purchaser under this Agreement may be waived only with the written consent of
Purchaser.
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement, the
Investors' Rights Agreement or Warrant, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on Purchaser's part
of any breach, default or noncompliance under this Agreement, the Investors'
Rights Agreement or Warrant or any waiver on such party's part of any provisions
or conditions of this Agreement, or the Investors' Rights Agreement or Warrant
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or the
Investors' Rights Agreement or otherwise afforded to any party, shall be
cumulative and not alternative.
6.8 NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified; (ii) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day; (iii) four (4) business days after deposit with an internationally
recognized overnight courier, specifying express delivery, with written
verification of receipt. All communications shall be sent to the Company and
Purchaser at its respective address as set forth on the signature page hereof or
at such other address as the Company or Purchaser may designate by ten (10) days
advance written notice to the other parties hereto.
6.9 EXPENSES. Each party shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement.
6.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should
<PAGE> 16
result in litigation, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
6.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
6.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
6.13 BROKER'S FEES. Each party hereto represents and warrants
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any broker's
or finder's fee or any other commission directly or indirectly in connection
with the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.13 being untrue.
6.14 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
6.15 KNOWLEDGE. For purposes of this Agreement, wherever the
term "knowledge" is used it shall mean the actual knowledge of any officer or
director of the Company, after due investigation.
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed the
Securities Purchase Agreement as of the date set forth in the first paragraph
hereof.
COMPANY PURCHASER
AWARD SOFTWARE INTERNATIONAL, INC. VOBIS MICROCOMPUTER AG
By:____________________________________________ By:____________________________
Title:_________________________________________ Title:_________________________
Address: 777 East Middlefield Road Address: Carlo-
Schmid-Str. 12
Mountain View, CA 94043 D-52146
Wurselen
Germany
SECURITIES PURCHASE AGREEMENT
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. AGREEMENT TO SELL AND PURCHASE 1
1.1 Authorization of Shares and the Warrant 1
1.2 Sale and Purchase 1
2. CLOSING, DELIVERY AND PAYMENT 1
2.1 Closing 1
2.2 Delivery 2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 2
3.1 Organization, Good Standing and Qualification 2
3.2 Capitalization; Voting Rights 2
3.3 Authorization; Binding Obligations 3
3.4 Financial Statements 3
3.5 Liabilities. 3
3.6 Agreements; Action. 3
3.7 Obligations to Related Parties 4
3.8 Changes 5
3.9 Title to Properties and Assets; Liens, etc 6
3.10 Patents and Trademarks 6
3.11 Compliance with Other Instruments 7
3.12 Litigation. 7
3.13 Tax Returns and Payments 7
3.14 Employees 7
3.15 Obligations of Management. 8
3.16 Registration Rights 8
3.17 Compliance with Laws; Permits 8
3.18 Environmental and Safety Laws 8
3.19 Minute Books 8
3.20 Real Property Holding Corporation 9
3.21 Insurance 9
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 9
4.1 Requisite Power and Authority 9
4.2 Consents 9
4.3 Investment Representations 9
4.4 Transfer Restrictions 10
5. CONDITIONS TO CLOSING 10
5.1 Conditions to Purchaser's Obligations at the Closing 10
5.2 Conditions to Obligations of the Company. 11
6. MISCELLANEOUS 12
6.1 Governing Law 12
6.2 Survival 12
6.3 Successors and Assigns 12
6.4 Entire Agreement 12
6.5 Severability 12
6.6 Amendment and Waiver 12
6.7 Delays or Omissions 13
6.8 Notices 13
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C>
6.9 Expenses 13
6.10 Attorneys' Fees 13
6.11 Titles and Subtitles 13
6.12 Counterparts 13
6.13 Broker's Fees 13
6.14 California Corporate Securities Law 14
6.15 Knowledge 14
</TABLE>
SECURITIES PURCHASE AGREEMENT
<PAGE> 1
EXHIBIT 4.2
VOTING AGREEMENT
This Voting Agreement (this "Agreement") is made and entered into as of
January 12, 1996 (the "Effective Date") by and among Award Software
International, Inc., a California corporation (the "Company"), Vobis
Microcomputer AG, a company organized under the laws of the Federal Republic of
Germany (the "Investor"), and the parties listed on Exhibit A attached hereto
(the "Shareholders"). The Investor and the Shareholders are sometimes
hereinafter collectively referred to herein as the "Holders".
RECITALS
WHEREAS, concurrently herewith, the Investor is purchasing from the
Company shares of its Common Stock and a warrant to purchase its Common Stock
(collectively, the "Securities") pursuant to a Securities Purchase Agreement
dated of even date herewith between the Company and the Investor (the "Purchase
Agreement");
WHEREAS, as an inducement to Vobis to purchase the Securities pursuant
to the Purchase Agreement, the Investor, the Shareholders and the Company desire
to enter into this Agreement to set forth their agreements and understandings
with respect to how shares of the Company's capital stock held by them will be
voted on certain matters;
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants made herein, the parties hereby agree as follows:
1. Size of Board of Directors. During the term of this Agreement,
each Holder agrees to vote all shares of capital stock of the Company now or
hereafter directly or indirectly owned (of record or beneficially) by such
Holder to maintain the authorized number of members of the Board of Directors of
the Company (the "Board") at no less than five (5) directors, and to oppose any
effort by any party to change the authorized number of directors of the Company
to less than five (5) directors. In addition, the Company agrees to maintain the
authorized number of members of the Board at no less than five (5) directors.
2. Election of Board of Directors.
2..1 Voting; Board Composition. During the term of this
Agreement, each Holder agrees to vote all shares of capital stock of the Company
now or hereafter directly or indirectly owned (of record or beneficially) by
such Holder, in such manner as may be necessary to elect (and maintain in
office) as a members of the Board an individual designated by the Investor who
is reasonably agreeable to the Company (the "Investor Designee").
2.2 Initial Board Members. As of the Effective Date, the
initial Vobis Designee shall be Theo Lieven.
<PAGE> 2
2.3 Changes in Board Designees. From time to time during
the term of this Agreement, the Investor may, in its sole discretion;
(a) elect to remove from the Board any incumbent
Investor Designee who occupies a Board seat for which the Investor is entitled
to designate the Investor Designee under Section 2.1; and/or
(b) designate a new Investor Designee for election
to a Board seat for which the Investor is entitled to designate the Investor
Designee under Section 2.1 (whether to replace a prior Investor Designee or to
fill a vacancy in such Board seat); provided such removal and/or designation of
the Investor Designee is approved in a writing signed by the Investor, in which
case such election to remove the Investor Designee and/or elect a new Investor
Designee will be binding on the Investor. In the event of such removal and/or
designation of the Investor Designee under this Section 2.3, the Holders shall
vote their shares of the Company's capital stock as provided in Section 2.1 to
cause: (a) he removal from the Board of the Investor Designee so designated for
removal by the Investor; and (b) the election to the Board of any new Investor
Designee so designated for election to the Board by the Investor.
