UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(1)
(Amendment No.)*
Panja, Inc.
---------------------------------
(Name of Issuer)
Common Stock, $0.01 par value
---------------------------------
(Title of Class of Securities)
001801109
---------------------------------
(CUSIP Number)
F. Thomas Dunlap
Vice President, General Counsel and Secretary
Intel Corporation
2200 Mission College Boulevard
Santa Clara, CA 95052
Telephone: (408) 765-8080
---------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 15, 1999
---------------------------------
(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 (e), 13d-1 (f) or 13d-1 (g), check the following box [ ].
*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 the disclosures provided
in a prior cover page.
The information required in 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 (the "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 12 Pages
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 2 of 12 Pages
1. NAME OF REPORTING PERSON: INTEL CORPORATION
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 94-
1672743
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP** (a)[]
(b)[]
3. SEC USE ONLY
4. SOURCE OF FUNDS:
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS []
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
7. SOLE VOTING POWER:
NUMBER OF 661,269
SHARES 8. SHARED VOTING POWER:
BENEFICIALLY 0
OWNED BY EACH 9. SOLE DISPOSITIVE POWER:
REPORTING 661,269
PERSON WITH 10. SHARED DISPOSITIVE POWER:
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 661,269
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES** X
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
7.2%; consisting of 423,212 shares owned directly and an
exercisable warrant to purchase an additional 238,057
shares. Excludes warrants to purchase 79,352 shares which
are not exercisable unless certain milestones are met.
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 3 of 12 Pages
ITEM 1. Security and Issuer.
(a) Name of Principal Executive Offices of Issuer:
Panja, Inc (the "Issuer")
11995 Forrestgate Drive
Dallas, TX 75243
(b) Title of Class of Equity Securities:
Common Stock, $0.01 par value
ITEM 2. Identity and Background.
(a) Name of Person Filing:
Intel Corporation (the "Reporting Person")
(b) Address of Principal Business Office:
2200 Mission College Boulevard
Santa Clara, CA 95052-8119
(c) Principal Business:
Manufacturer of microcomputer components,
modules and systems.
(d) Criminal Proceedings:
During the last five years, neither the
Reporting Person nor any executive officer or
director of the Reporting Person has been
convicted in any criminal proceeding.
(e) Civil Proceedings:
During the last five years, neither the
Reporting Person nor any executive officer or
director of the Reporting Person has been party
to any civil proceeding of a judicial or
administrative body of competent jurisdiction
as a result of which such person was or is
subject to any judgment, decree or final order
enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or
State securities laws or finding any violation
with respect to such laws.
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 4 of 12 Pages
(f) Place of Organization:
Delaware
Attached hereto as Appendix A is information required
by this Item 2 with respect to the executive officers
and directors of the Reporting Person. All such
individuals are U.S. citizens, except as otherwise
indicated on Appendix A.
ITEM 3. Source and Amount of Funds or Other Consideration.
(a) Source of Funds:
Funds for the purchase of the Common Stock and
the warrants were derived from the Reporting
Person's working capital.
(b) Amount of Funds:
$5 million was paid to acquire the Common Stock
and the warrants
ITEM 4. Purpose of the Transaction.
On December 15, 1999, the Reporting Person acquired
423,212 shares of Common Stock and a warrant to
purchase 238,057 shares of Common Stock for $5.0
million pursuant to a Securities Purchase and Investor
Rights Agreement dated December 15, 1999 (the
"Securities Purchase Agreement"). The Reporting
Person also acquired an additional warrant to purchase
79,352 shares of Common Stock which only becomes
exercisable upon satisfaction of certain milestones.
The Reporting Person presently holds the Common Stock
and warrants as an investment. As part of the
Securities Purchase Agreement, the Reporting Person
has agreed not to acquire more than 19.99% of the
Issuer's Common Stock, subject to certain exceptions.
The Reporting Person will from time to time explore
opportunities for liquidating all or a portion of the
Common Stock or warrants, through one or more sales
pursuant to public or private offerings or otherwise
depending upon the Reporting Person's evaluation of
market conditions, market price, alternative
investment opportunities, liquidity needs and other
factors. The Reporting Person may determine to retain
some portion of the Common Stock and warrants as an
investment.
In addition, the Reporting Person and the Issuer have
entered into a cooperation agreement. Pursuant to
that agreement, the Reporting Person and the Issuer
will cooperate with each other to port certain
products on Issuer architecture.
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 5 of 12 Pages
ITEM 5. Interest in Securities of the Issuer.
(a) Number of Shares 661,269 shares of
Beneficially Owned: Common Stock
Right to Acquire: None
Percent of Class: 7.2% of the
Issuer's
outstanding Common
Stock (based upon
9,302,233 shares
of Common Stock
outstanding,
determined from
representations
made by the Issuer
to the Reporting
Person in the
Securities
Purchase Agreement
(as defined in
Item 4). See
Cover Page Item
13. In accordance
with Rule 13d-3,
the number of
shares included in
the above
calculation
includes shares
issuable upon
exercise of the
warrant covering
238,057 because it
is presently
exercisable.
(b) Sole Power to Vote, Direct
the Vote of, Dispose of, or
Direct the Disposition of 661,269
Shares:
(c) Recent Transactions: As described more
fully in Item 4,
on December 15,
1999, the
Reporting Person
acquired 423,212
shares of Common
Stock at a price
of $11.81 per
share and warrants
to purchase an
aggregate of an
additional 317,409
shares at an
exercise price
$21.54, of which
warrants to
purchase 238,057
shares are
presently
exercisable.
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 6 of 12 Pages
(d) Rights with Respect to
Dividends or Sales N/A
Proceeds:
(e) Date of Cessation of Five
Percent Beneficial N/A
Ownership:
ITEM 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
Pursuant to the Securities Purchase Agreement, the
Reporting Person has registration rights in connection
with its holdings. In addition, until December 31,
2005 and so long as the Reporting Person holds at
least 25% of the securities originally purchased, the
Reporting Person has a right to acquire its pro rata
share of securities issuances by the Company, subject
to customary exceptions. The Securities Purchase
Agreement also contains a standstill provision
prohibiting the Reporting Person from acquiring more
than 19.99% of the securities of the Issuer or
participating in certain takeover activities for a two
(2) year period, subject to certain exceptions.
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1 Securities Purchase Agreement between the
Issuer and the Reporting Person dated
December 15, 1999
Exhibit 2 Equity Warrant dated December 15, 1999
Exhibit 3 Business Warrant dated December 15, 1999
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 7 of 12 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated as of December 21, 1999.
INTEL CORPORATION
By: /s/F. Thomas Dunlap, Jr.
-------------------------
F. Thomas Dunlap, Jr.
Vice President, General
Counsel and Secretary
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 8 of 12 Pages
APPENDIX A
DIRECTORS
The following is a list of all Directors of Intel Corporation and
certain other information with respect to each Director. All
Directors are United States citizens except as indicated below.
Name: Craig R. Barrett
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal President and Chief Executive Officer
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: John Browne
Business BP Amoco p.l.c., Britannic House, 1 Finsbury
Address: Circus, London EC2M 7BA
Principal Group Chief Executive
Occupation:
Name, principal The BP Amoco p.l.c., an integrated oil
business and company.
address of Britannic House, 1 Finsbury Circus
corporation or London EC2M 7BA
other
organization in
which employment
is conducted:
Citizenship: British
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 9 of 12 Pages
Name: Winston H. Chen
Business Paramitas Foundation, 3945 Freedom Circle,
Address: Suite 760, Santa Clara, CA 95054
Principal Chairman
Occupation:
Name, principal Paramitas Foundation, a charitable foundation.
business and 3945 Freedom Circle, Suite 760
address of Santa Clara, CA 95054
corporation or
other
organization in
which employment
is conducted:
Name: Andrew S. Grove
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Chairman of the Board of Directors
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: D. James Guzy
Business 1340 Arbor Road, Menlo Park, CA 94025
Address:
Principal Chairman
Occupation:
Name, principal The Arbor Company, a limited partnership
business and engaged in the electronics and computer
address of industry.
corporation or 1340 Arbor Road
other Menlo Park, CA 94025
organization in
which employment
is conducted:
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 10 of 12 Pages
Name: Gordon E. Moore
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Chairman Emeritus of the Board of Directors
Occupation:
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: David S. Pottruck
Business 101 Montgomery Street, San Francisco, CA 94104
Address:
Principal President and Co-Chief Executive Officer
Occupation:
Name, principal The Charles Schwab Corporation, an investment
business and company
address of 101 Montgomery Street
corporation or San Francisco, CA 94104
other
organization in
which employment
is conducted:
Name: Jane E. Shaw
Business 1310 Orleans Drive, Sunnyvale, CA 94089
Address:
Principal Chairman and Chief Executive Officer
Occupation:
Name, principal AeroGen, Inc., a private company specializing
business and in controlled delivery of drugs to the lungs
address of 1310 Orleans Drive
corporation or Sunnyvale, CA 94089
other
organization in
which employment
is conducted:
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 11 of 12 Pages
Name: Leslie L. Vadasz
Business 2200 Mission College Boulevard, Santa Clara,
Address: CA 95052
Principal Senior Vice President, Director, Corporate
Occupation: Business Development
Name, principal Intel Corporation, a manufacturer of
business and microcomputer components, modules and systems.
address of 2200 Mission College Boulevard
corporation or Santa Clara, CA 95052
other
organization in
which employment
is conducted:
Name: David B. Yoffie
Business Harvard Business School, Morgan Hall 215,
Address: Soldiers Field Road, Boston, MA 02163
Principal Max and Doris Starr Professor of International
Occupation: Business Administration
Name, principal Harvard Business School, an educational
business and institution.
address of Harvard Business School
corporation or Morgan Hall 215,Soldiers Field Road
other Boston, MA 02163
organization in
which employment
is conducted:
Name: Charles E. Young
Business 10920 Wilshire Boulevard, Suite 1835, Los
Address: Angeles, CA 90024
Principal A. Chancellor Emeritus
Occupation: B. Interim President
Name, principal A. University of California at Los Angeles, an
business and educational institution.
address of 10920 Wilshire Boulevard, Suite 1835
corporation or Los Angeles, CA 90024
other
organization in B. University of Florida
which employment 226 Tigert Hall
is conducted: PO Box 113150
Gainesville, FL 32610
<PAGE>
CUSIP No. 001801109 Schedule 13D Page 12 of 12 Pages
EXECUTIVE OFFICERS
The following is a list of all executive officers of Intel
Corporation excluding executive officers who are also directors.
Unless otherwise indicated, each officer's business address is
2200 Mission College Boulevard, Santa Clara, California 95052-
8119, which address is Intel Corporation's business address.
Name: Paul S. Otellini
Title: Executive Vice President, General Manager, Intel
Architecture Business Group
Name: Gerhard H. Parker
Title: Executive Vice President, General Manager, New
Business Group
Name: Andy D. Bryant
Title: Senior Vice President, Chief Financial Officer and
Enterprise Services Officer
Name: Sean M. Maloney
Title: Senior Vice President, Director, Sales and Marketing
Group
Name: Michael R. Splinter
Title: Senior Vice President, General Manager, Technology
and Manufacturing Group
Name: Albert Y. C. Yu
Title: Senior Vice President, General Manager,
Microprocessor Products Group
Name: F. Thomas Dunlap, Jr.
Title: Vice President, General Counsel and Secretary
Name: Arvind Sodhani
Title: Vice President, Treasurer
<PAGE>
EXHIBIT 1
PANJA INC. SECURITIES PURCHASE AND
INVESTOR RIGHTS AGREEMENT
<PAGE>
- ----------------------------------------------------------------
SECURITIES PURCHASE AND INVESTOR RIGHTS AGREEMENT
Between
INTEL CORPORATION
and
PANJA INC.
Dated December 15, 1999
- ----------------------------------------------------------------
<PAGE>
PANJA INC.
SECURITIES PURCHASE AND INVESTOR RIGHTS AGREEMENT
This Securities Purchase and Investor Rights Agreement (this
"Agreement") is made and entered into as of December 15, 1999, by
and between Panja Inc., a Texas corporation (the "Company"), and
Intel Corporation, a Delaware corporation (the "Investor").
RECITALS
WHEREAS, the Company desires to sell to the Investor, and
the Investor desires to purchase from the Company, shares of
Common Stock, par value $.01 per share, of the Company (the
"Common Stock"), a warrant to purchase a number of shares of
Common Stock substantially in the form attached to this Agreement
as Exhibit A (the "Equity Warrant"), and a warrant to purchase a
number of shares of Common Stock substantially in the form
attached to this Agreement as Exhibit B (the "Business Warrant,"
together with the Equity Warrant, the "Warrants"), on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual promises hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL SECURITIES.
(a) Authorization. The Company's Board of Directors will,
prior to the Closing, authorize the issuance, pursuant to the
terms and conditions of this Agreement, of the number of shares
of Common Stock being purchased hereunder and the Warrants, and
shall further reserve for issuance upon exercise of the Warrants
the number of shares of Common Stock issuable upon exercise of
the Warrants (the "Warrant Shares").
(b) Agreement to Purchase and Sell Certain Securities.
(i) The Company hereby agrees to issue to the Investor
at the Closing (as defined below), and the Investor hereby agrees
to acquire from the Company at the Closing, (A) four hundred
twenty-three thousand two hundred twelve (423,212) shares of
Common Stock (the "Purchased Shares") and (B) the Equity Warrant,
for an aggregate purchase price of Five Million Dollars
($5,000,000) (the "Purchase Price").
(ii) The parties hereto acknowledge that the Equity
Warrant is being issued by the Company to the Investor solely in
consideration of, and with respect to, the purchase by the
Investor of the Purchased Shares and not in consideration of the
execution and delivery by the parties of the Cooperation
Agreement, dated as of the date hereof, between the Company and
Intel (the "Business Agreement"); and no action that occurs under
the Business Agreement will have any effect on the validity or
exercisability of the Equity Warrant.
(c) Agreement to Purchase and Sell Business Warrant. The
Company hereby agrees, in connection with the Business Agreement,
to issue to the Investor at the Closing, and
<PAGE> 2
the Investor hereby agrees, in connection with the Business
Agreement, to acquire from the Company at the Closing the
Business Warrant.
(d) Exercise Price of the Warrants. The exercise price of
the Warrants shall be $21.54 per share as reflected in the
Warrants.
(e) Use of Proceeds. The Company intends to apply the net
proceeds from the sale of the Purchased Shares for working
capital and other general corporate purposes and to fund the
Business Agreement between the Company and Investor.
2. CLOSING. The purchase and sale of the Purchased Shares and
the Warrants shall take place at the offices of Gibson, Dunn &
Crutcher LLP, 1530 Page Mill Road, Palo Alto, California, at
10:00 a.m. California time, within three (3) business days after
the conditions set forth in Sections 5 and 6 have been satisfied
(or waived by the party entitled to waive any such conditions),
or at such other time and place as the Company and the Investor
mutually agree upon (which time and place are referred to in this
Agreement as the "Closing"). At the Closing, the Company will
deliver to the Investor certificates representing the Purchased
Shares and the Warrants against delivery to the Company by the
Investor of the Purchase Price in cash paid by wire transfer of
funds to the Company. Closing documents may be delivered by
facsimile with original signature pages sent by overnight
courier. The date of the Closing is referred to herein as the
Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor that the
statements in this Section 3 are true and correct, except as set
forth in the Disclosure Letter or in the SEC Documents (as
defined below). The Disclosure Letter (the "Disclosure Letter")
shall set forth exceptions, if any, to the representations and
warranties made by the Company in Section 3 hereof. Such
Disclosure Letter shall be organized such that any exceptions
specifically identify the representation and warranty, by
section, to which they relate, and shall clearly identify the
nature of the exception, to the Investor's reasonable
satisfaction.
(a) 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 Texas and has all
corporate power and authority required to (a) carry on its
business as presently conducted, and (b) enter into this
Agreement, the Warrants and the other agreements, instruments and
documents contemplated hereby, and to consummate the transactions
contemplated hereby and thereby. The Company is qualified to do
business and is in good standing in each jurisdiction in which
the failure to so qualify would have a Material Adverse Effect.
As used in this Agreement, "Material Adverse Effect" means a
material adverse effect on, or a material adverse change in, or a
group of such effects on or changes in, the business, operations,
financial condition, results of operations, prospects, assets or
liabilities of the Company and its Subsidiaries, taken as a
whole.
(b) Capitalization. The capitalization of the Company,
without giving effect to the transactions contemplated by this
Agreement, is as follows. The authorized stock of the Company
consists only of 40,000,000 shares of Common Stock, of which
8,561,612 shares were issued and outstanding as of October 31,
1999, and 10,000,000 shares of preferred stock, none of
<PAGE> 3
which is issued or outstanding on the date hereof. All such
shares of Common Stock have been duly authorized, and all such
issued and outstanding shares of Common Stock have been validly
issued, are fully paid and nonassessable and are free and clear
of all liens, claims and encumbrances, other than any liens,
claims or encumbrances created by or imposed upon the holders
thereof. As of the date hereof, the Company also has reserved
5,149,155 shares of Common Stock for issuance upon exercise of
options, rights, or other stock awards granted to officers,
directors, employees, consultants or independent contractors or
Affiliates of the Company under the Company's employee benefit,
stock purchase, stock option and equity incentive plans. As of
October 31, 1999, of the shares of Common Stock reserved for
issuance upon exercise of options, 2,080,710 shares remained
subject to outstanding options and 2,701,662 shares were reserved
for future grants. As of October 31, 1999, 70,990 shares of
Common Stock have been sold under the Company's stock purchase
plan, and 179,010 shares remain available for sale under such
plan. All shares of Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There
are no other equity securities, options, warrants, calls, rights,
commitments or agreements of any character to which the Company
is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of
the capital stock of the Company or obligating the Company to
grant, extend or enter into any such equity security, option,
warrant, call, right, commitment or agreement.
(c) Due Authorization. All corporate actions on the part
of the Company, its officers, directors and stockholders
necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under this
Agreement and the Warrants, and the authorization, issuance,
reservation for issuance and delivery of all of the Purchased
Shares being sold under this Agreement and the Warrants Shares
issuable upon exercise of the Warrants, have been or will be
taken prior to the Closing, and each of this Agreement and the
Warrants constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with
its terms, except (a) as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or others laws of general
application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies and (b) as
rights to indemnity or contribution may be limited under federal
or state securities laws or by principles of public policy
thereunder.
(d) Valid Issuance of Stock.
(i) Valid Issuance. The Purchased Shares and the
Warrant Shares will be, upon payment therefor by the Investor in
accordance with this Agreement and the Warrants, respectively,
duly authorized, validly issued, fully paid and non-assessable
(provided that the Investor acknowledges that the certificate
representing the Purchased Shares will not be physically
delivered to the Investor until the expiration of the Nasdaq
imposed waiting period relating to listing applications, which
shall not in any event be more than 14 business days after the
Closing Date).
