SC 14D9/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1

TO

SCHEDULE 14D-9

SOLICITATION/RECOMMENDATION STATEMENT

PURSUANT TO SECTION 14(d)(4) OF THE

SECURITIES EXCHANGE ACT OF 1934

INTERTRUST TECHNOLOGIES CORPORATION

(Name of Subject Company)

INTERTRUST TECHNOLOGIES CORPORATION

(Name of Person Filing Statement)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

46113Q109

(CUSIP Number of Class of Securities)

David Lockwood

President and Chief Executive Officer

InterTrust Technologies Corporation

4800 Patrick Henry Drive

Santa Clara, California 95054

(408) 855-0100

(Name, Address and Telephone Number of Person Authorized to Receive Notice and

Communications on Behalf of the Person(s) Filing Statement)

With Copies to:

Kenton J. King, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue, Suite 1100 Palo Alto, California 94301 (650) 470-4500 Roger Aaron, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, New York 10035 (212) 735-3000

¨ CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER.

This Amendment No. 1 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by InterTrust Technologies Corporation on November 22, 2002. Except as otherwise indicated, the information set forth in the original Schedule 14D-9 remains unchanged. Capitalized terms used but not defined herein have the meanings ascribed to them in the Schedule 14D-9.

Item 4.    The Solicitation or Recommendation.

Item 4 is amended and supplemented by deleting the text in the subsection entitled “Litigation Related to the Merger and the Effect of a Tender by a Majority of Outstanding Shares” and inserting the following in its place:

The California Actions.    On November 13, 2002, two alleged holders of InterTrust Common Stock filed substantially identical complaints in California Superior Court for Santa Clara County naming as defendants each of the directors of InterTrust (together, the “Directors”). The first complaint is captioned Fabrizio Righetti v. Curtis A. Hessler, et al., Case No. CV812654 (the “Righetti Action”). The second complaint is captioned Jung-Ho Nam v. Curtis A. Hessler, et al., Case No. CV812655 (the “Nam Action” and, together with the Righetti Action, the “California Actions”). A copy of the complaint in the Righetti Action is attached to this Schedule 14D-9 as Exhibit 18. A copy of the complaint in the Nam Action is attached to this Schedule 14D-9 as Exhibit 19. Both Mr. Righetti and Mr. Nam (together, the “California Plaintiffs”) purport to bring the California Actions on behalf of a class consisting of all holders of InterTrust Common Stock, except the Directors and their affiliates.

The California Plaintiffs claim that, in pursuing a strategic transaction with Parent and Buyer and approving the Merger Agreement, the Directors breached their fiduciary duties to holders of InterTrust Common Stock by, among other things, allegedly engaging in self-dealing, failing to obtain the highest price reasonably available for InterTrust and its shareholders, and failing to properly value InterTrust. Plaintiffs also allege that the proposed transaction with Parent and Buyer is the result of a “flawed” process that was designed to ensure the sale of InterTrust to Fidelio on terms preferential to Fidelio and in violation of the rights and interests of the Company’s public stockholders. Plaintiffs seek, among other things, a declaration that the Merger Agreement was entered into in breach of the Directors’ fiduciary duties, a preliminary and permanent injunction to enjoin Directors from consummating the Merger, a direction to the Directors to exercise their fiduciary duties to obtain a transaction that is in the best interests of InterTrust’ stockholders, rescission of the Merger or any of the terms thereof to the extent implemented, and an award of costs and disbursements, including reasonable attorneys’ and experts’ fees. See Exhibits 18 and 19 to this Schedule 14D-9 for a full and complete statement of the California Plaintiffs’ allegations.

The Delaware Action.    On November 27, 2002, two alleged holders of InterTrust Common Stock filed a complaint in the Delaware Court of Chancery (the “Court of Chancery”) naming as defendants each of the Directors, InterTrust and Parent. The complaint is captioned James Kaufman, et al. v. Curtis A. Hessler, et al., Case No. 20059-NC (the “Delaware Action”). A copy of the complaint in the Delaware Action is attached to this Schedule 14D-9 as Exhibit 20. The plaintiffs in the Delaware Action (the “Delaware Plaintiffs”) purport to bring the Delaware Action on behalf of a class consisting of all holders of InterTrust Common Stock, except the defendants and their affiliates.

The Delaware Plaintiffs allege that the Directors, aided and abetted by Parent, breached their fiduciary duties in approving the Merger Agreement. Among other things, the Delaware Plaintiffs assert that the Directors failed to take necessary and appropriate steps to maximize the value of InterTrust common stock, agreed in the Merger Agreement to pay an allegedly excessive termination fee to Parent

under certain circumstances and approved in connection with the Merger Agreement the licensing to Sony and Philips of rights under InterTrust’s patents in exchange for up-front payments of $18.5 million that the Delaware Plaintiffs assert operates as a “lock up” to preclude competing offers for InterTrust. See Exhibit 20 to this Schedule 14D-9 for a full and complete statement of the Delaware Plaintiffs’ allegations.

