-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bme9q8/yEQ7baDVvSceQUb0nmwPAwdaSdgk0dMpF08MCpKaUANGjtbVrCV7PfKzY dXLyK0Svxsavjom3d6Fjzg== 0000891618-97-000006.txt : 19970106 0000891618-97-000006.hdr.sgml : 19970106 ACCESSION NUMBER: 0000891618-97-000006 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970103 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AWARD SOFTWARE INTERNATIONAL INC CENTRAL INDEX KEY: 0001013920 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942893462 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47723 FILM NUMBER: 97500549 BUSINESS ADDRESS: STREET 1: 777 E MIDDLEFIELD ROAD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 4159684433 MAIL ADDRESS: STREET 1: 777 E MIDDLEFIELD ROAD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: VOBIS MICROCOMPUTER AG CENTRAL INDEX KEY: 0001028227 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: CARLO SCHMIDT STRABE 12 CITY: WUERSELEN STATE: I8 ZIP: 42146 BUSINESS PHONE: 1149240544 MAIL ADDRESS: STREET 1: CARLO SCHMIDT STRABE 12 CITY: WUERSELEN STATE: I8 ZIP: 42146 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 Award Software International, Inc. (Name of Issuer) Common Stock, no par value (Title of Class of Securities) 054531 10 8 (CUSIP Number) Theodor L. Lieven Dennis R. DeBroeck Vobis Microcomputer AG Fenwick & West Carlo-Schmidt-Stra(beta)e 12 Two Palo Alto Square 42146 Wuerselen Suite 700 Germany Palo Alto, CA 94306 (011)(49)(2405) 444-0 (415) 494-0600 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 27, 1996 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Check the following box if a fee is being paid with this statement |X|. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of less than five percent of such class. See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 88. The Exhibit Index is located at page 16. 2 SCHEDULE 13D - --------------------------------- -------------------------------- CUSIP NO. 054531 108 PAGE 2 OF 88 PAGES - -------------------------------- -------------------------------- - ------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON VOBIS MICROCOMPUTER AG - ------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| 2 (b) |_| - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION FEDERAL REPUBLIC OF GERMANY - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 913,596(1) ------------------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED ------------------------------------------------------------ BY 9 SOLE DISPOSITIVE POWER EACH REPORTING 913,596(1) ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 913,596(1) - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.4% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- (1) In addition, Reporting Person has a catch-up right, described in Item 4 below, which can only be exercised to the extent Issuer issues certain additional equity securities. - 2 - 3 ITEM 1. SECURITY AND ISSUER This statement relates to the Common Stock, no par value ("Common Stock"), of Award Software International, Inc., a California corporation ("Issuer"). The principal executive offices of Issuer are located at 777 East Middlefield Road, Mountain View, California 94043. ITEM 2. IDENTITY AND BACKGROUND This statement is filed on behalf of Vobis Microcomputer AG, a stock company organized under the laws of Germany ("Vobis"). Vobis manufacturers, sells and services computers and computer equipment and creates and sells computer software products. The address of Vobis' principal business and principal office is Carlo-Schmidt-Stra(beta)e 12, 42146 Wuerselen, Germany. Metro AG, a stock company organized under the laws of Germany, owns 90.0% of the capital stock of Vobis. Metro AG's business involves the following: (i) trading activities in connection with department stores and other retail companies; (ii) mail ordering; (iii) manufacturing of products that are subject of trading activities; (iv) activities on the catering and restaurant section; (v) real estate business; (vi) financial services; (vii) agency fund and acquisition, administration and disposition of investments and shareholdings in national and international companies. The address of Metro AG's principal business and principal office is Lenard Tietz Stra(beta)e 1, 50676 Koeln, Germany. Metro AG is a publicly-held company whose shares are listed on various stock exchanges. Metro Vermoegensverwaltung GmbH & Co. KG, a company organized under the laws of Germany, owns 60.7% of the capital stock of Metro AG. Metro Vermoegensverwaltung GmbH & Co. KG's business involves the administration of assets, including the administration and management of associated companies. The address of Metro Vermoegensverwaltung GmbH & Co. KG's principal business and principal office is Schlueterstr. 3, 40235 Duesseldorf, Germany. The attached Schedule I is a list of the members of the management boards and the members of the supervisory boards of Vobis, Metro AG and Metro Vermoegensverwaltung GmbH & Co. KG (under the German legal system, members of the management board have positions that are analogous to executive officers, and members of the supervisory board have positions analogous to directors). During the last five years, neither Vobis nor, to the best of Vobis' knowledge, any person named in Schedule I has been: (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, U.S. federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION In January 1996, Metro AG loaned to Vobis $7,005,453.12 of its working capital, which loan bore interest at a monthly rate of 3.73%. In January 1996, Vobis used those loan proceeds to acquire 570,033 shares of Common Stock and a warrant exercisable for up to 272,394 shares of Common Stock (the "Warrant"). This loan has been repaid. - 3 - 4 In July 1996, Metro AG loaned to Vobis $411,690 of its working capital, which loan bore interest at a monthly rate of 3.52%. In July 1996, Vobis used those loan proceeds to exercise a certain catch-up right (described below in Item 4) to acquire 41,169 shares of Common Stock. This loan has been repaid. In November 1996, Metro AG loaned to Vobis $240,000 of its working capital, which loan bears interest at a monthly rate of 3.48%. In December 1996, Vobis used those loan proceeds to exercise the catch-up right to acquire 30,000 shares of Common Stock. No amount of these loans by Metro AG to Vobis in January 1996, July 1996 and November 1996 consisted of funds or other consideration borrowed or otherwise obtained from other sources specifically for the purpose of making such loans. ITEM 4. PURPOSE OF TRANSACTION Vobis made the investments described herein for the purpose of investment and to maintain the right, pursuant to certain contractual rights described below, to designate one person to be elected to Issuer's Board of Directors. The transactions pursuant to which Vobis made such investments are summarized below. 1. TRANSACTIONS IN JANUARY 1996. SECURITIES PURCHASE AGREEMENT. Pursuant to a Securities Purchase Agreement entered into as of January 12, 1996, Vobis purchased from Issuer 570,033 shares of Common Stock for $7,000,005.24 ($12.28 per share) and the Warrant for $5,447.88 ($0.02 per share of Common Stock purchasable thereunder). The Warrant is exercisable for up to 272,394 shares of Common Stock at $12.28 per share up to and including the earlier of the closing of Issuer's initial public offering of Common Stock, of which the aggregate offering price and per share price to the public are at least $10,000,000 and $13.60, respectively (a "Qualified Public Offering"), pursuant to a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), if certain warrants to purchase Common Stock held by other parties terminate at the closing of the Qualified Public Offering, or (ii) September 30, 2000. Issuer closed in October 1996 its initial public offering of Common Stock pursuant to a registration statement under the Securities Act (the "IPO"), which did not qualify as a Qualified Public Offering. The Warrant contains a net exercise provision. INVESTORS' RIGHTS AGREEMENT. In connection with entering into the Securities Purchase Agreement, Issuer, Vobis and certain other parties entered into an Investors' Rights Agreement as of January 12, 1996, which provides, among other things, the following rights. (a) Registration Rights. If Issuer proposes to register any of its securities under the Securities Act either for its own account or for the account of other security holders exercising registration rights, holders of shares entitled to registration rights under the Investors' Rights Agreement, which include Vobis, are entitled to notice of such registration and are entitled, subject to certain limitations, to include shares therein. Those holders may also require Issuer to file a registration statement under the - 4 - 5 Securities Act with respect to their shares, subject to certain limitations. Further, those holders may require Issuer to register their shares on Form S-3 (or successor or similar form) when use of such form becomes available to Issuer. Issuer is required to bear all registration expenses in connection with all registrations, except that any Form S-3 (or successor or similar form) registration expenses incurred after the first two such registrations shall be borne by the selling shareholders on a pro rata basis in proportion to the number of shares sold by each. The selling shareholders in each registration are required to bear all selling expenses on a pro rata basis in proportion to the number of shares so registered. These rights are subject to certain conditions and limitations, among them the right of the underwriters of an offering to limit the number of shares included in such registration. (b) Right of First Refusal. Each of Vobis and certain other parties has the right of first refusal (the "Right of First Refusal"), subject to certain limitations, to purchase its pro rata share of all equity securities that Issuer may from time to time propose to sell. (c) Catch-Up Right. Vobis may elect in respect of each future issuance of Issuer's equity securities to purchase that number of shares as is necessary to maintain its ownership interest (in no event to exceed 17.5%) in Issuer existing immediately prior to such future issuance, subject to certain restrictions (the "Catch-Up Right"). The Catch-Up Right expires and terminates in accordance with its terms upon the earlier of (i) the date upon which Vobis owns less than 8% of Issuer's outstanding shares of Common Stock or (ii) completion of a Qualified Public Offering. VOTING AGREEMENT. In connection with entering into the Securities Purchase Agreement, Issuer, Vobis and certain shareholders of Issuer entered into a Voting Agreement as of January 12, 1996, pursuant to which Vobis and such shareholders agreed to vote their shares to maintain the number of directors on Issuer's Board of Directors at no less than five and to elect one person designated by Vobis to Issuer's Board of Directors. This agreement will terminate upon the earlier of (i) January 12, 1999, (ii) a change of control of Issuer, (iii) the date upon which Vobis owns less than 8% of Issuer's outstanding shares of Common Stock or (iv) completion of a Qualified Public Offering. 