(ii) Compliance with Securities Laws. Assuming the
correctness of the representations made by the Investor in
Section 4 hereof, the Purchased Shares and the
<PAGE> 4
Warrants will be issued to the Investor in compliance with
applicable exemptions from (i) the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended
(the "Securities Act") and (ii) the registration and
qualification requirements of all applicable securities laws of
the states of the United States.
(e) Subsidiaries and Affiliates.
(i) The Disclosure Letter or the SEC Documents sets
forth a list of all entities in which the Company beneficially
owns, directly or indirectly, 50% or more of the outstanding
stock or other equity interests (collectively, the
"Subsidiaries"). The Disclosure Letter also includes a complete
list of the corporations, partnerships, limited liability
companies or other entities with respect to which the Company
beneficially owns, directly or indirectly, ten percent (10%) or
more of the outstanding stock or other equity interests and the
percentage ownership of such entity by the Company. Except as
set forth in the Disclosure Letter or the SEC Documents, there is
no other entity with respect to which: (i) the Company
beneficially owns, directly or indirectly, ten percent (10%) or
more of the outstanding stock or other ownership interests of
such entity; (ii) the Company may be deemed to be in control
because of factors or relationships other than the quantity of
stock or other interests owned; or (iii) the investment by the
Company is accounted for by the equity method.
(ii) All capital stock or other equity interests owned
by the Company as described pursuant to Section 3(e)(i) are owned
by the Company or its Subsidiaries, as the case may be, as record
and beneficial owner thereof free and clear of all liens,
charges, encumbrances, equities and claims whatsoever. There is
no outstanding or authorized option, subscription, warrant, call,
right, commitment or other agreement of any character obligating
the Company to issue, sell, transfer, pledge or otherwise
encumber any share of capital stock or other equity interest
described pursuant to Section 3(e)(i) or any security or other
instrument convertible into or exercisable for or evidencing the
right to subscribe for any such share of capital stock or other
equity interest.
(iii) Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of its state of organization. Each Subsidiary is duly qualified
to do business as a foreign corporation and is in good standing
in every jurisdiction in which the nature of the business
conducted by it or the character or location of the properties
owned or leased by it makes such qualification necessary, except
where the failure to be so qualified would not have a Material
Adverse Effect. Each Subsidiary has all requisite corporate
power and authority to own or lease and operate its properties
and assets and to carry on its business as now conducted.
(f) Governmental Consents. No consent, approval, order or
authorization of, or registration qualification, designation,
declaration or filing with, or notice to, any federal, state or
local governmental authority on the part of the Company is
required in connection with the issuance of the Purchased Shares,
the Warrants or the Warrant Shares to the Investor, or the
consummation of the other transactions contemplated by this
Agreement and the Warrants, except for: (i) compliance with the
HSR Requirements (as defined below) that may be required for the
issuance of the Warrant Shares; and (ii) the listing of the
Purchased Shares and the Warrant Shares on the Nasdaq National
Market. All such qualifications and filings will, in the
<PAGE> 5
case of qualifications, be effective on the Closing and will, in
the case of filings, be made within the time prescribed by law.
As used herein, the term "HSR Requirements" means compliance with
the filing and other requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
(g) Non-Contravention. The execution, delivery and
performance of this Agreement and the Warrants by the Company,
and the consummation by the Company of the transactions
contemplated hereby and thereby (including issuance of the
Purchased Shares, the Warrants and the Warrant Shares), do not
and will not (i) contravene or conflict with the Certificate of
Incorporation or Bylaws of the Company; (ii) constitute a
violation of any provision of any federal, state, local or
foreign law binding upon or applicable to the Company; or (iii)
constitute a default or require any consent under, give rise to
any right of termination, cancellation or acceleration of, or to
a loss of any benefit to which the Company is entitled under, or
result in the creation or imposition of any lien, claim or
encumbrance on any assets of the Company under, any contract to
which the Company is a party or any permit, license or similar
right relating to the Company or by which the Company may be
bound or affected.
(h) Litigation. Except as set forth in the Disclosure
Letter, there is no action, suit, proceeding, claim, arbitration
or investigation ("Action") pending or, to the best of the
Company's knowledge, threatened: (i) against the Company or its
Subsidiaries, their respective activities, properties or assets,
or any officer, director or employee of the Company in connection
with such officer's, director's or employee's relationship with,
or actions taken on behalf of, the Company or a Subsidiary that
the Company believes is reasonably likely to have a Material
Adverse Effect, or (ii) that seeks to prevent, enjoin, alter or
delay the transactions contemplated by this Agreement or the
Warrants. Neither the Company nor any of its Subsidiaries is a
party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency
or instrumentality. No Action by the Company is currently
pending nor does the Company intend to initiate any Action that
is reasonably likely to have a Material Adverse Effect.
(i) Compliance with Law and Charter Documents. The Company
is not in violation or default of any provisions of its
Certificate of Incorporation or Bylaws, both as amended. The
Company has complied in all material respects and is in material
compliance with all applicable statutes, laws, rules, regulations
and orders of the United States of America and all states
thereof, foreign countries and other governmental bodies and
agencies having jurisdiction over the Company's business or
properties, where the failure to so materially comply would
reasonably likely have a Material Adverse Effect.
(j) SEC Documents.
(i) Reports. The Company has furnished to the
Investor prior to the date hereof a complete and correct list of
all registration statements, reports and proxy statements filed
by the Company with the Securities and Exchange Commission (the
"SEC") on or after March 31, 1999 (the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1999, its Quarterly
Reports on Form 10-Q for the fiscal quarters ended June 30 and
September 30, 1999 and all such other registration statements,
reports and proxy statements are collectively referred to herein
as the "SEC Documents"). Each of the SEC Documents, as of the
<PAGE> 6
respective date thereof (or if amended or superseded by a filing
prior to the Closing Date, then on the date of such filing), did
not, and each of the registration statements, reports and proxy
statements filed by the Company with the SEC after the date
hereof and prior to the Closing will not, as of the date thereof
(or if amended or superseded by a filing after the date of this
Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
The Company is not a party to any material contract, agreement or
other arrangement that was required to have been filed as an
exhibit to the SEC Documents that was not so filed.
(ii) Financial Statements. The Company has provided
the Investor with copies of its audited financial statements (the
"Audited Financial Statements") for the fiscal year ended March
31, 1999, and its unaudited financial statements for the six-
month period ended September 30, 1999 (the "Balance Sheet Date").
Since the Balance Sheet Date, the Company has duly filed with the
SEC all registration statements, reports and proxy statements
required to be filed by it under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Securities Act.
The audited and unaudited consolidated financial statements of
the Company included in the SEC Documents filed prior to the date
hereof fairly present, in conformity with generally accepted
accounting principles ("GAAP") (except, in the case of the Form
10-Q's, as may otherwise be permitted by Form 10-Q) applied on a
consistent basis (except as otherwise may be stated in the notes
thereto), the consolidated financial position of the Company and
its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments
in the case of unaudited interim financial statements).
(k) Absence of Certain Changes Since Balance Sheet Date.
Since the Balance Sheet Date, the business and operations of the
Company have been conducted in the ordinary course consistent
with past practice, and there has not been:
(i) any declaration, setting aside or payment of any
dividend or other distribution of the assets of the Company with
respect to any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company or any
subsidiary of the Company of any outstanding shares of the
Company's capital stock;
(ii) any damage, destruction or loss, whether or not
covered by insurance, except for such occurrences, individually
and collectively, that are not material to the Company;
(iii)any waiver by the Company of a valuable right or
of a material debt owed to it, except for such waivers,
individually and collectively, that are not material;
(iv) any material change or amendment to, or any waiver
of any material right under a material contract or arrangement by
which the Company or any of its assets or properties is bound or
subject, except for changes, amendments or waivers that are
expressly provided for or disclosed in this Agreement;
<PAGE> 7
(v) any change by the Company in its accounting
principles, methods or practices or in the manner it keeps its
accounting books and records, except any such change required by
a change in GAAP; or
(vi) any other event or condition of any character,
except for such events and conditions that have not resulted, and
could not reasonably be expected to result, either individually
or collectively, in a Material Adverse Effect.
(l) Intellectual Property.
(i) Ownership or Right to Use. The Company has sole
title to and owns, or is licensed or otherwise possesses legally
enforceable rights to use, all patents or patent applications,
software, know-how, registered or unregistered trademarks and
service marks and any applications therefor, registered or
unregistered copyrights, trade names, and any applications
therefor, trade secrets or other confidential or proprietary
information ("Intellectual Property") necessary to enable the
Company to carry on its business as currently conducted, except
where any deficiency, or group of deficiencies, would not have a
Material Adverse Effect.
(ii) No Infringement. Except as set forth in the
Disclosure Letter, the Company has not violated or infringed in
any material respect, and is not currently violating or
infringing in any material respect, and the Company has not
received any communications alleging that the Company (or any of
its employees or consultants) has violated or infringed, any
Intellectual Property of any other person or entity.
(iii)Year 2000 Compliance.
(A) All of the Company's and its Subsidiaries'
material products (including products currently under
development) will record, store, process and calculate and
present calendar dates falling on and after December 31, 1999,
and will calculate any information dependent on or relating to
such dates in the same manner and with the same functionality,
data integrity and performance as the products record, store,
process, calculate and present calendar dates on or before
December 31, 1999, or calculate any information dependent on or
relating to such dates (collectively, "Year 2000 Compliant").
All of the Company's and its Subsidiaries' material products will
lose no significant functionality with respect to the
introduction of records containing dates falling on or after
December 31, 1999. To the best knowledge of the Company, all of
the Company's and its Subsidiaries' internal computer systems
comprised of software, hardware, databases or embedded control
systems (microprocessor controlled, robotics or other device)
related to the Company's and its Subsidiaries' businesses
(collectively, a "Business System"), that constitutes any
material part of, or is used in connection with the use,
operation or enjoyment of, any material tangible or intangible
asset or real property of the Company and its Subsidiaries,
including its accounting systems, are Year 2000 Compliant. The
current versions of the Company's and its Subsidiaries' software
and all other Intellectual Property may be used prior to, during
and after December 31, 1999, such that such software and
Intellectual Property will operate prior to, during and after
such time period without error caused by date data that
represents or references different centuries or more than one
century.
<PAGE> 8
(B) To the knowledge of the Company, all of the
Company's products and the conduct of the Company's business with
customers and suppliers will not be materially adversely affected
by the advent of the year 2000, the advent of the twenty-first
century or the transition from the twentieth century through the
year 2000 and into the twenty-first century. To the knowledge of
the Company, neither the Company nor any of its subsidiaries is
reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any
products (including all products sold on or prior to the date
hereof) as a result of the advent of the year 2000, the advent of
the twenty-first century or the transition from the twentieth
century through the year 2000.
(m) Full Disclosure. The information contained in this
Agreement, the Disclosure Letter and the SEC Documents with
respect to the business, operations, assets, results of
operations and financial condition of the Company, and the
transactions contemplated by this Agreement , are true and
complete in all material respects and do not omit to state any
material fact or facts necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
INVESTOR. The Investor hereby represents and warrants to the
Company, and agrees that:
(a) Organization Good Standing and Qualification. The
Investor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
corporate power and authority required to carry on its business
as presently conducted, to enter into this Agreement and the
Warrants and to consummate the transactions contemplated hereby
and thereby.
(b) Authorization. The execution of this Agreement and the
Warrants has been duly authorized by all necessary corporate
action on the part of the Investor. Each of this Agreement and
the Warrants constitutes the Investor's legal, valid and binding
obligation, enforceable in accordance with its terms, except (a)
as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting the enforcement of creditors' rights generally and
(ii) the effect of rules of law governing the availability of
equitable remedies, and (b) as rights to indemnity or
contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
(c) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local
governmental authority on the part of the Investor is required in
connection with the purchase of the Purchased Shares or the
Warrants or the Warrant Shares by the Investor, except for
compliance with the HSR Requirements in connection with the
issuance of the Warrant Shares.
(d) Purchase for Own Account. The Purchased Shares, the
Warrants and, upon exercise of the Warrants, the Warrant Shares,
are being acquired for investment for the Investor's own account,
not as a nominee or agent, and not with a view to the public
resale or distribution thereof within the meaning of the
Securities Act, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing
the same. The
<PAGE> 9
Investor also represents that it has not been formed for the
specific purpose of acquiring the Purchased Shares, the Warrants
or the Warrant Shares.
(e) Investment Experience. The Investor understands that
the purchase of the Purchased Shares, the Warrants and the
Warrant Shares involves substantial risk. The Investor has
experience as an investor in securities of companies and
acknowledges that it is able to fend for itself, can bear the
economic risk of its investment in the Purchased Shares, the
Warrants and the Warrant Shares and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of this investment in the
Purchased Shares, the Warrants and the Warrant Shares and
protecting its own interests in connection with this investment.
(f) Accredited Investor Status. The Investor is an
"accredited investor" within the meaning of Regulation D
promulgated under the Securities Act. The Investor has not
incurred, and will not incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or the
acquisition of the Purchased Shares, the Warrants or the Warrant
Shares.
(g) Restricted Securities. The Investor understands that
the Purchased Shares, the Warrants and the Warrant Shares are
characterized as "restricted securities" under the Securities
Act, inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that such
securities may be resold under the Securities Act and applicable
regulations thereunder only pursuant to a registration statement
under the Securities Act or an exemption therefrom. The Investor
is familiar with Rule 144 of the SEC, as presently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act.
(h) Disclosure of Information. The Investor acknowledges
that it has been furnished (i) with substantially the same kind
of information regarding the Company and its business, assets,
results of operation, and financial condition as would be
contained in a registration statement prepared in connection with
a public sale of the Purchased Shares, the Warrants and the
Warrant Shares and (ii) copies of all the Company's SEC filings
since December 31, 1996. The Investor has had an opportunity to
review all such information about the Company as the Investor
desires and has been given an opportunity to ask questions and
receive answers about the Company. The Investor hereby
acknowledges that the Company has not made any representations or
warranties to the Investor with respect to the value of the
Purchased Shares, the Warrants and the Warrant Shares, and the
actual value of thereof may be more or less than the
consideration being paid therefor pursuant to this Agreement and
the Warrants.
(i) Legends. The Investor agrees that the certificates for
the Purchased Shares, the Warrants and the Warrant Shares shall
bear a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or with any
state securities commission, and may not be transferred or
disposed of by the holder in the absence of a registration
statement which is effective
<PAGE> 10
under the Securities Act of 1933 and applicable state laws
and rules, or, unless, immediately prior to the time set for
transfer, such transfer may be effected without violation of
the Securities Act of 1933 and other applicable state laws
and rules."
In addition, the Investor agrees that the Company may place stop
transfer orders with its transfer agents with respect to such
certificates. The appropriate portion of the legend and the stop
transfer orders will be removed promptly upon delivery to the
Company of such satisfactory evidence as reasonably may be
required by the Company that such legend or stop orders are not
required to ensure compliance with the Securities Act.
5. CONDITIONS TO THE INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of the Investor under Sections l and 2 of this
Agreement are subject to the fulfillment or waiver, on or before
the Closing, of each of the following conditions:
(a) Representations and Warranties True. Each of the
representations and warranties of the Company contained in
Section 3 shall be true and correct in all material respects on
and as of the date hereof and on and as of the date of the
Closing, except as set forth in the Disclosure Letter or the SEC
Documents, with the same effect as though such representations
and warranties had been made as of the Closing.
(b) Performance. The Company shall have performed and
complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and shall have
obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
(c) Securities Exemptions. The offer and sale of the
Purchased Shares and the Warrants to the Investor pursuant to
this Agreement shall be exempt from the registration requirements
of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
(d) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at
the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Investor,
and the Investor shall have received all such counterpart
originals and certified or other copies of such documents as it
may reasonably request. Such documents shall include but not be
limited to the following:
(i) Certified Charter Documents. A copy of (i) the
Articles of Incorporation certified as of a recent date by the
Secretary of State of Texas as a complete and correct copy
thereof, and (ii) (iii) the Bylaws of the Company (as amended
through the date of the Closing) certified by the Secretary of
the Company as a true and correct copy thereof as of the Closing.
(ii) Board Resolutions. A copy, certified by the
Secretary of the Company, of the resolutions of the Board of
Directors of the Company providing for the approval of this
Agreement and the Warrants and the issuance of the Purchased
Shares, the Warrants and the Warrant Shares, and the other
matters contemplated hereby and thereby.
<PAGE> 11
(iii)Registrar and Transfer Agent Certificate. A
certificate, executed by the Company's registrar and transfer
agent certifying the number of outstanding shares of Common Stock
of the Company as of a recent date reasonably acceptable to the
Investor.
(e) Opinion of Company Counsel. The Investor will have
received an opinion on behalf of the Company, dated as of the
date of the Closing, from counsel to the Company, in the form
attached as Exhibit C.
(f) No Material Adverse Effect. Between the date hereof
and the Closing, there shall not have occurred any event
constituting a Material Adverse Effect.
(g) Other Actions. The Company shall have executed such
certificates, agreements, instruments and other documents, and
taken such other actions as shall be customary or reasonably
requested by the Investor in connection with the transactions
contemplated hereby.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Investor under this Agreement
are subject to the fulfillment or waiver, on or before the
Closing, of each of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Investor contained in
Section 4 shall be true and correct in all material respects on
and as of the date hereof and on and as of the date of the
Closing with the same effect as though such representations and
warranties had been made as of the Closing.
(b) Performance. The Investor shall have performed and
complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and shall have
obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
(c) Payment of Purchase Price. The Investor shall have
delivered to the Company the Purchase Price as specified in
Section 1(b).
(d) Securities Exemptions. The offer and sale of the
Purchased Shares and the Warrants to the Investor pursuant to
this Agreement shall be exempt from the registration requirements
of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
(e) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at
the Closing and all documents incident thereto will be reasonably
satisfactory in form and substance to the Company and to the
Company's legal counsel, and the Company will have received all
such counterpart originals and certified or other copies of such
documents as it may reasonably request.
(f) Nasdaq Requirements. All requirement of the Nasdaq
National Market in connection with the transactions contemplated
by this Agreement shall have been complied with (provided that
the Investor acknowledges that the certificate representing the
Purchased Shares will not be physically delivered to the Investor
until the expiration of the Nasdaq imposed
<PAGE> 12
waiting period relating to listing applications, which shall not
in any event be more than 14 business days after the Closing
Date).
7. COVENANTS AND AGREEMENTS OF THE PARTIES.
(a) Information Rights.