2.4 Notice; Cumulative Voting. The Company shall promptly
give each of the Holders written notice of any change in composition of the
Board and of any proposal by the Investor to remove or elect a new Investor
Designee. In any election of directors pursuant to this Section 2, the Holders
shall vote their shares in a manner sufficient to elect to the board the
individuals to be elected thereto as provided in this Section 2, utilizing
cumulative voting, if and to the extent necessary to do so.
3. Further Assurances. Each of the Holders and the Company agree not
to vote any shares of the Company's capital stock, or to take any other actions,
that would in any manner defeat, impair, be inconsistent with or adversely
affect he stated intentions of the parties under Sections 1 and 2 of this
Agreement.
4. Transferees; Legends on Certificates.
4.1 Effect on Transferees. Each and every transferee or
assignee of any shares of capital stock of the Company from any Holder which or
who is Affiliate (as defined below) of such Holder shall be bound by and subject
to the terms and conditions of this Agreement that are applicable to such
transferee's transferor or assignor, and the Company shall require, as a
condition precedent to the transfer of any shares of capital stock of the
Company subject to this Agreement, that the transferee agrees in writing to be
bound by, and subject to, all the terms and conditions of this Agreement. For
purposes of this Agreement, "Affiliate" shall mean as to any Holder: (a) any
other person directly or indirectly controlling, controlled by or under common
control with such Holder; (b) any other person owning or controlling 10% or more
of the outstanding voting securities of such Holder; (c) any officer, director
or partner of such Holder; (d) any business entity for which Holder acts as an
officer, director or partner;
2
<PAGE> 3
(e) the spouse or any relative of such Holder; and (f) any trust or other estate
in which such Holder or any other person covered by items (a) through (e) has a
beneficial interest or as to which such Holder serves as trustee or in a similar
capacity.
4.2 Legend. The Holders agree that all Company share
certificates now or hereafter held by them that represent shares of capital
stock of the Company subject to this Agreement will be stamped or otherwise
imprinted with a legend to read as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS AND
RESTRICTIONS WITH REGARD TO THE VOTING OF SUCH SHARES AND THEIR
TRANSFER, AS PROVIDED IN THE PROVISIONS OF A VOTING AGREEMENT, A COPY
OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE CORPORATION.
5. Enforcement of Agreement. Each of the Holders acknowledge
and agree that any breach of any of them of this Agreement shall cause the
Investor irreparable harm which may not be adequately compensable by money
damages. Accordingly, in the event of a breach or threatened breach by a Holder
of any provision of this Agreement, the Company and the Investor shall each be
entitled to the remedies of specific performance, injunction or other
preliminary or equitable relief, including the right to compel any such
breaching Holder, as appropriate, to vote such Holder's shares of capital stock
of the Company in accordance with the provisions of this Agreement, in addition
to such other rights remedies as may be available to the Company or the Investor
for any such breach or threatened breach, including but not limited to the
recovery of money damages.
6. Term. This Agreement shall commence on the Effective Date and
shall terminate upon the first to occur of the following:
(a) The date that is three (3) years from the Effective
Date;
(b) The consummation of the sale of securities of the
Company to the public pursuant to an effective registration statement filed by
the Company under the Securities Act of 1933, as amended, pursuant to which the
aggregate offering price to the public is at least $10,000,000.00 and the price
per share is at least $6.80.
(c) Immediately prior to the closing of (i) any
consolidation or merger of the Company with or into any other corporation or
corporations in which the holders of the Company's outstanding shares
immediately before such consolidation or merger do not, immediately after such
consolidation or merger, retain stock representing a majority of the voting
power of the surviving corporation of such consolidation or merger or stock
representing a majority of the voting power of a corporation that wholly owns,
directly or indirectly, the surviving corporation or such consolidation or
merger; (ii) the sale, transfer or assignment of securities of the Company
representing a majority of the
3
<PAGE> 4
voting power of all the Company's outstanding voting securities by the holders
thereof to an acquiring party in a single transaction or series of related
transactions; (iii) any other sale, transfer or assignment of securities of the
Company representing over fifty percent (50%) of the voting power of the
Company's then outstanding voting securities by the holders thereof to an
acquiring party;' or (iv) the sale of all or substantially all the Company's
assets; or
(d) The date that the aggregate percentage ownership
interest in the Company of the Investor and any wholly-owned subsidiaries of the
Investor collectively equals less than eight percent (8%), as determined in
accordance with Section 3.1 of that certain Investor's Rights Agreement dated as
of even date herewith among the Company, the Investor and certain shareholders
of the Company.
7. Miscellaneous.
7.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among residents of, and wholly to be performed
within, the State of California, without reference to principles of conflict of
laws or choice of laws.
7.2 Further Instruments. From time to time, each party
hereto shall execute and deliver such instruments and documents as may be
reasonably necessary to carry out the purposes and intent of this Agreement.
7.3 Successors. This Agreement shall be binding upon and
shall inure to the benefit of the executors, administrators, legal
representatives, heirs, successors, and assigns of the parties hereto; provided,
however, that any transferee of any shares of stock of the Company affected by
this Agreement which or who is an Affiliate of the transferring Holder of such
shares shall be required, as a condition precedent to acquiring such shares, to
first agree in writing to be bound by all the terms and conditions of this
Agreement applicable to such transferee's transferor; and provided further that
no rights under this Agreement may be assigned apart from the related shares of
the Company's capital stock.
7.4 Counterparts. This Agreement may be executed 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.
7.5 Entire Agreement. This document constitutes and
contains the entire agreement and understanding of the parties regarding the
subject matter of this Agreement and supersedes any and all prior negotiations,
correspondence, understandings and agreements among the parties respecting the
subject matter hereof.