2. TRANSACTION IN JULY 1996. In July 1996, Vobis exercised the Catch-Up Right, in respect of certain issuances by Issuer of options to purchase shares of Common Stock, to purchase 41,169 shares of Common Stock at $10.00 per share for a total purchase price of $411,690. 3. TRANSACTION IN NOVEMBER/DECEMBER 1996. In November 1996, Vobis exercised the Catch-Up Right, in respect of the issuance by Issuer of shares of Common Stock in the IPO, to purchase on December 27, 1996 30,000 shares of Common Stock at $8.00 per share for a total purchase price of $240,000. - 5 - 6 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of the date of this statement, Vobis beneficially owns a total of 913,596 shares of Common Stock, consisting of 641,202 shares of Common Stock and the Warrant to purchase 272,394 shares of Common Stock. Vobis also has the Catch-Up Right, which, as described above in Item 4, is exercisable to the extent Issuer issues certain additional equity securities. Excluding the Catch-Up Right (which can only be exercised to the extent Issuer issues certain additional equity securities), the 913,596 shares of Common Stock beneficially owned by Vobis on the date of this statement represent a beneficial ownership of approximately 13.4% of Issuer's outstanding shares of Common Stock based upon Issuer's representations to Vobis that 6,507,754 shares of Common Stock were outstanding on November 21, 1996. (b) Vobis has sole power to vote and to direct the vote of, and sole power to dispose or to direct the deposition of, all 913,596 shares of Common Stock which it beneficially owns on the date of this statement. (c) Except as set forth herein, Vobis has not effected any transaction in Common Stock during the past 60 days, and, to the best of its knowledge, no person named in Schedule I has effected any transactions in Common Stock during the past 60 days. (d) No other person is known to Vobis to have the right to receive or the power to direct the receipt of dividends from or proceeds from the sale of any shares of Common Stock beneficially owned by Vobis on the date of this statement. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Except as set forth in Items 1-5 above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among Vobis and any of the persons named in Item 2, or between Vobis and any other person, with respect to any of the securities of Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS The following documents are filed as an exhibit hereto: Exhibit A: Securities Purchase Agreement, dated as of January 12, 1996, between Vobis and Issuer Exhibit B: Investors' Rights Agreement, dated as of January 12, 1996, between Vobis, Issuer and certain other parties Exhibit C: Voting Agreement, dated as of January 12, 1996, between Vobis, Issuer and certain other parties Exhibit D: Warrant, dated as of January 12, 1996, issued by Issuer to Vobis - 6 - 7 SCHEDULE I VOBIS MICROCOMPUTER AG MANAGEMENT BOARD
PRESENT PRINCIPAL TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP ----- ---------------- ---------- ----------- Chairman Theodor Lieven Chairman of German Carlo-Schmidt-Stra(beta)e Management Board 12, 54146 Wuerselen, Germany and Chief Executive Officer of Vobis Microcomputer AG Vice Chairman Dr. Gert Huegler Vice Chairman of German Hohenstaufenallee 41 Management Board 52072 Wuerselen, Germany and Sales Director of Vobis Microcomputer AG Member Willy Weck Member of German Roermondestr. 411 Management Board 527072 Aachen, Germany and Chief Financial Officer of Vobis Microcomputer AG
- 7 - 8 VOBIS MICROCOMPUTER AG SUPERVISORY BOARD
PRESENT PRINCIPAL TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP ----- ---------------- ---------- ----------- Chairman Wolfgang Urban Chairman of German Leonard-Titz-Str. 1 Supervisory Board 50676 Koeln, Germany of Vobis AG; Member of Management Board of Metro AG Member Rainer Fraling Member of German AM Kupferofen 35 Supervisory Board 52066 Aachen, Germany of Vobis AG Member Klaus Dannenfeld Head of the German Hechelscheid 13 internal audit 52152 Simmerath, Germany department of Vobis AG; Member of Supervisory Board of Vobis AG Member Spyridon Goelden Works council at German Harscampstr. 58 Vobis AG; 52062 Aachen, Germany Member of Supervisory Board of Vobis AG Member Gerhard Schulmeyer Chairman of German Otto-Hahn-Ring 6 Management Board of 81739 Muenchen, Germany Siemens Nixdorf Informationssysteme AG; Member of Supervisory Board of Vobis AG Member Erwin Conradi Chairman of German Schlueterstr. 3 Supervisory Board 40235 Duesseldorf, Germany of Metro AG; Member of Supervisory Board of Vobis AG
- 8 - 9 METRO AG MANAGEMENT BOARD
PRESENT PRINCIPAL TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP ----- ---------------- ---------- ----------- Chairman Wolfgang Urban Chairman of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG Chairman Klaus Wiegandt Chairman of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG Member Dr. Hans-Joachim Koerber Member of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG Member Dr. Wolf-Dietrich Loose Member of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG Member Joachim Suhr Member of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG Member Siegfried Kaske Member of German Leonard-Titz-Str. 1 Management Board of 50676 Koeln, Germany Metro AG
- 9 - 10 METRO AG SUPERVISORY BOARD
PRESENT PRINCIPAL TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP ----- ---------------- ---------- ----------- Chairman Erwin Conradi President of German Schluterstr. 3 Metro Holding AG; 40235 Duesseldorf, Germany Chairman of Management Board of Metro Vermoegens-verwaltung GmbH & Co. KG; Chairman of Supervisory Board of Metro AG; Member of Supervisory Board of Vobis AG Vice-Chairman Hans Dieter Cleven Vice President of German Neihofstr. 4 Metro Holding AG; CH 6340 Baar/Zug, Germany Member of Management Board of Metro Vermoegens-verwaltung GmbH & Co. KG; Member of Supervisory Board of Metro AG Member Prof. Erich Greipl Member of German Schluterstr. 3 Supervisory Board 40235 Duesseldorf, Germany of Metro AG; Member of Management Board of Metro Vermoegensver-waltung GmbH & Co. KG Member Dr. Hermann Kraemer Member of German Benningplatz. 1 Management Board of 40474 Duesseldorf, Germany Veba AG; Member of Supervisory Board of Metro AG
- 10 - 11 Member Dr. Klaus Liesen Chairman of German Huttropstr. 60 Supervisory Board 46138 Essen, Germany of Rhurgas AG; Member of Supervisory Board of Metro AG Member Prof. Dr. Helmut Schlesinger Member of German Wilhelm-Epatein Str. 14 Supervisory Board 60431 Frankfurt/Main, of Metro AG Germany Member Dr. Manfred Schneider Chairman of German 51368 Leverkusen, Management Board of Germany Bayer AG; Member of Supervisory Board of Metro AG Member Hans-Peter Schreib Member of the German Humboldt-Stra(beta)e 9 German Association 40237 Duesseldorf, Germany of Security Holdings; Member of Supervisory Board of Metro AG Member Dr. H. Schulte-Noelle Chairman of German Koeniginstr. 28 Management Board of 80802 Muenchen, Germany Allianz AG; Member of Supervisory Board of Metro AG Member Dr. Joachim Theye Lawyer; German Marktstr. 3 Member of 28195 Bremen, Germany Supervisory Board of Metro AG Employees' Klaus Bruns Employee of Kaufhof German Representative Postfach 100840 Warenhaus; 46008 Oberhausen, Germany Employee Representative in Supervisory Board of Metro AG
- 11 - 12 Employees' Holger Grape Employee of German Representative Karl-Muck-Platz1 Deutsche 20355 Hamburg, Germany Angestellten Gewerkschaft; Employee Representative in Supervisory Board of Metro AG Employees' Hubert Hasselhoff Employee of German Representative Am Teinkamp 7 DSBK-Handels AG; 31157 Sarstedt, Germany Employee Representative in Supervisory Board of Metro AG Employees' Hanns-Juergen Hengst Employee of Kaufhof German Representative Hohe Stra(beta)e 41-53 Warenhaus AG; 50662 Koeln, Germany Employee Representative in Supervisory Board of Metro AG Employees' Gerhard Herbst Employee of German Representative Wilhelm Lauscher Str. 69-77 Gewerkschaft 60329 Frankfurt/Main, Nahrung-Genu(beta) Germany -Gaststatten; Representative in Supervisory Board of Metro AG Employees' Hermann Hesse Employee of Kaufhof German Representative Koenigsalle 1 Warenhaus AG; 40212 Duesseldorf, Germany Employee Representative in Supervisory Board of Metro AG Employees' Ingeborg Janz Employee of Real German Representative Gutenbergstr. 2 Warenhaus GmbH; 38640 Gosler, Germany Employee Representative in Supervisory Board of Metro AG
- 12 - 13 Employees' Dr. Karheinz Marth Employee of German Representative Kanzlerstr. 8 Gewerkschaft HBV; 40472 Duesseldorf, Germany Employee Representative in Supervisory Board of Metro AG Employees' Gustav-Adolf Munkert Employee of Kaufhof German Representative Leonard-Tietz-Str. 1 Warenhaus AG; 50676 Koeln, Germany Employee Representative in Supervisory Board of Metro AG Employees' Peter Sauberling Employee of German Representative Am Tannenwald 2 Praktiker Bau-und 66459 Kiel, Germany Heimwerke AG; Employee Representative in Supervisory Board of Metro AG
- 13 - 14 METRO VERMOEGENSVERWALTUNG GMBH & CO. KG MANAGEMENT BOARD
PRESENT PRINCIPAL TITLE NAME AND ADDRESS OCCUPATION CITIZENSHIP ----- ---------------- ---------- ----------- Chairman Erwin Conradi President of German Schluterstr. 3 Metro Holding AG; 40235 Duesseldorf, Germany Chairman of Management Board of Metro Vermoegens-verwaltung GmbH & Co. KG; Chairman of Supervisory Board of Metro AG; Member of Supervisory Board of Vobis AG Member Hans Dieter Cleven Vice President of German Neihofstr. 4 Metro Holding AG; CH 6340 Baar/Zug, Germany Member of Management Board of Metro Vermoegens-verwaltung GmbH & Co. KG; Member of Supervisory Board of Metro AG Member Prof. Erich Greipl Member of German Schluterstr. 3 Management Board of 40235 Duesseldorf, Germany Metro Vermoegens-verwaltung GmbH & Co. KG; Member of Supervisory Board of Metro AG
- 14 - 15 SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 27, 1996 Vobis Microcomputer AG By: /s/ Willy Weck ----------------------------------------- Willy Weck, Chief Financial Officer and Member of Management Board By: /s/ Dr. Gert Huegler ----------------------------------------- Dr. Gert Huegler, Sales Director and Member of Management Board [SIGNATURE PAGE TO SCHEDULE 13D] 16 EXHIBIT INDEX
Exhibit Document Description ------- -------------------- 4.1 Securities Purchase Agreement, dated as of January 12, 1996, between Vobis and Issuer. 4.2 Voting Agreement, dated as of January 12, 1996, between Vobis, Issuer and certain other parties. 4.3 Investors' Rights Agreement, dated as of January 12, 1996, between Vobis, Issuer and certain other parties. 4.4 Warrant, dated as of January 12, 1996, issued by Issuer to Vobis.