The Delaware Action seeks, among other things, an order directing the Directors to fulfill their fiduciary duties, enjoining the Offer and Merger, awarding the costs and disbursements of the action, including reasonable attorneys’ and experts’ fees.

On December 2, 2002, the Delaware Plaintiffs filed in the Court of Chancery motions for expedited proceedings, including expedited discovery, and for an order preliminarily enjoining the Offer. There has been no formal discovery to date in either the California Actions or the Delaware Action (together with the California Actions, the “Actions”).

Based on its review of the complaints, InterTrust believes that the allegations in the Actions are without merit and intends, along with the Directors, to defend the Actions vigorously.

In the event that a majority of the shares of InterTrust Common Stock tender their Shares in the Offer, InterTrust and the Directors intend to rely upon the acceptance of the Offer in defense of the claims asserted in the Actions. Specifically, InterTrust and the Directors intend to argue that the tender by the holders of a majority of the shares of InterTrust Common Stock in the Offer constitutes a ratification or acceptance of the conduct that is the subject of the complaints in the Actions. InterTrust and the Directors further intend to argue that such ratification or acceptance constitutes a complete defense to the claims asserted in the Actions or otherwise operates to protect them from liability or increase the plaintiffs’ burdens of pleading and proof in the Actions. In addition, Defendants intend to argue that any holder of shares of InterTrust Common Stock who tenders Shares in the Offer has acquiesced in the transaction and cannot attack it or participate as a class member in the Actions or any later-filed lawsuit seeking damages relating to the Merger Agreement or the transactions related thereto.

Item 8.    Additional Information to be Furnished.

Item 8 is amended by deleting the text in the second paragraph in the subsection entitled “Antitrust – United States” and inserting the following two paragraphs in its place:

Under the HSR Act, the purchase of shares of InterTrust Common Stock in the Offer may not be completed until the expiration of the 30-calendar-day waiting periods following the filing by each of Philips and SCA of certain required information and documentary material concerning the Offer with the FTC and the Antitrust Division, unless the waiting periods are earlier terminated by the FTC and the Antitrust Division. Philips filed its Premerger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division in connection with the purchase of shares in the Offer and the Merger on November 22, 2002, and SCA filed its Premerger Notification and Report Form on December 2, 2002. As a result, the required waiting periods with respect to the Offer and the Merger will expire at 11:59 p.m., New York City time, on January 2, 2003, which is the later of the expiration of the waiting periods for the Philips filing and the SCA filing, unless earlier terminated by the FTC or the Antitrust Division or a filing party receives a request for additional information or documentary material prior to the expiration of the applicable waiting period. If, within the applicable 30-calendar-day waiting period, either the FTC or the Antitrust Division requests additional information or documentary material from SCA or Philips, the initial waiting period would be extended for an additional period of 30 calendar days following the date of substantial compliance with that request by SCA and Philips. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR rules. After that time, the waiting period could be extended only by court order or with filing parties’ consent. The FTC or the Antitrust Division may terminate the additional 30-calendar-day waiting period before its expiration.

In practice, complying with a request for additional information or documentary material can take a significant period of time. Although InterTrust is also required to make an HSR filing with the FTC and the Antitrust Division in connection with the Offer, neither InterTrust’s failure to make that filing nor a request made to InterTrust from the FTC or the Antitrust Division for additional information or documentary material will extend the waiting period with respect to the purchase of shares of InterTrust Common Stock in the Offer and the Merger. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions, such as Parent's and Purchaser's acquisition of shares in the Offer and the Merger. At any time before or after the Purchaser's purchase of shares, the FTC or the Antitrust Division could take action under the antitrust laws that either considers necessary or desirable in the public interest, including seeking to enjoin the purchase of shares in the Offer and the Merger, the divestiture of shares purchased in the Offer or the divestiture of substantial assets of InterTrust or any of its subsidiaries or affiliates. Private parties as well as state attorneys general may also bring legal actions under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, of the result thereof. See the subsection entitled “Certain Conditions of the Offer” in Item 3 of this Schedule 14D-9.

Division and the FTC in connection with the Offer, neither the Company’s failure to make such filings nor a request to the Company from the Antitrust Division or the FTC for additional information or documentary material will extend the waiting period.

Item 9.    Exhibits.

Item 9 is hereby amended and supplemented as follows:

Exhibit 20 Complaint filed by James Kaufman, et al. in the Delaware Court of Chancery on November 27, 2002.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

		INTERTRUST TECHNOLOGIES CORPORATION
		By:	/S/    DAVID LOCKWOOD
		Name:	David Lockwood
		Title:	President and Chief Executive Officer
Dated:	December 5, 2002

EX-20

Exhibit 20

IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

JAMES KAUFMAN and BARRIE KAUFMAN, as Trustees by and for the KAUFMAN FAMILY TRUST 9/03/98 and COLIN GILBERT, on Behalf of themselves, and All Others Similarly Situated, Plaintiffs, -against- CURTIS A. HESLER, ROBERT R. WALKER, LESTER HOCHBERG, DAVID C. CHANCE, DAVID LOCKWOOD, TIMO RIUKKA, SATISH K. GUPTA, VICTOR SHEAR, INTERTRUST TECHNOLOGIES CORPORATION, and FIDELIO ACQUISITION COMPANY, LLC, Defendants. Case No. 20059-NC CLASS ACTION

