Exhibit 99.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.
SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE
VOID AFTER 5:00 P.M. EASTERN TIME ON SEPTEMBER 30, 2006 (the "EXPIRATION DATE").
No. 2001-8-___________
ARTISOFT, INC.
WARRANT TO PURCHASE [_______] SHARES OF
COMMON STOCK, $.01 PAR VALUE PER SHARE
For VALUE RECEIVED, [____________________] ("Warrantholder"), is
entitled to purchase, subject to the provisions of this Warrant, from Artisoft,
Inc., a Delaware corporation ("Company"), at any time not later than 5:00 P.M.,
Eastern time, on the Expiration Date, at an exercise price per share equal to
$[____] [ten-day trailing average bid price, but not more than $4.00] (the
exercise price in effect being herein called the "Warrant Price"), [______]
shares ("Warrant Shares") of Common Stock (as defined below). The number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as described herein. As used
herein, "Common Stock" means the common stock, $0.01 par value per share, of the
Company, and any capital stock of any class of the Company hereafter authorized
that shall not be entitled to a fixed sum in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company.
SECTION 1. REGISTRATION. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
SECTION 2. TRANSFERS. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company to establish that such transfer is
being made in accordance with the terms hereof, and a new Warrant shall be
issued to the transferee and the surrendered Warrant shall be canceled by the
Company.
SECTION 3. EXERCISE OF WARRANT. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto as Appendix A (the "Exercise Agreement") and
payment by cash, certified check or wire transfer of funds (or by cash-less
exercise as provided below) for the Warrant Price for that number of Warrant
Shares then being purchased, to the Company during normal business hours on any
business day at the Company's principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof).
The Warrant Shares so purchased shall be deemed to be issued to the holder
hereof or such holder's designee, as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered
(or evidence of loss, theft or destruction thereof and security or indemnity
satisfactory to the Company), the Warrant Price shall have been paid, the
completed Exercise Agreement shall have been delivered and, in the case of any
transfer of Warrant Shares effected at the time of such exercise, an
appropriately executed stock power and a certificate containing such reasonable
and appropriate customary representations as may be reasonably requested by the
Company shall have been delivered to the Company. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding three (3) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or, subject to compliance with applicable law, such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
Each exercise hereof shall constitute the re-affirmation by the
Warrantholder that the representations and warranties contained in Sections 5.3,
5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 of the Purchase Agreement (as defined below) are
true and correct in all material respects with respect to the Warrantholder as
of the time of such exercise.
SECTION 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such
security that such legend is unnecessary.
SECTION 5. PAYMENT OF TAXES. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
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required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's reasonable satisfaction that such tax
has been paid. The holder shall be responsible for income and gift taxes due
under federal, state or other law, if any such tax is due.
SECTION 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall
be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange
and substitution of and upon cancellation of the mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
SECTION 7. RESERVATION OF COMMON STOCK. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued Common Stock, sufficient
shares to provide for the exercise of the rights of purchase represented by the
Warrant in compliance with its terms. The Company agrees that all Warrant Shares
issued upon exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares upon payment in full of the Exercise Price
therefor in accordance with the terms of this Warrant, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company.
SECTION 8. ADJUSTMENTS. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while the
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event upon payment of a Warrant
Price that has been adjusted to reflect a fair allocation of the economics of
such event to the Warrantholder. Such adjustments shall be made successively
whenever any event listed above shall occur.
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(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation in which the Company is not the survivor, or sale, transfer or other
disposition of all or substantially all of the Company's assets to another
corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each Warrantholder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, such shares of
stock, securities or assets as would have been issuable or payable with respect
to or in exchange for a number of Warrant Shares equal to the number of Warrant
Shares immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of each Warrantholder to the end
that the provisions hereof (including, without limitation, provision for
adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or properties thereafter deliverable upon the exercise thereof. The Company
shall not effect any such consolidation, merger, sale, transfer or other
disposition without the consent of the Warrantholder unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the holder of
the Warrant such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to purchase, and the other
obligations under this Warrant. The provisions of this paragraph (b) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
(c) In case the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price per share of Common Stock (as defined below), less the fair
market value (as determined by the Company's Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Market Price per
share of Common Stock. "Market Price" as of a particular date (the "Valuation
Date") shall mean the following: (a) if the Common Stock is then listed on a
national stock exchange, the closing sale price of one share of Common Stock on
such exchange on the last trading day prior to the Valuation Date; (b) if the
Common Stock is then quoted on Nasdaq, the closing sale price of one share of
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Common Stock on Nasdaq on the last trading day prior to the Valuation Date or,
if no such closing sale price is available, the average of the high bid and the
low sales price quoted on Nasdaq on the last trading day prior to the Valuation
Date; or (c) if the Common Stock is not then listed on a national stock exchange
or quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of
the Valuation Date, shall be determined in good faith by the Board of Directors
of the Company and the Warrantholder. The Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the Warrantholder prior to
the exercise hereunder as to the Market Value of a share of Common Stock as
determined by the Board of Directors of the Company. In the event that the Board
of Directors of the Company and the Warrantholder are unable to agree upon the
Market Value in respect of subpart (c) hereof, the Company and the Warrantholder
shall jointly select an appraiser, who is experienced in such matters. The
decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne evenly by the Company and the Warrantholder. Such
adjustment shall be made successively whenever such a payment date is fixed.