(i) Financial Information. The Company covenants and
agrees that, commencing on the Closing and continuing for so long
as the Investor holds at least ten percent (10%) the Purchased
Shares (such number to be proportionately adjusted for stock
splits, stock dividends and similar events), the Company shall:
(A) Annual Reports. Furnish to the Investor
promptly following the filing of such report with the SEC a copy
of the Company's Annual Report on Form 10-K for each fiscal year.
In the event the Company shall no longer be required to file
Annual Reports on Form 10-K, the Company shall, within ninety
(90) days following the end of each respective fiscal year,
deliver to the Investor a copy of a consolidated balance sheet as
of the end of such fiscal year, a consolidated statement of
income and a consolidated statement of cash flows of the Company
and its Subsidiaries for such year, setting forth in each case in
comparative form the figures from the Company's previous fiscal
year, all prepared in accordance with generally accepted
accounting principles and practices and audited by nationally
recognized independent certified public accountants.
(B) Quarterly Reports. Furnish to the Investor
promptly following the filing of such report with the SEC, a copy
of each of the Company's Quarterly Reports on Form 10-Q. In the
event the Company shall no longer be required to file Quarterly
Reports on Form 10-Q, the Company shall, within forty-five (45)
days following the end of each of the first three (3) fiscal
quarters of each fiscal year, deliver to the Investor a copy a
consolidated balance sheet as of the end of the respective fiscal
quarter, consolidated statements of income and consolidated
statements of cash flows of the Company and its Subsidiaries for
the respective fiscal quarter and for the year to-date, setting
forth in each case in comparative form the figures from the
comparable periods in the Company's immediately preceding fiscal
year, all prepared in accordance with generally accepted
accounting principles and practices, but all of which may be
unaudited.
(ii) SEC Filings. The Company shall deliver to the
Investor copies of each other document filed with the SEC on a
non-confidential basis promptly following the filing of such
document with the SEC.
(b) Registration Rights.
(i) Definitions. For purposes of this Section 7(b):
(A) Registration. The terms "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
<PAGE> 13
(B) Registrable Securities. The term
"Registrable Securities" means: (x) the Purchased Shares and the
Warrant Shares and (y) any shares of Common Stock of the Company
or other securities of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, any of the
securities described in the immediately preceding clause.
Notwithstanding the foregoing, "Registrable Securities" shall
exclude any Registrable Securities (i) sold by a person in a
transaction in which rights under this Section 7(b) are not
assigned in accordance with this Agreement or any Registrable
Securities sold in a public offering, whether sold pursuant to
Rule 144 promulgated under the Securities Act, or in a registered
offering, or otherwise or (ii) that may then be sold to the
public pursuant to Rule 144.
(C) Registrable Securities Then Outstanding. The
number of shares of "Registrable Securities then outstanding"
shall mean the number of Purchased Shares, shares of Common Stock
and other securities that are Registrable Securities and are then
issued and outstanding.
(D) Holder. For purposes of this Section 7(b),
the term "Holder" means any person owning of record Registrable
Securities that have not been sold to the public or pursuant to
Rule 144 promulgated under the Securities Act or any permitted
assignee of record of such Registrable Securities to whom rights
under this Section 7(b) have been duly assigned in accordance
with this Agreement.
(E) Form S-3. The term "Form S-3" means such
form under the Securities Act as is in effect on the date hereof
or any successor registration form under the Securities Act
subsequently adopted by the SEC that permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(ii) Demand Registration.
(A) Request by Holders. If (i) the Company
shall, following the Closing, receive a written request from the
Holders of twenty-five percent (25%) of the Registrable
Securities, that the Company file a registration statement under
the Securities Act on Form S-3 or, if Form S-3 is not then
available for use by the Company, then such other form as such
Holders (upon the advice of the underwriters, if any, engaged by
such Holders) may request (including a "shelf" registration
statement, if requested by such Holders, during any period of
time that Rule 144 is not available as an exemption for the sale
in a single 90-day period of all of the Registrable Securities
that any such Holder desires to sell, in which case the Company
would maintain the effectiveness of such "shelf" registration
statement until all such Registrable Securities are sold under
such registration statement or could be sold under Rule 144 in a
single 90-day period, provided that the Company shall not be
required to keep such registration statement effective for longer
than six (6) months after the effective date thereof) covering
the registration of Registrable Securities, and (ii) the expected
gross proceeds of the sale of Registrable Securities under such
registration statement would equal or exceed Five Million Dollars
($3,000,000), then the Company shall, within ten (10) business
days of the receipt of such written request, give written notice
of such request ("Request Notice") to all Holders, and use
commercially reasonable efforts to effect, as soon as
practicable, the registration under the
<PAGE> 14
Securities Act of all Registrable Securities that Holders request
to be registered and included in such registration by written
notice given such Holders to the Company within twenty (20) days
after receipt of the Request Notice; provided that the Company
shall not be obligated to effect any such registration if the
Company has, within the six (6) month period preceding the date
of such request, already effected a registration under the
Securities Act pursuant to Section 7(b)(iii), other than a
registration from which the Registrable Securities of Holders
have been excluded with respect to all or any portion of the
Registrable Securities the Holders requested be included in such
registration; provided, however, that the Company shall have no
obligation to cause any registration statement contemplated by
this Section 7(b)(ii) to become effective prior to the one
hundred and eightieth (180th) day after the Closing Date;
provided, further, that the Company shall have no obligation to
cause any "shelf" registration statement contemplated by this
Section 7(b)(ii) to become effective prior to the first
anniversary of the Closing Date.
(B) Underwriting. If the Holders initiating the
registration request under this Section 7(b)(ii) ("Initiating
Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, then they shall so
advise the Company as a part of their request, and the Company
shall include such information in the written notice referred to
in Section 7(b)(ii)(A). In such event, the right of any Holder
to include his or her 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 determined based on the number of Registrable Securities
held by such Holders being registered). All Holders proposing to
distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such
underwriting by the Holders of a majority of the Registrable
Securities being registered and reasonably acceptable to the
Company (including a market stand-off agreement of up to ninety
(90) days if required by such underwriters). Notwithstanding any
other provision of this Section 7(b)(ii), if the underwriter(s)
advise(s) the Company in writing that marketing factors require a
limitation of the number of securities to be underwritten then
the Company shall so advise all Holders of Registrable Securities
that would otherwise be registered and underwritten pursuant
hereto, and the number of Registrable Securities that may be
included in the underwriting shall be reduced as required by the
underwriter(s) and allocated among the Holders of Registrable
Securities on a pro rata basis according to the number of
Registrable Securities requested to be included in such
registration by each Holder requesting registration (including
the initiating Holders); provided, however, that the number of
shares of Registrable Securities to be included in such
underwriting and registration shall not be reduced unless all
other securities of the Company and any selling securityholder
other than the Holders are first entirely excluded from the
underwriting and registration. Any Registrable Securities
excluded and withdrawn from such underwriting shall be withdrawn
from the registration.
(C) Maximum Number of Demand Registrations. The
Company shall be obligated to effect only two (2) such
registrations pursuant to this Section 7(b)(ii).
(D) Expenses. All expenses incurred in
connection with any registration pursuant to this Section
7(b)(ii), including all federal and "blue sky" registration,
filing and qualification fees, printer's and accounting fees, and
fees and disbursements of counsel
<PAGE> 15
for the Company (but excluding underwriters' discounts and
commissions relating to shares sold by the Holders), shall be
borne by the Company. Each Holder participating in a
registration pursuant to this Section 7(b)(ii) shall bear such
Holder's proportionate share (based on the total number of shares
sold in such registration other than for the account of the
Company) of all discounts, commissions or other amounts payable
to underwriters or brokers in connection with such offering by
the Holders. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 7(b)(ii) if the
registration request is subsequently withdrawn at the request of
the Holders of a majority of the Registrable Securities to be
registered, unless the Holders of such majority agree that such
registration constitutes the use by the Holders of one (1) demand
registration pursuant to this Section 7(b)(ii) (in which case
such registration shall also constitute the use by all Holders of
Registrable Securities of one (l) such demand registration);
provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change
relating to the Company not known to the Holders at the time of
their request for such registration and have withdrawn their
request for registration after learning of such material adverse
change, then the Holders shall not be required to pay any of such
expenses and such registration shall not constitute the use of a
demand registration pursuant to this Section 7(b)(ii).
(iii)Piggyback Registrations. The Company shall notify
all Holders of Registrable Securities in writing at least thirty
(30) days prior to filing any registration statement under the
Securities Act for purposes of effecting a public offering of
securities of the Company (including registration statements
relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any employee
benefit plan or any merger or other corporate reorganization) and
will afford each such Holder an opportunity to include in such
registration statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the
Registrable Securities held by such Holder shall within twenty
(20) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities
such Holder wishes to include in such registration statement. 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 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.
(A) Underwriting. If a registration statement
under which the Company gives notice under this Section 7(b)(iii)
is for an underwritten offering, then the Company shall so advise
the Holders of Registrable Securities. In such event, the right
of any such Holder's Registrable Securities to be included in
such a registration pursuant 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
managing underwriter or underwriters selected for such
underwriting (including a market stand-off agreement of up to
ninety (90) days if required by such underwriters); provided,
however, that it shall not be considered customary to require any
of the Holders to provide representations and warranties
regarding the Company or indemnification of the underwriters for
material misstatements or omissions of the Company in
<PAGE> 16
the registration statement or prospectus for such offering.
Notwithstanding any other provision of this Agreement, if the
managing underwriter determine(s) in good faith that marketing
factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
from the registration and the underwriting; provided; however,
that the securities to be included in the registration and the
underwriting shall be allocated, (1) first (A) in connection with
any registrations effective after June 30, 2000 other than a
registration statement relating to a demand registration of other
shareholders of the Company, to the Company (provided, however,
that a minimum of twenty-five percent (25%) of the number of
Registrable Securities held by each Holder (where any Registrable
Securities that are not shares of Common Stock but are
exercisable or exchangeable for, or convertible into, shares of
Common Stock, shall be deemed to have been so exercised,
exchanged or converted for such purpose) must also in any event
be included if requested by any such Holder) or (B) in
connection any registration statement relating to a demand
registration of other shareholders of the Company, such
shareholder exercising such demand registration rights, (2)
second, to the extent the managing underwriter determines
additional securities can be included after compliance with
clause (1), to each of the Holders (to the extent not included
pursuant to clause (1)) requesting inclusion of their Registrable
Securities in such registration statement on a pro rata basis
based on the total number of Registrable Securities and other
securities entitled to registration requested to be included by
each such Holder, and (3) third, to the extent the managing
underwriter determines additional securities can be included
after compliance with clauses (1) and (2), to all other holders
of Common Stock of the Company having the right to include their
shares in such registration allocated in such manner as they may
agree. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, the Holder
and the partners and retired partners of such Holder, or the
estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing
persons, and for any Holder that is a corporation, the Holder and
all corporations that are affiliates of such Holder, shall be
deemed to be a single "Holder," and any pro rata reduction with
respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and
individuals included in such "Holder," as defined in this
sentence.
(B) Expenses. All expenses incurred in
connection with a registration pursuant to this Section 7(b)(iii)
(excluding underwriters' and brokers' discounts and commissions
relating to shares sold by the Holders), including all federal
and "blue sky" registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(C) Not Demand Registration. Registration
pursuant to this Section 7(b)(iii) shall not be deemed to be a
demand registration as described in Section 7(b)(ii) above.
Except as otherwise provided herein, there shall be no limit on
the number of times the Holders may request registration of
Registrable Securities under this Section 7(b)(iii).
(iv) Form S-3 Registration. If requested by the
Investor, the Company shall use all reasonable commercial efforts
to cause to be filed and become effective with the SEC a
Registration Statement on Form S-3 relating to all of the
Registrable Securities (in the event such registration statement
is not effective on such date, the Company shall continue to use
all reasonable commercial efforts to cause it to become effective
until it becomes effective), such
<PAGE> 17
Registration Statement to be effected only for sales or other
transfers by the Investor in connection with offerings, sales and
transfers not constituting an underwritten public offering;
provided, however, that the Company shall not be obligated to
cause such registration statement to become effective before the
one hundred eighty-first (181st) day following the Closing Date;
provided, further, that in the event Form S-3 is not available to
the Company, then the Company shall not be required to effect any
such registration, in which event the Investor will, if it still
desires to have such shares registered, need to request a demand
registration under Section 7(b)(ii) above. The Company shall use
its best efforts to cause any such Registration Statement to
become effective as promptly as possible after such filing (but
shall not be required to cause such Registration Statement to
become effective prior to the one hundred eighty-first (181st)
day following the Closing Date) and shall also use its best
efforts to obtain any related qualifications, registrations or
other compliances that may be necessary under any applicable
"blue sky" laws. In connection with such registration, the
Company will:
(A) Notice. Promptly give written notice to the
Holders of the proposed registration and any related
qualification or compliance; and
(B) Registration. Effect such registration and
all such qualifications and compliances and as would permit or
facilitate the sale and distribution of all or such portion of
such Holders or Holders' Registrable Securities on and after the
one hundred and eightieth (180th) day following the Closing Date;
provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance
pursuant to this Section 7(b)(iv) 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.
(C) Expenses. The Company shall pay all expenses
incurred in connection with each registration requested pursuant
to this Section 7(b)(iv), excluding underwriters' or brokers'
discounts and commissions relating to shares sold by the Holders,
including federal and "blue sky" registration, filing and
qualification fees, printers' and accounting fees, and fees and
disbursements of counsel.
(D) Not Demand Registration. Form S-3
registrations shall not be deemed to be demand registrations as
described in Section 7(b)(ii) above.
(E) Maintenance. The Company shall use all
reasonable commercial efforts to maintain the effectiveness of
any Form S-3 registration statement filed under this Section
7(b)(iv) until the earlier of: (a) the date on which all of the
Registrable Securities have been sold; and (b) the six-month
anniversary of the effective date of such registration statement;
provided, however, that unless all of the Registrable Securities
held by the Investor as of such six-month anniversary could then
be sold in a single transaction in accordance with Rule 144 under
the Securities Act without exceeding the volume limitations
thereof, if the Company receives written notice from the Investor
that the Investor may be deemed to be an "affiliate" of the
Company for purposes of the Securities Act, the date in this
clause E shall be extended until the Investor advises the Company
that it no longer believes it may be deemed such an "affiliate."
<PAGE> 18
(F) Maximum Number of Form S-3 Registrations.
The Company shall be obligated to effect only five (5) such
registrations pursuant to this Section 7(b)(iv).
(v) Obligations of the Company. Whenever required to
effect the registration of any Registrable Securities under this
Agreement the Company shall, as expeditiously as reasonably
possible:
(A) Registration Statement. Prepare and file
with the SEC a registration statement with respect to such
Registrable Securities and use commercially reasonable efforts to
cause such registration statement to become effective; provided,
however, that, except as otherwise required by this Section 7(b),
the Company shall not be required to keep any such registration
statement effective for more than ninety (90) days.
(B) Amendments and Supplements. 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.
(C) Prospectuses. 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 the Registrable Securities
owned by them that are included in such registration.
(D) Blue Sky. Use commercially 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.
(E) Underwriting. In the event of any
underwritten public offering, enter into and perform its
obligations under an underwriting agreement in usual and
customary form (including customary indemnification of the
underwriters by the Company), 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; provided, however, that it shall not be considered
customary to require any of the Holders to provide
representations and warranties regarding the Company or
indemnification of the underwriters for material misstatements or
omissions of the Company in the registration statement or
prospectus for such offering.
(F) Notification. 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
<PAGE> 19
of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing. In
such event, the Company shall prepare a supplement or post-
effective amendment to such registration statement or related
prospectus or file any other required document so that, as
thereafter delivered to the purchasers of Registrable Securities
sold thereunder, the prospectus will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(G) Opinion and Comfort Letter. Furnish, at the
request of any Holder requesting registration of Registrable
Securities, 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 addressed to the underwriters, if
any, and to the Holders requesting registration of Registrable
Securities and (ii) in the event that such securities are being
sold through underwriters, a "comfort" 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, addressed to the underwriters.
(vi) Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to Sections 7(b)(ii), (iii) or (iv) 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 timely effect the registration of their Registrable
Securities.
(vii)Indemnification. In the event any Registrable
Securities are included in a registration statement under
Sections 7(b)(ii), (iii) or (iv):
(A) By the Company. To the extent permitted by
law, the Company will indemnify and hold harmless each Holder,
the partners, officers, shareholders, employees, representatives
and directors of each Holder, any underwriter (as determined 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"):
(x) 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;
<PAGE> 20
(y) 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
(z) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any federal
or state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any federal or
state securities law in connection with the offering covered by
such registration statement;
and the Company will reimburse each such Holder, partner,
officer, shareholder, employee, representative, director,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this subsection 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 (i) a Violation that occurs in reliance
upon and in conformity with written information furnished
expressly for use in connection with such registration by such
Holder, partner, officer, shareholder, employee, representative,
director, underwriter or controlling person of such Holder, (ii)
any failure by such Holder to deliver a copy of the registration
statement or prospectus or any amendment or supplement thereto as
required by the Securities Act or the rules or regulations
thereunder, or (iii) any failure by such Holder to stop using the
registration statement or prospectus or any amendment or
supplement thereto after receipt of written notice from the
Company to stop.
(B) By Selling Holders. To the extent permitted
by law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the registration statement, 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, officers, shareholders, employees, representatives and
directors and any person who controls such Holder within the
meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to
which the Company or any such officer or director, controlling
person, underwriter or other such Holder, partner, officer,
shareholder, employee, representative, director 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
(i) 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
expressly for use in connection with such registration, (ii) any
failure by such Holder to deliver a copy of the registration
statement or prospectus or any amendment or supplement thereto as
required by the Securities Act or the rules or regulations
thereunder, or (iii) any failure by such Holder to stop using the
registration statement or prospectus or any amendment or
supplement thereto after receipt of written notice from the
Company to stop; and each such Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such
officer or director, controlling person, underwriter or other
Holder, partner, officer, shareholder, employee,
<PAGE> 21
representative, director or controlling person of such other
Holder in connection with investigating or defending any such
loss, claim, damage, liability or action: provided, however, that
the indemnity agreement contained in this subsection 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; and provided further, that the total
amounts payable in indemnity by a Holder under this subsection or
otherwise in respect of any and all Violations shall not exceed
in the aggregate the net proceeds received by such Holder in the
registered offering out of which such Violations arise.
(C) Notice. Promptly after receipt by an
indemnified party under 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, 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, to the extent that
representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or
potential conflict of 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 shall not relieve such indemnifying party of
liability except to the extent the indemnifying party is
prejudiced as a result thereof.
(D) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and Holders are
subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or
the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any person if a copy of the Final
Prospectus was timely furnished to the indemnified party and was
not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the
Securities Act.
