SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
INFORMATION TO BE INCLUDED IN STATEEMENTS FILED PURSUANT
TO RULE 13d-1(A) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(1)
(Amendment No. 1)
PICTURETEL CORPORATION
-------------------------
(Name of Issuer)
Common Stock
-------------------------
(Title of Class of Securities)
720035302
-------------------------
(CUSIP Number)
F. Thomas Dunlap, Jr.
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)
July 13, 2000
-------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box[ ].
Check the following box if a fee is being paid with this
statement [ ].
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 (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.
Page 1 of 73
The Exhibit Index is on page 13.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 2 of 73 Pages
1. NAME OF REPORTING PERSON Intel
Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE 94-1672743
PERSON
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a) [ ]
GROUP (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
NUMBER OF 7. SOLE VOTING POWER 8,278,708(1)
SHARES
BENEFICIALLY 8. SHARED VOTING POWER N/A
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 8,278,708
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER N/A
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 8,278,708
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW
(11) 15.3%
14. TYPE OF REPORTING PERSON CO
--------------------------
(1) The Reporting Person owns 4,478,708 shares of Series A
Preference Stock and 3,800,000 shares of Series B Preference
Stock. The Series A Preference Stock and Series B Preference
Stock do not have voting rights but are convertible into shares
of Common Stock on a one-for-one basis.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 3 of 73 Pages
Item 1. Security and Issuer.
------ -------------------
(a) Name and Address of Principal Executive Offices
of Issuer:
----------------------------------------------
PictureTel Corporation
100 Minuteman Road
Andover, Massachusetts 01810
(b) Title and Class of Equity Securities:
------------------------------------
Series A Preference Stock (such Series A
Preference Stock is convertible into shares of
PictureTel Corporation's Common Stock).
Series B Preference Stock (such Series B
Preference Stock will be convertible into
shares of PictureTel Corporation's Common Stock
after October 13, 2000).
Item 2. Identity and Background.
------ -----------------------
(a) Name of Person Filing: Intel Corporation (the
"Reporting Person")
(b) Principal Business: Manufacturer of
microcomputer components, modules and systems
(c) Address of Principal Business and Principal
Office:
---------------------------------------------
2200 Mission College Boulevard
Santa Clara, CA 95052-8119
(d) Criminal Proceedings:
--------------------
During the last five years neither the
Reporting Person nor any 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 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 would have
been 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.
(f) Place of Organization: Delaware
---------------------
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 4 of 73 Pages
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
Series B Shares (as defined in Item 4) will be
derived from the Reporting Person's working
capital
(b) Amount of Funds: The Reporting Person will pay
Nine Million, Five Hundred Thousand Dollars
($9,500,000) to acquire the Series B Shares (as
defined in Item 4).
Item 4. Purpose of the Transaction.
------ --------------------------
As previously reported, on February 17, 1999, pursuant
to a Stock Purchase and Investor Rights Agreement,
dated January 18, 1999, between the Reporting Person
and the Issuer (the "Series A Purchase Agreement"),
the Reporting Person purchased from Issuer the number
of shares of Issuer's Series A Preference Stock (the
"Series A Shares") equal to Thirty Million, Five
Hundred Thousand Dollars ($30,500,000), divided by a
per share purchase price equal to the lower of (i) Six
Dollars and Eighty-One Cents ($6.81), or (ii) the
average of the closing prices of one share of Issuer's
Common Stock on the Nasdaq National Market during the
five trading day period ending on the second trading
day immediately preceding the closing of the purchase
of the Series A Shares.
On July 13, 2000, the Reporting Person, the issuer and
certain other persons entered into a Stock Purchase
and Investors Rights Agreement (the "Series B Purchase
Agreement"), pursuant to which the Reporting Person
and other purchasers agreed to purchase from the
Issuer, and the Issuer agreed to sell, an aggregate of
8,738,000 shares of the Issuer's Series B Preference
Stock at an aggregate purchase price of $21,845,000.
Under the Series B Purchase Agreement, the Reporting
Person will purchase 3,800,000 of shares of Issuer's
Series B Preference Stock (the "Series B Shares").
The closing of the transaction, which is subject to
customary closing conditions, is expected to occur on
or around July 24, 2000.
The Reporting Person will hold the Series A Shares and
the Series B Shares as an investment. Depending on
the Reporting Person's evaluation of market
conditions, market price, alternative investment
opportunities, liquidity needs and other factors, the
Reporting Person will from time to time explore
opportunities for liquidating all or a portion of the
Series A Shares and the Series B Shares (or the shares
of Common Stock into which the Series A Shares and
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 5 of 73 Pages
the Series B Shares are convertible), through one or
more sales pursuant to public or private offerings or
otherwise. In such event, the Reporting Person may
determine to retain some portion of the Series A
Shares and the Series B Shares (or such underlying
shares of Common Stock) as an investment.
Item 5. Interests in Securities of the Issuer.
------ -------------------------------------
The information contained in Item 4 is incorporated
herein by this reference.
(a) Number of Shares Beneficially Owned: 8,278,708
Right to Acquire: 8,278,708
Percent of Class: 15.3%
(b) Sole Power to Vote, Direct the Vote of, or
Dispose of Shares: 8,278,708
(c) Recent Transactions: See Item 4.
(d) Rights with Respect to Dividends or Sales
Proceeds: N/A
(e) Date of Cessation of Five Percent Beneficial
Ownership: N/A
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the
Issuer.
------ ----------------------------------------------------
Pursuant to the Series A Purchase Agreement and the
Series B Purchase Agreement (each as defined in Item
4), the Reporting Person has, under certain
circumstances, various rights related to: (a)
registration of the Series A Shares, Series B Shares
and the Common Stock issuable upon conversion or
exchange of the Series A Shares and Series B Shares
pursuant to certain shelf, demand and piggyback
registration rights granted to the Reporting Person;
(b) a representative of the Reporting Person observing
board of director and committee meetings of the Issuer
in a non-voting capacity; (c) certain rights of
consent, notification and negotiation in connection
with certain sales of securities, acquisitions, asset
sales, grants of licenses and other corporate events
of the Issuer or any of its significant subsidiaries;
and (d) the participation in future issuances of
securities by the Issuer and the maintenance of the
Reporting Person's percentage ownership of the Issuer.
Pursuant to a Letter Agreement, dated January 18,
1999, between the Issuer and the Reporting Person, the
Issuer has certain rights of notification and
negotiation in connection with certain proposed sales
by the Reporting Person of the Shares or Common Stock
issuable upon conversion of the Shares.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 6 of 73 Pages
Item 7. Material to Be Filed as Exhibits.
------ --------------------------------
Exhibit 1 PictureTel Corporation Stock Purchase and
Investor Rights Agreement, dated
January 18, 1999.*
Exhibit 2 Press Releases of PictureTel Corporation
and Intel Corporation, dated January 19
and 20, 1999.*
Exhibit 3 Letter Agreement, dated January 18, 1999,
between Intel Corporation and PictureTel
Corporation.*
Exhibit 4 PictureTel Corporation Stock Purchase and
Investors Rights Agreement, dated July 13,
2000.
Exhibit 5 Press Release of PictureTel Corporation,
Intel Corporation and the State of
Wisconsin Investment Board, dated July 13,
2000.
*Previously filed
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 7 of 73 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 July 20, 2000
INTEL CORPORATION
By: /s/F. Thomas Dunlap, Jr.