COMPLAINT

Plaintiffs, by and through their attorneys, allege upon personal knowledge as to themselves and their own acts and upon information and belief as to all other matters, based upon the investigation conducted by counsel, which included, inter alia a review or public documents filed with the United States Securities and Exchange Commission (“SEC”) and other published materials, as follows:

SUMMARY OF THE ACTION

1.    This is a class action brought by plaintiffs on behalf of the public stockholders of InterTrust Technologies Corporation (“InterTrust” or the “Company”) common stock for injunctive and other appropriate relief in connection with the sale of InterTrust to Fidelio Acquisition Company, LLC (“Fidelio”), through a tender offer and merger that commenced on November 22, 2002 and is set to expire on December 20, 2002 (hereinafter, the “Tender Offer” or the “Tender Offer and Merger”).

2.    The Tender Offer is unfairly structured to guarantee that Fidelio is the only purchaser in a position to purchase InterTrust. The decision of the Individual Defendants (defined below), who constitute InterTrust’s Board of Directors, to pursue the proposed transaction will deny InterTrust’s shareholders of the opportunity to share appropriately in the true value of InterTrust’s assets. Plaintiffs allege that they and the other public stockholders of InterTrust are entitled to seek to enjoin the proposed transaction or, alternatively, to rescind the transaction and/or recover damages in the event the transaction is consummated.

PARTIES

3.    Plaintiffs James Kaufman and Barrie Kaufman are trustees of the Kaufman Family Trust 9/03/98 (“Kaufman Trust”), which is, and at all times relevant to the action has been, a shareholder of InterTrust. As of the date of the Tender Offer, the Kaufman Trust owned 250,000 shares of InterTrust common stock.

4.    Plaintiff Colin Gilbert is, and at all relevant times to the action, a shareholder of InterTrust. As of the date of the Tender Offer, Mr. Gilbert owned approximately 230,000 shares of InterTrust common stock.

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5.    Defendant InterTrust is a Delaware corporation based in California. InterTrust is engaged in inventing and defining technologies for Digital Rights Management (“DRM”), including various trusted competing technologies that enable secure management of digital processes and information.

6.    Defendant Fidelio is a Delaware limited liability company whose members are Koninklijke Philips Electronics N.V. (“Philips”), Sony Corporation of America (“SCA”) and Stephens Acquisition LLC (“Stephens”). Fidelio Sub, Inc. (“Fidelio Sub”), a Delaware corporation and a wholly owned subsidiary of Fidelio, was organized to acquire all of the outstanding shares of InterTrust pursuant to the Tender Offer and Merger. Fidelio Sub has not conducted any activities other than in connection with the Tender Offer and the Merger since its organization. “Fidelio” hereinafter refers to Fidelio and Fidelio Sub, as well as Philips, SCA and Stephens.

(a)  Philips is a corporation organized under the laws of Netherlands with its principal executive offices located at Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. Philips is Europe’s largest and one of the world’s largest electronics companies.

(b)  SCA is a New York corporation and an indirect, wholly owned subsidiary of Sony Corporation, a Japanese corporation (“Sony”). SCA’s principal executive offices are located at 550 Madison Avenue, 33rd Floor, New York, New York, 10022. SCA is a leading manufacturer of audio, video, communications and information technology products for the consumer and professional markets.

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(c)  Stephens is a newly formed entity that has not conducted any business other than in connection with the Tender Offer and Merger. Stephens is an Arkansas limited liability company and a wholly owned subsidiary of Stephens Group, Inc. Stephens Group, Inc. is a privately held, Little Rock, Arkansas based holding company, and is the parent of Stephens Inc., an investment banking firm that is a member of the National Association of Securities Dealers and the New York Stock Exchange. The principal executive offices of Stephens, Stephens Group, Inc. and Stephens Inc. is 111 Cepter Street, Suite 500, Little Rock, Arkansas 72201.

7.    Defendant Curtis A. Hessler (“Hessler”) is a Board member of the Company.

8.    Defendant Robert R. Walker (“Walker”) is a Board member of the Company.

9.    Defendant Lester Hochberg (“Hochberg”) is a Board member of the Company.

10.    Defendant David C. Chance (“Chance”) is a Board member of the Company, and its former Vice Chairman.

11.    Defendant David Lockwood (“Lockwood”) is the Vice Chairman, President and CEO as well as a Board member of the Company.

12.    Defendant Timo Ruikka (“Ruikka”) is a Board member of the Company.

13.    Defendant Satish K. Gupta (“Gupta”) is a Board member of the Company.

14.    Defendant Victor Shear (“Shear”) is the Chairman of the Board of the Company.

15. The defendants named above in ¶¶ 6-14 are sometimes collectively referred to herein as the “Individual Defendants.” Each Individual Defendant owed and owes the Company and its public stockholders fiduciary obligations and were and are required to, inter alia, further

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the best interests of the Company and its public stockholders; undertake an adequate evaluation of the Company’s worth as to potential merger/acquisition candidates; refrain from abusing their positions of control; and refrain from favoring their own interests at the expense of the Company and its stockholders.