(d) [intentionally omitted]
(e) For the term of this Warrant, in addition to the provisions
contained above, the Warrant Price shall be subject to adjustment as provided
below. An adjustment to the Warrant Price shall become effective immediately
after the payment date in the case of each dividend or distribution and
immediately after the effective date of each other event which requires an
adjustment.
(f) In the event that, as a result of an adjustment made pursuant to
this Section 8, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
(g) Except as provided in subsection (h) hereof, if and whenever the
Company shall issue or sell, or is, in accordance with any of subsections (g)(l)
through (g)(6) hereof, deemed to have issued or sold, any shares of Common Stock
for a consideration per share less than the Warrant Price in effect immediately
prior to the time of such issue or sale, then and in each such case (a "TRIGGER
ISSUANCE") the then-existing Warrant Price, shall be reduced, as of the close of
business on the effective date of the Trigger Issuance, to the lowest price per
share at which any share of Common Stock was issued or sold or deemed to be
issued or sold.
For purposes of this subsection (g), "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued by the Company or deemed to
be issued pursuant to this subsection (g), other than Excluded Issuances (as
defined in subsection (h) hereof).
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For purposes of this subsection (g), the following subsections (g)(l)
to (g)(6) shall also be applicable (subject, in each such case, to the
provisions of subsection (h) hereof) and to each other subsection contained in
this subsection (g):
(g)(1) Issuance of Rights or Options. In case at any time the Company
shall in any manner grant (directly and not by assumption in a merger or
otherwise) any warrants or other rights to subscribe for or to purchase, or
any options for the purchase of, Common Stock or any stock or security
convertible into or exchangeable for Common Stock (such warrants, rights or
options being called "Options" and such convertible or exchangeable stock
or securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible Securities
are immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the sum
(which sum shall constitute the applicable consideration) of (x) the total
amount, if any, received or receivable by the Company as consideration for
the granting of such Options, plus (y) the aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus (z), in the case of such Options which relate to Convertible
Securities, the aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Warrant Price in effect
immediately prior to the time of the granting of such Options, then the
total number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Warrant Price. Except as otherwise provided in subsection 8(g)(3), no
adjustment of the Warrant Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(g)(2) Issuance of Convertible Securities. In case the Company shall
in any manner issue (directly and not by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the sum (which
sum shall constitute the applicable consideration) of (x) the total amount
received or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus (y) the aggregate amount of
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additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be outstanding for
purposes of adjusting the Warrant Price, provided that (a) except as
otherwise provided in subsection 8(g)(3), no adjustment of the Warrant
Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities and (b) no further
adjustment of the Warrant Price shall be made by reason of the issue or
sale of Convertible Securities upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Warrant Price have
been made pursuant to the other provisions of subsection 8(g).
(g)(3) Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for
in any Option referred to in subsection 8(g)(l) hereof, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subsections 8(g)(l) or 8(g)(2), or
the rate at which Convertible Securities referred to in subsections 8(g)(l)
or 8(g)(2) are convertible into or exchangeable for Common Stock shall
change at any time (including, but not limited to, changes under or by
reason of provisions designed to protect against dilution), the Warrant
Price in effect at the time of such event shall forthwith be readjusted to
the Warrant Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
termination of any Option for which any adjustment was made pursuant to
this subsection 8(g) or any right to convert or exchange Convertible
Securities for which any adjustment was made pursuant to this subsection
8(g) (including without limitation upon the redemption or purchase for
consideration of Convertible Securities by the Company), the Warrant Price
then in effect hereunder shall forthwith be changed to the Warrant Price
which would have been in effect at the time of such termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such termination, never been issued.
(g)(4) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount
received by the Company therefor, after deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for a
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consideration other than cash, the amount of the consideration other than
cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company, after deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any Options shall be issued in connection with the issue
and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to have
been issued for such consideration as determined in good faith by the Board
of Directors of the Company.
(g)(5) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(g)(6) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company or any of its wholly-owned subsidiaries, and
the disposition of any such shares (other than the cancellation or
retirement thereof) shall be considered an issue or sale of Common Stock
for the purpose of this subsection (g).