EX-4.1 2 SECURITIES PURCHASE AGREEMENT 1 Exhibit 4.1 AWARD SOFTWARE INTERNATIONAL, INC. SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as of January 12, 1996 between AWARD SOFTWARE INTERNATIONAL, INC., a California corporation (the "Company"), and VOBIS MICROCOMPUTER AG, a corporation incorporated under the laws of the Federal Republic of Germany ("Vobis" or "Purchaser"). RECITALS WHEREAS, the Company has authorized the sale and issuance of an aggregate of 1,140,066 shares of its Common Stock (the "Shares") and a warrant to purchase up to 544,788 shares of its Common Stock in the form attached hereto as Exhibit E (the "Warrant"). WHEREAS, Purchaser desires to purchase the Shares and Warrant on the terms and conditions set forth herein; and WHEREAS, the Company desires to issue and sell the Shares and the Warrant to Purchaser on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. 1.1 AUTHORIZATION OF SHARES AND THE WARRANT. On or prior to the Closing (as defined in Section 2 below), the Company has authorized the sale and issuance to Purchaser of the Shares and the Warrant. 1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the Closing the Company hereby agrees to issue and sell to Purchaser, and Purchaser agrees to purchase from the Company, the Shares at an aggregate purchase price of $7,000,005.24, six dollars fourteen cents ($6.14) per share, and the Warrant at an aggregate purchase price of $5,447.88, one cent ($.01) per warrant, which Warrant purchase price has been paid by Purchaser to the Company prior to the Closing. 2. CLOSING, DELIVERY AND PAYMENT. 2.1 CLOSING. The closing of the sale and purchase of the Shares and Warrants under this 2 Agreement (the "Closing") shall take place at 5:00 p.m., California time, on the date hereof or at such time or place as the Company and Purchaser may mutually agree (such date is hereinafter referred to as the "Closing Date"). 2.2 DELIVERY. At the Closing, subject to the terms and conditions hereof, the Company will deliver to Purchaser certificates representing the Shares and the Warrant to be purchased at the Closing against payment of the purchase price therefor by wire transfer or certified check made payable to the order of the Company. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on the Schedule of Exceptions attached hereto as Exhibit A, the Company hereby represents and warrants to Purchaser as follows: 3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement and the Investors' Rights Agreement in the form attached hereto as Exhibit B (the "Investors Rights Agreement"), to issue and sell the Shares, the Warrant and the shares of Common Stock issuable upon exercise of the Warrants (the "Underlying Shares"), to carry out the provisions of this Agreement and the Investors' Rights Agreement, and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. The Company owns no equity securities of any other corporation, limited partnership or similar entity. The Company is not a participant in any joint venture, partnership or similar arrangement. 3.2 CAPITALIZATION; VOTING RIGHTS. Immediately after the Closing, the authorized capital stock of the Company consists of 20,000,000 shares of Common Stock, (i) 10,230,449 shares of which will be issued and outstanding, (ii) 2,500,000 shares of which are reserved for future issuance to key employees pursuant to the Company's 1995 Stock Option Plan (under which options to purchase 1,472,311 shares are outstanding and options to purchase 1,012,689 shares remain available for issuance) and (iii) 1,251,455 shares of which are reserved for issuance upon exercise of certain warrants to purchase shares of Common Stock (the "Existing Warrants"). All issued and outstanding shares of the Company's Common Stock (i) have been duly authorized and validly issued to the persons listed on Exhibit C hereto, and (ii) are fully paid and 3 nonassessable. Except as may be granted pursuant to the Investors' Rights Agreement, the Company's 1995 Stock Option Plan and the Existing Warrants, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. The Underlying Shares have been duly and validly reserved for issuance and, when issued in compliance with the Warrant, will be validly issued, fully paid and nonassessable and will be free of any liens or encumbrances; provided, however, that the Underlying Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization of this Agreement and the Investors' Rights Agreement, the performance of all obligations of the Company hereunder and thereunder at the Closing and the authorization, sale, issuance and delivery of the Shares and the Warrant pursuant hereto has been taken or will be taken prior to the Closing. The Agreement, and the Investors' Rights Agreement and the Warrant, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights; (ii) general principles of equity that restrict the availability of equitable remedies; and (iii) to the extent that the enforceability of the indemnification provisions in Section 2.8 of the Investors' Rights Agreement may be limited by applicable laws. The sale of the Shares and Warrants (and the Underlying Shares issuable upon exercise of the Warrant) is not and will not be subject to (a) any rights of first refusal that have not been properly waived or (b) any preemptive rights. 3.4 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser (i) its audited balance sheet as at December 31, 1994 and audited statement of income for the twelve months ending December 31, 1994 and (ii) its unaudited balance sheet as at September 30, 1995 (the "Statement Date") and unaudited consolidated statement of income for the nine-month period ending on the Statement Date (collectively, the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except as disclosed therein, 4 and present fairly the financial condition and position of the Company as of December 31, 1994 and the Statement Date; provided, however, that the unaudited financial statements are subject to normal recurring year-end audit adjustments (which are not expected to be material), and do not contain all footnotes required under generally accepted accounting principles. 3.5 LIABILITIES. The Company has no material liabilities and, to the best of its knowledge, knows of no material contingent liabilities not disclosed in the Financial Statements, except current liabilities incurred in the ordinary course of business subsequent to the Statement Date which have not been, either individually or in the aggregate, materially adverse. 3.6 AGREEMENTS; ACTION. a) Except for agreements explicitly contemplated hereby and agreements between the Company and its employees with respect to the sale of the Company's Common Stock, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. b) There are no agreements, understandings, instruments, contracts, proposed transactions, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound which may involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements entered into in the ordinary course of business), or (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company (other than licenses entered into in the ordinary course of the Company's business a standard form of which have been made available to Purchaser or Purchaser's counsel or arising from the purchase of "off the shelf" or other standard products), or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services, or (iv) indemnification by the Company with respect to infringements of proprietary rights (other than indemnification obligations arising from purchase or sale agreements entered into in the ordinary course of business). c) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than with respect to redemption of Common Stock referred to in the Schedule of Exceptions and indebtedness incurred in the ordinary course of business or as disclosed in the Financial Statements) individually in excess of $100,000, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, 5 exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated. e) Except as set forth in Section 3.6(e) of the Schedule of Exceptions, the Company is not aware of any material agreements to which it is a party or by which its assets are bound. For purposes of this Section 3.6(e), "material" shall mean agreements that involve revenues payable to the Company in excess of $200,000, or obligations payable by the Company in excess of $100,000. 3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the Company to officers, directors, shareholders, or employees of the Company other than a) for payment of salary for services rendered, b) reimbursement for reasonable expenses incurred on behalf of the Company and c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). None of the officers, directors or shareholders of the Company, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or shareholders of the Company may own stock in publicly traded companies which may compete with the Company. No officer, director or shareholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). Except as may be disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 3.8 CHANGES. Since the Statement Date, there has not been to the Company's knowledge: a) Any change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company; 6 b) Any resignation or termination of any key officers of the Company; and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer; c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise; d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company; e) Any waiver by the Company of a valuable right or of a material debt owed to it; f) Any direct or indirect loans made by the Company to any shareholder, employee, officer or director of the Company, other than advances made in the ordinary course of business; g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder; h) Any declaration or payment of any dividend or other distribution of the assets of the Company; i) Any labor organization activity; j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; k) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets; l) Any change in any material agreement to which the Company is a party or by which it is bound which materially and adversely affects the business, assets, liabilities, financial condition, operations or prospects of the Company, including compensation agreements with the Company's employees; or m) Any other event or condition of any character that, either individually or cumulatively, has materially and adversely affected the business, 7 assets, liabilities, financial condition or operations of the Company. 3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those resulting from taxes which have not yet become delinquent, (ii) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, and (iii) those that have otherwise arisen in the ordinary course of business. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. 3.10 PATENTS AND TRADEMARKS. To the Company's knowledge, the Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, information and other proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted, without any infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements entered into in the ordinary course of the Company's business, or arising from the purchase of "off the shelf" or standard products. The Company has not received any communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company's business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any employee is now obligated. The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees 8 made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been assigned to the Company. 3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or default of any term of its Articles of Incorporation or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to the Company which would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company. The execution, delivery, and performance of and compliance with this Agreement and the Investors' Rights Agreement, and the issuance and sale of the Shares and the Warrant (and the Underlying Shares issuable upon exercise of the Warrant) hereto will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 3.12 LITIGATION. There is no action, suit, proceeding or investigation pending or to the Company's knowledge currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Warrant, or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which might result, either individually or in the aggregate, in any material adverse change in the business, assets, liabilities, financial condition or operations of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate. 3.13 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax returns (federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns have been paid or will be paid prior to the time they become delinquent. The Company has not been advised (i) that any of its returns, federal, state or other, have been or are being audited as of the date hereof, or (ii) of any deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any liability of any tax to be imposed upon its properties or assets 9 as of the date of this Agreement that is not adequately provided for. 3.14 EMPLOYEES. The Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company's knowledge, threatened with respect to the Company. No employee has any agreement or contract, written or verbal, regarding his employment. The Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To the Company's knowledge, no former or current employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company; and to the Company's knowledge, the continued employment by the Company of its present employees, and the performance of the Company's contracts with its independent contractors, will not result in any such violation. The Company has not received any notice alleging that any such violation has occurred. No employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. The Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee or group of key employees. All former or current employees of, or consultants to, the Company have entered into nondisclosure and proprietary rights agreements in the form as attached as Exhibit F, and the Company is not aware of the breach of any such agreement. 3.15 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is currently devoting one hundred percent (100%) of his business time to the conduct of the business of the Company. The Company is not aware of any officer or key employee of the Company planning to work less than full time at the Company in the future. 