CLASS ACTION ALLEGATIONS

16.    Plaintiffs bring this action on their own behalf and as a class action pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all holders of InterTrust stock who are being and will be harmed by defendants’ actions described below (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any defendant.

17.    This action is properly maintainable as a class action.

18.    The Class is so numerous that joinder of all members is impracticable. According to InterTrust’s SEC filings, there were more than 96 million shares of InterTrust common stock outstanding.

19.    There are questions of law and fact that are common to the Class and that predominate over questions affecting any individual Class member. The common questions include, inter alia, the following:

(a) whether defendants have breached their fiduciary duties of loyalty, independence or due care with respect to plaintiffs and the other members of the Class in connection with the Tender Offer;

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(b) whether the Individual Defendants are engaging in self-dealing in connection with the Tender Offer;

(c) whether the Individual Defendants are unjustly enriching themselves and other insiders or affiliates of InterTrust;

(d) whether defendants have breached any of their other fiduciary duties to plaintiffs and the other members of the Class in connection with the Tender Offer, including the duties of good faith, disclosure, diligence, honesty and fair dealing;

(e) whether the defendants, in bad faith and for improper motives, have impeded or erected barriers to discourage other offers for the Company or its assets; and

(f) whether plaintiffs and the other members of the Class would suffer irreparable injury were the transactions complained of herein consummated.

20.    Plaintiffs’ claims are typical of the claims of the other members of the Class and plaintiffs do not have any interests adverse to the Class.

21.    Plaintiffs are adequate representatives of the Class, have retained competent counsel experienced in litigation of this nature and will fairly and adequately protect the interests of the Class.

22.    The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of

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the Class which would establish incompatible standards of conduct for the party opposing the Class.

23.    Plaintiffs anticipate that there will be no difficulty in the management of this litigation. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

24.    Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole.

SUBSTANTIVE ALLEGATIONS

InterTrust’s Future Prospects

25.    InterTrust is engaged in inventing and defining DRM technologies, including various trusted competing technologies that enable secure management of digital processes and information. InterTrust is a leading holder of intellectual property in DRM, with at least 26 U.S. patents and at least 85 patent applications pending worldwide. InterTrust’s patent portfolio covers software and hardware technologies that can be implemented in a broad range of products that use DRM, including digital media platforms, web services and enterprise infrastructure.

26.    A significant factor with respect to InterTrust’s future prospects concerns broad and ongoing litigation against the Microsoft Corporation (“Microsoft”). As described in a Company press release dated June 24, 2002:

InterTrust Technologies Corporation (Nasdaq: ITRU) today announced that it is further substantially broadening its patent infringement lawsuit against Microsoft Corporation (Nasdaq: MSFT).

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In accordance with a schedule agreed to by the parties, InterTrust served on Microsoft infringement allegations that add four new patents and more than doubles the number of new claims to the litigation, bringing the totals to 11 patents, 144 claims and over 190 separate infringement scenarios.

Since initially suing Microsoft for patent infringement in April 2001, InterTrust has expanded the lawsuit by adding numerous significant Microsoft products and services that use InterTrust’s patented innovations in basic infrastructure for trusted computing and digital rights management. InterTrust is now seeking an injunction against the following Microsoft products, among others: Windows XP, Office XP, Microsoft .NET, a number of Microsoft.NET-based products and services, Windows Media Player, new embedded products such as Windows CE for automotive, XBOX, and aspects of Microsoft’s ActiveX technology. InterTrust is also seeking compensatory and punitive damages for Microsoft’s acts of infringement.

27.    In the Company’s Form 10-Q for the quarter ended September 30, 2002, filed just days after the Company’s November 13, 2002 announcement of the Tender Offer and Merger, the Company discussed the significant ongoing litigation against Microsoft, that discovery has started in the case and that a Markman hearing on a portion of the patents under dispute is scheduled for the second quarter of 2003.

Negotiations Leading To The Tender Offer and Merger

28.    According to the Tender Offer Statement filed in connection with the Tender Offer and Merger, representatives of InterTrust first met with representatives of SCA regarding a potential patent licensing arrangement in January 2002, and the parties engaged in negotiations regarding the terms of a DRM patent license agreement through April 2002. On April 25, 2002, SCA informed InterTrust that an acquisition of InterTrust was one of

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several alternatives that SCA was considering, in addition to entering into a DRM patent license agreement with InterTrust, as a means of establishing a patent licensing program.