(E) Contribution. In order to provide for just
and equitable contribution to joint liability under the
Securities Act in any case in which either (i) any Holder
exercising rights under this Agreement, or any controlling person
of any such Holder, makes a claim for indemnification pursuant to
this section, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this section provides for
indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling
Holder or any such controlling person in circumstances for which
indemnification is provided under this section; then, and in each
such case, the Company and such Holder will contribute to the
aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such
proportion so that such Holder is responsible for the portion
represented by
<PAGE> 22
the percentage that the public offering price of its Registrable
Securities offered by and sold under the registration statement
bears to the public offering price of all securities offered by
and sold under such registration statement, and the Company and
other selling Holders are responsible for the remaining portion;
provided, however, that, in any such case: (A) no such Holder
will be required to contribute any amount in excess of the public
offering price of all such Registrable Securities offered and
sold by such Holder pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) will
be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
(F) Survival. The obligations of the Company and
Holders under this Section 7(b)(vii) shall survive until the
third anniversary of the completion of any offering of
Registrable Securities in a registration statement, regardless of
the expiration of any statutes of limitation or extensions of
such statutes.
(viii)Termination of the Company's Obligations. The
Company shall have no obligations pursuant to this Section 7(b)
with respect to any Registrable Securities proposed to be sold by
a Holder in a registration pursuant to Section 7(b)(ii), (iii) or
(iv) more than five (5) years after the Closing Date.
(ix) No Superior Registration Rights to Third Parties.
Without the prior written consent of the Holders of a majority of
the Purchased Shares, the Company covenants and agrees that it
shall not grant, or cause or permit to be created, for the
benefit of any person or entity any registration rights of any
kind (whether similar to the demand, "piggyback" or Form S-3
registration rights described in this Section 7, or otherwise)
relating to shares of the Company's Common Stock or any other
securities of the Company that are superior to the rights granted
under this Section 7(b).
(x) Suspension Provisions. Notwithstanding the
foregoing subsections of this Section 7(b), the Company shall not
be required to take any action with respect to the registration
or the declaration of effectiveness of the registration statement
following written notice to the Holders from the Company (a
"Suspension Notice") of the existence of any state of facts or
the happening of any event (including pending negotiations
relating to, or the consummation of, a transaction, or the
occurrence of any event that the Company believes, in good faith,
requires additional disclosure of material, non-public
information by the Company in the registration statement that the
Company believes it has a bona fide business purpose for
preserving confidentiality or that renders the Company unable to
comply with the published rules and regulations of the SEC
promulgated under the Securities Act or the Exchange Act, as in
effect at any relevant time (the "Rules and Regulations")) that
would result in (1) the registration statement, any amendment or
post-effective amendment thereto, or any document incorporated
therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or (2) the prospectus issued under the registration
statement, any prospectus supplement, or any document
incorporated therein by reference including an untrue statement
of material fact or omitting to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
provided that the Company (1) shall not issue a Suspension Notice
more than once in any twelve (12)
<PAGE> 23
month period, (2) shall use its best efforts to remedy, as
promptly as practicable, but in any event within ninety (90) days
of the date on which the Suspension Notice was delivered, the
circumstances that gave rise to the Suspension Notice and deliver
to the Holders notification that the Suspension Notice is no
longer in effect and (3) shall not issue a Suspension Notice for
any period during which the Company's executive officers are not
similarly restrained from disposing of shares of the Company's
Common Stock. Upon receipt of a Suspension Notice from the
Company, all time limits applicable to the Holders under this
Section 7(b) shall automatically be extended by an amount of time
equal to the amount of time the Suspension Notice is in effect,
the Holders will forthwith discontinue disposition of all such
shares pursuant to the registration statement until receipt from
the Company of copies of prospectus supplements or amendments
prepared by or on behalf of the Company (which the Company shall
prepare promptly), together with a notification that the
Suspension Notice is no longer in effect, and if so directed by
the Company, the Holders will deliver to the Company all copies
in their possession of the prospectus covering such shares
current at the time of receipt of any Suspension Notice.
(xi). "Market Stand-Off" Agreement; Limited
Shareholder Participation.
(A) The Company and Investor agree that: (1)
prior to June 30, 2000, the Company shall not allow the
shareholders of the Company other than Investor to sell more than
ten percent (10%) of the total shares being sold in any
registered offering of securities of the Company (including
registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements
relating to any employee benefit plan or any merger or other
corporate reorganization) and (2) such ten percent (10%) of such
offering shall be shared among the shareholders of the Company
other than Investor as the Company shall determine; provided
however, that these Sections 7(xi)(A)(1) and (2) shall not apply
if, in such registration, Investor is able to register all of
Investor's Registrable Securities.
(B) Investor hereby agrees that it shall not, to
the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose
of any Registrable Securities (other than to subsidiaries,
partners or affiliates of the Investor who agree to be similarly
bound) prior the earlier of (1) June 30, 2000 or (2) the
completion of the Company's first underwritten offering of its
securities to be sold to the public after the date of this
Agreement; provided however, that all executive officers and
directors enter into similar agreements or sell in accordance
with Section 7(xi)(A). In order to enforce the foregoing
covenant, the Company shall have the right to place restrictive
legends on the certificates representing the shares subject to
this Section and to impose stop transfer instructions with
respect to the Registrable Securities and such other shares of
stock of each Holder (and the shares or securities of every other
person subject to the foregoing restriction) until the end of
such period.
(c) Obligations Regarding Confidential Information.
Confidential Information (as defined below) shall not be
disclosed by any party hereto to any third party except in
accordance with the provisions set forth below. For purposes of
this Agreement, the term "Confidential Information" refers to the
following items: (i) the existence of this
<PAGE> 24
Agreement and the Warrants, and (ii) the terms and provisions of
this Agreement and the Warrants, provided, however, that
Confidential Information shall not include any information that
was (i) publicly known and generally available in the public
domain prior to its disclosure by the Company, (ii) becomes
publicly known and generally available in the public domain
through no action or inaction on the part of the Company or (iii)
becomes publicly known by written consent or other action of the
Investor.
(i) Press Releases, Etc. Within ten (10) days of the
Closing, the Company may issue a press release in the form
provided by Investor disclosing that Investor has invested in the
Company; provided that the final form of the press release is
approved in advance in writing by Investor. No other
announcement regarding the Confidential Information in a press
release, conference, advertisement, announcement, professional or
trade publication, mass marketing materials or otherwise may be
made without the prior written consent of Investor.
(ii) Permitted Disclosures. Notwithstanding the
foregoing, (i) any party may disclose any of the Confidential
Information to its current or bona fide prospective investors,
employees, investment bankers, lenders, accountants and
attorneys, in each case only where such persons or entities are
under appropriate nondisclosure obligations (the Company shall be
responsible for any failure of any such person to comply with the
provisions of this Section 7(c)); (ii) the Company may disclose
the fact that Investor is an investor in the Company to third
parties without the requirement for nondisclosure agreements and
(iii) the Investor may disclose its investment in the Company and
other Confidential Information to third parties or to the public
at its sole discretion and, if it does so, the Company shall have
the right to disclose to third parties any such information
disclosed in a press release or other public announcement by the
Investor.
(iii)Legally Compelled Disclosure. Except to the
extent required by law or judicial or administrative order or
except as provided herein, the Company shall not disclose any
Confidential Information without the Investor's prior written
approval; provided, however, that the Company may disclose any
Confidential Information, to the extent required by law or
judicial or administrative order, provided that if such
disclosure is pursuant to judicial or administrative order, the
Company will notify the Investor promptly before such disclosure
and will cooperate with the Investor to seek confidential
treatment with respect to the disclosure if requested by the
Investor and provided further that if such disclosure is required
pursuant to law or the rules and regulations of any federal,
state or local governmental authority or any regulatory body, the
parties will cooperate to seek confidential treatment to the
maximum extent, in the reasonable judgment of counsel of the
Company, possible under law. Notwithstanding the foregoing
provisions or any other provision to the contrary, the Company
agrees that, except to the extent required by judicial or
administrative order, which the Company shall resist to the
maximum extent possible under law, the Company will not file this
Agreement (the "Exhibit Filing") with any governmental authority
or any regulatory body; provided, however, that to the extent
required under the Rules and Regulations, upon the advice of
counsel and subject to any request by Investor to seek
confidential treatment, the Company may (A) file this Agreement
and the Warrants as an exhibit to any filing required to be made
by the Company under the Exchange Act, (B) identify the Investor
as "Intel Corporation" and (C) describe the material terms of the
Investor's investment. The Investor hereby acknowledges that the
Company has advised Investor
<PAGE> 25
that the Company has been advised by its counsel that such
counsel believes that the Company will be required to file this
Agreement and the Warrants as exhibits to the Form 10-K that the
Company will be required to file under the Exchange Act for its
fiscal year ending March 31, 2000. The Company agrees that it
will provide the Investor with drafts of any documents, press
releases or other filings (including the filing permitted by the
proviso of the immediately preceding sentence) in which the
Company desires to disclose this Agreement and the Warrants, the
transactions contemplated hereby or thereby or any other
Confidential Information is disclosed at least three (3) business
days prior to the filing or disclosure thereof, and that it will
make any changes to such materials as requested by the Investor
unless advised by counsel that the Rules and Regulations require
otherwise. Unless permitted by the terms of this Section 7(c),
the Company will not disclose any Confidential Information or
file this Agreement or the Warrants if the Investor has objected
to such disclosure or filing. The Company will not, except as
permitted above, file this Agreement or the Warrants with any
governmental authority or any regulatory body, or disclose the
identity of the Investor or any other Confidential Information in
any filing.
(iv) Other Information. The provisions of this Section
7(c) shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by
any of the parties hereto with respect to the transactions
contemplated hereby. Additional disclosures and exchange of
confidential information between the Company and the Investor
shall be governed by the terms of the Corporate Non-Disclosure
Agreement No. 127931, effective June 1, 1999, executed by the
Company and the Investor.
(d) Rights of Participation.
(i) General. As used in this Agreement, the "Rights
Period" means the period from the date hereof until the earlier
of: (1) such time as the Investor, together with its
Subsidiaries, no longer hold the equivalent of at least twenty-
five percent (25%) of the Purchased Shares, such number to be
proportionately adjusted for stock splits, stock dividends and
similar events, or (2) December 31, 2005. During the Rights
Period, the Investor and each other person or entity to whom
rights under this Section 7(d) have been duly assigned (each of
the Investor and each such assignee, a "Participation Rights
Holder") shall have a right of first refusal to purchase such
Participation Rights Holder's Pro Rata Share (as defined below)
of all New Securities (as defined below) that the Company may
from time to time issue during such period (such New Securities
would be allocated among the Participation Rights Holders who
elect to exercise their right to purchase such New Securities on
a pro rata basis according to the number of Purchased Shares held
by each such Participation Rights Holder. The rights described
in the preceding sentence, as further described in this Section
7(d), are referred to as the "Right of Participation".
(ii) Pro Rata Share. "Pro Rata Share" means, with
respect to each Participation Rights Holder, the ratio of the
following numbers calculated immediately prior to the issuance of
the New Securities giving rise to the Right of Participation:
(A) the Participant Share Number (as defined below) for such
Participation Rights Holder, to (B) the sum of (a) the total
number of shares of Common Stock and other voting capital stock
of the Company then outstanding, plus (b) the number of shares of
voting capital stock issuable upon the exercise, conversion or
exchange of any other security of the Company then outstanding.
<PAGE> 26
(iii)New Securities. "New Securities" means any Common
Stock, preferred stock or other voting capital stock or security
of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or preferred
stock or other voting capital stock or security, and securities
of any type whatsoever that are, or may become, convertible into
or exchangeable or exercisable for Common Stock, preferred stock
or other voting capital stock or security; provided, however,
that the term New Securities shall not include:
(A) any shares of Common Stock (or options,
rights, awards to acquire, or warrants therefor) issued to
employees, officers, directors or consultants of the Company
pursuant to any stock purchase, stock option, stock incentive,
equity incentive, and other employee benefit plans, and
agreements having similar purpose and effect, in effect on the
Closing Date or approved by the Board of Directors after the
Closing Date;
(B) the Purchased Shares issued under this
Agreement;
(C) shares of Common Stock issued upon exercise
of any warrant issued to Investor;
(D) any securities issued in connection with any
stock split stock, dividend or other similar event in which all
Participation Rights Holders are entitled to participate on a pro
rata basis;
(E) any securities issued upon the exercise,
conversion or exchange of any outstanding security if such
outstanding security constituted a New Security;
(F) any securities issued pursuant to the
acquisition of another Person, or subsidiary or division thereof,
by the Company by consolidation, merger, purchase of assets, or
other reorganization; or
(G) any shares of capital stock of the Company,
or any options, warrants, rights or other securities convertible
into, exercisable for or exchangeable into shares of capital
stock of the Company, (i) issued to a bank lender to the Company
(or any other person that lends money to the Company) or (ii)
offered and sold by the Company pursuant to a registration
statement filed under the Securities Act.
(iv) Participant Share Number. "Participant Share
Number", with respect to a Participant Rights Holder, means the
sum of (1) the number of Purchased Shares held by such
Participant, and (2) the number of shares of Common Stock or
other voting capital stock or security issuable upon the
exercise, conversion or exchange of any other security of the
Company held by such Participant.
(v) Purchase Price. The purchase price paid by the
Participant Rights Holder for the New Securities shall equal the
sales price of the New Securities.
(vii) Procedures. If the Company proposes to
undertake an issuance of New Securities (in a single transaction
or a series of related transactions) in circumstances that
entitled a Participation Rights Holder to participate therein in
accordance this Section 7(d), the
<PAGE> 27
Company shall give to each Participation Rights Holder written
notice of its intention to issue New Securities (the
"Participation Notice"), describing the amount and the type of
New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities. Each
Participation Rights Holder shall have fifteen (15) business days
from the date of receipt of any such Participation Notice to
agree in writing to purchase up to the maximum number of such New
Securities that such Participation Rights Holder is entitled to
purchase for the purchase price specified in Section 7(d)(v)
above and upon the terms and conditions specified in the
Participation Notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased
(not to exceed such maximum). If any Participation Rights Holder
fails to so agree in writing within such 15 business day period,
then such Participation Rights Holder shall forfeit the right
hereunder to participate in such sale of New Securities. All
sales hereunder shall be consummated concurrently with the
closing of the transaction triggering the Right of Participation.
(ix) Failure to Exercise. Upon the expiration of such
fifteen (15) business day period, the Company shall have one
hundred twenty (120) days thereafter, subject to extensions for
regulatory compliance, to sell the New Securities described in
the Participation Notice (with respect to which the Participation
Rights Holders' rights of first refusal hereunder were not
exercised), or enter into an agreement to do so within sixty (60)
days thereafter (which agreement must be consummated within one
hundred twenty (120) days after its execution, subject to
extensions for regulatory compliance), at the price (or a higher
price) and upon non-price terms not materially more favorable to
the purchasers thereof than specified in the Participation
Notice. If the Company has not issued and sold such New
Securities within such 120-day period, or entered into an
agreement to do so within sixty (60) days thereafter (and
consummated such agreement within such 120-day period), then the
Company shall not thereafter issue or sell any New Securities
without again first offering such New Securities to the
Participation Rights Holders pursuant to this Section 7(d).
(e) Rights in the Event of a Corporate Event.
(i) Corporate Events. A "Corporate Event" shall mean
any of the following, whether accomplished through one or a
series of related transactions: (A) any transaction, other than
an issuance of securities in connection with the acquisition of
an unaffiliated third party in an arms length transaction, that
results in a greater than fifty percent (50%) change in the total
outstanding number of voting securities (which, for purposes of
this Agreement, shall mean all securities of the Company that
presently are, or would be upon conversion, exchange or exercise,
entitled to vote in the election of directors) of the Company
immediately prior to such issuance (other than any such change
solely as a result of a stock split, stock dividend or other
recapitalization affecting holders of Common Stock and other
classes of voting securities of the Company on a pro rata basis);
(B) an acquisition of the Company by consolidation, merger
(regardless of whether the Company is the survivor of such merger
or not), share purchase or exchange or other reorganization or
transaction in which the holders of the Company's outstanding
voting securities immediately prior to such transaction own,
immediately after such transaction, securities representing less
than a majority of the voting power of the Company or the Person
issuing such securities or surviving such transaction, as the
case may be; (C) the acquisition of all or substantially all the
assets of the Company; and (D) any transaction or series of
related transactions that results in the failure of the majority
of the members of the
<PAGE> 28
Board immediately prior to the closing of such transaction or
series of related transactions failing to constitute a majority
of the Board (or its successor) immediately following such
transaction or series of related transactions.
(ii) Notice of Corporate Events. Until such time as
the Investor no longer holds at least twenty-five percent (25%)
of the Purchased Shares (such number to be proportionately
adjusted for stock splits, stock dividends and similar events),
the Company shall provide the Investor with written notice of
terms of any offer (written or oral) from any Person for a
proposed Corporate Event. Any notice shall be delivered to the
Investor as soon as practicable but no later than five (5)
business days after the date the Company first becomes aware of
such offer or proposed Corporate Event. Without limiting the
generality of the foregoing, such notice shall set forth the
identity(ies) of the Person(s) involved, the consideration to be
paid and all other material terms and conditions. If such offer
is in writing (whether in the form of a letter of intent, term
sheet or otherwise), the Company shall deliver a copy thereof to
the Investor.
8. INDEMNIFICATION.
(a) Agreement to Indemnify.
(i) Company Indemnity. The Investor, its Affiliates
and Associates, and each officer, director, shareholder,
employer, representative and agent of any of the foregoing
(collectively, the "Investor Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this
Section 8 by the Company with respect to any and all Damages (as
defined below) incurred by any Investor Indemnitee as a proximate
result of any misrepresentation in, or breach of, any
representation, warranty, covenant or agreement made by the
Company in this Agreement (including any exhibits and schedules
hereto); provided, however, no Investor Indemnitee may make a
claim for indemnification hereunder unless the aggregate amount
of such Damages (together with all concurrent or prior claims
hereunder) exceeds $100,000 (the "Indemnification Threshold") in
which case the Company will be liable for the full amount of such
Damages including the initial $100,000 of Damages. The aggregate
liability of the Company hereunder will not in any event exceed
the aggregate consideration paid to the Company in connection
with this Agreement and the Warrants(the "Indemnification Cap").
Indemnification claims arising from the registration of
Registrable Securities under Federal and state securities laws
are covered by Section 7(b) and not this Section 8.
(ii) Investor Indemnity. The Company, its Affiliates
and Associates, and each officer, director, shareholder,
employer, representative and agent of any of the foregoing
(collectively, the "Company Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this
Section 8, by the Investor, in respect of any and all Damages
incurred by any Company Indemnitee as a proximate result of any
misrepresentation in, or breach of, any representation, warranty,
covenant or agreement made by the Investor in this Agreement;
provided, however, no Company Indemnitee may make a claim for
indemnification hereunder unless the aggregate amount of such
Damages (together with all concurrent or prior claims hereunder)
exceeds the Indemnification Threshold, in which case the Investor
will be liable for the full amount of such Damages including the
initial $100,000 of Damages. The aggregate liability of the
Investor hereunder will not in any event exceed the
<PAGE> 29
Indemnification Cap. Indemnification claims arising from the
registration of Registrable Securities under Federal and state
securities laws are covered by Section 7(b) and not this Section
8.