------------------------
F. Thomas Dunlap, Jr.
Vice President, General
Counsel and Secretary
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 8 of 73 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 Intel Corporation, 2200 Mission College
Address: Boulevard, Santa Clara, 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 BP Amoco p.l.c., an integrated oil company.
business and Britannic House, 1 Finsbury Circus
address of London EC2M 7BA
corporation or
other
organization in
which employment
is conducted:
Citizenship: British
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 9 of 73 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 Intel Corporation, 2200 Mission College
Address: Boulevard, Santa Clara, 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 The Arbor Company, 1340 Arbor Road, Menlo
Address: Park, CA 94025
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. 720035302 Schedule 13D Page 10 of 73 Pages
Name: Gordon E. Moore
Business Intel Corporation, 2200 Mission College
Address: Boulevard, Santa Clara, 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 The Charles Schwab Corporation, 101 Montgomery
Address: Street, San Francisco, CA 94104
Principal President and Co-Chief Executive Officer
Occupation:
Name, principal The Charles Schwab Corporation, a financial
business and services provider
address of 101 Montgomery Street
corporation or San Francisco, CA 94104
other
organization in
which employment
is conducted:
Name: Jane E. Shaw
Business AeroGen, Inc., 1310 Orleans Drive, Sunnyvale,
Address: CA 94089
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. 720035302 Schedule 13D Page 11 of 73 Pages
Name: Leslie L. Vadasz
Business Intel Corporation, 2200 Mission College
Address: Boulevard, Santa Clara, CA 95052
Principal Executive Vice President; President, Intel
Occupation: Capital
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 Park 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 Morgan Hall 215,Soldiers Field Park Road
corporation or Boston, MA 02163
other
organization in
which employment
is conducted:
Name: Charles E. Young
Business University of Florida, 226 Tigert Hall, P.O.
Address: Box 113150, Gainesville, FL 32610
Principal Interim President of the University of Florida
Occupation:
Name, principal University of Florida
business and 226 Tigert Hall
address of P.O. Box 113150
corporation or Gainesville, FL 32610
other
organization in
which employment
is conducted:
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 12 of 73 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. All
executive officers are United States citizens except as indicated
below.
Name: Paul S. Otellini
Title: Executive Vice President; General Manager, Intel
Architecture Group
Name: Gerhard H. Parker
Title: Executive Vice President; General Manager, New
Business Group
Name: Andy D. Bryant
Title: Senior Vice President, Chief Financial and
Enterprise Services Officer
Name: Sean M. Maloney
Title: Senior Vice President, Director, Sales and
Marketing Group
Citizenship: British
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, Intel
Architecture Group
Name: F. Thomas Dunlap, Jr.
Title: Vice President, General Counsel and Secretary
Name: Arvind Sodhani
Title: Vice President, Treasurer
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 13 of 73 Pages
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Document Page
----------- ------------------------------------ ------------
Exhibit 1 PictureTel Corporation Stock Purchase
and Investor Rights Agreement, dated
January 18, 1999.*
Exhibit 2 Press Releases of PictureTel
Corporation and Intel Corporation,
dated January 19 and 20, 1999.*
Exhibit 3 Letter Agreement, dated January 18,
1999, between Intel Corporation and
PictureTel Corporation.*
Exhibit 4 PictureTel Corporation Stock Purchase
and Investors Rights Agreement, dated 14
July 13, 2000.
Exhibit 5 Press Release of PictureTel
Corporation, Intel Corporation and 71
the State of Wisconsin Investment
Board, dated July 13, 2000.
*Previously filed
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 14 of 73 Pages
EXHIBIT 1
STOCK PURCHASE AND INVESTOR RIGHTS AGREEMENT
(dated July 13, 2000)
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 15 of 73 Pages
PICTURETEL CORPORATION
STOCK PURCHASE AND INVESTOR RIGHTS AGREEMENT
This Stock Purchase and Investor Rights Agreement (this
"Agreement") is made and entered into as of July 13, 2000, by and
between PictureTel Corporation, a Delaware corporation (the
"Company"), Intel Corporation, a Delaware corporation ("Intel"),
the State of Wisconsin Investment Board ("SWIB"), and the persons
listed on Schedule 1 attached hereto (each such person, and
Intel, being referred to herein individually as an "Investor" and
collectively as the "Investors").
RECITALS
WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase from the Company, shares of Series B
Preference Stock, par value $.01 per share, of the Company (the
"Series B Preference Stock"), on the terms and conditions set
forth in this Agreement; and
WHEREAS, such Series B Preference Stock will be convertible into
shares of the Common Stock, par value $.01 per share, of the
Company (the "Common Stock").
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 STOCK.
(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 shares of Series B
Preference Stock, having the rights, preferences, privileges and
restrictions set forth in the Certificate of Designations,
Preferences and Other Rights of Series B Preference Stock in the
form attached hereto as Exhibit A (the "Certificate of
Designations") and in an amount equal to the number of Purchased
Shares (as defined in Section 1(b)), and shall further reserve
for issuance upon conversion of the Series B Preference Stock the
number of shares of Common Stock issuable upon the conversion of
the Purchased Shares.
(b) Agreement to Purchase and Sell Securities. The Company
hereby agrees to issue to the Investors at the Closing (as
defined below), and the Investors hereby agree to acquire from
the Company at the Closing, the number of shares of Series B
Preference Stock (collectively, the "Purchased Shares") equal to
Twenty-One Million Eight Hundred Forty-Five Thousand Dollars
($21,845,000) (the "Purchase Price") divided by the Per Share
Purchase Price (as defined below), rounded up to the nearest
whole share. As used in this Agreement, "Per Share Purchase
Price" equals Two Dollars and Fifty Cents ($2.50). The
allocation of the Purchase Price among the Investors is set forth
opposite such Investor's name on Schedule 1 attached hereto. At
the Closing, each Investor shall receive the number of Purchased
Shares equal to the Purchase Price set forth opposite such
Investor's name on Schedule 1 attached hereto divided by the Per
Share Purchase Price.
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CUSIP No. 720035302 Schedule 13D Page 16 of 73 Pages
(c) 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.
2. CLOSING. The purchase and sale of the Purchased Shares
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 Investors
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 Investors certificates representing the Purchased
Shares against delivery to the Company by the Investors 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 Investors that the
statements in this Section 3 are true and correct, except as set
forth in the Disclosure Letter (as defined in Section 7(a)(ii)):
(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 Delaware and has all
corporate power and authority required to (a) carry on its
business as presently conducted, and (b) enter into this
Agreement 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 applicable party 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
will consist, immediately prior to the issuance of shares of the
Series B Preference Stock under this Agreement, only of (i)
Eighty Million (80,000,000) shares of Common Stock, of which
40,966,647 shares were issued and outstanding as of July 1, 2000;
and (ii) Fifteen Million (15,000,000) shares of Preference Stock,
of which 800,000 are designated Junior Preference Stock reserved
for issuance under the Rights Agreement dated as of March 25,
1992 (the "Rights Agreement") between the Company and The First
National Bank of Boston as Rights Agent, none of which is issued
and outstanding on the date hereof, 4,500,000 are designated
Series A Preference Stock, of which 4,478,708 shares are issued
and outstanding as of the date hereof and 9,000,000 are
designated Series B Preference Stock, of which no shares are
issued and outstanding on the date hereof. All such shares of
Common Stock, Series A Preference Stock, Series B Preference
Stock and Junior Preference Stock have been duly authorized, and
all such issued and outstanding shares of Common Stock and Series
A Preference 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 17 of 73 Pages
holders thereof. As of the date hereof, the Company has also
reserved (i) 4,478,708 shares of Common Stock for issuance upon
conversion of the outstanding Series A Preference Stock, (ii)
8,738,000 shares of Common Stock for issuance upon conversion of
the Series B Preference Stock to be purchased hereunder, and
(iii) 9,344,829 shares of Common Stock for issuance upon exercise
of options or other stock awards granted to officers, directors,
employees or independent contractors or affiliates of the Company
under the Company's 1984 Stock Option Plan, the Art Fatum Stock
Option Plan, the Cathy O'Rourke Stock Option Plan, the Lewis
Jaffe Stock Option Plan, the Robert Byrnes Stock Option Plan, the
1994 Employee Purchase Plan, the 1999 International Stock
Purchase Plan, the Directors Stock Option Plan, the Equity
Incentive Plan, the 1999 Equity Plan, the MultiLink 1987 Stock
Option Plan, the MultiLink 1996 Stock Option Plan and the
Starlight Stock Option Plan (collectively, the "Plans"). 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. Except for
warrants to purchase 2,723 shares of Common Stock issued in
connection with the Company's acquisition of Starlight Networks,
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. The Company does
not have any subsidiaries, nor does the Company own any capital
stock, assets comprising the business of, obligations of, or any
other interest (including any equity or partnership interest) in,
or any outstanding loan or advance to or from, any person or
entity.