29.    On May 9, 2002, concurrent with the announcement of its first quarter financial results, InterTrust announced that it would narrow its business focus to licensing intellectual property. On May 23, 2002, shortly following that announcement, InterTrust and Sony announced that it had signed a global patent license agreement with Sony (the “Sony License Agreement”):

InterTrust Licenses Patents to Sony for Integration into Future Digital Rights Management Products and Services

SANTA CLARA, Calif., May 23, 2002 — Inter-Trust Technologies Corporation (Nasdaq: ITRU) today announced a global licensing agreement with Sony Corporation (NYSE: SNE) that will allow Sony to use certain InterTrust patents in products that distribute digital consumer media content.

Under the agreement, InterTrust will receive a $28.5 million fee, in addition to running royalties for future Sony products and services that integrate InterTrust patents related to digital rights management (DRM).

InterTrust, which holds key patents in trusted computing and DRM, has licensed its intellectual property to Sony for the development, manufacture and marketing of digital media products and services across its diverse media and electronics business units.

30.    In the Company’s 10-Q for the quarter ended June 30, 2002, the Company reported that it would not be booking any of the $28.5 million as revenue, because under the Sony License Agreement $20 million was to be refunded if Sony or affiliates acquired the Company, and because the remaining $8.5 million would be booked in connection with other pending deals.

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31.    Item 601 of Regulation S-K of the SEC provides, in relevant part, for the filing of any contract “not made in the ordinary course of business which is material to the registrant and is to be performed in whole or in part at or after the filing of the registration statement or was entered into not more than two years before such filing.” The Sony License Agreement was clearly material to the Company. Indeed, as reported in the Company’s Form 10-Q for the period ended September 30, 2002, filed just a few days after the announcement of the Tender Offer and Merger:

License revenues were $8.8 million, or 99% of total revenues, for the three months ended September 30, 2002, as compared to $1.5 million, or 80% of total revenues, in the three months ended September 30, 2001, and primarily represent the recognition of deferred revenue related to the Sony agreement and amortization of deferred license fees. License revenues for the nine months ended September 30, 2002 were $9.7 million, up from $4.5 million for the nine months ended September 30, 2001. The increase for both the three and nine month periods was due to the $8.5 million revenue from the Sony license completed in May 2002.

32.    Nonetheless, in order to keep the price of InterTrust shares artificially low so that it could be acquired by Sony at a bargain price, the Individual Defendants violated the disclosure laws and never filed the Sony License Agreement. Indeed, the details and terms of the Sony License Agreement were not made public until the Tender Offer commenced on November 22, 2002. Had defendants obeyed the disclosure laws and filed the Sony License Agreement, InterTrust would have been “in play” much earlier and the consequent price to be paid for an acquisition of InterTrust would have been much higher. The Sony License Agreement was hidden from public view so that only Sony or its affiliates would be in a position to acquire InterTrust.

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33.    In early November 2002, representatives of InterTrust met with representatives of SCA to discuss the terms of an amendment to the Sony License Agreement, which would eliminate the field of use limitations in the original Sony License Agreement and the obligation to pay ongoing royalties with respect to any services or content using the licensed patents. Also in early November 2002, representatives of InterTrust met with representatives of Philips to discuss the terms of a patent license agreement that would be substantially identical to the Sony License Agreement.

34.    On November 9, 2002, the InterTrust Board held a special meeting to discuss a combined offer SCA and Philips for the shares of InterTrust, as well as the terms of the proposed amendment to the Sony License Agreement and a possible license agreement with Philips. The InterTrust Board authorized the team negotiating on behalf of InterTrust to negotiate an acquisition at a price of no less than $4.50 per Share.

35.    On November 10, 2002, representatives of SCA and Philips indicated that each of them had secured internal approvals to negotiate a transaction at a price of $4.25 per share. Representatives of InterTrust stated that, although no formal board meeting had been held, most of InterTrust’s directors had been contacted and were prepared to endorse a transaction at $4.25 per Share.

The Tender Offer and Merger

36.    On November 13, 2002 it was announced in a press release that InterTrust had entered into a definitive merger agreement (the “Merger Agreement”) pursuant to which Fidelio would commence the Tender Offer to purchase all outstanding shares of common

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stock of InterTrust for $4.25 per share in cash, conditioned upon the tendering of shares representing a majority of InterTrust’s outstanding common stock and other customary conditions. Pursuant to stockholder support and tender agreements, certain principal stockholders of InterTrust owning approximately 20% of the outstanding common stock of InterTrust agreed to tender all of their shares into the Tender Offer and to grant irrevocable proxies to Fidelio to vote in the manner specified in such agreements. Under the Merger Agreement, shares of InterTrust common stock not purchased through the Tender Offer would be converted into the right to receive $4.25 per share, without interest.

37.    The Tender Offer commenced on November 22, 2002 through the dissemination of a Tender Offer to InterTrust shareholders and a Schedule 14D filing with the SEC. In addition to all of the outstanding shares of InterTrust common stock, the Tender Offer includes stock purchase rights issued pursuant to a Rights Agreement, dated as of June 8, 2001, between InterTrust and American Stock Transfer and Trust Company, Inc., at a purchase price of $4.25 per Share. In addition to SCA and Philips, the Tender Offer Statement lists Stephens, which was not mentioned as a party to the Merger Agreement in InterTrust’s previous announcement of the Tender Offer, as a member of Fidelio.