3.16 REGISTRATION RIGHTS. Except as required pursuant to the Investors' Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register (as defined in Section 1.1 of the Investors' Rights Agreement) any of the Company's presently outstanding securities or any of its securities that may hereafter be issued. 3.17 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the 10 ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of the Shares, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. 3.18 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. 3.19 MINUTE BOOKS. The minute books of the Company provided to the Purchaser contain a complete summary of all meetings of directors and shareholders since the time of incorporation in all material respects. 3.20 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property holding corporation within the meaning of Internal Revenue Code Section 897(c)(2) and any regulations promulgated thereunder. 3.21 INSURANCE. The Company has obtained and will maintain fire and casualty insurance policies with coverage customary for companies similarly situated to the Company. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby represents and warrants to the Company as follows (such representations and warranties do not lessen or obviate the representations and warranties of the Company set forth in this Agreement): 4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and the Investors' Rights Agreement and to carry out their provisions. All action on Purchaser's part required for the lawful execution and delivery of this Agreement and the Investors' Rights Agreement have been or will be effectively taken prior to the Closing. Upon their execution and delivery, 11 this Agreement and the Investors' Rights Agreement will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, (ii) general principles of equity that restrict the availability of equitable remedies, and (iii) to the extent that the enforceability of the indemnification provisions of Section 2.8 of the Investors' Rights Agreement may be limited by applicable laws. 4.2 CONSENTS. All consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings with any governmental or banking authority on the part of Purchaser required in connection with the consummation of the transactions contemplated in the Agreement or the Investors' Rights Agreement have been or shall have been obtained prior to and be effective as of the Closing. 4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares, the Warrants and Underlying Shares have not been registered under the Securities Act. Purchaser also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in the Agreement. Purchaser hereby represents and warrants as follows: a) PURCHASER BEARS ECONOMIC RISK. Purchaser is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment indefinitely unless the Shares, the Warrant, or Underlying Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Purchaser understands that the Company has no present intention of registering the Shares, the Warrant, or Underlying Shares, or any shares of its Common Stock. Purchaser also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Purchaser to transfer all or any portion of the Shares, the Warrant or Underlying Shares under the circumstances, in the amounts or at the times Purchaser might propose. b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares and the Warrant (and Underlying Shares upon exercise of the Warrant) for Purchaser's own account for investment only, and not with a view towards their distribution. c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business or financial experience, Purchaser has the capacity to protect its own interests in 12 connection with the transactions contemplated in this Agreement and the Investors' Rights Agreement. Further, Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in this Agreement. d) ACCREDITED INVESTORS. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. e) COMPANY INFORMATION. Purchaser has received and read the Financial Statements and certain other information provided by the Company and has had an opportunity to discuss the Company's business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company's operations and facilities. Purchaser has also had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of this investment. f) RULE 144. Purchaser acknowledges and agrees that the Shares, the Warrants and the Underlying Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring not less than two years after a party has purchased and paid for the security to be sold, the sale being through an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934, as amended) and the number of shares being sold during any three-month period not exceeding specified limitations. 4.4 TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees that the Shares, the Warrants and Underlying Shares are subject to restrictions on transfer as set forth in the Investors' Rights Agreement. 5. CONDITIONS TO CLOSING. 5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. Purchaser's obligations to purchase the Shares and Warrant at the Closing are subject to the satisfaction, at or prior to the Closing, of the following conditions: a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the Company in Section 3 hereof shall be 13 true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing. b) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement and the Investors' Rights Agreement (except for such as may be properly obtained subsequent to the Closing). c) CORPORATE DOCUMENTS. The Company shall have delivered to Purchaser or its counsel, copies of all corporate documents of the Company as Purchaser shall reasonably request. d) COMPLIANCE CERTIFICATE. The Company shall have delivered to Purchaser a Compliance Certificate, executed by the President and the Chief Financial Officer of the Company, dated the date of the Closing, to the effect that the conditions specified in subsections (a), (b), and (c) of this Section 5.1 have been satisfied. e) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights Agreement substantially in the form attached hereto as Exhibit B shall have been executed and delivered by the parties thereto. f) OPINION OF COUNSEL. The Purchaser shall have received from legal counsel to the Company an opinion addressed to them, dated as of the Closing Date, in substantially the form attached hereto as Exhibit D. g) BOARD OF DIRECTORS. Upon the Closing, the authorized size of the Board of Directors of the Company shall be increased to seven (7) members consisting of George C. Huang, David S. Lee, Masami Maeda, Cheng Ming Lee, William P. Tai (or a representative of the Walden Group reasonably agreeable to the Company), Anthony Sun (or a representative of Venrock Associates reasonably agreeable to the Company) and a representative of Purchaser reasonably agreeable to the Company. h) VOTING AGREEMENT. A Voting Agreement substantially in the form attached hereto as Exhibit G shall have been executed and delivered by the parties thereto. 5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation to issue and sell the Shares and Warrants at Closing is subject to the satisfaction, on or prior to the Closing, of the following conditions: 14 a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Purchaser in Section 4 hereof shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said date. b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchaser on or before the Closing. c) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights Agreement substantially in the form attached hereto as Exhibit B shall have been executed and delivered by Purchaser. d) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Investors' Rights Agreement (except for such as may be properly obtained subsequent to the Closing). 6. MISCELLANEOUS. 6.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California. 6.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive the closing of the transactions contemplated hereby. 6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares and/or the Warrant from time to time. 6.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Investors' Rights Agreement, the Warrant and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 6.5 SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or 15 unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 6.6 AMENDMENT AND WAIVER. a) This Agreement may be amended or modified only upon the written consent of the Company and Purchaser. b) The obligations of the Company and the rights of Purchaser under this Agreement may be waived only with the written consent of Purchaser. 6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Investors' Rights Agreement or Warrant, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on Purchaser's part of any breach, default or noncompliance under this Agreement, the Investors' Rights Agreement or Warrant or any waiver on such party's part of any provisions or conditions of this Agreement, or the Investors' Rights Agreement or Warrant must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or the Investors' Rights Agreement or otherwise afforded to any party, shall be cumulative and not alternative. 6.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) four (4) business days after deposit with an internationally recognized overnight courier, specifying express delivery, with written verification of receipt. All communications shall be sent to the Company and Purchaser at its respective address as set forth on the signature page hereof or at such other address as the Company or Purchaser may designate by ten (10) days advance written notice to the other parties hereto. 6.9 EXPENSES. Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. 6.10 ATTORNEYS' FEES. In the event that any dispute among the parties to this Agreement should 16 result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 6.11 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 6.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 6.13 BROKER'S FEES. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 6.13 being untrue. 6.14 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION BEING AVAILABLE. 6.15 KNOWLEDGE. For purposes of this Agreement, wherever the term "knowledge" is used it shall mean the actual knowledge of any officer or director of the Company, after due investigation. 17 IN WITNESS WHEREOF, the parties hereto have executed the Securities Purchase Agreement as of the date set forth in the first paragraph hereof. COMPANY PURCHASER AWARD SOFTWARE INTERNATIONAL, INC. VOBIS MICROCOMPUTER AG By:____________________________________________ By:____________________________ Title:_________________________________________ Title:_________________________ Address: 777 East Middlefield Road Address: Carlo- Schmid-Str. 12 Mountain View, CA 94043 D-52146 Wurselen Germany SECURITIES PURCHASE AGREEMENT 18 TABLE OF CONTENTS
PAGE 1. AGREEMENT TO SELL AND PURCHASE 1 1.1 Authorization of Shares and the Warrant 1 1.2 Sale and Purchase 1 2. CLOSING, DELIVERY AND PAYMENT 1 2.1 Closing 1 2.2 Delivery 2 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 2 3.1 Organization, Good Standing and Qualification 2 3.2 Capitalization; Voting Rights 2 3.3 Authorization; Binding Obligations 3 3.4 Financial Statements 3 3.5 Liabilities. 3 3.6 Agreements; Action. 3 3.7 Obligations to Related Parties 4 3.8 Changes 5 3.9 Title to Properties and Assets; Liens, etc 6 3.10 Patents and Trademarks 6 3.11 Compliance with Other Instruments 7 3.12 Litigation. 7 3.13 Tax Returns and Payments 7 3.14 Employees 7 3.15 Obligations of Management. 8 3.16 Registration Rights 8 3.17 Compliance with Laws; Permits 8 3.18 Environmental and Safety Laws 8 3.19 Minute Books 8 3.20 Real Property Holding Corporation 9 3.21 Insurance 9 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 9 4.1 Requisite Power and Authority 9 4.2 Consents 9 4.3 Investment Representations 9 4.4 Transfer Restrictions 10 5. CONDITIONS TO CLOSING 10 5.1 Conditions to Purchaser's Obligations at the Closing 10 5.2 Conditions to Obligations of the Company. 11 6. MISCELLANEOUS 12 6.1 Governing Law 12 6.2 Survival 12 6.3 Successors and Assigns 12 6.4 Entire Agreement 12 6.5 Severability 12 6.6 Amendment and Waiver 12 6.7 Delays or Omissions 13 6.8 Notices 13
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6.9 Expenses 13 6.10 Attorneys' Fees 13 6.11 Titles and Subtitles 13 6.12 Counterparts 13 6.13 Broker's Fees 13 6.14 California Corporate Securities Law 14 6.15 Knowledge 14
SECURITIES PURCHASE AGREEMENT EX-4.2 3 VOTING AGREEMENT 1 EXHIBIT 4.2 VOTING AGREEMENT This Voting Agreement (this "Agreement") is made and entered into as of January 12, 1996 (the "Effective Date") by and among Award Software International, Inc., a California corporation (the "Company"), Vobis Microcomputer AG, a company organized under the laws of the Federal Republic of Germany (the "Investor"), and the parties listed on Exhibit A attached hereto (the "Shareholders"). The Investor and the Shareholders are sometimes hereinafter collectively referred to herein as the "Holders". RECITALS WHEREAS, concurrently herewith, the Investor is purchasing from the Company shares of its Common Stock and a warrant to purchase its Common Stock (collectively, the "Securities") pursuant to a Securities Purchase Agreement dated of even date herewith between the Company and the Investor (the "Purchase Agreement"); WHEREAS, as an inducement to Vobis to purchase the Securities pursuant to the Purchase Agreement, the Investor, the Shareholders and the Company desire to enter into this Agreement to set forth their agreements and understandings with respect to how shares of the Company's capital stock held by them will be voted on certain matters; NOW, THEREFORE, in consideration of the above recitals and the mutual covenants made herein, the parties hereby agree as follows: 1. Size of Board of Directors. During the term of this Agreement, each Holder agrees to vote all shares of capital stock of the Company now or hereafter directly or indirectly owned (of record or beneficially) by such Holder to maintain the authorized number of members of the Board of Directors of the Company (the "Board") at no less than five (5) directors, and to oppose any effort by any party to change the authorized number of directors of the Company to less than five (5) directors. In addition, the Company agrees to maintain the authorized number of members of the Board at no less than five (5) directors. 2. Election of Board of Directors. 