(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 authorization, issuance, reservation for
issuance and delivery of all of the Purchased Shares being sold
under this Agreement, and all Common Stock issuable upon
conversion of the Purchased Shares, have been or will be taken,
and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with their 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 shares of Series B Preference
Stock to be issued pursuant to this Agreement, and the shares of
Common Stock issuable upon conversion thereof, will be, upon
payment therefor by the Investors in accordance with this
Agreement, or conversion in accordance with the Certificate of
Designations, duly authorized, validly issued, fully paid and non-
assessable.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 18 of 73 Pages
(ii) Compliance with Securities Laws. Assuming the
correctness of the representations made by the Investors in
Section 4 hereof, the Purchased Shares will be issued to the
Investors in compliance with applicable exemptions from (A) the
registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Securities Act") and (B)
the registration and qualification requirements of all applicable
securities laws of the states of the United States.
(e) 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
to the Investors, or the consummation of the other transactions
contemplated by this Agreement, except for: (i) compliance with
the HSR Requirements (as defined below) that may be required for
the conversion of the Series B Preference Stock; (ii) the listing
of the Common Stock issuable upon conversion of the Series B
Preference Stock on the Nasdaq National Market, (iii) the
approval of the Company's application to Nasdaq pursuant to Rule
4460 of the NASD Marketplace Rules, and (iv) the filing of the
Certificate of Designations with the Secretary of State of the
State of Delaware. All such qualifications and filings will, in
the 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").
(f) Non-Contravention. The execution, delivery and
performance of this Agreement by the Company, and the
consummation by the Company of the transactions contemplated
hereby (including issuance of the Purchased Shares, and issuance
of shares of Common Stock upon conversion of the Purchased
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.
(g) Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation ("Action") pending or, to the
best of the Company's knowledge, threatened: (a) against the
Company, its 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 (b) that seeks to prevent,
enjoin, alter or delay the transactions contemplated by this
Agreement (including issuance of the Purchased Shares). The
Company is not 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 be material to the Company.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 19 of 73 Pages
(h) 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.
(i) SEC Documents.
(1) Reports. The Company has furnished to the
Investors prior to the date hereof a complete and correct list of
all registration statements, reports and proxy statements filed
by the Company with the SEC on or after March 31, 2000 (the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, its Quarterly Reports on Form 10-Q for the
fiscal quarter ended March 31, 2000 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 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.
(2) Financial Statements. The Company has provided
the Investors with copies of its audited financial statements
(the "Audited Financial Statements") for the fiscal year ended
December 31, 1999, and its unaudited financial statements for the
three?month period ended March 31, 2000 (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).
(j) 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 20 of 73 Pages
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;
(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.
(k) Invention Assignment and Confidentiality Agreement.
Each employee and consultant or independent contractor of the
Company whose duties include the development of products or
Intellectual Property (as defined below), and each former
employee and consultant or independent contractor whose duties
included the development of products or Intellectual Property,
has entered into and executed an invention assignment and
confidentiality agreement in customary form or an employment or
consulting agreement containing substantially similar terms.
(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) Licenses; Other Agreements. The Company is not
currently the licensee of any material portion of the
Intellectual Property of the Company. There are not outstanding
any licenses or agreements of any kind relating to any
Intellectual Property owned by the Company, except for agreements
with customers of the Company entered into in the ordinary course
of the Company's business and other licenses and agreements that,
collectively, are not material. The Company is not obligated to
pay any royalties or other payments to third parties with respect
to the marketing, sale, distribution, manufacture, license or use
of any Intellectual
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 21 of 73 Pages
Property, except as the Company may be so obligated in the
ordinary course of its business, as disclosed in the Company's
SEC Documents or where the aggregate amount of such payments
could not reasonably be expected to be material.
(iii) No Infringement. 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.
(iv) Employees and Consultants. To the best of the
Company's knowledge, no employee of or consultant to the Company
is in material default under any term of any material employment
contract, agreement or arrangement relating to Intellectual
Property of the Company or any material non-competition
arrangement, other contract or restrictive covenant relating to
the Intellectual Property of the Company. The Intellectual
Property of the Company (other than any Intellectual Property
duly acquired or licensed from third parties) was developed
entirely by the employees of or consultants to the Company during
the time they were employed or retained by the Company, and to
the best knowledge of the Company, at no time during conception
or reduction to practice of such Intellectual Property of the
Company were any such employees or consultants operating under
any grant from a government entity or agency or subject to any
employment agreement or invention assignment or non-disclosure
agreement or any other obligation with a third party that would
materially and adversely affect the Company's rights in the
Intellectual Property of the Company. Such Intellectual Property
of the Company does not, to the best knowledge of the Company,
include any invention or other intellectual property of such
employees or consultants made prior to the time such employees or
consultants were employed or retained by the Company nor any
intellectual property of any previous employer of such employees
or consultants nor the intellectual property of any other person
or entity.
(m) Registration Rights. Other than as set forth in that
certain Stock Purchase and Investor Rights Agreement dated as of
January 18, 1999 between the Company and Intel, the Company is
not currently subject to any agreement providing any person or
entity any rights (including piggyback registration rights) to
have any securities of the Company registered with the SEC or
registered or qualified with any other governmental authority.
(n) Title to Property and Assets. The properties and
assets of the Company are owned by the Company free and clear of
all mortgages, deeds of trust, liens, charges, encumbrances and
security interests except for statutory liens for the payment of
current taxes that are not yet delinquent and liens, encumbrances
and security interests that arise in the ordinary course of
business and do not in any material respect affect the properties
and assets of the Company. With respect to the property and
assets it leases, the Company is in compliance with such leases
in all material respects.
(o) Tax Matters. The Company has filed all material tax
returns required to be filed, which returns are true and correct
in all material respects, and the Company has paid in full all
taxes that have become due on or prior to the date hereof (and
will have paid when due all taxes that become due after the date
hereof and prior to the Closing), including penalties and
interest,
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 22 of 73 Pages
assessments, fees and other charges, other than those being
contested in good faith and/or those for which adequate reserves
have been provided for.
(p) 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.
(q) Finder's Fee. The Company neither is nor will be
obligated for any finder's or broker's fee or commission in
connection with this transaction.
(r) No Personal Interests. To the best of its knowledge,
no officer or employee of SWIB has or will receive, directly or
indirectly, a personal interest in the Company or its property or
anything of substantial economic value for his or her private
benefit from the Company, or anyone acting on its behalf, in
connection with the investment made pursuant to this Agreement.
(s) Enforcement and Civil Actions. None of the Company,
any of its affiliates, or any directors or officers of the
Company or any of its affiliates is or has been the subject of,
or a defendant in: (i) an enforcement action or prosecution (or
settlement in lieu thereof) brought by a governmental authority
relating to a violation of securities, tax, fiduciary or criminal
laws, or (ii) a civil action (or settlement in lieu thereof)
brought by investors in a common investment vehicle for violation
of duties owed to the investors. The Company will notify each
Investor within ten days in the event any such action or
prosecution is initiated during and period in which such Investor
holds any equity securities of the Company.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
INVESTOR. Each of the Investors, severally and not jointly,
hereby represents and warrants to the Company, and agrees that:
(a) Organization Good Standing and Qualification. If
applicable, the Investor is duly organized, validly existing and
in good standing under the laws of the state of its incorporation
or organization and has all corporate power and authority
required to carry on its business as presently conducted. If
applicable, the Investor 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. SWIB is an
independent agency of the State of Wisconsin.
(b) Authorization. The execution of this Agreement has
been duly authorized by all necessary corporate, agency or other
action on the part of the Investor. This Agreement constitutes
the Investor's legal, valid and binding obligation, enforceable
in accordance with its terms, except as may be limited by (a) (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. The
Investor has full corporate power and authority to enter into
this Agreement, except as rights to
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 23 of 73 Pages
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 Preference Shares by the
Investor.