38.    The purpose of the Tender Offer and the Merger is to acquire control of and the entire equity interest in InterTrust. After consummation of the Merger, Fidelio will be merged with and into InterTrust, with InterTrust as the surviving company in the Merger. Accordingly, the Tender Offer and Merger will transfer 100% of InterTrust’s revenues and

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profits to Fidelio with all of InterTrust’s operations thereby accruing to the benefit of Fidelio — i.e., to SCA, Philips and Stephens.

The Individual Defendants’ Recommendation

39.    In the Solicitation/Recomendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) filed with the SEC in connection with the Tender Offer and signed by defendant Lockwood, the Individual Defendants recommended that the Company’s stockholders accept the Tender Offer, tender their shares pursuant to the Tender Offer and approve the Merger and the Merger Agreement. The Schedule 14D-9 stated that as to the factors considered by the Board of Directors in its recommendation, the Individual Defendants did not attempt to weigh the value to the Company of success against Microsoft in the ongoing litigation, even though a Markman hearing is scheduled for soon after the Merger. The only mention of this litigation is in connection with a discussion of the “Opportunities and Challenges Facing the Company,” which includes as “risks” to the Company “the risks associated with resolving the Microsoft litigation, including the risk that the Company’s patents or claims could be rejected or narrowed by the Court.”

40.    The recommendation of the Individual Defendants was based, at least in part, on the opinion of Allen & Co., the financial advisor on the transaction, which concluded that the share price to be received by InterTrust shareholders in the Tender Offer and Merger is fair from a financial point of view. However, according to the Schedule 14D-9, in rendering its fairness opinion, Allen & Co. “did not give any effect to, and not attempt to assign any value to, any commercial arrangements entered into by InterTrust or [Fidelio] in connection

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with the merger, including the Sony License Amendment, the Philips License Agreement and the Philips License Amendment.” Moreover, Allen & Co. engaged in no analysis whatsoever of the value of the Microsoft litigation to InterTrust.

41.    In addition, under the terms of an engagement letter, dated January 8, 2002, InterTrust agreed to pay Allen & Co., in addition to a retainer of $500,000 creditable against any transaction fee that may become due, a transaction fee of 2% of the first $1 billion in any sale of the Company completed by January 8, 2003. Thus, Allen & Co. stands to gain $9.1 million if the Merger goes through, Allen & Co. was patently conflicted in its analysis of whether the Merger was fair to InterTrust shareholders, since it was motivated by its own interest in making sure that a transaction occurred by the end of 2002. In sum, Allen & Co.’s analysis could not have been reasonably relied upon by the InterTrust Board of Directors in connection with their recommendation.

42.    The Individual Defendants were also clearly motivated to make sure that the transaction occurred since they stood to thereby gain millions of dollars from accelerating stock options. As described in the Schedule 14D-9, in the event of a change of control of the Company, the vesting of options held by defendant Lockwood to acquire 2.5 million shares would accelerate on most unvested shares, while acceleration will vest for defendant Wood with respect to an option for 675,000 shares. In addition, pursuant to acceleration letters, upon an extraordinary corporate transaction of the Company, 100% of any unvested shares granted to certain executive officers will become vested: (1) options to defendant Maher for 350,000 shares; (2) options granted to defendant Nguyen for 400,000 shares; (3) options

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granted to defendant Scadina for 50,000 shares; (4) options granted to defendant Shamoon for 450,000 shares. Thus, as a group, the Individual Defendants will receive several millions of dollars worth of accelerated stock options pursuant to the Tender Offer and Merger.

Deterrence of Bidders Other Than Fidelio

43.    The Company has in place a stock purchase rights plan (“Rights Agreement”) pursuant to which rights were distributed at a rate of one right for each share of InterTrust common stock held by stockholders of record as of June 28, 2002. The rights plan acts as a poison pill (“Poison Pill”) by diluting the value of InterTrust stock should an unwanted suitor seek to gain control of InterTrust without the consent of InterTrust’s Board of Directors. Effective November 13, 2002, the Individual Defendants amended the Rights Agreement to provide that Fidelio will not be considered an “acquiring person” in connection with the Tender Offer and Merger. Therefore, the Poison Pill is no longer in effect with respect to Fidelio but it remains in effect as to all suitors outer than Fidelio.

44.    The Poison Pill as currently utilized dramatically impairs the rights of Class members to exercise freedom of choice in a proxy contest or to avail themselves of a bona fide offer to purchase their shares by an acquiror unfavored by incumbent management, i.e., any suitor other than Fidelio. This fundamental shift of control of the Company’s destiny from the hands of its shareholders to the hands of the Individual Defendants results in a heightened fiduciary duty of the Individual Defendants to consider, in good faith, third party bids, and further requires the Individual Defendants to pursue a third party’s interest in acquiring the Company and to negotiate in good faith with a bidder on behalf of the

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Company’s shareholders. The only legitimate use of the Poison Pill is to maximize consideration to shareholders in any acquisition of the Company, and by suspending the Poison Pill as to Fidelio and to Fidelio only, the Individual Defendants have achieved precisely the opposite effect, in violation of their fiduciary duties.