(iii)Equitable Relief. Nothing set forth in this
Section 8 shall be deemed to prohibit or limit any Investor
Indemnitee's or Company Indemnitee's right at any time before, on
or after the Closing, to seek injunctive or other equitable
relief for the failure of any Indemnifying Party to perform or
comply with any covenant or agreement contained herein.
(b) Survival. All representations and warranties of the
Investor and the Company contained herein and all claims of any
Investor Indemnitee or Company Indemnitee in respect of any
inaccuracy or misrepresentation in or breach hereof, shall
survive the Closing until the second anniversary of the date of
this Agreement, regardless of whether the applicable statute of
limitations, including extensions thereof, may expire. All
covenants and agreements of the Investor and the Company
contained in this Agreement shall survive the Closing in
perpetuity (except to the extent any such covenant or agreement
shall expire by its terms). All claims of any Investor
Indemnitee or Company Indemnitee in respect of any breach of such
covenants or agreements shall survive the Closing until the
expiration of two years following the non-breaching party's
obtaining actual knowledge of such breach.
(c) Claims for Indemnification. If any Investor Indemnitee
or Company Indemnitee (an "Indemnitee") shall believe that such
Indemnitee is entitled to indemnification pursuant to this
Section 8 in respect of any Damages, such Indemnitee shall give
the appropriate Indemnifying Party (which for purposes hereof, in
the case of an Investor Indemnitee, means the Company, and in the
case of a Company Indemnitee, means the Investor) prompt written
notice thereof. Any such notice shall set forth in reasonable
detail and to the extent then known the basis for such claim for
indemnification. The failure of such Indemnitee to give notice
of any claim for indemnification promptly shall not adversely
affect such Indemnitee's right to indemnity hereunder except to
the extent that such failure adversely affects the right of the
Indemnifying Party to assert any reasonable defense to such
claim. Each such claim for indemnity shall expressly state that
the Indemnifying Party shall have only the twenty (20) business
day period referred to in the next sentence to dispute or deny
such claim. The Indemnifying Party shall have twenty (20)
business days following its receipt of such notice either (a) to
acquiesce in such claim by giving such Indemnitee written notice
of such acquiescence or (b) to object to the claim by giving such
Indemnitee written notice of the objection. If the Indemnifying
Party does not object thereto within such twenty (20) business
day period, such Indemnitee shall be entitled to be indemnified
for all Damages reasonably and proximately incurred by such
Indemnitee in respect of such claim. If the Indemnifying Party
objects to such claim in a timely manner, the senior management
of the Company and the Investor shall meet to attempt to resolve
such dispute. If the dispute cannot be resolved by the senior
management, either party may make a written demand for formal
dispute resolution and specify therein the scope of the dispute.
Within thirty (30) days after such written notification, the
parties agree to meet for one (1) day with an impartial mediator
and consider dispute resolution alternatives other than
litigation. If an alternative method of dispute resolution is
not agreed upon within thirty days after the one day mediation,
either party may begin litigation proceedings. Nothing in this
section shall be deemed to require arbitration.
<PAGE> 30
(d) Defense of Claims. In connection with any claim that
may give rise to indemnity under this Section 8 resulting from or
arising out of any claim or Proceeding against an Indemnitee by a
person or entity that is not a party hereto, the Indemnifying
Party may (unless such Indemnitee elects not to seek indemnity
hereunder for such claim) but shall not be obligated to, upon
written notice to the relevant Indemnitee, assume the defense of
any such claim or Proceeding if the Indemnifying Party with
respect to such claim or Proceeding acknowledges to the
Indemnitee the Indemnitee's right to indemnity pursuant hereto to
the extent provided herein (as such claim may have been modified
through written agreement of the parties) and provides
assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Party will be financially able to satisfy such claim
to the extent provided herein if such claim or Proceeding is
decided adversely; provided, however, that nothing set forth
herein shall be deemed to require the Indemnifying Party to waive
any crossclaims or counterclaims the Indemnifying Party may have
against the Indemnified Party for damages. The Indemnified Party
shall be entitled to retain separate counsel, reasonably
acceptable to the Indemnifying Party, if the Indemnified Party
shall determine, upon the written advice of counsel, that an
actual or potential conflict of interest exists between the
Indemnifying Party and the Indemnified Party in connection with
such Proceeding. The Indemnifying Party shall be obligated to
pay the reasonable fees and expenses of such separate counsel to
the extent the Indemnified Party is entitled to indemnification
by the Indemnifying Party with respect to such claim or
Proceeding under this Section 8(d). If the Indemnifying Party
assumes the defense of any such claim or Proceeding, the
Indemnifying Party shall select counsel reasonably acceptable to
such Indemnitee to conduct the defense of such claim or
Proceeding, shall take all steps necessary in the defense or
settlement thereof and shall at all times diligently and promptly
pursue the resolution thereof. If the Indemnifying Party shall
have assumed the defense of any claim or Proceeding in accordance
with this Section 8(d), the Indemnifying Party shall be
authorized to consent to a settlement of, or the entry of any
judgment arising from, any such claim or Proceeding, with the
prior written consent of such Indemnitee, not to be unreasonably
withheld; provided, however, that the Indemnifying Party shall
pay or cause to be paid all amounts arising out of such
settlement or judgment concurrently with the effectiveness
thereof; provided further, that the Indemnifying party shall not
be authorized to encumber any of the assets of any Indemnitee or
to agree to any restriction that would apply to any Indemnitee or
to its conduct of business; and provided further, that a
condition to any such settlement shall be a complete release of
such Indemnitee and its Affiliates, directors, officers,
employees and agents with respect to such claim, including any
reasonably foreseeable collateral consequences thereof. Such
Indemnitee shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its
own expense. Each Indemnitee shall, and shall cause each of its
Affiliates, directors, officers, employees and agents to,
cooperate fully with the Indemnifying Party in the defense of any
claim or Proceeding being defended by the Indemnifying Party
pursuant to this Section 8(d). If the Indemnifying Party does
not assume the defense of any claim or Proceeding resulting
therefrom in accordance with the terms of this Section 8(d), such
Indemnitee may defend against such claim or Proceeding in such
manner as it may deem appropriate, including settling such claim
or Proceeding after giving notice of the same to the Indemnifying
Party, on such terms as such Indemnitee may deem appropriate. If
any Indemnifying Party seeks to question the manner in which such
Indemnitee defended such claim or Proceeding or the amount of or
nature of any such settlement, such Indemnifying Party shall have
the burden to prove by a preponderance of
<PAGE> 31
the evidence that such Indemnitee did not defend such claim or
Proceeding in a reasonably prudent manner.
(e) No Other Claims. The indemnification obligations set
forth in this Section 8 shall be the exclusive remedy of the
Investor and the Company for claims against each other in
connection with this Agreement, whether such claims are in tort
or contract or whether such claims are made for breach of any
representation, warranty or covenant herein or otherwise;
provided, that this Section 8(e) shall not limit the ability of
either party hereto (i) to make a claim other than in connection
with this Agreement based on events occurring or actions taken by
the other party after the date hereof (including, without
limitation, claims in connection with the Business Agreement) or
(ii) to recover damages for fraud.
(f) Certain Definitions. As used in this Agreement, (a)
"Affiliate" means, with respect to any person or entity, any
person or entity directly or indirectly controlling, controlled
by or under direct or indirect common control with such other
person or entity; (b) "Associate" means, when used to indicate a
relationship with any person or entity, (1) any other person or
entity of which such first person or entity is an officer,
director or partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity
securities, membership interests or other comparable ownership
interests issued by such other person or entity, (2) any trust or
other estate in which such first person or entity has a ten
percent (10%) or more beneficial interest or as to which such
first person or entity serves as trustee or in a similar
fiduciary capacity, and (3) any relative or spouse of such first
person or entity who has the same home as such first person or
entity or who is a director or officer of such first person or
entity; (c) "Damages" means all demands, claims, actions or
causes of action, assessments, losses, damages, costs, expenses,
liabilities, judgments, awards, fines, response costs, sanctions,
taxes, penalties, charges and amounts paid in settlement,
including (1) interest on cash disbursements in respect of any of
the foregoing at the prime rate of Chase Manhattan Bank, as in
effect from time to time, compounded quarterly, from the date
each such cash disbursement is made until the date the party
incurring such cash disbursement shall have been indemnified in
respect thereof, and (2) reasonable out-of-pocket costs, fees and
expenses (including reasonable costs, fees and expenses of
attorneys, accountants and other agents of, or other parties
retained by, such party), and (d) "Proceeding" means any action,
suit, hearing, arbitration, audit, proceeding (public or private)
or investigation that is brought or initiated by or against any
federal, state, local or foreign governmental authority or any
other person or entity.
9. ASSIGNMENT. The rights of the Investor under Sections 7(a)
and (b) are transferable to a Person who acquires any of the
Purchased Shares. The rights of the Investor under Sections 7(d)
and (e) are transferable only to a Subsidiary or any Person who
acquires all of the Purchased Shares and the Warrants or Warrant
Shares in circumstances where the Investor is transferring such
securities to such Person to comply with applicable law or a
request of a governmental authority (including in connection with
any approvals the Investor may be seeking from such governmental
authority relating to any acquisition, license or other business
activity engaged in, or proposed to be engaged in, by the
Investor). No assignment permitted by this Section 9 shall be
effective until the Company is given written notice by the
assigning party stating the name and address of the assignee and
identifying the securities of the Company as to which the rights
in question are being assigned. In all cases, any such assignee
shall receive such assigned rights subject to all the terms and
conditions of this Agreement.
<PAGE> 32
10. STANDSTILL AGREEMENT.
10.1 Standstill. The Investor hereby agrees that the Investor
shall neither acquire, nor enter into discussions, negotiations,
arrangements or understandings with any third party to acquire,
beneficial ownership (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended) of any Voting
Stock (as defined below), any securities convertible into or
exchangeable for Voting Stock, or any other right to acquire
Voting Stock (except, in any case, by way of stock dividends or
other distributions or offerings made available to holders of any
Voting Stock generally) without the written consent of the
Company, if the effect of such acquisition would be to increase
the Voting Power (as defined below) of all Voting Stock then
beneficially owned (as defined above) by the Investor or which it
has a right to acquire to more than nineteen and ninety-nine one
hundredths percent (19.99%) (the "Standstill Percentage") of the
Total Voting Power (as defined below) of the Company at the time
in effect; provided that:
(a) The Investor may acquire Voting Stock without regard to
the foregoing limitation, and such limitation shall be suspended,
but not terminated, if and for as long as (i) a tender or
exchange offer is made and is not withdrawn or terminated by
another person or group to purchase or exchange for cash or other
consideration any Voting Stock that, if accepted or if otherwise
successful, would result in such person or group beneficially
owning or having the right to acquire shares of Voting Stock with
aggregate Voting Power of more than nineteen and ninety-nine one
hundredths percent (19.99%) of the Total Voting Power of the
Company then in effect and such offer is not withdrawn or
terminated prior to the Investor making an offer to acquire
Voting Stock or acquiring Voting Stock; provided however, that
the foregoing standstill limitation will be reinstated once any
such tender or exchange offer is withdrawn or terminated, (ii)
another person or group hereafter acquires Voting Stock that
results in such person or group being required to file a Schedule
13D (under the rules promulgated under Section 13(d) under the
Securities and Exchange Act of 1934, as such rules and section
are in effect on the date hereof), or other similar or successor
schedule or form, indicating that the purpose of such acquisition
is other than for mere investment; provided, however, that the
foregoing standstill limitation will be reinstated once the
percentage of Total Voting Power beneficially owned by such other
person or group falls below five percent (5%); (iii) another
person or group hereafter acquires Voting Stock that results in
such person or group being required to file a Schedule 13G, or
other similar or successor schedule or form, indicating that such
other person or group beneficially owns or has the right to
acquire Voting Stock with aggregate Voting Power of more than
nineteen and ninety-nine one hundredths percent (19.99%) of the
Total Voting Power of the Company; provided, however, that the
foregoing standstill limitation will be reinstated once the
percentage of Total Voting Power beneficially owned by such other
person or group falls below five percent (5%); or (iv) another
person or group orally or in writing contacts the Company and
advises the Company of such person's or group's intention to
commence a tender or exchange offer that, if so commenced, would
result in a suspension pursuant to clause (i) above (e.g., a
"bear hug" offer); provided, however, that the foregoing
standstill limitation will be reinstated if such intention is
withdrawn in writing or other reasonable evidence of such
withdrawal is provided to the Investor. The Company shall notify
the Investor in writing of the occurrence of any event described
in clauses (i) through (iv) of the immediately preceding sentence
as soon as practicable following the Company's becoming aware of
any such event, and in any case, shall
<PAGE> 33
provide the Investor written notice of any such event within
twenty-four (24) hours of the occurrence of any such event.
(b) The Investor will not be obliged to dispose of any
Voting Stock if the aggregate percentage of the Total Voting
Power of the Company represented by Voting Stock beneficially
owned by the Investor or which the Investor has a right to
acquire is increased beyond the Standstill Percentage (i) as a
result of a recapitalization of the Company or a repurchase or
exchange of securities by the Company or any other action taken
by the Company or its affiliates; (ii) as the result of
acquisitions of Voting Stock made during the period when the
Investor's "standstill" obligations are suspended pursuant to
Section 10.1(a); (iii) as a result of an equity index
transaction, provided that Investor shall not vote such shares;
(iv) by way of stock dividends or other distributions or rights
or offerings made available to holders of shares of Voting Stock
generally; (v) with the consent of a simple majority of the
authorized members of the Company's Board of Directors; or (vi)
as part of a transaction on behalf of Investor's Defined Benefit
Pension Plan, Profit Sharing Retirement Plan, 401(k) Savings
Plan, Sheltered Employee Retirement Plan and Sheltered Employee
Retirement Plan Plus, or any successor or additional retirement
plans thereto (collectively, the "Retirement Plans") where the
Company's shares in such Retirement Plans are voted by a trustee
for the benefit of Investor employees or, for those Retirement
Plans where Investor controls voting, where Investor agrees not
to vote any shares of such Retirement Plan Voting Stock that
would cause Investor to exceed the Standstill Percentage.
(c) As used in this Section 10, (i) the term "Voting Stock"
means the Common Stock and any other securities issued by the
Company having the ordinary power to vote in the election of
directors of the Company (other than securities having such power
only upon the happening of a contingency that has not occurred),
(ii) the term "Voting Power" of any Voting Stock means the number
of votes such Voting Stock is entitled to cast for directors of
the Company at any meeting of shareholders of the Company, and
(iii) the term "Total Voting Power" means the total number of
votes which may be cast in the election of directors of the
Company at any meeting of shareholders of the Company if all
Voting Stock was represented and voted to the fullest extent
possible at such meeting other than votes that may be cast only
upon the happening of a contingency that has not occurred. For
purposes of this Section 10, the Investor shall not be deemed to
have beneficial ownership of any Voting Stock held by a pension
plan or other employee benefit program of the Investor if the
Investor does not have the power to control the investment
decisions of such plan or program.
10.2 Right of First Refusal upon Section 10.1(a) Event. If the
Investor elects to participate and tender or exchange any of the
Shares pursuant to any event described in clause (i) of the first
sentence of Section 10.1(a), the Investor shall provide written
notice of such intention to the Company. The Company shall have
two (2) business days from delivery of such notice to elect to
purchase all, but not less than all, of such Shares from the
Investor for cash, at the Offer Price (as defined below) per
share offered by the person or group in the event described in
clause (i), by delivering an irrevocable written election by the
Company to purchase such Shares at such price. In the event the
Company delivers such written election, the Company shall be
obligated to purchase, and the Investor shall be obligated to
sell, such Shares within five (5) business days of delivery of
the Company's written election to the Investor. If the Company
fails to deliver such written election within the two (2)
business day period described above or fails to purchase
<PAGE> 34
such Shares within the five (5) business day period described
above, it shall forfeit its rights under this Section 10.2 with
respect to such tender or exchange, regardless whether the terms
and conditions of such tender or exchange may subsequently be
modified. As used herein, "Offer Price" means (a) in the case of
a cash offer, the amount of cash per share to be paid; (b) in the
case of a share offer where the shares offered are listed on an
exchange or quoted on the Nasdaq National Market, an amount equal
to the average of the closing prices of such security's sales on
all domestic securities exchanges on which said security may at
the time be listed, or, if there have been no sales on any such
exchange on such 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 National
Market as of 4:00 p.m., New York time, or, if on any day such
security is not quoted in the NASDAQ National Market, 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, Incorporated, or any similar successor
organization, all determined as of the date written notice is
delivered to the Company by the Investor pursuant to the first
sentence of this Section 10.2; or (c) in the event of any other
tender or exchange offer, the value of the securities and/or
other property as set forth in the offer by the person or group
making such offer.
10.3 Termination of Standstill. The provisions of Sections 10.1
and 10.2 shall terminate on the second anniversary of the date of
this Agreement.
11. TERMINATION. Prior to the Closing, this Agreement may be
terminated and the purchase and sale of the Purchased Shares and
the Warrants contemplated by this Agreement may be abandoned only
in accordance with the following provisions:
(a) by mutual written consent of the Investor and the
Company;
(b) by the Investor or the Company if any court of
competent jurisdiction in the United States or other United
States federal or state governmental authority shall have issued
a final order, decree or ruling, or taken any other final action,
restraining, enjoining or otherwise prohibiting the purchase and
sale of the Purchased Shares, and such order, decree, ruling or
other action is or shall have become nonappealable;
(c) by the Investor, upon five (5) days written notice to
the Company, if the Closing shall not have occurred by December
23, 1999 (the "Outside Date"); provided, however, that the
Investor may not terminate this Agreement pursuant to this clause
(c) if the Investor's failure to fulfill any of its obligations
under this Agreement shall have been a principal reason that the
Closing shall not have occurred on or before said date;
(d) by the Company if (i) there shall have been a breach of
any representation or warranty on the part of the Investor set
forth in this Agreement or if any representation or warranty of
the Investor shall have become untrue such that the conditions
set forth in Section 6(a) would be incapable of being satisfied
by the Outside Date; provided, however, that the Company shall
only be able to terminate this Agreement under this Section
11(d)(i) if it has not breached any of its obligations hereunder
in any material respect; or (ii) there shall have been a breach
by the Investor of any of its respective covenants or agreements
hereunder in any material respect, and the Investor has not cured
such breach within ten (10) business days after
<PAGE> 35
notice by the Company thereof; provided, however, that the
Company shall only be able to terminate this Agreement under this
Section 11(d)(ii) if it has not breached any of its obligations
hereunder in any material respect; or
(e) by the Investor if (i) there shall have been a breach
of any representation or warranty on the part of the Company set
forth in this Agreement or if any representation or warranty of
the Investor shall have become untrue such that the conditions
set forth in Section 5(a) would be incapable of being satisfied
by the Outside Date; provided, however, that the Investor shall
only be able to terminate this Agreement under this Section
11(e)(i) if it has not breached any of its obligations hereunder
in any material respect; or (ii) there shall have been a breach
by the Company of any of its respective covenants or agreements
hereunder in any material respect, and the Company has not cured
such breach within ten (10) business days after notice by the
Investor thereof; provided, however, that the Investor shall only
be able to terminate this Agreement under this Section 11(e)(ii)
if it has not breached any of its obligations hereunder in any
material respect.