(d) Non-Contravention. The execution, delivery and
performance of this Agreement by the Investor, and the
consummation by the Investor of the transactions contemplated
hereby, do not and will not (i) contravene or conflict with the
Investor's Certificate of Incorporation, Bylaws or Agreement of
Limited Partnership, as applicable, or with respect to SWIB,
SWIB's statutory charter; (ii) constitute a violation of any
provision of any federal, state, local or foreign law binding
upon or applicable to the Investor; or (iii) with respect to each
Investor other than SWIB, 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 Investor is entitled under, or result in the creation
or imposition of any lien, claim or encumbrance on any assets of
the Investor under, any contract to which the Investor is a party
or any permit, license or similar right relating to the Investor
or by which the Investor may be bound or affected.
(e) Litigation. There is no Action pending that seeks to
prevent, enjoin, alter or delay the transactions contemplated by
this Agreement.
(f) Purchase for Own Account. The Purchased 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
Investor also represents that it has not been formed for the
specific purpose of acquiring the Purchased Shares.
(g) Investment Experience. The Investor understands that
the purchase of the Purchased 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 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 and protecting
its own interests in connection with this investment.
(h) Accredited Investor Status. Except for the officers
and directors of the Company named on Schedule 2 attached hereto,
each Investor is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
(i) Restricted Securities. The Investor understands that
the Purchased 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 under the Securities Act and applicable regulations
thereunder such securities may be resold without
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 24 of 73 Pages
registration under the Securities Act only in certain limited
circumstances. 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.
(j) Legends. The Investor agrees that the certificates for
the Purchased Shares shall bear the following legend:
"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 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.
(k) Finder's Fee. Investor neither is nor will be
obligated for any finder's or broker's fee or commission in
connection with this transaction.
5. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT CLOSING.
The obligations of the Investors 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 of the Disclosure Letter (as defined in
Section 7(a)(ii) below) and on and as of the date of the Closing,
except as set forth in the Disclosure Letter, 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 to the Investors 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 Investors,
and the Investors shall have
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 25 of 73 Pages
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
Certificate of Incorporation certified as of a recent date by the
Secretary of State of Delaware as a complete and correct copy
thereof, (ii) a copy of the Certificate of Designations certified
as of a recent date by the Secretary of State of Delaware, (iii)
a copy of the Certificate of Decrease of the Series A Preference
Stock, in the form attached hereto as Exhibit A-1, certified as
of a recent date by the Secretary of State of Delaware, and (iv)
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 issuance of the Purchased Shares and the shares
of Common Stock issuable upon conversion of the Purchased Shares,
and the other matters contemplated hereby and thereby.
(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
Investors.
(iv) Stock Certificate. Each of the Investors shall
have received prior to funding stock certificates representing
the number of Purchased Shares purchased hereunder.
(e) Opinion of Company Counsel. The Investors will have
received an opinion on behalf of the Company, dated as of the
date of the Closing, from each of Ropes & Gray outside counsel to
the Company, in the form attached as Exhibit B, and the General
Counsel of the Company, in the form attached hereto as Exhibit C.
(f) No Material Adverse Effect. Between the date hereof
and the Closing, there shall not have occurred any Material
Adverse Effect to the Company.
(g) Nasdaq Requirements. All requirement of the Nasdaq
National Market in connection with the transactions contemplated
by this Agreement shall have been complied with by the Company.
The shares of Common Stock issuable upon conversion of the
Purchased Shares shall have been approved for quotation on the
Nasdaq National Market.
(h) Investor Satisfaction with Review of Disclosure Letter.
The Investors shall be satisfied, in the Investors discretion,
with their review of the contents of the Disclosure Letter (as
defined in Section 7(a)(ii)); provided, however, that the
Investors' willingness to proceed with the Closing shall not
affect the Company's liability for the breach by the Company of
any of its representations or warranties.
(i) 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 Investors in connection with the transactions
contemplated hereby.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 26 of 73 Pages
(j) Other Agreements.
(i) With respect solely to the obligations of Intel
hereunder, Intel or its affiliates and 1414c Inc. shall have
entered into an agreement regarding a multiyear hosting
commitment, access to market cameras and other provisions
mutually acceptable to Intel or its affiliates and 1414c Inc. In
addition, Intel or its affiliates shall have received the eMedia
application service for use internal to Intel or its affiliates
without charge for 24 months.
(ii) With respect solely to the obligations of Intel
hereunder, Bedrock and the Company shall have entered into an
agreement in which the Company extends to Bedrock a 36 month
commitment not to compete with any product whose predominant
function is a speakerphone.
(iii) Each Investor shall have received the number
of common shares of 1414c Inc., on a fully diluted basis, set
forth opposite such Investor's name on Schedule 1 attached
hereto.
(k) The aggregate amount of funds raised by the Company
pursuant to this Agreement shall be at least Twenty Million
Dollars ($20,000,000) but in no event greater than Twenty-Two
Million Dollars ($22,000,000). Members of the Company's Board of
Directors and senior managers of the Company shall have purchased
hereunder, in the aggregate, Series B Preference Stock with a
minimum value of Eight Hundred Thousand Dollars ($800,000).
(l) All of the Purchased Shares shall have been purchased
hereunder and the Company shall have received from each Investor
the full Purchase Price set forth opposite such Investor's name
on Schedule 1 attached hereto.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Investors 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 Investors 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 Investors 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 Investors 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 to the Investors pursuant to this Agreement
shall be exempt from the registration requirements of the
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 27 of 73 Pages
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.
(g) Other Actions. The Investors shall have executed such
certificates, agreements, instruments and other documents, and
taken such other actions as shall be customary or reasonably
requested by the Company in connection with the transactions
contemplated hereby.
7. COVENANTS OF THE PARTIES.
Except as otherwise set forth below, the Company and each of the
Investors, severally and not jointly, agree as follows:
(a) Review of the Company by the Investors; Disclosure
Letter.
(i) Review of Company. Between the date hereof and
the earlier of the termination of this Agreement in accordance
with its terms or the Closing Date, each Investor's authorized
agents (including its attorneys and accountants), at such
Investor's expense, shall have full authority to commence a
complete review of the Company, its assets, properties, business,
operations, prospects and condition (financial and otherwise),
including records of its counsel (except to the extent the
disclosure of any such information would likely result in loss of
attorney-client privilege with respect to such information). The
Company will cooperate fully with such examination and will make
full and complete disclosure to the Investors and their
representatives of all facts relating to the Company and its
assets, properties, liabilities, business, operations, prospects
and condition (financial or otherwise). The Company understands
that the purchase of the Purchased Shares by the Investors and
the other transactions contemplated by this Agreement are
expressly conditioned upon the Investors' satisfaction with the
results of the examination described in this Section 7(a)(i).
The Investors agree to use all reasonable efforts to complete
their review of the Company by the date hereof.
(ii) Disclosure Letter. On or prior to the date
hereof, the Company has delivered to each Investor a disclosure
letter (the "Disclosure Letter"), which sets forth exceptions, if
any, to the representations and warranties made by the Company in
Article 3 hereof. In any determination of whether any Investor
is entitled to indemnification for the breach of any
representations or warranties set forth in this Agreement, only
the Disclosure Letter shall be relevant, and the identification
of any matters on any drafts of the Disclosure Letter shall not
be introduced as evidence or otherwise used in any manner in
connection therewith.
(b) [This Section Intentionally Left Blank]
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 28 of 73 Pages
(c) Information Rights.
(i) Financial Information. The Company covenants and
agrees that, commencing on the Closing and continuing for so long
as an Investor holds any Purchased Shares, 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,
which shall include 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. 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 such balance sheets, statements of income and
statements of cash flows.
(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, which
shall include 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 (except, in the case
of any Form 10?Q, as may otherwise be permitted by Form 10-Q),
but all of which may be unaudited. 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 of such balance sheets,
statements of income and statements of cash flows.
(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.
(d) Registration Rights.
(i) Definitions. For purposes of this Section 7(d):
(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 of 1933, as amended, (the "Securities
Act"), and the declaration or ordering of effectiveness of such
registration statement.