45.    The Individual Defendants have engaged in other acts in order to make an acquisition of InterTrust untenable for any third party other than Fidelio. Under Section 8.5 of the Merger Agreement, if the Company enters into an alternative proposal, a termination or “breakup” fee of $16 million, plus up to $2.5 million in expenses, will be awarded to Fidelio. This breakup fee, amounting to approximately 4% of the transaction amount, significantly raises the ante for any other potential offeror. Moreover, as alleged below, an additional $7 million will need to be paid to Fidelio for cancellation of patent rights granted to it by the Company, making the total “breakup” fee, in effect $25.5 million, or nearly 5% of the transaction amount.

46.    In addition, in connection with the Tender Offer and Merger, the Individual Defendants have acted to significantly expand the patent rights granted under the Sony License Agreement and have provided Philips with those same rights. On November 13, 2002, at the same time the Tender Offer and Merger was announced, InterTrust entered into an Amendment to the Sony License Agreement (the “Sony License Amendment”) with Sony, which expanded the Sony License Agreement to cover all fields, to include additional products and services in the definition of licensed products and services, and to terminate

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Sony’s royalty obligations under the Sony License Agreement. As stated therein, the purpose of the Sony License Amendment was as follows:

By this Agreement, the Parties desire to expand the rights granted to Sony by the Agreement, in particular for InterTrust to grant to Sony a royalty free, fully paid-up, nonexclusive license in all fields under the Licensed Patents for Sony products and services in accordance with the terms of this Amendment.

47.    Also on November 13, 2002, InterTrust entered into a Foundation Patent License Agreement with Philips (the “Philips License Agreement”), the terms of which are substantially the same as the terms of the Sony License Agreement. Simultaneously therewith, InterTrust entered into an Amendment to the Philips License Agreement (the “Philips License Amendment”) with Philips, the terms of which are also substantially the same as the terms of the Sony License Amendment.

48.    In exchange for this major expansion of rights, Sony has agreed to pay InterTrust $6 million on the Sony License Amendment, while Philips has agreed to pay Sony $12.5 million ($11.5 million on the Philips License Agreement and $1 million on the Philips License Amendment). However, those payments will obviously inure to Fidelio, and thereby Sony and Philips, after the Merger is consummated. Under the terms of these agreements, the Company or any successor may terminate these agreements by paying $7 million and $6 million on the Sony License Amendment and $1 million on the Philips License Amendment.

49.    In effect, the Individual Defendants have transferred the “Crown Jewels” of InterTrust to Fidelio. The Sony License Agreement and the Phillips License Amendment were timed in connection with the Tender Offer so as to make InterTrust unattractive to any

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entity other than Fidelio since any other acquiror would be saddled with the license agreements with SCA and Philips until the expiration of the last of the licensed patents. Alternatively, any other acquiror would be required to pay an additional $7 million in order to eliminate the patent rights granted to Fidelio. Therefore, the total “breakup” fee to any other suitor would actually be $25.5 million, or over 5% of the transaction amount.

CAUSE OF ACTION

Claim for Breach of Fiduciary Duties

50.    InterTrust represents a highly attractive acquisition candidate. The Individual Defendants’ decision to lock in the transaction with Fidelio by making it impossible for any other suitor to seek to acquire InterTrust will deprive the Company’s public shareholders of the enhanced premium that further negotiation or exposure of InterTrust to the market could provide.

51.    By reason of their positions with InterTrust, the Individual Defendants are in possession of non-public information concerning the financial condition and prospects of InterTrust, and especially the true value and expected increased future value of InterTrust and its assets, which they have not disclosed to InterTrust’s public stockholders. The terms of the proposed transaction are grossly unfair to the Class, and the unfairness is compounded by the gross disparity between the knowledge and information possessed by the Individual Defendants by virtue of their positions of control of InterTrust and that possessed by InterTrust’s public shareholders.

52.    Defendants owe fundamental fiduciary obligations to InterTrust’s stockholders to take all necessary and appropriate steps to maximize the value of their shares. In addition,

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the Individual Defendants have the responsibility to act independently so that the interests of the Company’s public stockholders will be protected, to consider seriously all bona fide offers for the Company, and to conduct fair and active bidding procedures or other mechanisms for checking the market to assure that the highest possible price is achieved. Further, the directors of InterTrust must adequately ensure that no conflict of interest exists between the Individual Defendants’ own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, to insure that all such conflicts will be resolved in the best interests of the Company’s stockholders.

53.    Defendants have refused to take those steps necessary to ensure that InterTrust’s stockholders will receive maximum value for their shares of InterTrust stock. Defendants have refused to seriously consider offers, other than the offer of Fidelio, and have failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value in selling the Company. In addition, defendants have enacted unreasonable barriers which have made it untenable for any party other than Fidelio to acquire the Company. Moreover, despite their duty to maximize shareholder value, the defendants have clear and material conflicts of interest and are acting to better their own interests at the expense of InterTrust’s public shareholders.