In the event of the termination of this Agreement, this
Agreement shall forthwith become void and have no effect without
any liability on the part of any party hereto or its affiliates,
directors, officers or stockholders; provided, however, nothing
contained herein shall relieve any party from liability for any
breach of this Agreement prior to such termination.
12. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties.
(b) Governing Law. This Agreement will be governed by and
construed under the internal laws of the State of Delaware,
without reference to principles of conflict of laws or choice of
laws.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.
(d) Headings. The headings and captions used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs, exhibits
and schedules will, unless otherwise provided, refer to sections
and paragraphs hereof and exhibits and schedules attached hereto,
all of which exhibits and schedules are incorporated herein by
this reference.
(e) Notices. Any notice required or permitted under this
Agreement shall be given in writing, shall be effective when
received, and shall in any event be deemed received and
effectively given upon personal delivery to the party to be
notified or three (3) business days after deposit with the United
States Post Office, by registered or certified mail, postage
prepaid, or one (1) business day after deposit with a nationally
recognized courier service such as FedEx for next business day
delivery under circumstances in which such service guarantees
next business day delivery, or one (1) business day after
facsimile with copy delivered by registered
<PAGE> 36
or certified mail, in any case, postage prepaid and addressed to
the party to be notified at the address indicated for such party
on the signature page hereof or at such other address as the
Investor or the Company may designate by giving at least ten (10)
days advance written notice pursuant to this Section 12(e).
(f) No Finder's Fees. The Investor will indemnify and hold
harmless the Company from any liability for any commission or
compensation in the nature of a finders' or broker's fee for
which the Investor or any of its officers, partners, employees or
consultants, or representatives is responsible. The Company will
indemnify and hold harmless the Investor from any liability for
any commission or compensation in the nature of a finder's or
broker's fee for which the Company or any of its officers,
employees or consultants or representatives is responsible.
(g) Amendments and Waivers. The provisions of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company, the Investor (so long as the
Investor shall hold any of the Purchased Shares) and the holders
of Purchased Shares representing at least a majority of the total
aggregate number of Purchased Shares then outstanding (excluding
any of such shares that have been sold in a transaction in which
rights under Section 7(b) are not assigned in accordance with
this Agreement or sold to the public pursuant to SEC Rule 144 or
otherwise). Any amendment or waiver effected in accordance with
this Section 12(g) will be binding upon the Investor, the Company
and their respective successors and assigns.
(h) Severability. If any provision of this Agreement is
held to be unenforceable under applicable law, such provision
will be excluded from this Agreement and the balance of the
Agreement will be interpreted as if such provision were so
excluded and will be enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement, together with all
exhibits and schedules hereto, constitutes the entire agreement
and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations,
correspondence, agreements. understandings duties or obligations
between the parties with respect to the subject matter hereof.
(j) Further Assurances. From and after the date of this
Agreement upon the request of the Company or the Investor, the
Company and the Investor will execute and deliver such
instruments, documents or other writings, and take such other
actions, as may be reasonably necessary or desirable to confirm
and carry out and to effectuate fully the intent and purposes of
this Agreement.
(k) Meaning of Include and Including. Whenever in this
Agreement the word "include" or "including" is used, it shall be
deemed to mean "include, without limitation" or "including,
without limitation," as the case may be, and the language
following "include" or "including" shall not be deemed to set
forth an exhaustive list.
<PAGE> 37
(l) Fees, Costs and Expenses. All fees, costs and expenses
(including attorney's' fees and expenses) incurred by either part
hereto in connection with the preparation, negotiation and
execution of this Agreement and the consummation of the
transactions contemplated hereby and thereby (including the costs
associated with any filings with, or compliance with any of the
requirements of, any governmental authorities), shall be the sole
and exclusive responsibility of such party. Notwithstanding the
above, the Company shall pay to Investor, concurrently with the
Closing, $20,000 representing an agreed amount to cover
Investor's internal and external costs in connection with the
transactions contemplated by this Agreement.
(m) Competition. Nothing set forth herein shall be deemed
to preclude, limit or restrict the Company's or the Investor's
ability to compete with the other.
(n) Cooperation in HSR Act Filings.
(i) In the event of the exercise of the Warrants (or
any other action by the Investor with respect to any securities
of the Company held by the Investor) that would require a filing
by the Investor under the HSR Act, the Investor and its
respective Affiliates (including any "ultimate parent entity", as
defined in the HSR Act), and the Company and its respective
Affiliates (including any "ultimate parent entity", as defined in
the HSR Act), shall promptly prepare and make their respective
filings and thereafter shall make all required or requested
submissions under the HSR Act or any analogous applicable law, if
required. In taking such actions or making any such filings, the
parties hereto shall furnish information required in connection
therewith and seek timely to obtain any applicable actions,
consents, approvals or waivers of governmental authorities;
provided, however, that the parties hereto shall cooperate with
each other in connection with the making of all such filings to
the extent permitted by applicable law. Without limiting the
generality of the foregoing, to the extent permitted by
applicable law and so long as the following will not involve the
disclosure of confidential or proprietary information of one
party hereto to another, each party shall cooperate with the
other by (a) providing copies of all documents to be filed to the
non-filing party and its advisors prior to filing and, if
requested, accepting reasonable additions, deletions or changes
suggested in connection therewith and (b) providing to each other
party copies of all correspondence from and to any governmental
authority in connection with any such filing.
(ii) Notwithstanding the foregoing, neither the
Investor nor the Company or any of their respective Affiliates
shall be under any obligation to comply with any request or
requirement imposed by the Federal Trade Commission (the "FTC"),
the Department of Justice (the "DofJ") or any other governmental
authority in connection with the compliance with the requirements
of the HSR Act, or any other applicable law, if the Investor or
the Company, as applicable, in the exercise of its reasonable
discretion, deems such request or requirement unduly burdensome.
Without limiting the generality of the foregoing, neither party
shall not be obligated to comply with any request by, or any
requirement of, the FTC, the DofJ or any other governmental
authority: (i) to disclose information such party deems it in
its best interests to keep confidential; (ii) to dispose of any
assets or operations; or (iii) to comply with any proposed
restriction on the manner in which it conducts its operations.
In the event such party shall receive a second request in respect
of its HSR Filing determined by it to be unduly burdensome and it
shall prove unable to negotiate a means satisfactory to such
party for
<PAGE> 38
complying with such burdensome second request, or the Federal
Trade Commission or Department of Justice shall impose any
condition on such party or its Affiliates in respect thereof
deemed unacceptable by such party, then the Company and the
Investor shall in good faith enter into negotiations regarding an
alternative transaction that provides the Investor with the
economic benefits it would receive if it exercised the Warrants
or the warrant issued in connection with the Business Agreement.
(o) Rights Plan. Without limiting the generality of
Section 12(j), in the event that the Investor desires to take any
action permitted by this Agreement or the Warrants, and such
action would trigger or activate any provision under any existing
or future shareholder rights plan of the Company (including any
successor plan or other plan or mechanism adopted by the Company
that has the effect or purpose of discouraging an acquisition of
all or any portion of the Company, whether by means of a merger,
tender offer, acquisition of assets or stock, or otherwise, a
"Rights Plan"), or would trigger or activate any provision of any
state or other antitakeover statute, the Company shall take all
actions necessary (including action by its Board of Directors) to
permit the Investor to take such permitted action without causing
any such trigger or activation.
(j) Stock Splits, Dividends and other Similar Events. The
provisions of this Agreement (including the number of shares of
Common Stock and other securities described herein) shall be
appropriately adjusted to reflect any stock split, stock
dividend, reorganization or other similar event that may occur
with respect to the Company after the date hereof.
[The balance of this page is intentionally left blank.]
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
PANJA INC. INTEL CORPORATION
By: /s/Joe Hardt By: /s/Arvind Sodhani
Name: Joe Hardt Name: Arvind Sodhani
Vice President
Title: Pres. & CEO Title: and Treasurer
Date Signed: 12/13/99 Date Signed:
Address: Address:
11995 Forrestgate Drive 2200 Mission College Boulevard
Dallas, Texas 95243 Santa Clara, California 95052
Attn: Joe Hardt Attn: M&A Portfolio Manager
M/S RN6-46
Telephone No: (972) 644-3048 Telephone No: (408) 765-1240
Facsimile No: (972) 907-2053 Facsimile No: (408) 765-6038
with copies to: with copies to:
Munsch, Hardt, Kopf & Harr, Intel Corporation
P.C. 2200 Mission College Boulevard
Attn: A. Michael Hainsfurther Santa Clara, California 95052
4000 Fountain Place Attention: General Counsel
1445 Ross Avenue Fax Number: (408) 765-1859
Dallas, Texas 75202
Telephone No.: (214) 855-7567
Facsimile No.: (214) 855-7584
and
Gibson, Dunn & Crutcher LLP
Attention: Lawrence Calof
1530 Page Mill Road
Palo Alto, California 94304
Telephone No.: (650) 849-5331
Facsimile No.: (650) 849-5333
{Signature page to Securities Purchase and Investor Rights
Agreement }
<PAGE>
EXHIBIT A
Attached as Exhibit 2 to Item 7 of the Schedule 13D
<PAGE>
EXHIBIT B
Attached as Exhibit 3 to Item 7 of the Schedule 13D
<PAGE>
EXHIBIT C
Matters to be covered by opinion of counsel, subject to customary
limitations and qualifications.
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Texas. The Company has all requisite corporate power and
authority to own or lease its properties and assets and to
conduct its business as it currently conducted.
2. The Company has all requisite corporate power and
authority to execute and deliver the Securities Purchase
Agreement and the Warrants, to sell and issue the Purchased
Shares and the Warrants, to the Investor and to otherwise carry
out and perform its obligations under the terms of the Securities
Purchase Agreement and the Warrants. The Securities Purchase
Agreement and the Warrants have been duly and validly authorized,
executed and delivered by the Company, and each constitutes a
valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
3. Based in part on the representations and warranties of
Investor in the Securities Purchase Agreement, the offer and sale
of the Purchased Shares and the Warrants are exempt from the
registration provisions of the Securities Act of 1933, as
amended.
4. All corporate actions necessary on the part of the
Company for the sale and the issuance of the Purchased Shares and
the Warrants to the Investor and the execution and delivery of
the Purchase Agreement and the Warrants and the performance of
the Company's obligations thereunder have been taken. The
Purchased Shares and the Warrant Shares, when issued and paid for
as provided in the Purchase Agreement and the Warrants, will be
validly issues, fully paid and nonassessable.
5. The Company is not in violation of any term of its
Articles of Incorporation or Bylaws. To such counsel's
knowledge, neither the execution, delivery and performance of the
Purchase Agreement nor the issuance of the Purchased Shares and
the Warrants will result in any such violation or constitute a
default under or breach of (i) the provision of any judgment,
writ, decree or order applicable to, or binding upon, the Company
or (ii) any law, rule or regulation applicable to the Company.
6. Except for the listing of the Purchased Shares and the
Warrant Shares on Nasdaq and post-closing filings with the SEC
(or any actions to be taken under Section 7(b) of the Securities
Purchase Agreement or to be taken under the HSR Act), no consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority on the part of the
Company is required for the execution and delivery of the
Securities Purchase Agreement and the Warrants and the sale and
issuance of the Purchased Shares and the Warrants.
<PAGE>
EXHIBIT 2
EQUITY WARRANT
<PAGE>
EQUITY WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF
COMMON STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER
THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH
SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION
RULE 144.
WARRANT TO PURCHASE COMMON STOCK OF PANJA INC.
(Subject to Adjustment)
No. 001 December 15, 1999
THIS CERTIFIES THAT, for value received, Intel Corporation, or
its permitted registered assigns ("Holder"), is entitled, subject
to the terms and conditions of this Warrant, at any time or from
time to time after the date hereof (the "Effective Date"), and
before 5:00 p.m. Pacific Time on the fifth anniversary of the
Effective Date (the "Expiration Date"), to purchase from Panja
Inc., a Texas corporation (the "Company"), two hundred thirty-
eight thousand fifty seven (238,057) shares of Common Stock of
the Company at a price per share of $21.54 (the "Purchase
Price"). Both the number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price are subject
to adjustment and change as provided herein.
1. Certain Definitions. As used in this Warrant the
following terms shall have the following respective meanings:
1.1. "Fair Market Value" of a share of Common Stock as of a
particular date shall mean:
(a) If traded on a securities exchange or the Nasdaq
National Market, the Fair Market Value shall be deemed to be
the average of the closing prices of the Common Stock of the
Company on such exchange or market over the five (5) trading
days ending immediately prior to the applicable date of
valuation;
(b) If actively traded over-the-counter, the Fair
Market Value shall be deemed to be the average of the
closing bid prices over the thirty (30)-day period ending
immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair
Market Value shall be the value thereof, as agreed upon by
the Company and the Holder; provided,
<PAGE> 2
however, that if the Company and the Holder cannot agree on
such value, such value shall be determined by an independent
valuation firm experienced in valuing businesses such as the
Company and jointly selected in good faith by the Company
and the Holder. Fees and expenses of the valuation firm
shall be paid for by the Company.
1.2. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.3. "Registered Holder" shall mean any Holder in whose name
this Warrant is registered upon the books and records maintained
by the Company.
1.4. "Warrant" as used herein, shall include this Warrant
and any warrant delivered in substitution or exchange therefor as
provided herein.
1.5. "Common Stock" shall mean the Common Stock of the
Company and any other securities at any time receivable or
issuable upon exercise of this Warrant.
2. Exercise of Warrant.
2.1. Payment. Subject to compliance with the terms and
conditions of this Warrant and applicable securities laws, this
Warrant may be exercised, in whole or in part at any time or from
time to time, on or before the Expiration Date by the delivery
(including, without limitation, delivery by facsimile) of the
form of Notice of Exercise attached hereto as Exhibit 1 (the
"Notice of Exercise"), duly executed by the Holder, at the
principal office of the Company, and as soon as practicable after
such date, surrendering
(a) this Warrant at the principal office of the
Company, and
(b) payment, (i) in cash (by check) or by wire
transfer, (ii) by cancellation by the Holder of indebtedness
of the Company to the Holder; or (iii) by a combination of
(i) and (ii), of an amount equal to the product obtained by
multiplying the number of shares of Common Stock being
purchased upon such exercise by the then effective Purchase
Price (the "Exercise Amount"), except that if Holder is
subject to HSR Act Restrictions (as defined in Section 2.5
below), the Exercise Amount shall be paid to the Company
within five (5) business days of the termination of all HSR
Act Restrictions.
2.2. Net Issue Exercise. In lieu of the payment methods set
forth in Section 2.1(b) above, the Holder may elect to exchange
all or some of this Warrant for shares of Common Stock equal to
the value of the amount of the Warrant being exchanged on the
date of exchange. If Holder elects to exchange this Warrant as
provided in this Section 2.2, Holder shall tender to the Company
the Warrant for the amount being exchanged, along with written
notice of Holder's election to exchange some or all of the
Warrant, and the Company shall issue to Holder the number of
shares of the Common Stock computed using the following formula:
<PAGE> 3
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued
to Holder.
Y = the number of shares of Common Stock purchasable
under the amount of the Warrant being exchanged
(as adjusted to the date of such calculation).
A = the Fair Market Value of one share of the Common
Stock.
B = Purchase Price (as adjusted to the date of such
calculation).
2.3. "Easy Sale" Exercise. In lieu of the payment methods
set forth in Section 2.1(b) above, when permitted by law and
applicable regulations (including Nasdaq and NASD rules), the
Holder may pay the Exercise Amount through a "same day sale"
commitment from the Holder (and if applicable a broker-dealer
that is a member of the National Association of Securities
Dealers (a "NASD Dealer")), whereby the Holder irrevocably elects
to exercise this Warrant and to sell at least that number of
Shares so purchased to pay the Exercise Amount (and up to all of
the Shares so purchased) and the Holder (or, if applicable, the
NASD Dealer) commits upon sale (or, in the case of the NASD
Dealer, upon receipt) of such Shares to forward the Exercise
Amount directly to the Company, with any sale proceeds in excess
of the Exercise Amount being for the benefit of the Holder.
2.4. Stock Certificates; Fractional Shares. As soon as
practicable on or after the date of any exercise of this Warrant,
the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for
the number of whole shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share
equal to such fraction of the current Fair Market Value of one
whole share of Common Stock as of such date of exercise. No
fractional shares or scrip representing fractional shares shall
be issued upon an exercise of this Warrant.
2.5. HSR Act. The Company hereby acknowledges that exercise
of this Warrant by Holder may subject the Company and/or the
Holder to the filing requirements of the HSR Act and that Holder
may be prevented from exercising this Warrant until the
expiration or early termination of all waiting periods imposed by
the HSR Act ("HSR Act Restrictions"). If on or before the
Expiration Date Holder has sent the Notice of Exercise to Company
and Holder has not been able to complete the exercise of this
Warrant prior to the Expiration Date because of HSR Act
Restrictions, the Holder shall be entitled to complete the
process of exercising this Warrant for a period of 10 business
days following termination of the HSR Act Restrictions, in
accordance with the procedures contained herein notwithstanding
the fact that completion of the exercise of this Warrant would
take place after the Expiration Date.
2.6. Partial Exercise; Effective Date of Exercise. In case
of any partial exercise of this Warrant, the Company shall cancel
this Warrant upon surrender hereof
<PAGE> 4
and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Common Stock purchasable
hereunder. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its
surrender for exercise as provided above. However, if Holder is
subject to HSR Act filing requirements this Warrant shall be
deemed to have been exercised on the date immediately following
the date of the expiration of all HSR Act Restrictions. The
person entitled to receive the shares of Common Stock issuable
upon exercise of this Warrant shall be treated for all purposes
as the holder of record of such shares as of the close of
business on the date the Holder is deemed to have exercised this
Warrant.