7.6 Amendments and Waivers. Any terms of this Agreement may
be amended and the observance of any term of the Agreement may be waived (either
4
<PAGE> 5
generally or in a particular instance and either retroactively or prospectively)
with the written consent of the Company and the Investor. Any amendment or
waiver effected in accordance with this Section shall be binding upon the
Company, all the Holders and their permitted transferees and assignees.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY: INVESTOR:
Name: Name:
------------------------------ -------------------------------
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
SHAREHOLDERS:
Name:
------------------------------
By:
--------------------------------
Title:
-----------------------------
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY: INVESTOR:
Name: Name:
------------------------------ -------------------------------
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
SHAREHOLDERS:
Name:
------------------------------
By:
--------------------------------
Title:
-----------------------------
[Signature Page to Voting Agreement]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY: INVESTOR:
Name: Name:
------------------------------ -------------------------------
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
SHAREHOLDERS:
Name: Name:
------------------------------ -------------------------------
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
7
<PAGE> 8
WALDEN CAPITAL PARTNERS II, L.P.
By:
------------------------------------
Title:
---------------------------------
Address: 750 Battery Street
Floor 7
San Francisco, CA 94111-1523
WALDEN TECHNOLOGY VENTURES II, L.P.
By:
------------------------------------
Title:
---------------------------------
Address: 750 Battery Street
Floor 7
San Francisco, CA 94111-1523
8
<PAGE> 1
EXHIBIT 4.3
AWARD SOFTWARE INTERNATIONAL, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
PAGE
I. GENERAL.......................................................... 1.
1.1 Definitions............................................. 1.
II. REGISTRATION; RESTRICTIONS ON TRANSFER........................... 3.
2.1 Restrictions on Transfer................................ 3.
2.2 Demand Registration..................................... 4.
2.3 Piggyback Registrations................................. 5.
2.4 Form S-3 Registration................................... 6.
2.5 Expenses of Registration................................ 7.
2.6 Obligations of the Company.............................. 8.
2.7 Delay of Registration; Furnishing Information........... 9.
2.8 Indemnification......................................... 9.
2.9 Assignment of Registration Rights....................... 11.
2.10 Amendment of Registration Rights........................ 11.
2.11 Limitation on Subsequent Registration Rights............ 12.
2.12 "Market Stand-Off" Agreement............................ 12.
2.13 Rule 144 Reporting...................................... 12.
III. RIGHTS OF FIRST REFUSAL.......................................... 13.
3.1 Subsequent Offerings.................................... 13.
3.2 Exercise of Rights...................................... 13.
3.3 Issuance of Equity Securities to Other Persons.......... 13.
3.4 Termination of Rights of First Refusal.................. 14.
3.5 Transfer of Rights of First Refusal..................... 14.
3.6 Excluded Securities..................................... 14.
3.7 Catch-up Rights......................................... 14.
IV. MISCELLANEOUS.................................................... 15.
4.1 Governing Law........................................... 15.
4.2 Survival................................................ 15.
4.3 Successors and Assigns.................................. 15.
4.4 Severability............................................ 16.
4.5 Amendment and Waiver.................................... 16.
4.6 Delays or Omissions..................................... 16.
4.7 Notices................................................. 16.
4.8 Attorneys' Fees......................................... 16.
4.9 Titles and Subtitles.................................... 16.
4.10 Counterparts............................................ 17.
4.11 Termination Of Prior Agreements......................... 17.
i.
<PAGE> 3
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is entered into as
of January __, 1996, by and among AWARD SOFTWARE INTERNATIONAL, INC., a
California corporation (the "Company"), and the persons and entities set forth
on Exhibit A (collectively referred to hereinafter as the "Investors" and each
individually as an "Investor").
RECITALS
WHEREAS, the Company proposes to sell and issue up to 1,140,066 shares
of its Common Stock and a warrant to purchase up to 544,788 shares of its Common
Stock to Vobis Microcomputer AG ("Vobis") pursuant to that certain Securities
Purchase Agreement of even date herewith (the "Purchase Agreement");
WHEREAS, certain of the Investors are parties to either that certain
Common Stock Purchase Agreement, dated as of July 17, 1995, or that certain
Investors' Rights Agreement, dated as of September 30, 1995 (together, the
"Prior Agreements"), which provide such Investors with registration rights;
WHEREAS, such Investors desire to supersede those rights set forth in
such agreements with the rights set forth in this Agreement; and
WHEREAS, it is a condition precedent of entering into the Purchase
Agreement that the Company and all the Investors to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
I. GENERAL.
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"COMMON STOCK" means the Company's common stock, no par value.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
<PAGE> 4
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) the Shares; (ii) the Underlying
Shares and (iii) any Common Stock of the Company now or hereafter held by the
Investors. Notwithstanding the foregoing, Registrable Securities shall not
include any securities sold by a person to the public either pursuant to a
registration statement or Rule 144 or sold in a private transaction in which the
transferror's rights under Article II of this Agreement are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Twenty Thousand Dollars ($20,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"SHARES" shall mean shares of the Company's Common Stock issued
pursuant to or covered by the Purchase Agreement or the Prior Agreements,
including the Underlying Shares.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"UNDERLYING SHARES" shall mean the shares of the Company's Common Stock
issuable upon exercise of the Warrants.
"WARRANTS" shall mean the Warrants issued pursuant to or in connection
with the Purchase Agreement and the Prior Agreements to purchase shares of the
Company's Common Stock.
2.
<PAGE> 5
II. REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or
any portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be
bound by this Section 2.1, (B) Such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i)
and (ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its shareholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, or (D) to the Holder's family
member or trust for the benefit of an individual Holder, provided the transferee
will be subject to the terms of this Section 2.1 to the same extent as if he
were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the Agreement)
be stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.
or
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND FOR A
3.
<PAGE> 6
PERIOD OF TWELVE MONTHS FROM THE DATE OF ISSUANCE MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS OR ANY AREA SUBJECT TO ITS JURISDICTION OR
TO ANY PERSON WHO IS A NATIONAL THEREOF OR RESIDENT THEREIN (INCLUDING
ANY ESTATE OF SUCH PERSON) OR ANY CORPORATION, PARTNERSHIP OR OTHER
ENTITY CREATED OR ORGANIZED THEREIN WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend, including, without limitation, pursuant to an exemption
under Rule 144 and Regulation S promulgated under the Securities Act.
(d) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
2.2.1 Subject to the conditions of this Section 2.2, if the
Company shall receive a written request from the Holders of more than a majority
of the Registrable Securities then outstanding (the "Initiating Holders") that
the Company file a registration statement under the Securities Act covering the
registration of Registrable Securities having an aggregate offering price to the
public of at least $10,000,000 and a per share price which is at least $6.80 (as
adjusted for stock splits, stock dividends and the like) (a "Qualified Public
Offering"), then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all Holders, and subject to the
limitations of this Section 2.2, effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that the
Holders request to be registered.