(B) Registrable Securities. The term
"Registrable Securities" means: (x) the Purchased Shares and any
shares of Common Stock of the Company issued or issuable
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 29 of 73 Pages
upon conversion of the Purchased Shares; (y) any other shares of
Common Stock of the Company acquired by the Investors from the
Company after the date hereof; and (z) 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 Clauses (x) or (y). Notwithstanding the
foregoing, "Registrable Securities" shall exclude any Registrable
Securities sold by a person in a transaction in which rights
under this Section 7(d) 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.
(C) Registrable Securities Then Outstanding. The
number of shares of "Registrable Securities then outstanding"
shall mean the number of shares 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(d),
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(d) 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 the Company shall,
following the Closing, receive a written request from the Holders
of twenty-five percent (25%) of the Purchased Shares issued as of
the Closing, that the Company file a registration statement under
the Securities Act on Form S-3 or 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 could be sold under Rule 144 in a
single 90-day period) covering the registration of Registrable
Securities, 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 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 30 of 73 Pages
Securities Act pursuant to Section 7(d)(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(d)(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(d)(ii) to become effective prior to the first
anniversary of the Closing Date. If requested by such Holders,
upon the advice of the underwriters, if any, engaged by such
Holders, the Company shall register such Registrable Securities
on Form S?1 or any successor registration form.
(B) Underwriting. If the Holders initiating the
registration request under this Section 7(d)(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(d)(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 180 days
if required by such underwriters). Notwithstanding any other
provision of this Section 7(d)(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 then outstanding held 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 three (3) such
registration pursuant to this Section 7(d)(ii).
(D) Deferral. Notwithstanding the foregoing, if
the Company shall furnish to Holders requesting the filing of a
registration statement pursuant to this Section 7(d)(ii) a
certificate signed by the President or Chief Executive Officer of
the Company stating that in the good faith judgment of the
Company's Board of Directors, it would be materially detrimental
to the Company and its stockholders for such registration
statement to be filed, then the Company
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 31 of 73 Pages
shall have the right to defer such filing for a period of not
more than ninety (90) days after receipt of the request of the
initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month
period.
(E) Expenses. All expenses incurred in
connection with any registration pursuant to this Section
7(d)(ii), including all federal and "blue sky" registration,
filing and qualification fees, printer's and accounting fees, and
fees and disbursements of counsel 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(d)(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(d)(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(d)(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(d)(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(d)(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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 32 of 73 Pages
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 180 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 in 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 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), (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 then held 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), any other shares of Common Stock or
other securities of the Company. 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(d)(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(d)(iii) shall not be deemed to be a
demand registration as described in Section 7(d)(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).
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 33 of 73 Pages
(iv) Form S-3 Registration. If requested by an
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 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 ninety first (91st) day
following the Closing Date; provided, further, that in the event
Form S-3 is not available to the Company, the Company shall file
such other form as may be available if Holders who hold
Registrable Securities with a market value of at least One
Million Dollars ($1,000,000) deliver a written request to the
Company that the Company do so, where such market value is
determined as of the date of such written request. 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 ninety first (91st)
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
ninetieth (90th) 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(d)(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(d)(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) Deferral. Notwithstanding the foregoing, if
the Company shall furnish to Holders requesting the filing of a
registration statement pursuant to this Section 7(d)(iv), a
certificate signed by the President or Chief Executive Officer of
the Company stating that in the good faith judgment of the
Company's Board of Directors, it would be materially detrimental
to the Company and its stockholders for such registration
statement to be filed, then the Company shall have the right to
defer such filing for a period of not more than ninety (90) days
after receipt of the request of the initiating Holders; provided,
however, that the Company may not utilize this right more than
once in any twelve (12) month period, and the period of time
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 34 of 73 Pages
that the Company is obligated to maintain the effectiveness of
any registration statement under Clause (F) below shall be
extended for the length of any such period of deferral.
(E) Not Demand Registration. Form S-3
registrations shall not be deemed to be demand registrations as
described in Section 7(d)(ii) above.
(F) 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(d)(iv) until the earlier of: (a) the date on which all of the
Registrable Securities have been sold; and (b) the first
anniversary of the effective date of such registration statement;
provided, however, that unless all of the Registrable Securities
held by an Investor as of such first 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 such
Investor that such Investor may be deemed to be an "affiliate" of
the Company for purposes of the Securities Act, the date in this
Clause (b) shall be extended until such Investor advises the
Company that it no longer believes it may be deemed such an
"affiliate."
(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 in this Section
7(d), 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 35 of 73 Pages
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 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 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.
(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 and reasonably satisfactory to a
majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) 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
and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters
and to the Holders requesting registration of Registrable
Securities.
(vi) Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to Sections 7(d)(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(d)(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 Securities Exchange Act of 1934, as
amended, 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,
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 36 of 73 Pages
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;
(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 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.
(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
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; 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, 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 37 of 73 Pages
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 the percentage that the public offering price of
its Registrable Securities offered by and sold
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 38 of 73 Pages
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 11(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(d)(vii) shall survive until the
fifth 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(d) (other than pursuant to Section 7(d)(vii) hereof) with
respect to any Registrable Securities proposed to be sold by a
Holder in a registration pursuant to Section 7(d)(ii), (iii) or
(iv) upon the earlier to occur of (a) the date seven (7) years
after the Closing Date, and (b) such date that all shares of
Registrable Securities beneficially owned or subject to Rule 144
aggregation by such Holder may immediately be sold under Rule 144
(without regard to Rule 144(k)) during any 90-day period.
(ix) No Registration Rights to Third Parties. Without
the prior written consent of the Holders of at least 66 2/3% of
the Series B Preference Stock then outstanding, 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 pari
passu or superior to the rights granted under this Section 7(d).
(x) Suspension Provisions. Notwithstanding the
foregoing subsections of this Section 7(d), 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 Securities 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
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CUSIP No. 720035302 Schedule 13D Page 39 of 73 Pages
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 12 month period, (2) shall use its best
efforts to remedy, as promptly as practicable, but in any event
within thirty (30) 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(d) 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) The Company agrees (A) to file with the SEC a
registration statement covering the Series B Preference Stock and
underlying Common Stock within thirty (30) days after the Closing
Date; (B) to cause the effectiveness of such registration
statement covering the Series B Preference Stock and underlying
Common Stock within 120 days after the Closing Date, and to
notify each Investor of the effectiveness of such registration
statement promptly after such effectiveness; and (C) to use all
reasonable commercial efforts to cause such registration
statement to remain effective for one (1) year following the
initial effective date of such registration statement. If such
registration statement is not declared effective by the SEC
within 120 days after the Closing Date, the Company shall pay the
Liquidated Damages Amount (as defined below) to each Investor
each week until such registration statement is declared
effective. For purposes of the preceding sentence, "Liquidated
Damages Amount" means an amount equal to 0.25% of the Purchase
Price paid by Intel or SWIB, as the case may be.
(e) Obligations Regarding Confidential Information. The
terms and conditions of this Agreement and any agreements or
instruments related hereto (collectively, the "Financing Terms"),
including their existence, shall be considered confidential
information and shall not be disclosed by any party hereto to any
third party except in accordance with the provisions set forth in
this Agreement; provided, however, that the Financing Terms 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 Intel and SWIB.
(i) Press Releases, Etc. No announcement regarding
the Financing Terms in a press release, conference,
advertisement, announcement, professional or trade publication,
mass marketing materials or otherwise to the general public may
be made without the prior written consent of Intel and the prior
consent of SWIB. No announcement regarding Intel in a press
release, conference, advertisement, announcement, professional or
trade publication, mass
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CUSIP No. 720035302 Schedule 13D Page 40 of 73 Pages
marketing materials or otherwise to the general public may be
made without the prior written consent of Intel.