3. Valid Issuance: Taxes. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued,
fully paid and non-assessable, and the Company shall pay all
taxes and other governmental charges that may be imposed in
respect of the issue or delivery thereof. The Company shall not
be required to pay any tax or other charge imposed in connection
with any transfer involved in the issuance of any certificate for
shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company
shall not be required to issue or deliver any stock certificate
or security until such tax or other charge has been paid, or it
has been established to the Company's reasonable satisfaction
that no tax or other charge is due.
4. Adjustment of Purchase Price and Number of Shares. The
number of shares of Common Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities or property
receivable or issuable upon exercise of this Warrant) and the
Purchase Price are subject to adjustment upon occurrence of the
following events:
4.1. Adjustment for Stock Splits, Stock Subdivisions or
Combinations of Shares. The Purchase Price of this Warrant shall
be proportionally decreased and the number of shares of Common
Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any
stock split or subdivision of the Company's Common Stock. The
Purchase Price of this Warrant shall be proportionally increased
and the number of shares of Common Stock issuable upon exercise
of this Warrant (or any shares of stock or other securities at
the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the
Company's Common Stock.
4.2. Adjustment for Dividends or Distributions of Stock or
Other Securities or Property. In case the Company shall make or
issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other
distribution with respect to the Common Stock (or any shares of
stock or other securities at the time issuable upon exercise of
the Warrant) payable in (a) securities of the Company or (b)
assets (excluding cash dividends paid or payable solely out of
retained earnings), then, in each such case, the Holder of this
Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common
Stock (or such other stock or securities) issuable on such
exercise prior to such date, and without the payment of
additional
<PAGE> 5
consideration therefor, the securities or such other assets of
the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date
hereof and had thereafter, during the period from the date hereof
to and including the date of such exercise, retained such shares
and all such additional securities or other assets distributed
with respect to such shares as aforesaid during such period
giving effect to all adjustments as provided in this Warrant.
4.3. Reclassification. If the Company, by reclassification
of securities or otherwise, shall change any of the securities as
to which purchase rights under this Warrant exist into the same
or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this
Warrant immediately prior to such reclassification or other
change, and the Purchase Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this
Warrant.
4.4 Adjustment for Capital Reorganization, Merger or
Consolidation. In case of any capital reorganization of the
capital stock of the Company (other than a combination,
reclassification, exchange or subdivision of shares otherwise
provided for herein), or any merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each
such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made
so that the Holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Purchase Price then in
effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further
adjustment as provided in this Warrant. The foregoing provisions
of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and
to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the
per-share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than
cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the Holder
after the transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
4.5. Conversion of Common Stock. In case all of the
authorized and outstanding shares of Common Stock of the Company
are redeemed or converted or reclassified into other securities
or property pursuant to the Company's Articles of Incorporation
or otherwise, or the Common Stock otherwise ceases to exist,
then, in such
<PAGE> 6
case, the Holder of this Warrant, upon exercise hereof at any
time after the date on which the Common Stock is so redeemed or
converted, reclassified or ceases to exist (the "Termination
Date"), shall receive, in lieu of the number of shares of Common
Stock that would have been issuable upon such exercise
immediately prior to the Termination Date, the securities or
property that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had
been simultaneously converted immediately prior to the
Termination Date, all subject to further adjustment as provided
in this Warrant. Additionally, the Purchase Price shall be
immediately adjusted to equal the quotient obtained by dividing
(x) the aggregate Purchase Price of the maximum number of shares
of Common Stock for which this Warrant was exercisable
immediately prior to the Termination Date by (y) the number of
shares of Common Stock of the Company for which this Warrant is
exercisable immediately after the Termination Date, all subject
to further adjustment as provided herein.
5. Certificate as to Adjustments. In each case of any
adjustment in the Purchase Price, or number or type of shares
issuable upon exercise of this Warrant, the Chief Financial
Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based,
including a statement of the adjusted Purchase Price. The
Company shall promptly send (by facsimile and by either first
class mail, postage prepaid or overnight delivery) a copy of each
such certificate to the Holder.
6. Loss or Mutilation. Upon receipt of evidence
reasonably satisfactory to the Company of the ownership of and
the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to it, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of
like tenor as the lost, stolen, destroyed or mutilated Warrant.
7. Reservation of Common Stock. Subject to Section 4.5,
the Company hereby covenants that at all times there shall be
reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital
stock of the Company as are from time to time issuable upon
exercise of this Warrant and, from time to time, will take all
steps necessary to amend its Articles of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon
exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly
issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights,
except encumbrances or restrictions arising under federal or
state securities laws. Issuance of this Warrant shall constitute
full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the
exercise of this Warrant.
8. Transfer and Exchange. Subject to the terms and
conditions of this Warrant and compliance with all applicable
securities laws, this Warrant and all rights
<PAGE> 7
hereunder may be transferred, in whole or in part, on the books
of the Company maintained for such purpose at the principal
office of the Company referred to above, by the Registered Holder
hereof in person, or by duly authorized attorney, upon surrender
of this Warrant properly endorsed and upon payment of any
necessary transfer tax or other governmental charge imposed upon
such transfer. Upon any permitted partial transfer, the Company
will issue and deliver to the Registered Holder a new Warrant or
Warrants with respect to the shares of Common Stock not so
transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that when this Warrant
shall have been so endorsed, the person in possession of this
Warrant may be treated by the Company, 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 hereby, any notice to the contrary notwithstanding;
provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the
Registered Holder hereof as the owner for all purposes.
9. Restrictions on Transfer. The Holder, by acceptance
hereof, agrees that, absent an effective registration statement
filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act covering the disposition or sale of this
Warrant or the Common Stock issued or issuable upon exercise
hereof, as the case may be, and registration or qualification
under applicable state securities laws, such Holder will not
sell, transfer, pledge, or hypothecate any or all of such Warrant
or such Common Stock, as the case may be, unless either (i) the
Company has received an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that such
registration is not required in connection with such disposition
or (ii) the sale of such securities is made pursuant to SEC Rule
144.
10. Compliance With Securities Laws. By acceptance of this
Warrant, the Holder hereby represents, warrants and covenants
that any shares of stock purchased upon exercise of this Warrant
shall be acquired for investment only and not with a view to, or
for sale in connection with, any distribution thereof; that the
Holder has had such opportunity as such Holder has deemed
adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the
merits and risks of its investment in the Company; that the
Holder is able to bear the economic risk of holding such shares
as may be acquired pursuant to the exercise of this Warrant for
an indefinite period; that the Holder understands that the shares
of stock acquired pursuant to the exercise of this Warrant will
not be registered under the 1933 Act (unless otherwise required
pursuant to exercise by the Holder of the registration rights, if
any, granted to the Registered Holder) and will be "restricted
securities" within the meaning of Rule 144 under the 1933 Act and
that the exemption from registration under Rule 144 will not be
available for at least one (1) year from the date of exercise of
this Warrant, subject to any special treatment by the SEC for
exercise of this Warrant pursuant to Section 2.2, and even then
will not be available unless a public market then exists for the
stock, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule
144 are complied with; and that all stock certificates
representing shares of stock issued to the Holder upon exercise
of this Warrant or upon conversion of such shares may have
affixed thereto a legend substantially in the following form:
<PAGE> 8
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
11. No Rights or Liabilities as Stockholders. This Warrant
shall not entitle the Holder to any voting rights or other rights
as a stockholder of the Company. In the absence of affirmative
action by such Holder to purchase Common Stock by exercise of
this Warrant, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of the Holder hereof shall
cause such Holder hereof to be a stockholder of the Company for
any purpose.
12. Registration Rights. All shares of Common Stock
issuable upon exercise of this Warrant shall be "Registrable
Securities" or such other definition of securities entitled to
registration rights pursuant to the Securities Purchase and
Investor Rights Agreement between the initial Holder of this
Warrant and the Company (the "Securities Purchase Agreement").
13. Notices. Except as may be otherwise provided herein,
all notices, requests, waivers and other communications made
pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand
delivered to the other party; (b) when received when sent by
facsimile at the address and number set forth below; (c) three
business days after deposit in the U.S. mail with first class or
certified mail receipt requested postage prepaid and addressed to
the other party as set forth below; or (d) the next business day
after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-
business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service
provider.
<PAGE> 9
To Holder: To the Company:
Intel Corporation Panja Inc.
2200 Mission College Blvd. 11995 Forrestgate Drive
Santa Clara, CA 95052 Dallas, Texas 95243
Attn: M&A Portfolio Manager Attn: Joe Hardt
Fax Number: (408) 765-6038 Fax Number: (972) 907-2053
With copies to: With copies to:
Intel Corporation Munsch, Hardt, Kopf & Harr,
2200 Mission College Blvd. P.C.
Santa Clara, CA 95052 4000 Fountain Place
Attn: General Counsel 1445 Ross Avenue
Fax Number: (408) 765-1859 Dallas, Texas 75202
Attn: A. Michael Hainsfurther
Facsimile No.: (214) 855-7584
Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such
communication was addressed each communication made by it by
facsimile pursuant hereto but the absence of such confirmation
shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 13 by giving
the other party written notice of the new address in the manner
set forth above.
14. Headings. The headings in this Warrant are for
purposes of convenience in reference only, and shall not be
deemed to constitute a part hereof.
15. Law Governing. This Warrant shall be construed and
enforced in accordance with, and governed by, the laws of the
State of Delaware.
16. No Impairment. The Company will not, by amendment of
its Articles of Incorporation or bylaws, or through
reorganization, consolidation, merger, dissolution, issue or sale
of securities, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder of this Warrant
against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any
shares of stock issuable upon the exercise of this Warrant above
the amount payable therefor upon such exercise, and (b) will take
all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-
assessable shares of Common Stock upon exercise of this Warrant.
<PAGE> 10
17. Notices of Record Date. In case:
17.1. the Company shall take a record of the holders of
its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant), for the purpose of
entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of any
class or any other securities or to receive any other right; or
17.2. of any consolidation or merger of the Company with
or into another corporation, any capital reorganization of the
Company, any reclassification of the Capital Stock of the
Company, or any conveyance of all or substantially all of the
assets of the Company to another corporation in which holders of
the Company's stock are to receive stock, securities or property
of another corporation; or
17.3. of any voluntary dissolution, liquidation or
winding-up of the Company; or
17.4. of any redemption or conversion of all outstanding
Common Stock;
then, and in each such case, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice
specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or
right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation, winding-up, redemption or conversion is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock or (such stock or securities as
at the time are receivable upon the exercise of this Warrant),
shall be entitled to exchange their shares of Common Stock (or
such other stock or securities), for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be delivered at least thirty (30)
days prior to the date therein specified.
18. Severability. If any term, provision, covenant or
restriction of this Warrant is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Warrant shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
19. Counterparts. For the convenience of the parties, any
number of counterparts of this Warrant may be executed by the
parties hereto and each such executed counterpart shall be, and
shall be deemed to be, an original instrument.
20. Non-Contravention. The execution, delivery and
performance of this Warrant by the Company on and after the date
of this Warrant, and the consummation by the Company of the
transactions contemplated by this Warrant (including issuance of
the Common Stock hereunder), do not and will not: (i) contravene
or conflict with the Articles of Incorporation or Bylaws of the
Company; (ii) constitute a violation of any provision of any
federal, state, local or foreign law binding upon or applicable
to the Company; or (iii) constitute a default or require any
consent under, give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to
which the Company is entitled under, or result in the creation or
imposition
<PAGE> 11
of any lien, claim or encumbrance on any assets of the Company
under, any contract to which the Company is a party or any
permit, license or similar right relating to the Company or by
which the Company may be bound or affected.
21. Saturdays, Sundays and Holidays. If the Expiration
Date falls on a Saturday, Sunday or legal holiday, the Expiration
Date shall automatically be extended until 5:00 p.m. the next
business day.
22. Confidentiality. The existence and terms of this
Agreement shall be deemed to be Confidential Information as such
term is defined in Section 7(c) of the Securities Purchase
Agreement and any disclosure of the existence or terms of this
Agreement shall be governed by the provisions of Section 7(c) of
the Securities Purchase Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this
Warrant as of the Effective Date.
INTEL CORPORATION PANJA INC
/s/Arvind Sodhani /s/Joe Hardt
By By
Arvind Sodhani Joe Hardt
Printed Name Printed Name
Vice President and Treasurer Pres. & CEO
Title Title
[SIGNATURE PAGE TO PANJA INC. EQUITY WARRANT]
<PAGE> 13
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
PANJA INC.
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant Certificate for,
and to purchase thereunder, the securities PANJA INC., as
provided for therein, and (check the applicable box):
[] tenders herewith payment of the exercise price in full in
the form of cash or a certified or official bank check in
same-day funds in the amount of $____________ for _________
such securities.
[] Elects the Net Issue Exercise or Easy Sale Exercise option
pursuant to Section 2.2 or 2.3 of the Warrant, and
accordingly requests delivery of a net of ______________ of
such securities.
Please issue a certificate or certificates for such securities in
the name of, and pay any cash for any fractional share to (please
print name, address and social security number):
Name: ----------------------------------------------------
Address: ----------------------------------------------------
Signature: ----------------------------------------------------
Note: The above signature should correspond exactly with the
name on the first page of this Warrant Certificate or with the
name of the assignee appearing in the assignment form below.
If said number of shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the shares purchasable thereunder rounded up to the
next higher whole number of shares.
<PAGE> 14
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns and transfers unto
____________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect
to the number of Warrants set forth below, with full power of
substitution in the premises:
Name(s) of Assignee(s) Address # of Warrants
- ---------------------- ------------------ ------------------
- ---------------------- ------------------ ------------------
- ---------------------- ------------------ ------------------
And if said number of Warrants shall not be all the Warrants
represented by the Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the Warrants registered by said Warrant Certificate.
Dated: ----------------------------------------------------
Signature: ----------------------------------------------------
Notice: The signature to the foregoing Assignment must
correspond to the name as written upon the face of this security
in every particular, without alteration or any change whatsoever;
signature(s) must be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations
and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Securities and Exchange
Commission Rule 17Ad-15.
<PAGE>
EXHIBIT 3
BUSINESS WARRANT
<PAGE>
BUSINESS WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF
COMMON STOCK ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER
THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH
SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION
RULE 144.
WARRANT TO PURCHASE COMMON STOCK OF PANJA INC.
(Subject to Adjustment)
NO. 002 December 15, 1999
THIS CERTIFIES THAT, for value received, Intel Corporation, or
its permitted registered assigns ("Holder"), is entitled, subject
to the terms and conditions of this Warrant, at any time or from
time to time after the date hereof (the "Effective Date"), and
before 5:00 p.m. Pacific Time on the fifth anniversary of the
Effective Date (the "Expiration Date"), to purchase, subject to
the vesting provisions of Section 2.7 hereof, from Panja Inc., a
Texas corporation (the "Company"), seventy-nine thousand three
hundred fifty two (79,352) shares of Common Stock of the Company
at a price per share of $21.54 (the "Purchase Price"). Both the
number of shares of Common Stock purchasable upon exercise of
this Warrant and the Purchase Price are subject to adjustment and
change as provided herein.
1. Certain Definitions. As used in this Warrant the
following terms shall have the following respective meanings:
1.1. "Fair Market Value" of a share of Common Stock as of a
particular date shall mean:
(a) If traded on a securities exchange or the Nasdaq
National Market, the Fair Market Value shall be deemed to be
the average of the closing prices of the Common Stock of the
Company on such exchange or market over the five (5) trading
days ending immediately prior to the applicable date of
valuation;
(b) If actively traded over-the-counter, the Fair
Market Value shall be deemed to be the average of the
closing bid prices over the thirty (30)-day period ending
immediately prior to the applicable date of valuation; and
<PAGE> 2
(c) If there is no active public market, the Fair
Market Value shall be the value thereof, as agreed upon by
the Company and the Holder; provided, however, that if the
Company and the Holder cannot agree on such value, such
value shall be determined by an independent valuation firm
experienced in valuing businesses such as the Company and
jointly selected in good faith by the Company and the
Holder. Fees and expenses of the valuation firm shall be
paid for by the Company.
1.2. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.3. "Registered Holder" shall mean any Holder in whose name
this Warrant is registered upon the books and records maintained
by the Company.
1.4. "Warrant" as used herein, shall include this Warrant
and any warrant delivered in substitution or exchange therefor as
provided herein.
1.5. "Common Stock" shall mean the Common Stock of the
Company and any other securities at any time receivable or
issuable upon exercise of this Warrant.
2. Exercise of Warrant.
2.1. Payment. Subject to compliance with the terms and
conditions of this Warrant and applicable securities laws, this
Warrant may be exercised, in whole or in part at any time or from
time to time, on or before the Expiration Date by the delivery
(including, without limitation, delivery by facsimile) of the
form of Notice of Exercise attached hereto as Exhibit 1 (the
"Notice of Exercise"), duly executed by the Holder, at the
principal office of the Company, and as soon as practicable after
such date, surrendering
(a) this Warrant at the principal office of the
Company, and
(b) payment, (i) in cash (by check) or by wire
transfer, (ii) by cancellation by the Holder of indebtedness
of the Company to the Holder; or (iii) by a combination of
(i) and (ii), of an amount equal to the product obtained by
multiplying the number of shares of Common Stock being
purchased upon such exercise by the then effective Purchase
Price (the "Exercise Amount"), except that if Holder is
subject to HSR Act Restrictions (as defined in Section 2.5
below), the Exercise Amount shall be paid to the Company
within five (5) business days of the termination of all HSR
Act Restrictions.
2.2. Net Issue Exercise. In lieu of the payment methods set
forth in Section 2.1(b) above, the Holder may elect to exchange
all or some of this Warrant for shares of Common Stock equal to
the value of the amount of the Warrant being exchanged on the
date of exchange. If Holder elects to exchange this Warrant as
provided in this Section 2.2, Holder shall tender to the Company
the Warrant for the amount being exchanged, along with written
notice of Holder's election to exchange some or all of the
Warrant, and
<PAGE> 3
the Company shall issue to Holder the number of shares of the
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 Holder.
Y = the number of shares of Common Stock purchasable
under the amount of the Warrant being exchanged
(as adjusted to the date of such calculation).
A = the Fair Market Value of one share of the Common
Stock.
B = Purchase Price (as adjusted to the date of such
calculation).
2.3. "Easy Sale" Exercise. In lieu of the payment methods
set forth in Section 2.1(b) above, when permitted by law and
applicable regulations (including Nasdaq and NASD rules), the
Holder may pay the Exercise Amount through a "same day sale"
commitment from the Holder (and if applicable a broker-dealer
that is a member of the National Association of Securities
Dealers (a "NASD Dealer")), whereby the Holder irrevocably elects
to exercise this Warrant and to sell at least that number of
Shares so purchased to pay the Exercise Amount (and up to all of
the Shares so purchased) and the Holder (or, if applicable, the
NASD Dealer) commits upon sale (or, in the case of the NASD
Dealer, upon receipt) of such Shares to forward the Exercise
Amount directly to the Company, with any sale proceeds in excess
of the Exercise Amount being for the benefit of the Holder.