2.2.2 If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 and the Company shall include such information in the written
notice referred to in Section 2.2.1. In such event, the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders (which
underwriter or underwriters shall be
4.
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reasonably acceptable to the Company). Notwithstanding any other provision of
this Section 2.2, if the underwriter advises the Company that marketing factors
require a limitation of the number of securities to be underwritten (including
Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
2.2.3 The Company shall not be required to effect a
registration pursuant to this Section 2.2:
(i) prior to earlier of the third anniversary of the
date of this Agreement or the date six months after the effective date of its
Initial Offering; or
(ii) after the Company has effected a registration
pursuant to this Section 2.2, and such registration has been declared or ordered
effective; or
(iii) during the period starting with the date of
filing of, and ending on the date one hundred eighty (180) days following the
effective date of the registration statement pertaining to the Initial Offering,
provided that the Company is making reasonable and good faith efforts to cause
such registration statement to become effective; or
(iv) if within thirty (30) days of receipt of a written
request from Initiating Holders pursuant to Section 2.2.1, the Company gives
notice to the Holders of the Company's intention to make its Initial Offering
within ninety (90) days; or
(v) if the Company shall furnish to Holders requesting
a registration statement pursuant to this Section 2.2, a certificate signed by
the Chairman of the Board stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be effected at such
time, in which event the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of the
Initiating Holders; provided that such right to delay a request shall be
exercised by the Company no more than twice in any one-year period.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities
5.
<PAGE> 8
by such Holder. If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent such registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
2.3.1 UNDERWRITING. If the registration statement under which
the Company gives notice under this Section 2.3 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration pursuant to
this Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any shareholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
and in no event shall the amount of securities of the selling Holders included
in the registration be reduced below twenty-five percent (25%) of the total
amount of securities included in such registration, unless such offering is the
Initial Offering and such registration does not include shares of any other
selling shareholders, in which event any or all of the Registrable Securities of
the Holders may be excluded in accordance with the immediately preceding
sentence. In no event will shares of any other selling shareholder be included
in such registration which would reduce the number of shares which may be
included by Holders without the written consent of Holders of not less than a
majority of the Registrable Securities proposed to be sold in the offering.
2.3.2 RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated or withdraw any
registration initiated by it under this Section 2.3 prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration. The Registration Expenses of such withdrawn registration
shall be borne by the Company in accordance with Section 2.5 hereof.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
2.4.1 promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and
6.
<PAGE> 9
2.4.2 as soon as practicable, effect 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 such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders 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 2.4:
(i) if Form S-3 (or any successor or similar form) is
not available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $500,000, or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4: provided, that such
right to delay a request shall be exercised by the Company nor more than twice
in any one-year period, or
(iv) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 2.4, or
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
2.4.3 Subject to the foregoing, the Company shall file a Form
S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All such Registration Expenses incurred
in connection with registrations requested pursuant to this Section 2.4 after
the first two (2) registrations shall be paid by the selling Holders pro rata in
proportion to the number of shares sold by each.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder, shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of shares so registered. The Company shall not, however, be required to
pay for expenses of any registration proceeding begun pursuant to Section 2.2 or
2.4, the request of which has been
7.
<PAGE> 10
subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is
based upon material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or (b) the Holders
of a majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 2.2 or Section 2.4, as applicable, in
which event such right shall be forfeited by all Holders). If the Holders are
required to pay the Registration Expenses, such expenses shall be borne by the
holders of securities (including Registrable Securities) requesting such
registration in proportion to the number of shares for which registration was
requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand
registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
2.6.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities 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 up to ninety (90) days (except in
the case of a registration statement prepared pursuant to Section 2.4 (Form S-3)
keep effective for up to twelve (12) months) or, if earlier, until the Holder or
Holders have completed the distribution related thereto.
2.6.2 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 Securities Act with respect to the disposition of all
securities covered by such registration statement.
2.6.3 Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
2.6.4 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 the
Holders, 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.
2.6.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
2.6.6 Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities 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
8.
<PAGE> 11
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.
2.6.7 Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.
2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION.
2.7.1 No Holder shall have any right to 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 Article II.
2.7.2 It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
2.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
2.8.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers, directors and
legal counsel of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, 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") by the Company: (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 violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation
9.
<PAGE> 12
promulgated under the Securities Act, the Exchange Act or any state securities
law in connection with the offering covered by such registration statement; and
the Company will reimburse each such Holder, partner, officer or director,
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 Section 2.8.1 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 which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
2.8.2 To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers,
and legal counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other
such Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state law, 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 such
Holder under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, controlling person, underwriter or other Holder, or
partner, officer, director or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 2.8.2 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 Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 2.8
exceed the proceeds from the offering received by such Holder.
2.8.3 Promptly after receipt by an indemnified party under
this Section 2.8 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 2.8, deliver to
the indemnifying party a written notice of the 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 shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel
10.
<PAGE> 13
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 materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 2.8, 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 2.8.
2.8.4 If the indemnification provided for in this Section 2.8
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability 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 Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the 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; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering received by such Holder.
2.8.5 The obligations of the Company and Holders under this
Section 2.8 shall survive completion of any offering of Registrable Securities
in a registration statement. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Article II may be assigned
by a Holder to a transferee or assignee of Registrable Securities which (i) is a
subsidiary, parent, general partner, limited partner or retired partner of a
Holder, (ii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iii) acquires at least eighty-three thousand (83,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (A) the transferor shall, within ten (10) days
after such transfer, furnish to the Company 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 and (B) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities. Any amendment or waiver effected
11.
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in accordance with this Section 2.11 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Article II, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
2.11 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company that
would grant such holder registration rights senior to those granted to the
Holders hereunder.
2.12 "MARKET STAND-OFF" AGREEMENT. If requested by the Company as the
representative of the underwriters of Common Stock (or other securities) of the
Company, each Holder shall not sell or otherwise transfer or dispose of any
Shares Common Stock (or other securities) of the Company held by such each
Holder (other than those included in the registration) for a period specified by
the representative of the underwriters not to exceed one hundred eighty (180)
days following the effective date of a registration statement of the Company
filed under the Securities Act, provided that:
(i) such agreement shall apply only to the Company's Initial
Offering; and
(ii) all officers and directors of the Company shall enter into
similar agreements.