2..1 Voting; Board Composition. During the term of this Agreement, each Holder agrees to vote all shares of capital stock of the Company now or hereafter directly or indirectly owned (of record or beneficially) by such Holder, in such manner as may be necessary to elect (and maintain in office) as a members of the Board an individual designated by the Investor who is reasonably agreeable to the Company (the "Investor Designee"). 2.2 Initial Board Members. As of the Effective Date, the initial Vobis Designee shall be Theo Lieven. 2 2.3 Changes in Board Designees. From time to time during the term of this Agreement, the Investor may, in its sole discretion; (a) elect to remove from the Board any incumbent Investor Designee who occupies a Board seat for which the Investor is entitled to designate the Investor Designee under Section 2.1; and/or (b) designate a new Investor Designee for election to a Board seat for which the Investor is entitled to designate the Investor Designee under Section 2.1 (whether to replace a prior Investor Designee or to fill a vacancy in such Board seat); provided such removal and/or designation of the Investor Designee is approved in a writing signed by the Investor, in which case such election to remove the Investor Designee and/or elect a new Investor Designee will be binding on the Investor. In the event of such removal and/or designation of the Investor Designee under this Section 2.3, the Holders shall vote their shares of the Company's capital stock as provided in Section 2.1 to cause: (a) he removal from the Board of the Investor Designee so designated for removal by the Investor; and (b) the election to the Board of any new Investor Designee so designated for election to the Board by the Investor. 2.4 Notice; Cumulative Voting. The Company shall promptly give each of the Holders written notice of any change in composition of the Board and of any proposal by the Investor to remove or elect a new Investor Designee. In any election of directors pursuant to this Section 2, the Holders shall vote their shares in a manner sufficient to elect to the board the individuals to be elected thereto as provided in this Section 2, utilizing cumulative voting, if and to the extent necessary to do so. 3. Further Assurances. Each of the Holders and the Company agree not to vote any shares of the Company's capital stock, or to take any other actions, that would in any manner defeat, impair, be inconsistent with or adversely affect he stated intentions of the parties under Sections 1 and 2 of this Agreement. 4. Transferees; Legends on Certificates. 4.1 Effect on Transferees. Each and every transferee or assignee of any shares of capital stock of the Company from any Holder which or who is Affiliate (as defined below) of such Holder shall be bound by and subject to the terms and conditions of this Agreement that are applicable to such transferee's transferor or assignor, and the Company shall require, as a condition precedent to the transfer of any shares of capital stock of the Company subject to this Agreement, that the transferee agrees in writing to be bound by, and subject to, all the terms and conditions of this Agreement. For purposes of this Agreement, "Affiliate" shall mean as to any Holder: (a) any other person directly or indirectly controlling, controlled by or under common control with such Holder; (b) any other person owning or controlling 10% or more of the outstanding voting securities of such Holder; (c) any officer, director or partner of such Holder; (d) any business entity for which Holder acts as an officer, director or partner; 2 3 (e) the spouse or any relative of such Holder; and (f) any trust or other estate in which such Holder or any other person covered by items (a) through (e) has a beneficial interest or as to which such Holder serves as trustee or in a similar capacity. 4.2 Legend. The Holders agree that all Company share certificates now or hereafter held by them that represent shares of capital stock of the Company subject to this Agreement will be stamped or otherwise imprinted with a legend to read as follows: THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AGREEMENTS AND RESTRICTIONS WITH REGARD TO THE VOTING OF SUCH SHARES AND THEIR TRANSFER, AS PROVIDED IN THE PROVISIONS OF A VOTING AGREEMENT, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE CORPORATION. 5. Enforcement of Agreement. Each of the Holders acknowledge and agree that any breach of any of them of this Agreement shall cause the Investor irreparable harm which may not be adequately compensable by money damages. Accordingly, in the event of a breach or threatened breach by a Holder of any provision of this Agreement, the Company and the Investor shall each be entitled to the remedies of specific performance, injunction or other preliminary or equitable relief, including the right to compel any such breaching Holder, as appropriate, to vote such Holder's shares of capital stock of the Company in accordance with the provisions of this Agreement, in addition to such other rights remedies as may be available to the Company or the Investor for any such breach or threatened breach, including but not limited to the recovery of money damages. 6. Term. This Agreement shall commence on the Effective Date and shall terminate upon the first to occur of the following: (a) The date that is three (3) years from the Effective Date; (b) The consummation of the sale of securities of the Company to the public pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended, pursuant to which the aggregate offering price to the public is at least $10,000,000.00 and the price per share is at least $6.80. (c) Immediately prior to the closing of (i) any consolidation or merger of the Company with or into any other corporation or corporations in which the holders of the Company's outstanding shares immediately before such consolidation or merger do not, immediately after such consolidation or merger, retain stock representing a majority of the voting power of the surviving corporation of such consolidation or merger or stock representing a majority of the voting power of a corporation that wholly owns, directly or indirectly, the surviving corporation or such consolidation or merger; (ii) the sale, transfer or assignment of securities of the Company representing a majority of the 3 4 voting power of all the Company's outstanding voting securities by the holders thereof to an acquiring party in a single transaction or series of related transactions; (iii) any other sale, transfer or assignment of securities of the Company representing over fifty percent (50%) of the voting power of the Company's then outstanding voting securities by the holders thereof to an acquiring party;' or (iv) the sale of all or substantially all the Company's assets; or (d) The date that the aggregate percentage ownership interest in the Company of the Investor and any wholly-owned subsidiaries of the Investor collectively equals less than eight percent (8%), as determined in accordance with Section 3.1 of that certain Investor's Rights Agreement dated as of even date herewith among the Company, the Investor and certain shareholders of the Company. 7. Miscellaneous. 7.1 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California applicable to contracts made among residents of, and wholly to be performed within, the State of California, without reference to principles of conflict of laws or choice of laws. 7.2 Further Instruments. From time to time, each party hereto shall execute and deliver such instruments and documents as may be reasonably necessary to carry out the purposes and intent of this Agreement. 7.3 Successors. This Agreement shall be binding upon and shall inure to the benefit of the executors, administrators, legal representatives, heirs, successors, and assigns of the parties hereto; provided, however, that any transferee of any shares of stock of the Company affected by this Agreement which or who is an Affiliate of the transferring Holder of such shares shall be required, as a condition precedent to acquiring such shares, to first agree in writing to be bound by all the terms and conditions of this Agreement applicable to such transferee's transferor; and provided further that no rights under this Agreement may be assigned apart from the related shares of the Company's capital stock. 7.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.5 Entire Agreement. This document constitutes and contains the entire agreement and understanding of the parties regarding the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, understandings and agreements among the parties respecting the subject matter hereof. 7.6 Amendments and Waivers. Any terms of this Agreement may be amended and the observance of any term of the Agreement may be waived (either 4 5 generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section shall be binding upon the Company, all the Holders and their permitted transferees and assignees. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. COMPANY: INVESTOR: Name: Name: ------------------------------ ------------------------------- By: By: -------------------------------- --------------------------------- Title: Title: ----------------------------- ------------------------------ SHAREHOLDERS: Name: ------------------------------ By: -------------------------------- Title: ----------------------------- 5 6 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. COMPANY: INVESTOR: Name: Name: ------------------------------ ------------------------------- By: By: -------------------------------- --------------------------------- Title: Title: ----------------------------- ------------------------------ SHAREHOLDERS: Name: ------------------------------ By: -------------------------------- Title: ----------------------------- [Signature Page to Voting Agreement] 6 7 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. COMPANY: INVESTOR: Name: Name: ------------------------------ ------------------------------- By: By: -------------------------------- --------------------------------- Title: Title: ----------------------------- ------------------------------ SHAREHOLDERS: Name: Name: ------------------------------ ------------------------------- By: By: -------------------------------- --------------------------------- Title: Title: ----------------------------- ------------------------------ 7 8 WALDEN CAPITAL PARTNERS II, L.P. By: ------------------------------------ Title: --------------------------------- Address: 750 Battery Street Floor 7 San Francisco, CA 94111-1523 WALDEN TECHNOLOGY VENTURES II, L.P. By: ------------------------------------ Title: --------------------------------- Address: 750 Battery Street Floor 7 San Francisco, CA 94111-1523 8 EX-4.3 4 INVESTORS' RIGHTS AGREEMENT 1 EXHIBIT 4.3 AWARD SOFTWARE INTERNATIONAL, INC. INVESTORS' RIGHTS AGREEMENT 2 TABLE OF CONTENTS PAGE I. GENERAL.......................................................... 1. 1.1 Definitions............................................. 1. II. REGISTRATION; RESTRICTIONS ON TRANSFER........................... 3. 2.1 Restrictions on Transfer................................ 3. 2.2 Demand Registration..................................... 4. 2.3 Piggyback Registrations................................. 5. 2.4 Form S-3 Registration................................... 6. 2.5 Expenses of Registration................................ 7. 2.6 Obligations of the Company.............................. 8. 2.7 Delay of Registration; Furnishing Information........... 9. 2.8 Indemnification......................................... 9. 2.9 Assignment of Registration Rights....................... 11. 2.10 Amendment of Registration Rights........................ 11. 2.11 Limitation on Subsequent Registration Rights............ 12. 2.12 "Market Stand-Off" Agreement............................ 12. 2.13 Rule 144 Reporting...................................... 12. III. RIGHTS OF FIRST REFUSAL.......................................... 13. 3.1 Subsequent Offerings.................................... 13. 3.2 Exercise of Rights...................................... 13. 3.3 Issuance of Equity Securities to Other Persons.......... 13. 3.4 Termination of Rights of First Refusal.................. 14. 3.5 Transfer of Rights of First Refusal..................... 14. 3.6 Excluded Securities..................................... 14. 3.7 Catch-up Rights......................................... 14. IV. MISCELLANEOUS.................................................... 15. 4.1 Governing Law........................................... 15. 4.2 Survival................................................ 15. 4.3 Successors and Assigns.................................. 15. 4.4 Severability............................................ 16. 4.5 Amendment and Waiver.................................... 16. 4.6 Delays or Omissions..................................... 16. 4.7 Notices................................................. 16. 4.8 Attorneys' Fees......................................... 16. 4.9 Titles and Subtitles.................................... 16. 4.10 Counterparts............................................ 17. 4.11 Termination Of Prior Agreements......................... 17. i. 3 INVESTORS' RIGHTS AGREEMENT THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is entered into as of January __, 1996, by and among AWARD SOFTWARE INTERNATIONAL, INC., a California corporation (the "Company"), and the persons and entities set forth on Exhibit A (collectively referred to hereinafter as the "Investors" and each individually as an "Investor"). RECITALS WHEREAS, the Company proposes to sell and issue up to 1,140,066 shares of its Common Stock and a warrant to purchase up to 544,788 shares of its Common Stock to Vobis Microcomputer AG ("Vobis") pursuant to that certain Securities Purchase Agreement of even date herewith (the "Purchase Agreement"); WHEREAS, certain of the Investors are parties to either that certain Common Stock Purchase Agreement, dated as of July 17, 1995, or that certain Investors' Rights Agreement, dated as of September 30, 1995 (together, the "Prior Agreements"), which provide such Investors with registration rights; WHEREAS, such Investors desire to supersede those rights set forth in such agreements with the rights set forth in this Agreement; and WHEREAS, it is a condition precedent of entering into the Purchase Agreement that the Company and all the Investors to enter into this Agreement. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and in the Purchase Agreement, the parties mutually agree as follows: I. GENERAL. 1.1 DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings: "COMMON STOCK" means the Company's common stock, no par value. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FORM S-3" means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. "HOLDER" means any person owning of record Registrable Securities that have not been sold to the public or any assignee of record of such Registrable Securities in accordance with Section 2.10 hereof. 4 "INITIAL OFFERING" means the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document. "REGISTRABLE SECURITIES" means (i) the Shares; (ii) the Underlying Shares and (iii) any Common Stock of the Company now or hereafter held by the Investors. Notwithstanding the foregoing, Registrable Securities shall not include any securities sold by a person to the public either pursuant to a registration statement or Rule 144 or sold in a private transaction in which the transferror's rights under Article II of this Agreement are not assigned. "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares determined by calculating the total number of shares of the Company's Common Stock that are Registrable Securities and either (1) are then issued and outstanding or (2) are issuable pursuant to then exercisable or convertible securities. "REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed Twenty Thousand Dollars ($20,000) of a single special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SELLING EXPENSES" shall mean all underwriting discounts and selling commissions applicable to the sale. "SHARES" shall mean shares of the Company's Common Stock issued pursuant to or covered by the Purchase Agreement or the Prior Agreements, including the Underlying Shares. "SEC" or "COMMISSION" means the Securities and Exchange Commission. "UNDERLYING SHARES" shall mean the shares of the Company's Common Stock issuable upon exercise of the Warrants. "WARRANTS" shall mean the Warrants issued pursuant to or in connection with the Purchase Agreement and the Prior Agreements to purchase shares of the Company's Common Stock. 2. 5 II. REGISTRATION; RESTRICTIONS ON TRANSFER. 2.1 RESTRICTIONS ON TRANSFER. (a) Each Holder agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and until: (i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or (ii) (A) The transferee has agreed in writing to be bound by this Section 2.1, (B) Such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. (iii) Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder which is (A) a partnership to its partners or former partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interest in the limited liability company, or (D) to the Holder's family member or trust for the benefit of an individual Holder, provided the transferee will be subject to the terms of this Section 2.1 to the same extent as if he were an original Holder hereunder. (b) Each certificate representing Shares or Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws or as provided elsewhere in this Agreement): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. or THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND FOR A 3. 6 PERIOD OF TWELVE MONTHS FROM THE DATE OF ISSUANCE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS OR ANY AREA SUBJECT TO ITS JURISDICTION OR TO ANY PERSON WHO IS A NATIONAL THEREOF OR RESIDENT THEREIN (INCLUDING ANY ESTATE OF SUCH PERSON) OR ANY CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED THEREIN WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. (c) The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend, including, without limitation, pursuant to an exemption under Rule 144 and Regulation S promulgated under the Securities Act. (d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 2.2 DEMAND REGISTRATION. 2.2.1 Subject to the conditions of this Section 2.2, if the Company shall receive a written request from the Holders of more than a majority of the Registrable Securities then outstanding (the "Initiating Holders") that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities having an aggregate offering price to the public of at least $10,000,000 and a per share price which is at least $6.80 (as adjusted for stock splits, stock dividends and the like) (a "Qualified Public Offering"), then the Company shall, within thirty (30) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 2.2, effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered. 2.2.2 If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.2 and the Company shall include such information in the written notice referred to in Section 2.2.1. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders (which underwriter or underwriters shall be 4. 7 reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders). Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration. 2.2.3 The Company shall not be required to effect a registration pursuant to this Section 2.2: (i) prior to earlier of the third anniversary of the date of this Agreement or the date six months after the effective date of its Initial Offering; or (ii) after the Company has effected a registration pursuant to this Section 2.2, and such registration has been declared or ordered effective; or (iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of the registration statement pertaining to the Initial Offering, provided that the Company is making reasonable and good faith efforts to cause such registration statement to become effective; or (iv) if within thirty (30) days of receipt of a written request from Initiating Holders pursuant to Section 2.2.1, the Company gives notice to the Holders of the Company's intention to make its Initial Offering within ninety (90) days; or (v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; provided that such right to delay a request shall be exercised by the Company no more than twice in any one-year period. 2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to employee benefit plans or with respect to corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within fifteen (15) days after the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities 5. 8 by such Holder. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent such registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. 2.3.1 UNDERWRITING. If the registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated, first, to the Company; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any shareholder of the Company (other than a Holder) on a pro rata basis. No such reduction shall reduce the securities being offered by the Company for its own account to be included in the registration and underwriting, and in no event shall the amount of securities of the selling Holders included in the registration be reduced below twenty-five percent (25%) of the total amount of securities included in such registration, unless such offering is the Initial Offering and such registration does not include shares of any other selling shareholders, in which event any or all of the Registrable Securities of the Holders may be excluded in accordance with the immediately preceding sentence. In no event will shares of any other selling shareholder be included in such registration which would reduce the number of shares which may be included by Holders without the written consent of Holders of not less than a majority of the Registrable Securities proposed to be sold in the offering. 2.3.2 RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to terminate or withdraw any registration initiated or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof. 2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any Holder or Holders of Registrable Securities a written request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: 2.4.1 promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders of Registrable Securities; and 6. 9 2.4.2 as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4: (i) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders, or (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $500,000, or (iii) if the Company shall furnish to the Holders a certificate signed by the Chairman of the Board of Directors of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its shareholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.4: provided, that such right to delay a request shall be exercised by the Company nor more than twice in any one-year period, or (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on Form S-3 for the Holders pursuant to this Section 2.4, or (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. 2.4.3 Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. All such Registration Expenses incurred in connection with registrations requested pursuant to this Section 2.4 after the first two (2) registrations shall be paid by the selling Holders pro rata in proportion to the number of shares sold by each. 2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 2.2 or any registration under Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been 7. 10 subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is based upon material adverse information concerning the Company of which the Initiating Holders were not aware at the time of such request or (b) the Holders of a majority of Registrable Securities agree to forfeit their right to one requested registration pursuant to Section 2.2 or Section 2.4, as applicable, in which event such right shall be forfeited by all Holders). If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand registration. 2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 2.6.1 Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to ninety (90) days (except in the case of a registration statement prepared pursuant to Section 2.4 (Form S-3) keep effective for up to twelve (12) months) or, if earlier, until the Holder or Holders have completed the distribution related thereto. 2.6.2 Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. 2.6.3 Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 2.6.4 Use all reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 2.6.5 In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. 2.6.6 Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits 8. 11 to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 2.6.7 Furnish, at the request of a majority of the Holders participating in the registration, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and if permitted by applicable accounting standards, to the Holders requesting registration of Registrable Securities. 2.7 DELAY OF REGISTRATION; FURNISHING INFORMATION. 2.7.1 No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Article II. 2.7.2 It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities. 2.8 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4: 2.8.1 To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers, directors and legal counsel of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation") by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation 9. 12 promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, partner, officer or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided however, that the indemnity agreement contained in this Section 2.8.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, officer, director, underwriter or controlling person of such Holder. 2.8.2 To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers, and legal counsel and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder's partners, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, however, that the indemnity agreement contained in this Section 2.8.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.8 exceed the proceeds from the offering received by such Holder. 2.8.3 Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel 10. 13 retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8. 2.8.4 If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the proceeds from the offering received by such Holder. 2.8.5 The obligations of the Company and Holders under this Section 2.8 shall survive completion of any offering of Registrable Securities in a registration statement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register Registrable Securities pursuant to this Article II may be assigned by a Holder to a transferee or assignee of Registrable Securities which (i) is a subsidiary, parent, general partner, limited partner or retired partner of a Holder, (ii) is a Holder's family member or trust for the benefit of an individual Holder, or (iii) acquires at least eighty-three thousand (83,000) shares of Registrable Securities (as adjusted for stock splits and combinations); provided, however, (A) the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (B) such transferee shall agree to be subject to all restrictions set forth in this Agreement. 2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article II may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of at least a majority of the Registrable Securities. Any amendment or waiver effected 11. 14 in accordance with this Section 2.11 shall be binding upon each Holder and the Company. By acceptance of any benefits under this Article II, Holders of Registrable Securities hereby agree to be bound by the provisions hereunder. 2.11 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holders hereunder. 2.12 "MARKET STAND-OFF" AGREEMENT. If requested by the Company as the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall not sell or otherwise transfer or dispose of any Shares Common Stock (or other securities) of the Company held by such each Holder (other than those included in the registration) for a period specified by the representative of the underwriters not to exceed one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act, provided that: (i) such agreement shall apply only to the Company's Initial Offering; and (ii) all officers and directors of the Company shall enter into similar agreements. The obligations described in this Section 2.12 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. 2.13 RULE 144 REPORTING. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public; (b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become subject to such reporting requirements); a copy of the most recent 12. 15 annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. III. RIGHTS OF FIRST REFUSAL. 3.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first refusal to purchase its pro rata share of all Equity Securities, as defined below, that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 3.6 hereof. Each Investor's pro rata share is equal to the ratio of (A) the number of shares of the Company's Common Stock that are held by such Investor plus the number of shares of Common Stock issuable upon exercise of any Warrant held by such Investor immediately prior to the issuance of such Equity Securities to (B) the total number of shares of the Company's Common Stock outstanding plus the number of shares of Common Stock issuable upon exercise of the Warrants immediately prior to the issuance of the Equity Securities. The term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or other security of the Company, (ii) any security convertible, with or without consideration, into any Common Stock, Preferred Stock or other security (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant or right. 