2.4. Stock Certificates; Fractional Shares. As soon as
practicable on or after the date of any exercise of this Warrant,
the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for
the number of whole shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share
equal to such fraction of the current Fair Market Value of one
whole share of Common Stock as of such date of exercise. No
fractional shares or scrip representing fractional shares shall
be issued upon an exercise of this Warrant.
2.5. HSR Act. The Company hereby acknowledges that exercise
of this Warrant by Holder may subject the Company and/or the
Holder to the filing requirements of the HSR Act and that Holder
may be prevented from exercising this Warrant until the
expiration or early termination of all waiting periods imposed by
the HSR Act ("HSR Act Restrictions"). If on or before the
Expiration Date Holder has sent the Notice of Exercise to Company
and Holder has not been able to complete the exercise of this
Warrant prior to the Expiration Date because of HSR Act
Restrictions, the Holder shall be entitled to complete the
process of exercising this Warrant for a period of 10 business
days following termination of the HSR Act Restrictions, in
accordance with the procedures
<PAGE> 4
contained herein notwithstanding the fact that completion of the
exercise of this Warrant would take place after the Expiration
Date.
2.6. Partial Exercise; Effective Date of Exercise. In case
of any partial exercise of this Warrant, the Company shall cancel
this Warrant upon surrender hereof and shall execute and deliver
a new Warrant of like tenor and date for the balance of the
shares of Common Stock purchasable hereunder. This Warrant shall
be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided
above. However, if Holder is subject to HSR Act filing
requirements this Warrant shall be deemed to have been exercised
on the date immediately following the date of the expiration of
all HSR Act Restrictions. The person entitled to receive the
shares of Common Stock issuable upon exercise of this Warrant
shall be treated for all purposes as the holder of record of such
shares as of the close of business on the date the Holder is
deemed to have exercised this Warrant.
2.7. Vesting. This Warrant is subject to the following
vesting provisions:
(a) This Warrant shall immediately and fully vest and
become exercisable for all shares of Warrant Stock upon the
commencement by Intel of its marketing of the Company's
Panja technology to Intel customers pursuant to section 3.2
of the Cooperation Agreement, dated the date hereof, between
the Company and Intel ("Cooperation Agreement").
(b) Notwithstanding Sections 2.7(a), this Warrant
shall immediately and fully vest and become exercisable for
all shares of Warrant Stock immediately (i) prior to any
Corporate Event" (as defined below) or (ii) upon the
termination by the Company of the Cooperation Agreement
(other than a termination upon mutual agreement of Intel and
the Company, a termination by the Company upon material
breach by Intel or the expiration of such Agreement
according to its terms).
(c) For purposes of this section 2.7, a "Corporate
Event" shall mean any of the following, whether accomplished
through one or a series of related transactions: (A) any
transaction, other than an issuance of securities in
connection with the acquisition of an unaffiliated third
party in an arms length transaction, that results in a
greater than fifty percent (50%) change in the total
outstanding number of voting securities (which, for purposes
of this Warrant, shall mean all securities of the Company
that presently are, or would be upon conversion, exchange or
exercise, entitled to vote in the election of directors) of
the Company immediately prior to such issuance (other than
any such change solely as a result of a stock split, stock
dividend or other recapitalization affecting holders of
Common Stock and other classes of voting securities of the
Company on a pro rata basis); (B) an acquisition of the
Company by consolidation, merger (regardless of whether the
Company is the survivor of such merger or not), share
purchase or exchange or other reorganization or transaction
in which the holders of the Company's outstanding voting
securities immediately prior to such event own, immediately
after such event, securities representing less than a
majority of the voting power of the Company or the person or
entity issuing such securities or surviving such event, as
the case may be; (C) the acquisition of all or substantially
all the assets of the Company; and (D) any transaction or
series of related transactions that results in the failure
of the majority of the members of the Company's Board of
Directors (the "Board") immediately prior to the closing of
such transaction or series of
<PAGE> 5
related transactions failing to constitute a majority of the
Board (or its successor) immediately following such
transaction or series of related transactions.
(d) Any Vesting Event may be waived by the mutual
agreement of the Company and Intel. Upon such waiver, if
the parties so agree, the Vesting Event shall be deemed
substantially complete and the appropriate number of shares
of Warrant Stock shall immediately vest and become
exercisable. Any Deadline may be extended by the mutual
agreement of the Company and Intel.
3. Valid Issuance: Taxes. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued,
fully paid and non-assessable, and the Company shall pay all
taxes and other governmental charges that may be imposed in
respect of the issue or delivery thereof. The Company shall not
be required to pay any tax or other charge imposed in connection
with any transfer involved in the issuance of any certificate for
shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company
shall not be required to issue or deliver any stock certificate
or security until such tax or other charge has been paid, or it
has been established to the Company's reasonable satisfaction
that no tax or other charge is due.
4. Adjustment of Purchase Price and Number of Shares. The
number of shares of Common Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities or property
receivable or issuable upon exercise of this Warrant) and the
Purchase Price are subject to adjustment upon occurrence of the
following events:
4.1. Adjustment for Stock Splits, Stock Subdivisions or
Combinations of Shares. The Purchase Price of this Warrant shall
be proportionally decreased and the number of shares of Common
Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities at the time issuable upon exercise of
this Warrant) shall be proportionally increased to reflect any
stock split or subdivision of the Company's Common Stock. The
Purchase Price of this Warrant shall be proportionally increased
and the number of shares of Common Stock issuable upon exercise
of this Warrant (or any shares of stock or other securities at
the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the
Company's Common Stock.
4.2. Adjustment for Dividends or Distributions of Stock or
Other Securities or Property. In case the Company shall make or
issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other
distribution with respect to the Common Stock (or any shares of
stock or other securities at the time issuable upon exercise of
the Warrant) payable in (a) securities of the Company or (b)
assets (excluding cash dividends paid or payable solely out of
retained earnings), then, in each such case, the Holder of this
Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common
Stock (or such other stock or securities) issuable on such
exercise prior to such date, and without the payment of
additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been
entitled upon such date if such Holder had exercised this
<PAGE> 6
Warrant on the date hereof and had thereafter, during the period
from the date hereof to and including the date of such exercise,
retained such shares and all such additional securities or other
assets distributed with respect to such shares as aforesaid
during such period giving effect to all adjustments as provided
in this Warrant.
4.3. Reclassification. If the Company, by reclassification
of securities or otherwise, shall change any of the securities as
to which purchase rights under this Warrant exist into the same
or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this
Warrant immediately prior to such reclassification or other
change, and the Purchase Price therefor shall be appropriately
adjusted, all subject to further adjustment as provided in this
Warrant.
4.4 Adjustment for Capital Reorganization, Merger or
Consolidation. In case of any capital reorganization of the
capital stock of the Company (other than a combination,
reclassification, exchange or subdivision of shares otherwise
provided for herein), or any merger or consolidation of the
Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each
such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made
so that the Holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Purchase Price then in
effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further
adjustment as provided in this Warrant. The foregoing provisions
of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and
to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the
per-share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than
cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the Holder
after the transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
4.5. Conversion of Common Stock. In case all of the
authorized and outstanding shares of Common Stock of the Company
are redeemed or converted or reclassified into other securities
or property pursuant to the Company's Articles of Incorporation
or otherwise, or the Common Stock otherwise ceases to exist,
then, in such case, the Holder of this Warrant, upon exercise
hereof at any time after the date on which the Common Stock is so
redeemed or converted, reclassified or ceases to exist (the
<PAGE> 7
"Termination Date"), shall receive, in lieu of the number of
shares of Common Stock that would have been issuable upon such
exercise immediately prior to the Termination Date, the
securities or property that would have been received if this
Warrant had been exercised in full and the Common Stock received
thereupon had been simultaneously converted immediately prior to
the Termination Date, all subject to further adjustment as
provided in this Warrant. Additionally, the Purchase Price shall
be immediately adjusted to equal the quotient obtained by
dividing (x) the aggregate Purchase Price of the maximum number
of shares of Common Stock for which this Warrant was exercisable
immediately prior to the Termination Date by (y) the number of
shares of Common Stock of the Company for which this Warrant is
exercisable immediately after the Termination Date, all subject
to further adjustment as provided herein.
5. Certificate as to Adjustments. In each case of any
adjustment in the Purchase Price, or number or type of shares
issuable upon exercise of this Warrant, the Chief Financial
Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based,
including a statement of the adjusted Purchase Price. The
Company shall promptly send (by facsimile and by either first
class mail, postage prepaid or overnight delivery) a copy of each
such certificate to the Holder.
6. Loss or Mutilation. Upon receipt of evidence
reasonably satisfactory to the Company of the ownership of and
the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to it, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of
like tenor as the lost, stolen, destroyed or mutilated Warrant.
7. Reservation of Common Stock. Subject to Section 4.5,
the Company hereby covenants that at all times there shall be
reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital
stock of the Company as are from time to time issuable upon
exercise of this Warrant and, from time to time, will take all
steps necessary to amend its Articles of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon
exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly
issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or
restrictions on sale and free and clear of all preemptive rights,
except encumbrances or restrictions arising under federal or
state securities laws. Issuance of this Warrant shall constitute
full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the
exercise of this Warrant.
8. Transfer and Exchange. Subject to the terms and
conditions of this Warrant and compliance with all applicable
securities laws, this Warrant and all rights hereunder may be
transferred, in whole or in part, on the books of the Company
maintained for such purpose at the principal office of the
Company referred to above, by
<PAGE> 8
the Registered Holder hereof in person, or by duly authorized
attorney, upon surrender of this Warrant properly endorsed and
upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial
transfer, the Company will issue and deliver to the Registered
Holder a new Warrant or Warrants with respect to the shares of
Common Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that
when this Warrant shall have been so endorsed, the person in
possession of this Warrant may be treated by the Company, 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 hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this
Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for
all purposes.
9. Restrictions on Transfer. The Holder, by acceptance
hereof, agrees that, absent an effective registration statement
filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act covering the disposition or sale of this
Warrant or the Common Stock issued or issuable upon exercise
hereof, as the case may be, and registration or qualification
under applicable state securities laws, such Holder will not
sell, transfer, pledge, or hypothecate any or all of such Warrant
or such Common Stock, as the case may be, unless either (i) the
Company has received an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that such
registration is not required in connection with such disposition
or (ii) the sale of such securities is made pursuant to SEC Rule
144.
10. Compliance With Securities Laws. By acceptance of this
Warrant, the Holder hereby represents, warrants and covenants
that any shares of stock purchased upon exercise of this Warrant
shall be acquired for investment only and not with a view to, or
for sale in connection with, any distribution thereof; that the
Holder has had such opportunity as such Holder has deemed
adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the
merits and risks of its investment in the Company; that the
Holder is able to bear the economic risk of holding such shares
as may be acquired pursuant to the exercise of this Warrant for
an indefinite period; that the Holder understands that the shares
of stock acquired pursuant to the exercise of this Warrant will
not be registered under the 1933 Act (unless otherwise required
pursuant to exercise by the Holder of the registration rights, if
any, granted to the Registered Holder) and will be "restricted
securities" within the meaning of Rule 144 under the 1933 Act and
that the exemption from registration under Rule 144 will not be
available for at least one (1) year from the date of exercise of
this Warrant, subject to any special treatment by the SEC for
exercise of this Warrant pursuant to Section 2.2, and even then
will not be available unless a public market then exists for the
stock, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule
144 are complied with; and that all stock certificates
representing shares of stock issued to the Holder upon exercise
of this Warrant or upon conversion of such shares may have
affixed thereto a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
<PAGE> 9
(THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
11. No Rights or Liabilities as Stockholders. This Warrant
shall not entitle the Holder to any voting rights or other rights
as a stockholder of the Company. In the absence of affirmative
action by such Holder to purchase Common Stock by exercise of
this Warrant, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of the Holder hereof shall
cause such Holder hereof to be a stockholder of the Company for
any purpose.
12. Registration Rights. All shares of Common Stock
issuable upon exercise of this Warrant shall be "Registrable
Securities" or such other definition of securities entitled to
registration rights pursuant to the Securities Purchase and
Investor Rights Agreement between the initial Holder of this
Warrant and the Company (the "Securities Purchase Agreement").
13. Notices. Except as may be otherwise provided herein,
all notices, requests, waivers and other communications made
pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand
delivered to the other party; (b) when received when sent by
facsimile at the address and number set forth below; (c) three
business days after deposit in the U.S. mail with first class or
certified mail receipt requested postage prepaid and addressed to
the other party as set forth below; or (d) the next business day
after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-
business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service
provider.
<PAGE> 10
To Holder: To the Company:
Intel Corporation Panja Inc.
2200 Mission College Blvd. 11995 Forrestgate Drive
Santa Clara, CA 95052 Dallas, Texas 95243
Attn: M&A Portfolio Manager Attn: Joe Hardt
Fax Number: (408) 765-6038 Fax Number: (972) 907-2053
With copies to: With copies to:
Intel Corporation Munsch, Hardt, Kopf & Harr,
2200 Mission College Blvd. P.C.
Santa Clara, CA 95052 4000 Fountain Place
Attn: General Counsel 1445 Ross Avenue
Fax Number: (408) 765-1859 Dallas, Texas 75202
Attn: A. Michael Hainsfurther
Facsimile No.: (214) 855-7584
Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such
communication was addressed each communication made by it by
facsimile pursuant hereto but the absence of such confirmation
shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate
additional addresses, for purposes of this Section 13 by giving
the other party written notice of the new address in the manner
set forth above.
14. Headings. The headings in this Warrant are for
purposes of convenience in reference only, and shall not be
deemed to constitute a part hereof.
15. Law Governing. This Warrant shall be construed and
enforced in accordance with, and governed by, the laws of the
State of Delaware.
16. No Impairment. The Company will not, by amendment of
its Articles of Incorporation or bylaws, or through
reorganization, consolidation, merger, dissolution, issue or sale
of securities, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder of this Warrant
against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any
shares of stock issuable upon the exercise of this Warrant above
the amount payable therefor upon such exercise, and (b) will take
all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-
assessable shares of Common Stock upon exercise of this Warrant.
<PAGE> 11
17. Notices of Record Date. In case:
17.1. the Company shall take a record of the holders of
its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant), for the purpose of
entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of any
class or any other securities or to receive any other right; or
17.2. of any consolidation or merger of the Company with
or into another corporation, any capital reorganization of the
Company, any reclassification of the Capital Stock of the
Company, or any conveyance of all or substantially all of the
assets of the Company to another corporation in which holders of
the Company's stock are to receive stock, securities or property
of another corporation; or
17.3. of any voluntary dissolution, liquidation or
winding-up of the Company; or
17.4. of any redemption or conversion of all outstanding
Common Stock;
then, and in each such case, the Company will mail or cause to be
mailed to the Registered Holder of this Warrant a notice
specifying, as the case may be, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or
right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation, winding-up, redemption or conversion is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock or (such stock or securities as
at the time are receivable upon the exercise of this Warrant),
shall be entitled to exchange their shares of Common Stock (or
such other stock or securities), for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be delivered at least thirty (30)
days prior to the date therein specified.
18. Severability. If any term, provision, covenant or
restriction of this Warrant is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Warrant shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
19. Counterparts. For the convenience of the parties, any
number of counterparts of this Warrant may be executed by the
parties hereto and each such executed counterpart shall be, and
shall be deemed to be, an original instrument.
20. Non-Contravention. The execution, delivery and
performance of this Warrant by the Company on and after the date
of this Warrant, and the consummation by the Company of the
transactions contemplated by this Warrant (including issuance of
the Common Stock hereunder), do not and will not: (i) contravene
or conflict with the Articles of Incorporation or Bylaws of the
Company; (ii) constitute a violation of any provision of any
federal, state, local or foreign law binding upon or applicable
to the Company; or (iii) constitute a default or require any
consent under, give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to
which the Company is entitled under, or result in the creation or
imposition
<PAGE> 12
of any lien, claim or encumbrance on any assets of the Company
under, any contract to which the Company is a party or any
permit, license or similar right relating to the Company or by
which the Company may be bound or affected.
21. Saturdays, Sundays and Holidays. If the Expiration
Date falls on a Saturday, Sunday or legal holiday, the Expiration
Date shall automatically be extended until 5:00 p.m. the next
business day.
22. Confidentiality. The existence and terms of this
Agreement shall be deemed to be Confidential Information as such
term is defined in Section 7(c) of the Securities Purchase
Agreement and any disclosure of the existence or terms of this
Agreement shall be governed by the provisions of Section 7(c) of
the Securities Purchase Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this
Warrant as of the Effective Date.
INTEL CORPORATION PANJA INC
/s/Arvind Sodhani /s/Joe Hardt
By By
Arvind Sodhani Joe Hardt
Printed Name Printed Name
Vice President and Treasurer Pres. & CEO
Title Title
[SIGNATURE PAGE TO PANJA INC. BUSINESS WARRANT]
<PAGE> 14
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
PANJA INC.
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant Certificate for,
and to purchase thereunder, the securities PANJA INC., as
provided for therein, and (check the applicable box):
[] tenders herewith payment of the exercise price in full in
the form of cash or a certified or official bank check in
same-day funds in the amount of $____________ for _________
such securities.
[] Elects the Net Issue Exercise or Easy Sale Exercise option
pursuant to Section 2.2 or 2.3 of the Warrant, and
accordingly requests delivery of a net of ______________ of
such securities.
Please issue a certificate or certificates for such securities in
the name of, and pay any cash for any fractional share to (please
print name, address and social security number):
Name: ----------------------------------------------------
Address: ----------------------------------------------------
Signature: ----------------------------------------------------
Note: The above signature should correspond exactly with the
name on the first page of this Warrant Certificate or with the
name of the assignee appearing in the assignment form below.
If said number of shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the shares purchasable thereunder rounded up to the
next higher whole number of shares.
<PAGE> 15
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns and transfers unto
____________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect
to the number of Warrants set forth below, with full power of
substitution in the premises:
Name(s) of Assignee(s) Address # of Warrants
- ---------------------- ------------------ ------------------
- ---------------------- ------------------ ------------------
- ---------------------- ------------------ ------------------
And if said number of Warrants shall not be all the Warrants
represented by the Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the Warrants registered by said Warrant Certificate.
Dated: ----------------------------------------------------
Signature: ----------------------------------------------------
Notice: The signature to the foregoing Assignment must
correspond to the name as written upon the face of this security
in every particular, without alteration or any change whatsoever;
signature(s) must be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations
and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Securities and Exchange
Commission Rule 17Ad-15.