(ii) Permitted Disclosures. Notwithstanding the
foregoing, (a) any party may disclose any of the Financing Terms
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 subject to
appropriate nondisclosure obligations; (b) Intel may disclose its
investment in the Company and the Financing Terms 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 Intel; (c) SWIB may disclose its investment in
the Company and the Financing Terms 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 SWIB; (d) the Company may disclose in its
Exchange Act filings that each of SWIB and Intel is an investor
in the Company, provided that the final form of the disclosure is
approved in advance in writing by such party; and (e) SWIB may
disclose its investment or any of the Financing Terms pursuant to
the requirements of the Wisconsin Public Records Law. To the
extent required by the rules and regulations of the SEC, upon the
advice of counsel, the Company may file this Agreement as
exhibits to its Exchange Act reports; provided, however, that the
Company agrees to seek confidential treatment of any portions of
those documents requested by Intel or SWIB, and provided further
that the Company provides Intel and SWIB with drafts of
confidential treatment requests and redacted copies of the
agreements at least three (3) business days prior to the filing
thereof.
(iii) Legally Compelled Disclosure. In the event
that any party is requested or becomes legally compelled
(including, without limitation, pursuant to securities laws and
regulations) to disclose the existence of the Financing Terms in
contravention of these provisions, such party (the "Disclosing
Party") shall provide the other parties (the "Non-Disclosing
Parties") with prompt written notice of that fact so that the
appropriate party may seek (with the cooperation and reasonable
efforts of the other parties) a protective order, confidential
treatment or other appropriate remedy. In such event, the
Disclosing Party shall furnish only that portion of the
information which is legally required and shall exercise
reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded such information to the extent
reasonably requested by any Non?Disclosing Party.
(iv) Joint Press Release. Prior to the execution of
this Agreement, Intel, SWIB and the Company will agree on the
content of a joint press release announcing the existence of this
Agreement, which press release will be issued promptly following
the execution of this Agreement at a time mutually agreed upon by
the parties.
(v) Other Information. The provisions of this Section
7(e) 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 Intel (including
any exchanges of information with any the Investor board
observer) shall be governed by the terms of the Corporate Non-
Disclosure Agreement No. 2722411, dated October 7, 1998,
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 41 of 73 Pages
executed by the Company and the Investor, and any Confidential
Information Transmittal Records provided in connection therewith.
(f) [This Section Intentionally Left Blank]
(g) Rights of Participation.
(i) General. For so long as any Investor holds the
equivalent of at least fifty percent (50%) of the Purchased
Shares purchased by such Investor hereunder (where any shares of
Common Stock held by the Investor as a result of conversion of
the Purchased Shares shall be treated as if they had not been
converted for these purposes), such number to be proportionately
adjusted for stock splits, stock dividends and similar events,
such Investor and each other person or entity to whom rights
under this Section 7(g) 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 (where any shares of
Common Stock held as a result of conversion of Purchased Shares
shall be deemed for these purposes to still be Purchased
Shares)). The rights described in the preceding sentence, as
further described in this Clause (g), are referred to as the
"Right of Participation". Notwithstanding the foregoing, a
Participation Rights Holder shall not have the Right of
Participation with respect to any issuance of New Securities that
would result in less than a ten percent (10%) reduction in such
Participation Rights Holder's Pro Rata Share (where prior
issuances of New Securities in which the such Participation
Rights Holder was not entitled to participate are aggregated with
the issuance in question for purposes of such ten percent (10%)
calculation).
(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, Series B Preference 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.
(iii) New Securities. "New Securities" means any
Common Stock, Preference 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
Preference 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,
Preference Stock or other voting capital stock or security;
provided, however, that the term "New Securities" shall not
include:
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 42 of 73 Pages
(A) any shares of Common Stock (or options or
warrants therefor) issued to employees, officers, directors or
consultants of the Company pursuant to any stock purchase, stock
option, stock incentive and other employee benefit plans, and
agreements having similar purpose and effect, approved by the
Board or the Company's Compensation Committee;
(B) the Purchased Shares issued under this
Agreement;
(C) shares of Common Stock issued upon conversion
of any Purchased Shares;
(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; or
(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.
(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, (2) the number of shares of Common Stock converted
from Series B Preference Stock held by such Participant, (3) the
number of shares of other voting capital stock or security of the
Company held by such Participant, and (4) the number of shares of
Series B Preference Stock, 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
lower of (1) the sales price of the New Securities, and (2) the
average Market Price (as defined below) of such New Securities
over the ten (10) trading days immediately preceding the date on
which the Participation Rights Holder elects to purchase such New
Securities.
(vi) Alternative Purchase Price. At the Company's
election, if, in written opinion of the Company's independent
auditors, made available to each Participation Rights Holder upon
request, the effect of determining the purchase price after such
issuance pursuant to Clause (v) above would require the Company
to take a charge against earnings in accordance with GAAP, then
for purposes of this Section 7(g), the purchase price shall mean
the Market Price on the date the Participation Rights Holder
elects to purchase 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 Clause (g), the 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
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 43 of 73 Pages
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 Clause (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; provided, however, that any
Participation Rights Holders that have elected to exercise their
Right of Participation shall be entitled to exercise such right
with respect to any New Securities where such right has been
forfeited by such other Participation Rights Holder(s), and the
Company shall follow repeat the procedures set forth in this
Clause (g)(v) to ascertain whether the electing Participation
Rights Holders desire to purchase such other 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(g).
(h) Legal Fees. At the Closing, the Company agrees to pay
a flat fee of $15,000 to Intel and $15,000 to SWIB for their
expenses (whether external or internal) arising in connection
with the transactions contemplated by this Agreement.
(i) Covenant Not to Sue.
(A) For purposes of this Section 7(i), the following
definitions shall apply:
(1) "Assert" means to bring an action of any
nature before any legal, judicial, arbitration, administrative,
executive or other type of body or tribunal that has or claims to
have authority to adjudicate such action in whole or in part.
Examples of such body or tribunal include, without limitation,
United States State and Federal Courts, the United States
International Trade Commission and any foreign counterparts of
any of the foregoing.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 44 of 73 Pages
(2) "Chipset" means any single product consisting
of integrated circuit(s) one or more of which is designed to be
connected directly to an Intel microprocessor.
(3) "Company's Products" means all products
manufactured by or for Company other than (i) Chipsets, and (ii)
microprocessors that are hardware or software compatible with one
or more Intel microprocessors.
(4) "Intel's Products" means (i) all
microprocessors manufactured by or for Intel, (ii) all Chipsets
manufactured by or for Intel, and (iii) all products manufactured
by or for Intel that cannot be substituted for a product first
manufactured by or for Company without a loss of some material
functionality.
(5) "Patent Rights" means with respect to a party
all of such party's rights arising from or related to all classes
or types of patents, utility models and design patents and
applications for these classes or types of patent rights and any
equivalent rights in all countries of the world that are owned or
controlled by such party.
(B) For so long as Intel holds any shares of Series B
Preference Stock, the Company agrees that the Company shall not
Assert any Patent Right against Intel, its subsidiaries or
affiliates, or their customers (direct or indirect), distributors
(direct or indirect), agents (direct or indirect) and contractors
(direct or indirect) for the manufacture, use, import, offer for
sale or sale of any of Intel's Products or any process or method
employed in the manufacture, testing, distribution or use thereof
for so long as Intel does not Assert any Patent Right against
Company, its subsidiaries or affiliates, or their customers
(direct or indirect), distributors (direct or indirect), agents
(direct or indirect) and contractors (direct or indirect) for the
manufacture, use, import, offer for sale or sale of Company's
Products or any process or method employed in the manufacture,
testing, distribution or use thereof.
(C) If Company assigns (directly or by operation of
law) ownership of any of its Patent Rights to a third party not
bound by this Agreement, then effective immediately prior to such
assignment, Company agrees that Intel shall have a nonexclusive,
nontransferable license, without right of sublicense, under such
assigned Patent Rights to make, use, sell, offer for sale and
import Intel's Products. This conditional license shall survive
any termination or expiration of this Agreement and shall remain
in full force and effect until mutually agreed otherwise by the
parties.
(D) The provisions of this Section 7(i) shall be
applicable only as between the Company and Intel.
(j) Nasdaq National Market. The Company shall use its best
efforts to cause the shares of Common Stock issuable upon
exercise of the Purchased Shares to be approved for quotation on
the Nasdaq National Market as promptly as practicable after the
date hereof.