The obligations described in this Section 2.12 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
2.13 RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent
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<PAGE> 15
annual or quarterly report of the Company; and such other reports and documents
as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.
III. RIGHTS OF FIRST REFUSAL.
3.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as defined
below, that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
3.6 hereof. Each Investor's pro rata share is equal to the ratio of (A) the
number of shares of the Company's Common Stock that are held by such Investor
plus the number of shares of Common Stock issuable upon exercise of any Warrant
held by such Investor immediately prior to the issuance of such Equity
Securities to (B) the total number of shares of the Company's Common Stock
outstanding plus the number of shares of Common Stock issuable upon exercise of
the Warrants immediately prior to the issuance of the Equity Securities. The
term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant or right to subscribe to or purchase any Common
Stock, Preferred Stock or other security or (iv) any such warrant or right.
3.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase up to its pro rata
share of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities to any Investor who would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale.
3.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Investors elect to purchase their pro rata share of the Equity Securities, then
the Company shall promptly notify in writing the Investors who do so elect and
shall offer such Investors the right to acquire such unsubscribed shares. The
Investors shall have five (5) days after receipt of such notice to notify the
Company of its election to purchase all or a portion thereof of the unsubscribed
shares. If the Investors fail to exercise in full the rights of first refusal,
the Company shall have ninety (90) days thereafter to sell the Equity Securities
in respect of which the Investor's rights were not exercised, at a price and
upon general terms and conditions materially no more favorable to the purchasers
thereof than specified in the Company's notice to the Investors pursuant to
Section 3.2 hereof. If the Company has not sold such Equity Securities within
days of the notice provided pursuant to Section 3.2, the Company shall not
thereafter issue or sell any Equity Securities, without first offering such
securities to the Investors in the manner provided above.
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3.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
set forth in Sections 3.1, 3.2 and 3.3 above shall terminate upon the closing
date of the registration statement pertaining to a Qualified Public Offering.
3.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Investor under this Article III may be transferred to the same parties,
subject to the same restrictions, as any transfer of registration rights
pursuant to Section 2.9.
3.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Article III shall have no application to any of the following Equity
Securities:
3.6.1 shares of Common Stock (and/or options, warrants or
other Common Stock purchase rights issued pursuant to such options, warrants or
other rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors;
3.6.2 stock issued pursuant to any rights or agreements
outstanding as of the date of this Agreement, options and warrants (other than
options, warrants or other Common Stock purchase rights covered by Section 3.6.1
above) outstanding as of the date of this Agreement; and stock issued pursuant
to any such rights or agreements granted after the date of this Agreement,
provided that the rights of first refusal established by this Article III
applied with respect to the initial sale or grant by the Company of such rights
or agreements;
3.6.3 any Equity Securities issued for consideration other
than cash pursuant to a merger, consolidation, acquisition or similar business
combination;
3.6.4 shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
3.6.5 any Equity Securities issued pursuant to any equipment
leasing arrangement, or bank financing;
3.6.6 any Equity Securities that are issued by the Company
pursuant to a registration statement filed under the Securities Act; and
3.6.7 shares of the Company's Common Stock or Preferred Stock
issued in connection with strategic transactions involving the Company and other
entities, including (A) joint ventures, manufacturing, marketing or distribution
arrangements or (B) technology transfer or development arrangements; provided
that such strategic transactions and the issuance of shares therein, has been
approved by the Company's Board of Directors.
3.7 CATCH-UP RIGHTS. In the event the Company (a) issues any shares of
Common Stock and/or grants any options, warrants or other Common Stock purchase
rights exercisable for Common Stock in a transaction that is not subject to the
right of first refusal established by this Article III by reason of Section
3.6.1 and after such transaction the Employee Stock Pool, as hereinafter
defined, is greater than 1,500,000 (as adjusted appropriately for any stock
splits,
14.
<PAGE> 17
stock dividends or other such changes in the capitalization of the Company) or
(b) issues any Equity Securities in a transaction that is not subject to the
right of first refusal established by this Article III by reason of Sections
3.6.3, 3.6.5, 3.6.6 (unless such offering is for a Qualified Public Offering) or
3.6.7, the Company will give Vobis written notice of such grant or issuance not
later that ten (10) days after it has occurred, providing relevant details of
the transaction including the purchase price of the Equity Securities issued and
the Vobis Purchase Price (as defined below). For purposes hereof, the Employee
Stock Pool, as of a given date, shall be the sum of (i) the number of shares of
Common Stock issuable upon exercise of options, warrants or other Common Stock
purchase rights granted to employees, officers or directors of, or consultants
or advisors to the Company or any subsidiary ("Employee Rights") and then
outstanding and (ii) the number of shares of Common Stock previously issued upon
exercise of Employee Rights outstanding at any time after the date of this
Agreement, minus the number of any such shares of Common Stock as to which Vobis
has previously been given notice in respect of its rights hereunder (all such
numbers having been adjusted appropriately for any stock splits, stock dividends
or other such changes in the capitalization of the Company). For purposes of
this Section 3.7, the "Vobis Purchase Price" shall mean the purchase price for
which the Vobis Group (as defined below) may exercise its rights under this
Section 3.7 to purchase securities from the Company which shall equal: (i) in
the case of direct issuances of Common Stock under (a) above, the fair market
value of the Common Stock on the date of issuance; (ii) in the case of the
issuances of Employee Rights under (a) above, the fair market of the underlying
Common Stock on the date of grant of such Employee Right; (iii) in the case of
any Equity Securities covered by (b) above, the actual price paid or payable
with respect to such Equity Securities; and (iv) in the event the consideration
for the Equity Securities issued by the Company under (a) or (b) above was other
than cash, the fair market value of such consideration as reasonably determined
in good faith by the Board of Directors of the Company as of the date of
issuance of such Equity Securities; provided, however, that notwithstanding the
above, if the fair market value as determined in (i) or (ii) above is higher
than the price paid or payable in connection with any issuances under (i) or
(ii) above, then the Vobis Purchase Price shall equal the average of such fair
market value and such actual purchase price paid or payable for such issuance.