54.    The proposed sale is wrongful, unfair and harmful to InterTrust’s public stockholders, and represents an effort by the Individual Defendants to aggrandize their own financial position and interests at the expense of and to the detriment of Class members. The

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transaction is an attempt to deny plaintiffs and the other members of the Class their rights while usurping the same for the benefit of Fidelio on unfair terms.

55.    The Individual Defendants have violated the fiduciary duties owed to the public shareholders of InterTrust, including their duties of loyalty, disclosure and duty of care. The Individual Defendants’ agreement to the terms of the Tender Offer, its timing, and the failure to auction the Company and invite other bidders, and the Individual Defendants’ failure to provide a market check demonstrate a clear absence of the exercise of loyalty to InterTrust’s public shareholders.

56.    By transferring the “Crown Jewels” of the Company to Fidelio, thereby assuring that no other potential bidder would be able to bid on the Company, the Individual Defendants have locked themselves into a merger with Fidelio without fully informing themselves about or intentionally ignoring the intrinsic worth of InterTrust.

57.    The Individual Defendants have breached their fiduciary and other common law duties owed to plaintiffs and other members of the Class in that they have not and are not exercising independent business judgment and have acted and are acting to the detriment of the Class.

58.    Because the Individual Defendants have breached their duties of loyalty, disclosure, good faith and independence in connection with the sale of InterTrust, the burden of proving the inherent or entire fairness of the Acquisition, including all aspects of its negotiation and structure, is placed upon the Individual Defendants as a matter of law.

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59.    Defendant Fidelio has knowingly aided and abetted the breaches of fiduciary duty committed by the other defendants to the detriment of InterTrust’s public shareholders. Indeed, the proposed transaction could not take place without the active participation of Fidelio.

60.    As a result of the actions of the Individual Defendants, plaintiffs and the other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of InterTrust’s assets and businesses and/or have been and will be prevented from obtaining a fair and adequate price for their shares of InterTrust’s common stock.

61.    Plaintiffs seek preliminary and permanent injunctive relief and declaratory relief preventing defendants from inequitably and unlawfully depriving plaintiffs and the Class of their rights to realize a full and fair value for their stock, and to compel defendants to carry out their fiduciary duties to maximize shareholder value.

62.    Only through the exercise of this Court’s equitable powers can plaintiffs be fully protected from the immediate and irreparable injury which defendants’ actions threaten to inflict. Defendants are precluding the stockholders’ enjoyment of the full economic value of their investment by failing to proceed expeditiously and in good faith to evaluate and pursue a premium acquisition proposal that would maximize shareholders value.

63.    Unless enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiffs and the members of the Class, and/or aid and abet and participate in

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such breaches of duty, and will prevent the sale of InterTrust at an appropriate premium, all to the irreparable harm of plaintiffs and other members of the Class.

64.    Plaintiffs and the Class have no adequate remedy at law.

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WHEREFORE, plaintiffs demand judgment as follows:

(a)  Declaring this to be a proper class action, certifying plaintiffs as class representatives, and appointing their counsel to represent the Class;

(b)  Ordering the Individual Defendants to fulfill their fiduciary duties to plaintiffs and the other members of the Class by announcing their intention to:

(i)  Cooperate fully with any entity or person, having a bona fide interest in proposing any transactions that would maximize shareholder value;

(ii)  Immediately undertake an appropriate evaluation of InterTrust’s worth as a merger/acquisition candidate;

(iii)  Take all appropriate steps to enhance InterTrust’s value and attractiveness as a merger/acquisition candidate;

(iv)  Take all appropriate steps to effectively expose InterTrust to the marketplace in an effort to create an active auction of the Company;

(v)  Act independently so that the interests of the Company’s public stockholders will be protected; and

(vi)  Adequately ensure that no conflicts of interest exist between the Individual Defendants’ own interests and their fiduciary obligation to maximize shareholder value or, in the event such conflicts exist, to ensure that all conflicts of interest are resolved in the best interests of the public stockholders of InterTrust;

(vii)  Require the proper implementation of InterTrust’s poison pill so as to maximize shareholder value.

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(c)  Ordering the Individual Defendants, jointly and severally, to account to plaintiffs and the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein;

(d)  Awarding plaintiffs the costs and disbursements of this action, including a reasonable allowance for plaintiffs’ attorneys’ and experts’ fees; and

(e)  Granting such other and further relief as may be just and proper.

DATED:    November 27, 2002

CHIMICLES & TIKELLIS LLP

/s/    PAMELA S. TIKELLIS

Pamela S. Tikellis

Robert J. Kriner, Jr.

One Rodney Square

Post Office Box 1035

Wilmington, DE 19899

Telephone: (302) 656-2500

Attorneys for Plaintiffs

OF COUNSEL:

WOLF HALDENSTEIN ADLER FREEMAN

& HERZ LLP

Michael Jaffe

270 Madison Avenue

New York, New York 10016

Telephone: (212) 545-4600

Fax: (212) 545-4653

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