(k) Option Pricing. The Company shall, within 30 days
after the Closing Date, adopt such amendments to the Company's
Plans (as defined in Section 3(b) hereof) and the Company's
Bylaws to provide that: (i) the exercise price of any option
grants made under such Plans, or
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 45 of 73 Pages
pursuant to other arrangements or agreements, shall be equal to,
or in excess of, the fair market value of the Company's Common
Stock on the date of such the grant; and (ii) the Company shall
not, without the approval of the holders of a majority of the
Common Stock, decrease the exercise price of any stock option
grants made under the such Plans or any other arrangements or
agreements.
(l) Sales Below Per Share Purchase Price. The Company
agrees that, during the ninety (90) day period following the
Closing, the Company will not sell or issue any shares of Series
B Preference Stock or Common Stock at a per share price of less
than $2.50 (or for other consideration with an equivalent value).
8. INDEMNIFICATION.
(a) Agreement to Indemnify.
(i) Company Indemnity. Each 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 inaccuracy or misrepresentation in, or breach of,
any representation, warranty, covenant or agreement made by the
Company in this Agreement (including any exhibits and schedules
hereto). Indemnification claims arising from the registration of
Purchased Shares under Federal and state securities laws are
covered by Section 7(b) and not this Section 8.
(ii) Investor Indemnity. The Company, its respective
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 an Investor, in respect of any and all Damages
incurred by any Company Indemnitee as a proximate result of any
inaccuracy or misrepresentation in, or breach of, any
representation, warranty, covenant or agreement made by such
Investor in this Agreement. Indemnification claims arising from
the registration of Purchased Shares under Federal and state
securities laws are covered by Section 7(b) and not this Section
8; provided, however, the indemnification obligations of the
Investors hereunder shall be several, and not joint and several.
(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
Investors 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 third 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
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CUSIP No. 720035302 Schedule 13D Page 46 of 73 Pages
Investors 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.
(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
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CUSIP No. 720035302 Schedule 13D Page 47 of 73 Pages
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 the evidence that such
Indemnitee did not defend such claim or Proceeding in a
reasonably prudent manner.
(e) Certain Definitions. As used in this Section 8, (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)
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 48 of 73 Pages
"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 each Investor under Section 7(c)
and (d) are transferable only to a Person who acquires at least
twenty percent (20%) of the Purchased Shares issued on the
Closing Date to such Investor (subject to appropriate adjustment
for all stock splits, dividends, combinations, recapitalizations
and the like where all holders of the Company's Common Stock
participate on a pro rata basis). The rights of each Investor
under Section 7(g) are transferable only to (a) subsidiary of the
Investor, of which the Investor beneficially owns, either
directly or indirectly, at least fifty percent (50%) of the
voting securities and controls a majority of the Board of
Directors or other equivalent governing body or (b) a Person who
acquires at least twenty percent (20%) of the Purchased Shares
issued on the Closing Date to such Investor (subject to
appropriate adjustment for all stock splits, dividends,
combinations, recapitalizations and the like where all holders of
the Company's Common Stock participate on a pro rata basis) in
circumstances where the Investor is transferring such Purchased
Shares to such Person to comply with applicable law or a request
of a governmental authority (including in connection with any
approvals the Investors 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
Investors). 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.
10. TERMINATION. Prior to the Closing, this Agreement may be
terminated and the purchase and sale of the Shares contemplated
by this Agreement may be abandoned only in accordance with the
following provisions:
(a) by mutual written consent of the Investors and the
Company;
(b) by the Investors 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 Shares, and such order, decree, ruling or other
action is or shall have become nonappealable;
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 49 of 73 Pages
(c) by the Investors, upon five (5) days written notice to
the Company, if the Closing shall not have occurred by August 31,
2000 (the "Outside Date"); provided, however, that the Investors
may not terminate this Agreement pursuant to this clause (c) if
the Investors' 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 Investors set
forth in this Agreement or if any representation or warranty of
the Investors 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 Clause (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
Investors of any of its respective covenants or agreements
hereunder in any material respect, and the Investors have not
cured such breach within ten (10) business days after notice by
the Company thereof; provided, however, that the Company shall
only be able to terminate this Agreement under this Clause
(d)(ii) if it has not breached any of its obligations hereunder
in any material respect; or
(e) by the Investors 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 Investors 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 Investors shall
only be able to terminate this Agreement under this Clause (e)(i)
if they have not breached any of their obligations hereunder in
any material respect; (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
Investors thereof; provided, however, that the Investors shall
only be able to terminate this Agreement under this Clause
(e)(ii) if they have not breached any of their obligations
hereunder in any material respect; (iii) the Investors do not
obtain the approvals contemplated by Section 5(i).
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.
11. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon
the respective 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.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 50 of 73 Pages
(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 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 11(e).
(f) No Finder's Fees. Each 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 such Investor or any of its officers, partners, employees
or consultants, or representatives is responsible. The Company
will indemnify and hold harmless each 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 Section 7
and Section 8 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,
Intel and the holders of Purchased Shares representing at least
66 2/3% 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 11(g) will be binding upon the
Investors, 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.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 51 of 73 Pages
(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 Investors, the
Company and the Investors 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.
(l) Fees, Costs and Expenses. Except as otherwise set
forth in Section 7(h), all fees, costs and expenses (including
attorney's' fees and expenses) incurred by the parties 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.
(m) Competition. Nothing set forth herein shall be deemed
to preclude, limit or restrict the Company's or any Investor's
ability to compete with the other.
(n) Cooperation in HSR Act Filings.
(i) In the event of a conversion of the Purchased
Shares (or any other action by Intel with respect to any
Securities of the Company held by Intel) that would require a
filing by Intel under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), Intel 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.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 52 of 73 Pages
(ii) Notwithstanding the foregoing, neither Intel nor
any of its 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 Intel, in the exercise of its reasonable
discretion, deems such request or requirement unduly burdensome.
Without limiting the generality of the foregoing, Intel 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 Intel 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 Intel 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 Intel for complying with such
burdensome second request, or the Federal Trade Commission or
Department of Justice shall impose any condition on Intel or its
affiliates in respect thereof deemed unacceptable by Intel, the
Company and Intel shall cooperate in good faith to negotiate an
alternative transaction that provides Intel with the economic
benefits it would receive if it converted the Purchased Shares
(or took any such other action referenced in the first
parenthetical in the first sentence of Clause (i)).
(o) Rights Plan. Without limiting the generality of
Section 11(j), in the event that Intel desires to take any action
permitted by this Agreement, and such action would cause a
"Common Stock Event" or any similar event under the Rights Plan
(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, the "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 Intel to take such permitted action
without causing any such "Common Stock Event," similar event,
trigger or activation.
(p) Stock Splits, Dividends and other Similar Events. The
provisions of this Agreement (including the number of shares of
Series B Preference Stock, 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>
CUSIP No. 720035302 Schedule 13D Page 53 of 73 Pages
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
PICTURETEL CORPORATION
By: /s/Norman E. Gaut
Norman E. Gaut
Printed Name
Chairman & CEO
Title
7/13/00
Date Signed
Address:
100 Minuteman Road
Andover, Massachusetts 01810
Telephone No: (978) 292-5000
Facsimile No: (978) 292-3334
with copies to:
Picturetel Corporation
Attention: General Counsel
100 Minuteman Road
Andover, Massachusetts 01810
{Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 54 of 73 Pages
INVESTOR:
INTEL CORPORATION
By: /s/Ravi Jacob
Ravi Jacob
Printed Name
Assistant Treasurer
Title
Date Signed
Address:
2200 Mission college
Boulevard
Santa Clara, California 95052
Telephone No.: (408) 765-
1240
Facsimile No.: (408) 765-
6038
with copies to:
Intel Corporation
Attention: General Counsel
2200 Mission College
Boulevard
Santa Clara, California 95052
and
Gibson, Dunn & Crutcher
Attention: Lawrence Calof
1530 Page Mill Road
Palo Alto, California 94304
Telephone No.: (650) 849-5300
Facsimile No.: (650) 849-
5333
{Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 55 of 73 Pages
INVESTOR:
STATE OF WISCONSIN INVESTMENT
BOARD
By: /s/John F. Nelson
John F. Nelson
Printed Name
Investment Director
Title
7/13/2000
Date Signed
Address:
121 East Wilson Street
Madison, Wisconsin 53702
{Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 56 of 73 Pages
INVESTOR:
HALPERN DENNY FUND II, L.P.