Vobis and any of its wholly-owned subsidiaries holding Registrable Securities
(collectively, the "Vobis Group") shall have the right, exercisable at any time
within thirty (30) days after such notice is given, to purchase from the Company
at the Vobis Purchase Price specified that number of Equity Securities (which
shall be Common Stock in the case of any Employee Rights) as is necessary to
restore its percentage ownership interest (determined in accordance with Section
3.1) to the percentage ownership interest of the Vobis Group immediately prior
to such issuance, but in no event to greater than seventeen and one-half percent
(17.5%). Notwithstanding the foregoing, in the case of transactions involving
the issuance of Common Stock and Employee Rights representing less than three
and one-half percent (3.5%) of the Common Stock outstanding immediately prior to
the first of such transactions, the Company may at its election defer giving
such notice until issuances in that and any subsequent transactions as to which
notice has been deferred hereunder, constitute in the aggregate three and
one-half percent (3.5%) or more of the Common Stock outstanding. In such case,
the notice given by the Company shall specify the information called for herein
with respect to each such transaction, and the right of the Vobis Group to
purchase with respect to all such transactions shall be at the Vobis Purchase
Price applicable to the shares of Common Stock sold or issuable upon exercise of
Employee Rights granted in such transactions. The rights granted to the Vobis
Group under this Section 3.7 shall terminate and be of no further force or
effect on the earlier of (A) the
15.
<PAGE> 18
closing date of a Qualified Public Offering or (B) on the day prior to a
transaction (or the first of a series of transactions to be covered by a
deferred notice) to which this Section 3.7 would otherwise apply, if on such
date the percentage ownership interest of the Vobis Group (determined in
accordance with Section 3.1) is less than eight percent (8%). Notwithstanding
the foregoing, in the event of a Qualified Public Offering in which the Company
offers in excess of 1,500,000 shares, as presently constituted (including any
shares to be offered under any overallotment option), the Company agrees to give
the Vobis Group the opportunity to purchase in a single transaction up to twelve
percent (12.0%) of such excess in such offering. Any right to purchase Equity
Securities under this Section 3.7 may be allocated among the members of the
Vobis Group on such basis as Vobis may determine.
IV. MISCELLANEOUS.
4.1 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.
4.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby.
4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
4.4 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
4.5 AMENDMENT AND WAIVER. Except as otherwise expressly provided, this
Agreement may be amended or modified, 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 upon the written consent of the Company
and the holders of at least a majority of the Registrable Securities; provided,
however, only Vobis may waive or amend the rights granted under Section 3.7.
4.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
16.
<PAGE> 19
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
4.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) if to an Investor located in the United States, five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) if to an Investor located in the United States, one (1)
day, and if to an Investor located outside of the United States, four (4)
business days, after deposit with an internationally recognized overnight
courier, specifying express delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the address as set
forth on the signature pages hereof or Exhibit A hereto or at such other address
as such party may designate by ten (10) days advance written notice to the other
parties hereto.
4.8 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
4.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
4.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
4.11 TERMINATION OF PRIOR AGREEMENTS. The Investors hereby agree to the
termination of (i) that certain Investors' Rights Agreement, dated as of
September 30, 1995 (the "Rights Agreement") and (ii) Sections 6 and 7 of that
certain Common Stock Purchase Agreement, dated as of July 17, 1995 (the "Prior
Agreement"), and hereby agree that the Company shall have no further obligations
under the Rights Agreement and Sections 6 and 7 of the Prior Agreement and that
the rights granted hereunder are in lieu thereof. As required by Section 4.5 of
the Rights Agreement and Section 8.4 of the Prior Agreement, the undersigned
represent at least two-thirds (66 2/3%) of the Registrable Securities and all of
the Purchasers, respectively, thereunder. Notwithstanding anything herein to the
contrary, unless otherwise amended or modified by this Section 4.11, the rights
and obligations of the parties under the Prior Agreement (excluding Sections 6
and 7 thereof) shall remain in full force and effect.
17.
<PAGE> 20
18.
<PAGE> 21
[THIS SPACE INTENTIONALLY LEFT BLANK]
19.
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Investors'
Rights Agreement as of the date set forth in the first paragraph hereof.
COMPANY INVESTORS
AWARD SOFTWARE INTERNATIONAL, INC. VENROCK ASSOCIATES
By: By:
------------------------------- ------------------------------------
Title: Title:
---------------------------- ---------------------------------
Address: 777 East Middlefield Road Address: 30 Rockefeller Plaza, Rm 5508
Mountain View, CA 94043 New York, NY 10112
VENROCK ASSOCIATES II, L.P.
By:
------------------------------------
Title:
---------------------------------
Address: 30 Rockefeller Plaza, Rm 5508
New York, NY 10112
INVESTORS' RIGHTS AGREEMENT
<PAGE> 23
WALDEN CAPITAL PARTNERS II, L.P.
By:
-----------------------------------
Title:
--------------------------------
Address: 750 Battery Street
Floor 7
San Francisco, CA 94111-1523
WALDEN TECHNOLOGY VENTURES II, L.P.
By:
-----------------------------------
Title:
--------------------------------
Address: 750 Battery Street
Floor 7
San Francisco, CA 94111-1523
INVESTORS' RIGHTS AGREEMENT
<PAGE> 24
VOBIS MICROCOMPUTER AG
By:
---------------------------------
Title:
------------------------------
Address: Carlo-Schmid-Str. 12
D-52146 Wurselen
Germany
INVESTORS' RIGHTS AGREEMENT
<PAGE> 25
CHAILEASE VENTURE CAPITAL CO., LTD.
By:
------------------------------------------
Title:
---------------------------------------
Address: 5th Fl., No. 420 Fu-Hsin N. Rd.
Taipei, Taiwan
KOOS VENTURE CAPITAL CO., LTD.
By:
------------------------------------------
Title:
---------------------------------------
Address: 5th Fl., No. 420 Fu-Hsin N. Rd.
Taipei, Taiwan
CHINATRUST VENTURE CAPITAL CO., LTD.
By:
------------------------------------------
Title:
---------------------------------------
Address: 5th Fl., No. 420 Fu-Hsin N. Rd.
Taipei, Taiwan
INVESTORS' RIGHTS AGREEMENT
<PAGE> 26
HANTECH VENTURE CAPITAL CO., LTD.
By:
-----------------------------------------
Title:
--------------------------------------
Address: Suite 3201, 32F, International
Trade Building
No. 333, Keelung Road, Sec. 1
Taipei Taiwan
INVESTORS' RIGHTS AGREEMENT
<PAGE> 27
HUNG LIEN INVESTMENT
By:
------------------------
Title:
---------------------
Address:
-------------------
-------------------
-------------------
INVESTORS' RIGHTS AGREEMENT
<PAGE> 28
EXHIBIT A
SCHEDULE OF INVESTORS
Venrock Associates
Venrock Associates II, L.P.
Walden Capital Partners II, L.P.