3.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity Securities, it shall give each Investor written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. Each Investor shall have fifteen (15) days from the giving of such notice to agree to purchase up to its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the foregoing, the Company shall not be required to offer or sell such Equity Securities to any Investor who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale. 3.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the Investors elect to purchase their pro rata share of the Equity Securities, then the Company shall promptly notify in writing the Investors who do so elect and shall offer such Investors the right to acquire such unsubscribed shares. The Investors shall have five (5) days after receipt of such notice to notify the Company of its election to purchase all or a portion thereof of the unsubscribed shares. If the Investors fail to exercise in full the rights of first refusal, the Company shall have ninety (90) days thereafter to sell the Equity Securities in respect of which the Investor's rights were not exercised, at a price and upon general terms and conditions materially no more favorable to the purchasers thereof than specified in the Company's notice to the Investors pursuant to Section 3.2 hereof. If the Company has not sold such Equity Securities within days of the notice provided pursuant to Section 3.2, the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Investors in the manner provided above. 13. 16 3.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal set forth in Sections 3.1, 3.2 and 3.3 above shall terminate upon the closing date of the registration statement pertaining to a Qualified Public Offering. 3.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of each Investor under this Article III may be transferred to the same parties, subject to the same restrictions, as any transfer of registration rights pursuant to Section 2.9. 3.6 EXCLUDED SECURITIES. The rights of first refusal established by this Article III shall have no application to any of the following Equity Securities: 3.6.1 shares of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board of Directors; 3.6.2 stock issued pursuant to any rights or agreements outstanding as of the date of this Agreement, options and warrants (other than options, warrants or other Common Stock purchase rights covered by Section 3.6.1 above) outstanding as of the date of this Agreement; and stock issued pursuant to any such rights or agreements granted after the date of this Agreement, provided that the rights of first refusal established by this Article III applied with respect to the initial sale or grant by the Company of such rights or agreements; 3.6.3 any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination; 3.6.4 shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization by the Company; 3.6.5 any Equity Securities issued pursuant to any equipment leasing arrangement, or bank financing; 3.6.6 any Equity Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act; and 3.6.7 shares of the Company's Common Stock or Preferred Stock issued in connection with strategic transactions involving the Company and other entities, including (A) joint ventures, manufacturing, marketing or distribution arrangements or (B) technology transfer or development arrangements; provided that such strategic transactions and the issuance of shares therein, has been approved by the Company's Board of Directors. 3.7 CATCH-UP RIGHTS. In the event the Company (a) issues any shares of Common Stock and/or grants any options, warrants or other Common Stock purchase rights exercisable for Common Stock in a transaction that is not subject to the right of first refusal established by this Article III by reason of Section 3.6.1 and after such transaction the Employee Stock Pool, as hereinafter defined, is greater than 1,500,000 (as adjusted appropriately for any stock splits, 14. 17 stock dividends or other such changes in the capitalization of the Company) or (b) issues any Equity Securities in a transaction that is not subject to the right of first refusal established by this Article III by reason of Sections 3.6.3, 3.6.5, 3.6.6 (unless such offering is for a Qualified Public Offering) or 3.6.7, the Company will give Vobis written notice of such grant or issuance not later that ten (10) days after it has occurred, providing relevant details of the transaction including the purchase price of the Equity Securities issued and the Vobis Purchase Price (as defined below). For purposes hereof, the Employee Stock Pool, as of a given date, shall be the sum of (i) the number of shares of Common Stock issuable upon exercise of options, warrants or other Common Stock purchase rights granted to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary ("Employee Rights") and then outstanding and (ii) the number of shares of Common Stock previously issued upon exercise of Employee Rights outstanding at any time after the date of this Agreement, minus the number of any such shares of Common Stock as to which Vobis has previously been given notice in respect of its rights hereunder (all such numbers having been adjusted appropriately for any stock splits, stock dividends or other such changes in the capitalization of the Company). For purposes of this Section 3.7, the "Vobis Purchase Price" shall mean the purchase price for which the Vobis Group (as defined below) may exercise its rights under this Section 3.7 to purchase securities from the Company which shall equal: (i) in the case of direct issuances of Common Stock under (a) above, the fair market value of the Common Stock on the date of issuance; (ii) in the case of the issuances of Employee Rights under (a) above, the fair market of the underlying Common Stock on the date of grant of such Employee Right; (iii) in the case of any Equity Securities covered by (b) above, the actual price paid or payable with respect to such Equity Securities; and (iv) in the event the consideration for the Equity Securities issued by the Company under (a) or (b) above was other than cash, the fair market value of such consideration as reasonably determined in good faith by the Board of Directors of the Company as of the date of issuance of such Equity Securities; provided, however, that notwithstanding the above, if the fair market value as determined in (i) or (ii) above is higher than the price paid or payable in connection with any issuances under (i) or (ii) above, then the Vobis Purchase Price shall equal the average of such fair market value and such actual purchase price paid or payable for such issuance. Vobis and any of its wholly-owned subsidiaries holding Registrable Securities (collectively, the "Vobis Group") shall have the right, exercisable at any time within thirty (30) days after such notice is given, to purchase from the Company at the Vobis Purchase Price specified that number of Equity Securities (which shall be Common Stock in the case of any Employee Rights) as is necessary to restore its percentage ownership interest (determined in accordance with Section 3.1) to the percentage ownership interest of the Vobis Group immediately prior to such issuance, but in no event to greater than seventeen and one-half percent (17.5%). Notwithstanding the foregoing, in the case of transactions involving the issuance of Common Stock and Employee Rights representing less than three and one-half percent (3.5%) of the Common Stock outstanding immediately prior to the first of such transactions, the Company may at its election defer giving such notice until issuances in that and any subsequent transactions as to which notice has been deferred hereunder, constitute in the aggregate three and one-half percent (3.5%) or more of the Common Stock outstanding. In such case, the notice given by the Company shall specify the information called for herein with respect to each such transaction, and the right of the Vobis Group to purchase with respect to all such transactions shall be at the Vobis Purchase Price applicable to the shares of Common Stock sold or issuable upon exercise of Employee Rights granted in such transactions. The rights granted to the Vobis Group under this Section 3.7 shall terminate and be of no further force or effect on the earlier of (A) the 15. 18 closing date of a Qualified Public Offering or (B) on the day prior to a transaction (or the first of a series of transactions to be covered by a deferred notice) to which this Section 3.7 would otherwise apply, if on such date the percentage ownership interest of the Vobis Group (determined in accordance with Section 3.1) is less than eight percent (8%). Notwithstanding the foregoing, in the event of a Qualified Public Offering in which the Company offers in excess of 1,500,000 shares, as presently constituted (including any shares to be offered under any overallotment option), the Company agrees to give the Vobis Group the opportunity to purchase in a single transaction up to twelve percent (12.0%) of such excess in such offering. Any right to purchase Equity Securities under this Section 3.7 may be allocated among the members of the Vobis Group on such basis as Vobis may determine. IV. MISCELLANEOUS. 4.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 4.2 SURVIVAL. The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. 4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; provided, however, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. 4.4 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 4.5 AMENDMENT AND WAIVER. Except as otherwise expressly provided, this Agreement may be amended or modified, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only upon the written consent of the Company and the holders of at least a majority of the Registrable Securities; provided, however, only Vobis may waive or amend the rights granted under Section 3.7. 4.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further 16. 19 agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 4.7 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) if to an Investor located in the United States, five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) if to an Investor located in the United States, one (1) day, and if to an Investor located outside of the United States, four (4) business days, after deposit with an internationally recognized overnight courier, specifying express delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 4.8 ATTORNEYS' FEES. In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 4.9 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 4.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 4.11 TERMINATION OF PRIOR AGREEMENTS. The Investors hereby agree to the termination of (i) that certain Investors' Rights Agreement, dated as of September 30, 1995 (the "Rights Agreement") and (ii) Sections 6 and 7 of that certain Common Stock Purchase Agreement, dated as of July 17, 1995 (the "Prior Agreement"), and hereby agree that the Company shall have no further obligations under the Rights Agreement and Sections 6 and 7 of the Prior Agreement and that the rights granted hereunder are in lieu thereof. As required by Section 4.5 of the Rights Agreement and Section 8.4 of the Prior Agreement, the undersigned represent at least two-thirds (66 2/3%) of the Registrable Securities and all of the Purchasers, respectively, thereunder. Notwithstanding anything herein to the contrary, unless otherwise amended or modified by this Section 4.11, the rights and obligations of the parties under the Prior Agreement (excluding Sections 6 and 7 thereof) shall remain in full force and effect. 17. 20 18. 21 [THIS SPACE INTENTIONALLY LEFT BLANK] 19. 22 IN WITNESS WHEREOF, the parties hereto have executed this Investors' Rights Agreement as of the date set forth in the first paragraph hereof. COMPANY INVESTORS AWARD SOFTWARE INTERNATIONAL, INC. VENROCK ASSOCIATES By: By: ------------------------------- ------------------------------------ Title: Title: ---------------------------- --------------------------------- Address: 777 East Middlefield Road Address: 30 Rockefeller Plaza, Rm 5508 Mountain View, CA 94043 New York, NY 10112 VENROCK ASSOCIATES II, L.P. By: ------------------------------------ Title: --------------------------------- Address: 30 Rockefeller Plaza, Rm 5508 New York, NY 10112 INVESTORS' RIGHTS AGREEMENT 23 WALDEN CAPITAL PARTNERS II, L.P. By: ----------------------------------- Title: -------------------------------- Address: 750 Battery Street Floor 7 San Francisco, CA 94111-1523 WALDEN TECHNOLOGY VENTURES II, L.P. By: ----------------------------------- Title: -------------------------------- Address: 750 Battery Street Floor 7 San Francisco, CA 94111-1523 INVESTORS' RIGHTS AGREEMENT 24 VOBIS MICROCOMPUTER AG By: --------------------------------- Title: ------------------------------ Address: Carlo-Schmid-Str. 12 D-52146 Wurselen Germany INVESTORS' RIGHTS AGREEMENT 25 CHAILEASE VENTURE CAPITAL CO., LTD. By: ------------------------------------------ Title: --------------------------------------- Address: 5th Fl., No. 420 Fu-Hsin N. Rd. Taipei, Taiwan KOOS VENTURE CAPITAL CO., LTD. By: ------------------------------------------ Title: --------------------------------------- Address: 5th Fl., No. 420 Fu-Hsin N. Rd. Taipei, Taiwan CHINATRUST VENTURE CAPITAL CO., LTD. By: ------------------------------------------ Title: --------------------------------------- Address: 5th Fl., No. 420 Fu-Hsin N. Rd. Taipei, Taiwan INVESTORS' RIGHTS AGREEMENT 26 HANTECH VENTURE CAPITAL CO., LTD. By: ----------------------------------------- Title: -------------------------------------- Address: Suite 3201, 32F, International Trade Building No. 333, Keelung Road, Sec. 1 Taipei Taiwan INVESTORS' RIGHTS AGREEMENT 27 HUNG LIEN INVESTMENT By: ------------------------ Title: --------------------- Address: ------------------- ------------------- ------------------- INVESTORS' RIGHTS AGREEMENT 28 EXHIBIT A SCHEDULE OF INVESTORS Venrock Associates Venrock Associates II, L.P. Walden Capital Partners II, L.P. Walden Technology Ventures II, L.P. Vobis Microcomputer AG Chailease Venture Capital Co., Ltd. Koos Venture Capital Co., Ltd. Chinatrust Venture Capital Co., Ltd. Hantech Venture Capital Co., Ltd. Hung Lien Investment EX-4.4 5 WARRANT 1 EXHIBIT 4.4 No.W-5 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS. WARRANT TO PURCHASE A MAXIMUM OF 544,788 SHARES OF COMMON STOCK OF AWARD SOFTWARE INTERNATIONAL, INC. (Void after September 30, 2000) This certifies that VOBIS MICROCOMPUTER AG (the "Holder"), or assigns, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, is entitled to purchase from AWARD SOFTWARE INTERNATIONAL, INC., a California corporation (the "Company"), having a place of business at 777 East Middlefield Road, Mountain View, CA 94043-4023, a maximum of Five Hundred Forty-Four Thousand, Seven Hundred Eighty-Eight (544,788) fully paid and nonassessable shares of the Company's Common Stock ("Common Stock") for cash at a price of six dollars fourteen cents ($6.14) per share (the "Stock Purchase Price") at any time or from time to time up to and including the earlier of (i) the closing of the Company's initial public offering of its Common Stock of which the aggregate offering price and per share price to the public are at least $10,000,000 and $6.80, respectively (a "Qualified Public Offering"), pursuant to a registration statement under the Securities Act of 1933, as amended, if the warrants covering 246,664 shares of Common Stock currently held by the Walden and Venrock investor groups terminate at the closing of a Qualified Public Offering; provided, the Holder has received at least ten (10) business days prior notice that such warrants will so terminate, or (ii) 5:00 p.m. (Pacific time) on September 30, 2000, such earlier day being referred to herein as the "Expiration Date", upon surrender to the Company at its principal office (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant. 1. 