By: Halpern Denny & Co. IV,
L.L.C.
By: /s/David P. Malm
David P. Malm
Printed Name
General Partner
Title
Date Signed
Address:
{Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 57 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Norman E. Gaut
Norman E. Gaut
Printed Name
CEO & Chairman
Title
13 July 2000
Date Signed
Address:
100 Minuteman Dr.
Andover, MA 01810
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 58 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Enzo Toressi
Enzo Toressi
Printed Name
Title
July 13th - 00
Date Signed
Address:
211 Tourney Loop
Los Gatos, CA 95032
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 59 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Carl Ledbetter
Carl Ledbetter
Printed Name
Title
Date Signed
Address:
346 Madison St.
Denver, CO 80206
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 60 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/David B. Levi
David B. Levi
Printed Name
Director
Title
July 13, 2000
Date Signed
Address:
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 61 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Werner Schmucking
Werner Schmucking
Printed Name
Director
Title
7/13/00
Date Signed
Address:
Defreggustr. 8
81545 Munich Germany
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 62 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Lewis Jaffe
Lewis Jaffe
Printed Name
President
Title
7/13/00
Date Signed
Address:
47 Gerold Rd.
Marblehead, MA 01445
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 63 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Tim Duffy
Tim Duffy
Printed Name
Group VP, Conferencing Products
Title
July 13, 2000
Date Signed
Address:
PictureTel Corporation
100 Minuteman Road
Andover, MA 01810
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 64 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/David C. Snow
David C. Snow
Printed Name
V.P., Strategic Initiatives
Title
July 13, 2000
Date Signed
Address:
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 65 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Amit Akkad
Amit Akkad
Printed Name
VP & GM - Enterprise Services
Title
7/13/00
Date Signed
Address:
100 Minuteman Drive
Andover, MA 01810
Telephone No.: 978-292-5545
Facsimile No.: 978-292-3393
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 66 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Jon Kosheff
Jon Kosheff
Printed Name
Vice President, Finance
Title
7/13/00
Date Signed
Address:
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 67 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/Ned Semonite
Ned Semonite
Printed Name
VP Product Development
Title
July 13, 2000
Date Signed
Address:
PictureTel Corporation
100 Minuteman Road
Andover, MA 01810
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 68 of 73 Pages
INVESTOR:
(Please Insert Your Name and
Address Below)
By: /s/W. Robert Kellegrew, Jr.
W. Robert Kellegrew, Jr.
Printed Name
Title
7/13/00
Date Signed
Address:
286 Chestnut
Clinton, MA 01510
Signature page to PictureTel Corporation Stock Purchase and
Investor Rights Agreement}
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 69 of 73 Pages
SCHEDULE 1
INVESTORS, ALLOCATION OF PURCHASE PRICE AND
NUMBER OF 1414c SHARES RECEIVED
Amount of # of 1414c
Name Investment Shares
------------------------------------- ---------- ---------
1. State of Wisconsin Investment Board $9,500,000 600,000
2. Halpern Denny Fund II, L.P. $2,000,000 126,316
3. Norman Gaut $255,000 16,104
4. Enzo Toressi $110,000 6,947
5. Carl Ledbetter $45,000 2,843
6. David Levi $150,000 9,474
7. Werner Schmucking $50,000 3,158
8. Lewis Jaffe $50,000 3,158
9. Timothy Duffy $50,000 3,158
10. David Snow $50,000 3,158
11. Amit Akkad $20,000 1,263
12. Jon Kosheff $25,000 1,579
13. Edward Semonite $25,000 1,579
14. W. Robert Kellegrew, Jr. $15,000 947
15. Intel Corporation $9,500,000 600,000
Note: Total 1414c shares issued to investors (including Intel)
will be 1,379,684. Shares to remain with PictureTel will be
18,620,316.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 70 of 73 Pages
SCHEDULE 2
CERTAIN OFFICERS AND DIRECTORS WHO ARE
NON-ACCCREDITED INVESTORS
Norman Gaut
Enzo Toressi
Carl Ledbetter
David Levi
Werner Schmucking
Lewis Jaffe
Timothy Duffy
David Snow
Amit Akkad
Jon Kosheff
Edward Semonite
W. Robert Kellegrew, Jr.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 71 of 73 Pages
EXHIBIT 5
PRESS RELEASE
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 72 of 73 Pages
CONTACTS:
Nicole Burdette Vicki Hearing
O'Keeffe & Company State of Wisconsin
610.325.6550 x10 608.261.2415
[email protected] [email protected]
PICTURETEL RECEIVES $22 MILLION INVESTMENT
Intel and Wisconsin Board Increase Their Investments
ANDOVER, MASS., July 13, 2000 - PictureTel Corporation (NASDAQ:
PCTL) said today that Intel Capital and the State of Wisconsin
Investment Board have executed an agreement for each to invest
$9.5 million in a new series of non-voting class B preferred
shares, convertible into common stock after 90 days from the
closing on a one-for-one basis at a purchase price of $2.50 per
share.
Additional investments in the new shares have been agreed to by
Halpern Denny, a Boston-based equity fund, and by a group of
PictureTel directors and senior management, bringing to $22
million the total of new equity announced today. Funding, upon
closing conditions specified in the agreement, is anticipated to
take place on July 24.
"Securing these new funds is the first step in our efforts to
strengthen our balance sheet. We expect to announce shortly the
completion of the senior debt component of the financing
package," said Lewis Jaffe, PictureTel's president and chief
operating officer. "This investment coincides with the
introduction of our next series of products. The next generation
platform, we believe, will take the videoconferencing industry to
the next level. The ease with which data and information can be
shared will change the paradigm of how people approach
videoconferencing in the future. In addition, we believe no
other supplier can match the video and audio quality delivered by
our next generation series of products.
The architecture and software for the next generation products
was jointly developed with Intel under a previous agreement,
Jaffe noted.
The State of Wisconsin Investment Board is currently the largest
holder of PictureTel common shares. Halpern Denny, an equity
fund, worked with Jaffe when the PictureTel president was a
managing director of Arthur Andersen's corporate restructuring
practice.
"The State of Wisconsin Investment Board is pleased to be able to
participate in this round of funding which will help enable
PictureTel to launch its next major product initiative," said
John Nelson, Investment Director of Small Company Stocks. "As a
long-term shareholder, we look forward to participating in the
company's future in the rapidly growing videoconferencing
market." The State of Wisconsin Investment Board manages over
$70 billion on behalf of 465,000 government employees and
retirees.
<PAGE>
CUSIP No. 720035302 Schedule 13D Page 73 of 73 Pages
About Intel Capital
Intel Capital, Intel Corporation's strategic investment program,
focuses on making equity investments and acquisitions to grow the
Internet economy, including Internet infrastructure, content and
services in support of Intel's strategic interests. For more
information, visit the company's Web site at
www.intel.com/capital.
About PictureTel
PictureTel Corporation (NASDAQ: PCTL) is a world leader in
developing, manufacturing and marketing a full range of
integrated visual- and audio-collaboration and streaming-video
solutions. The company's systems meet customers' collaboration
needs from the desktop to the boardroom. PictureTel also markets
network conferencing servers and a comprehensive portfolio of
enterprise-wide services. Additional PictureTel information is
available at www.picturetel.com. PictureTel collaboration
products and services eliminate the barrier of distance, enabling
people to be Anywhere Now.
This release includes projections and other forward-looking
statements about the company's revenues, earnings, and other
measures of economic performance. Actual results could differ
materially from forecasts due to many factors such as, for
example, competitive pressures, changes in technology, and the
difficulty in forecasting in overseas markets and indirect
channels. Additional information concerning risks that could
cause actual results to differ is contained in the company's
annual report on Form 10K as files with the SEC. The company
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
###
PictureTel is a registered trademark of PictureTel Corporation.
PictureTel 900 Series, ImageShare, People+Content, Limelight, and
Anywhere Now are trademarks of PictureTel.