Walden Technology Ventures II, L.P.
Vobis Microcomputer AG
Chailease Venture Capital Co., Ltd.
Koos Venture Capital Co., Ltd.
Chinatrust Venture Capital Co., Ltd.
Hantech Venture Capital Co., Ltd.
Hung Lien Investment
<PAGE> 1
EXHIBIT 4.4
No.W-5
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE A MAXIMUM OF
544,788 SHARES OF COMMON STOCK OF
AWARD SOFTWARE INTERNATIONAL, INC.
(Void after September 30, 2000)
This certifies that VOBIS MICROCOMPUTER AG (the "Holder"), or assigns,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, is entitled to purchase from AWARD SOFTWARE INTERNATIONAL,
INC., a California corporation (the "Company"), having a place of business at
777 East Middlefield Road, Mountain View, CA 94043-4023, a maximum of Five
Hundred Forty-Four Thousand, Seven Hundred Eighty-Eight (544,788) fully paid
and nonassessable shares of the Company's Common Stock ("Common Stock") for
cash at a price of six dollars fourteen cents ($6.14) per share (the "Stock
Purchase Price") at any time or from time to time up to and including the
earlier of (i) the closing of the Company's initial public offering of its
Common Stock of which the aggregate offering price and per share price to the
public are at least $10,000,000 and $6.80, respectively (a "Qualified Public
Offering"), pursuant to a registration statement under the Securities Act of
1933, as amended, if the warrants covering 246,664 shares of Common Stock
currently held by the Walden and Venrock investor groups terminate at the
closing of a Qualified Public Offering; provided, the Holder has received at
least ten (10) business days prior notice that such warrants will so terminate,
or (ii) 5:00 p.m. (Pacific time) on September 30, 2000, such earlier day being
referred to herein as the "Expiration Date", upon surrender to the Company at
its principal office (or at such other location as the Company may advise the
Holder in writing) of this Warrant properly endorsed with the Form of
Subscription attached hereto duly filled in and signed and, if applicable, upon
payment in cash or by check of the aggregate Stock Purchase Price for the
number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Stock Purchase Price and the number
of shares purchasable hereunder are subject to adjustment as provided in
Section 3 of this Warrant.
1.
<PAGE> 2
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the
holder of record hereof, at any time or from time to time, up to the Expiration
Date for all or any part of the shares of Common Stock (but not for a fraction
of a share) which may be purchased hereunder. The Company agrees that the
shares of Common Stock purchased under this Warrant shall be and are deemed to
be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered,
properly endorsed, the completed, executed Form of Subscription delivered and
payment made for such shares. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder
hereof by the Company at the Company's expense within a reasonable time after
the rights represented by this Warrant have been so exercised. In case of a
purchase of less than all the shares which may be purchased under this Warrant,
the Company shall cancel this Warrant and execute and deliver a new Warrant or
Warrants of like tenor for the balance of the shares purchasable under the
Warrant surrendered upon such purchase to the Holder hereof within a reasonable
time. Each stock certificate so delivered shall be in such denominations of
Common Stock as may be requested by the Holder hereof and shall be registered
in the name of such Holder.
1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Form of Subscription
and notice of such election in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the following formula:
X=Y(A-B)
------
A
WHERE X= the number of shares of Common Stock to be issued to the
Holder
Y= the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled
(at the date of such calculation)
A= the fair market value of one share of the Company's Common
Stock (at the date of such calculation)
B= Stock Purchase Price (as adjusted to the date of such
calculation)
2.
<PAGE> 3
For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company's Board of Directors in good faith;
provided, however, that in the event the Company makes an initial public
offering of its Common Stock the fair market value per share shall be the
average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00
P.M., New York time, on such day, or, if on any day such security is not quoted
in the NASDAQ system, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporation, or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which
"fair market value" is being determined and the 20 consecutive business days
prior to such day; provided that if such security is listed on any domestic
securities exchange the term "business days" as used in this sentence means
business days on which such exchange is open for trading; provided, further,
that if the Warrant is exercised at or immediately prior to the Qualified
Public Offering of its Common Stock, the fair market value per share be the per
share offering price to the public of such Qualified Public Offering.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required
to provide for the exercise of the rights represented by this Warrant. The
Company will take all such action as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock may be listed; provided,
however, that the Company shall not be required to effect a registration under
Federal or state securities laws with respect to such exercise. The Company
will not take any action which would result in any adjustment of the Stock
Purchase Price (as defined in Section 3 hereof) (i) if the total number of
shares of Common Stock issuable after such action upon exercise of all
outstanding warrants, together with all shares of Common Stock then outstanding
and all shares of Common Stock then issuable upon exercise of all options and
upon the conversion of all convertible securities then outstanding, would
exceed the total number of shares of Common Stock then authorized by the
Company's Articles of Incorporation, or (ii) if the total number of shares of
Common Stock issuable after such action upon the conversion of all such shares
of Common Stock, together with all shares of Common Stock then issuable upon
exercise of all options and upon the conversion of all such shares of Common
Stock, together with all shares of Common Stock then outstanding and all shares
of Common Stock then issuable upon exercise of all options and upon the
conversion of all convertible securities then outstanding
3.
<PAGE> 4
would exceed the total number of shares of Common Stock then authorized by the
Company's Articles of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the
number of shares obtained by multiplying the Stock Purchase Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing the product
thereof by the Stock Purchase Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the Holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to
receive, without payment therefor,
(A) Common Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution,
(B) any cash paid or payable otherwise than as a cash
dividend, or
(C) Common Stock or additional stock or other
securities or property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate rearrangement,
(other than (i) shares of Common Stock issued as a stock split, adjustments in
respect of which shall be covered by the terms of Section 3.1 above or (ii) an
event for which adjustment is otherwise made pursuant to Section 3.4 below),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (B) and (C) above) which such Holder would
hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
4.
<PAGE> 5
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby) such shares of stock, securities
or other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any
reorganization described above, appropriate provision shall be made with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Stock Purchase Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company will not
effect any such consolidation, merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or the corporation purchasing such assets shall assume by
written instrument, executed and mailed or delivered to the registered Holder
hereof at the last address of such Holder appearing on the books of the
Company, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase.
3.4 OTHER NOTICES. If at any time:
(1) the Company shall declare any cash dividend upon
its Common Stock;
(2) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock;
(3) the Company shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of any class
or other rights;
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation;
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or
(6) there shall be an initial public offering of
Company securities;
5.