2 This Warrant is subject to the following terms and conditions: 1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. 1.1 GENERAL. This Warrant is exercisable at the option of the holder of record hereof, at any time or from time to time, up to the Expiration Date for all or any part of the shares of Common Stock (but not for a fraction of a share) which may be purchased hereunder. The Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered, properly endorsed, the completed, executed Form of Subscription delivered and payment made for such shares. Certificates for the shares of Common Stock so purchased, together with any other securities or property to which the Holder hereof by the Company at the Company's expense within a reasonable time after the rights represented by this Warrant have been so exercised. In case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Common Stock as may be requested by the Holder hereof and shall be registered in the name of such Holder. 1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the contrary, in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Form of Subscription and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X=Y(A-B) ------ A WHERE X= the number of shares of Common Stock to be issued to the Holder Y= the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) A= the fair market value of one share of the Company's Common Stock (at the date of such calculation) B= Stock Purchase Price (as adjusted to the date of such calculation) 2. 3 For purposes of the above calculation, fair market value of one share of Common Stock shall be determined by the Company's Board of Directors in good faith; provided, however, that in the event the Company makes an initial public offering of its Common Stock the fair market value per share shall be the average of the closing prices of such security's sales on all domestic securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day such security is not quoted in the NASDAQ system, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporation, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which "fair market value" is being determined and the 20 consecutive business days prior to such day; provided that if such security is listed on any domestic securities exchange the term "business days" as used in this sentence means business days on which such exchange is open for trading; provided, further, that if the Warrant is exercised at or immediately prior to the Qualified Public Offering of its Common Stock, the fair market value per share be the per share offering price to the public of such Qualified Public Offering. 2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under Federal or state securities laws with respect to such exercise. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 3 hereof) (i) if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action upon the conversion of all such shares of Common Stock, together with all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all such shares of Common Stock, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding 3. 4 would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3. Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment. 3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION. If at any time or from time to time the Holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, (A) Common Stock or any shares of stock or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, (B) any cash paid or payable otherwise than as a cash dividend, or (C) Common Stock or additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than (i) shares of Common Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 3.1 above or (ii) an event for which adjustment is otherwise made pursuant to Section 3.4 below), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clauses (B) and (C) above) which such Holder would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property. 4. 5 3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any capital reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any reorganization described above, appropriate provision shall be made with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. 3.4 OTHER NOTICES. If at any time: (1) the Company shall declare any cash dividend upon its Common Stock; (2) the Company shall declare any dividend upon its Common Stock payable in stock or make any special dividend or other distribution to the holders of its Common Stock; (3) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; (4) there shall be any capital reorganization or reclassification of the capital stock of the Company; or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; (5) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (6) there shall be an initial public offering of Company securities; 5. 6 then, in any one or more of said cases, the Company shall give written notice to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, (a) at least thirty (30) days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or public offering, at least thirty (30) days' prior written notice of the date when the same shall take place; provided, however, that the Holder shall make a best efforts attempt to respond to such notice as early as possible after the receipt thereof. Any notice given in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (b) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up, conversion or public offering, as the case may be. 3.5 CERTAIN EVENTS. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 5. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any warrant or of any shares of Common Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Warrant shall be construed as conferring upon the holder hereof the right to vote or to consent or to receive notice as a shareholder of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares 6. 7 purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the Stock Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 7. REGISTRATION RIGHTS AGREEMENT. The registration rights of the Holder (including Holders' successors) with respect to the stock underlying this Warrant will be the same as granted to the holders of the Company's Common Stock under that certain Investors' Rights Agreement of even date herewith (the "Investors' Rights Agreement"). 8. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal and state securities laws and the transfer restrictions set forth in the Investors' Rights Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes), upon surrender of this Warrant properly endorsed and compliance with the provisions of the Investors' Rights Agreement. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Warrant shall have been so endorsed, may be treated by the Company, at the Company's option, and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the Company any notice to the contrary notwithstanding; but until such transfer on such books, the Company may treat the registered owner hereof as the owner for all purposes. 9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and obligations of the Company, of the holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, referred to in Sections 7 and 8 shall survive the exercise of this Warrant. 10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 11. NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, or (iii) four (4) business days, after deposit with an internationally recognized overnight courier, specifying express delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as shown on the books of the Company or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the 7. 8 Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the holder hereof. 13. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California without giving effect to principles of conflicts of law. 14. LOST WARRANTS. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant. 8. 9 15. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 12 day of January, 1996. AWARD SOFTWARE INTERNATIONAL, INC. a California corporation By: ----------------------------------------- Title: -------------------------------------- ATTEST: - ----------------------------- Secretary 10 EXHIBIT A SUBSCRIPTION FORM Date: 19 ------------------------, -- Award Software International, Inc. - --------------------------------- - --------------------------------- Attn: President Gentlemen: / / The undersigned hereby elects to exercise the warrant issued to it by Award Software International, Inc. (the "Company") and dated January , 1996 -- Warrant No. W- (the "Warrant") and to purchase thereunder -------- --------------- shares of the Common Stock of the Company (the "Shares") at a purchase price of Six Dollars Fourteen Cents ($6.14) per Share or an aggregate purchase price of Dollars ($ )(the "Purchase Price"). - ------------------------ ---------- / / The undersigned hereby elects to convert percent ----------------------- ( %) of the value of the Warrant pursuant to the provisions of Section ------- 1.2 of the Warrant. Pursuant to the terms of the Warrant the undersigned has delivered the Purchase Price herewith in full in cash or by certified check or wire transfer. The undersigned also makes the representations set forth on the attached Exhibit B of the Warrant. Very truly yours, --------------------------------------- By: ------------------------------------ Title: --------------------------------- 11 EXHIBIT B INVESTMENT REPRESENTATIONS THIS AGREEMENT MUST BE COMPLETED, SIGNED, AND RETURNED TO --------------------- ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT CERTIFICATE DATED JANUARY , 1996, WILL BE ISSUED. 19 ---------------------, -- Award Software International, Inc. [Address] - --------------------------------- - --------------------------------- Attention: President The undersigned, ("Purchaser"), intends to -------------------------- acquire up to shares of the Common Stock (the "Common Stock") of --------------- Award Software International, Inc. (the "Company") from the Company pursuant to the exercise or conversion of certain Warrants to purchase Common Stock held by Purchaser. The Common Stock will be issued to Purchaser in a transaction not involving a public offering and pursuant to an exemption from registration under the Securities Act of 1933, as amended, (the "1933 Act") and applicable state securities laws. In connection with such purchase and in order to comply with the exemptions from registration relied upon by the Company, Purchaser represents, warrants and agrees as follows: Purchaser is acquiring the Common Stock for its own account, to hold for investment, and Purchaser shall not make any sale, transfer or other disposition of the Common Stock in violation of the 1933 Act or the General Rules and Regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC") or in violation of any applicable state securities law. Purchaser has been advised that the Common Stock has not been registered under the 1933 Act or state securities laws on the ground that this transaction is exempt from registration, and that reliance by the Company on such exemptions is predicated in part on Purchaser's representations set forth in this letter. Purchaser has been informed that under the 1933 Act, the Common Stock must be held indefinitely unless it is subsequently registered under the 1933 Act or unless an exemption from such registration (such as Rule 144) is available with respect to any proposed transfer or disposition by Purchaser of the Common Stock. Purchaser further agrees that the Company may refuse to permit Purchaser to sell, transfer or dispose of the Common Stock (except as permitted 1. 12 under Rule 144) unless there is in effect a registration statement under the 1933 Act and any applicable state securities laws covering such transfer, or unless Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel for the Company, to the effect that such registration is not required. Purchaser also understands and agrees that there will be placed on the certificate(s) for the Common Stock, or any substitutions therefor, a legend stating in substance: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. These shares have been acquired for investment and may not be sold or otherwise transferred in the absence of an effective registration statement for these shares under the Securities Act and applicable state securities laws, or an opinion of counsel satisfactory to the Company that registration is not required and that an applicable exemption is available." Purchaser has carefully read this letter and has discussed its requirements and other applicable limitations upon Purchaser's resale of the Common Stock with Purchaser's counsel. Very truly yours, ------------------------------ By: ---------------------------- -----END PRIVACY-ENHANCED MESSAGE-----