<PAGE> 6
then, in any one or more of said cases, the Company shall give written notice
to the Holder of this Warrant at the address of such Holder as shown on the
books of the Company, (a) at least thirty (30) days' prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, and (b) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or public offering, at least thirty
(30) days' prior written notice of the date when the same shall take place;
provided, however, that the Holder shall make a best efforts attempt to respond
to such notice as early as possible after the receipt thereof. Any notice
given in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto. Any notice given
in accordance with the foregoing clause (b) shall also specify the date on
which the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, conversion or public offering, as the case may be.
3.5 CERTAIN EVENTS. If any change in the outstanding Common Stock
of the Company or any other event occurs as to which the other provisions of
this Section 3 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder of the Warrant in accordance
with such provisions, then the Board of Directors of the Company shall make an
adjustment in the number and class of shares available under the Warrant, the
Stock Purchase Price or the application of such provisions, so as to protect
such purchase rights as aforesaid. The adjustment shall be such as will give
the Holder of the Warrant upon exercise for the same aggregate Stock Purchase
Price the total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.
4. ISSUE TAX. The issuance of certificates for shares of Common
Stock upon the exercise of the Warrant shall be made without charge to the
Holder of the Warrant for any issue tax (other than any applicable income
taxes) in respect thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the then Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of any warrant or of any shares of Common
Stock issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares
6.
<PAGE> 7
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised. No provisions hereof, in the absence of affirmative
action by the holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Stock Purchase Price or as
a shareholder of the Company, whether such liability is asserted by the Company
or by its creditors.
7. REGISTRATION RIGHTS AGREEMENT. The registration rights of the
Holder (including Holders' successors) with respect to the stock underlying
this Warrant will be the same as granted to the holders of the Company's Common
Stock under that certain Investors' Rights Agreement of even date herewith (the
"Investors' Rights Agreement").
8. WARRANTS TRANSFERABLE. Subject to compliance with applicable
federal and state securities laws and the transfer restrictions set forth in the
Investors' Rights Agreement, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed and
compliance with the provisions of the Investors' Rights Agreement. Each taker
and holder of this Warrant, by taking or holding the same, consents and agrees
that this Warrant, when endorsed in blank, shall be deemed negotiable, and that
the holder hereof, when this Warrant shall have been so endorsed, may be treated
by the Company, at the Company's option, and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant, or to the transfer
hereof on the books of the Company any notice to the contrary notwithstanding;
but until such transfer on such books, the Company may treat the registered
owner hereof as the owner for all purposes.
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights
and obligations of the Company, of the holder of this Warrant and of the
holder of shares of Common Stock issued upon exercise of this Warrant, referred
to in Sections 7 and 8 shall survive the exercise of this Warrant.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
11. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, or (iii) four (4) business days, after deposit with an internationally
recognized overnight courier, specifying express delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as shown on the books of the Company or at such other
address as such party may designate by ten (10) days advance written notice to
the other parties hereto.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets. All of the
obligations of the Company relating to the
7.
<PAGE> 8
Common Stock issuable upon the exercise of this Warrant shall survive the
exercise and termination of this Warrant. All of the covenants and agreements
of the Company shall inure to the benefit of the successors and assigns of the
holder hereof.
13. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description
headings of the several sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. This
Warrant shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of California without
giving effect to principles of conflicts of law.
14. LOST WARRANTS. The Company represents and warrants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant.
8.
<PAGE> 9
15. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then effective Stock Purchase Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 12 day of January,
1996.
AWARD SOFTWARE INTERNATIONAL, INC.
a California corporation
By:
-----------------------------------------
Title:
--------------------------------------
ATTEST:
- -----------------------------
Secretary
<PAGE> 10
EXHIBIT A
SUBSCRIPTION FORM
Date: 19
------------------------, --
Award Software International, Inc.
- ---------------------------------
- ---------------------------------
Attn: President
Gentlemen:
/ / The undersigned hereby elects to exercise the warrant issued to it by
Award Software International, Inc. (the "Company") and dated January , 1996
--
Warrant No. W- (the "Warrant") and to purchase thereunder
-------- ---------------
shares of the Common Stock of the Company (the "Shares") at a purchase price of
Six Dollars Fourteen Cents ($6.14) per Share or an aggregate purchase price of
Dollars ($ )(the "Purchase Price").
- ------------------------ ----------
/ / The undersigned hereby elects to convert percent
-----------------------
( %) of the value of the Warrant pursuant to the provisions of Section
-------
1.2 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
The undersigned also makes the representations set forth on the attached
Exhibit B of the Warrant.
Very truly yours,
---------------------------------------
By:
------------------------------------
Title:
---------------------------------
<PAGE> 11
EXHIBIT B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED, AND RETURNED TO
---------------------
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT CERTIFICATE DATED JANUARY , 1996, WILL BE ISSUED.
19
---------------------, --
Award Software International, Inc.
[Address]
- ---------------------------------
- ---------------------------------
Attention: President
The undersigned, ("Purchaser"), intends to
--------------------------
acquire up to shares of the Common Stock (the "Common Stock") of
---------------
Award Software International, Inc. (the "Company") from the Company pursuant
to the exercise or conversion of certain Warrants to purchase Common Stock held
by Purchaser. The Common Stock will be issued to Purchaser in a transaction
not involving a public offering and pursuant to an exemption from registration
under the Securities Act of 1933, as amended, (the "1933 Act") and applicable
state securities laws. In connection with such purchase and in order to comply
with the exemptions from registration relied upon by the Company, Purchaser
represents, warrants and agrees as follows:
Purchaser is acquiring the Common Stock for its own account, to hold
for investment, and Purchaser shall not make any sale, transfer or other
disposition of the Common Stock in violation of the 1933 Act or the General
Rules and Regulations promulgated thereunder by the Securities and Exchange
Commission (the "SEC") or in violation of any applicable state securities law.
Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter.
Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock. Purchaser further agrees that the Company may refuse to
permit Purchaser to sell, transfer or dispose of the Common Stock (except as
permitted
1.
<PAGE> 12
under Rule 144) unless there is in effect a registration statement under the
1933 Act and any applicable state securities laws covering such transfer, or
unless Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not required.
Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. These shares have
been acquired for investment and may not be sold or otherwise
transferred in the absence of an effective registration statement
for these shares under the Securities Act and applicable state
securities laws, or an opinion of counsel satisfactory to the Company
that registration is not required and that an applicable exemption
is available."
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Common Stock with Purchaser's counsel.
Very truly yours,
------------------------------
By:
----------------------------