(h) Anything herein to the contrary notwithstanding, the Company shall
not be required to make any adjustment of the Warrant Price in the case of the
issuance of (A) capital stock, Options or Convertible Securities issued to
directors, officers, employees or consultants of the Company in connection with
their service as directors of the Company, their employment by the Company or
their retention as consultants by the Company pursuant to an equity compensation
program approved by the Board of Directors of the Company or the compensation
committee of the Board of Directors of the Company, (B) shares of Common Stock
upon the conversion or exercise of Options or Convertible Securities issued
prior to the date hereof, (C) securities issued pursuant to that certain
Purchase Agreement dated August 8, 2001, among the Company and the Investors
named therein (the "Purchase Agreement") and securities issued upon the exercise
or conversion of those securities, (D) securities issued or issuable as a
dividend or distribution on the Series B Preferred Stock, and (E) shares of
Common Stock issued or issuable by reason of a dividend, stock split or other
distribution on shares of Common Stock (but only to the extent that such a
dividend, split or distribution results in an adjustment in the Warrant Price
pursuant to the other provisions of this Warrant) (collectively, "Excluded
Issuances").
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SECTION 9. FRACTIONAL INTEREST. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of the Warrant. If any fractional
share of Common Stock would, except for the provisions of the first sentence of
this Section 9, be delivered upon such exercise, the Company, in lieu of
delivering such fractional share, shall pay to the exercising holder of this
Warrant an amount in cash equal to the current Fair Market Value of such
fractional share of Common Stock. As used in this Warrant, "Fair Market Value"
of a share of Common Stock as of a particular date (the "Valuation Date") shall
mean the following: (a) if the Common Stock is then listed on a national stock
exchange, the closing sale price of one share of Common Stock on such exchange
on the last trading day prior to the Valuation Date; (b) if the Common Stock is
then quoted on Nasdaq, the closing sale price of one share of Common Stock on
Nasdaq on the last trading day prior to the Valuation Date or, if no such
closing sale price is available, the average of the high bid and the low sales
price quoted on Nasdaq on the last trading day prior to the Valuation Date; or
(c) if the Common Stock is not then listed on a national stock exchange or
quoted on Nasdaq, the Fair Market Value of one share of Common Stock as of the
Valuation Date, shall be determined in good faith by the Board of Directors of
the Company and the Warrantholder. The Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder prior to the
exercise hereunder as to the Fair Market Value of a share of Common Stock as
determined by the Board of Directors of the Company. In the event that the Board
of Directors of the Company and the Warrantholder are unable to agree upon the
Fair Market Value in respect of subpart (c) hereof, the Company and the
Warrantholder shall jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and conclusive, and the
cost of such appraiser shall be borne evenly by the Company and the
Warrantholder.
SECTION 10. EXTENSION OF EXPIRATION DATE. If the Company fails to cause any
Registration Statement covering Warrant Shares or Additional Shares issuable
upon the exercise of this Warrant (the "Additional Warrant Shares") (unless
otherwise defined herein, capitalized terms are as defined in the Registration
Rights Agreement dated of even date herewith (the "Registration Rights
Agreement")) to be declared effective prior to the applicable dates set forth
therein, or if any of the events specified in clause (B) of Section 2(c)(i) of
the Registration Rights Agreement occurs and the Blackout Period (whether alone,
or in combination with any other Blackout Period) continues for more than 60
days in any 12 month period, or for more than a total of 90 days, then the
Expiration Date of this Warrant shall be extended one day for each day beyond
the 60-day or 90-day limits, as the case may be, that the Blackout Period
continues.
SECTION 11. BENEFITS. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
SECTION 12. NOTICES TO WARRANTHOLDER. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
9
defect therein shall not affect the legality or validity of the subject
adjustment.
SECTION 13. IDENTITY OF TRANSFER AGENT. The Transfer Agent for the Common
Stock is ComputerShare Investor Services. Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will mail to the Warrantholder a statement setting forth
the name and address of such transfer agent.
SECTION 14. NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by, then such notice shall
be deemed given upon the earlier of (A) receipt of such notice by the recipient
or (B) three days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one day after delivery to such
carrier. All notices shall be addressed as follows: (i) if to the Warrantholder,
at its address as set forth in the Company's books and records and, if to the
Company, at the address as follows, or at such other address as the
Warrantholder or the Company may designate by ten days' advance written notice
to the other:
If to the Company:
Artisoft, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
Fax: (000) 000-0000
With a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
SECTION 15. REGISTRATION RIGHTS. The initial holder of this Warrant is
entitled to the benefit of certain registration rights in respect of the Warrant
Shares and the Additional Warrant Shares as provided in the Registration Rights
Agreement, and any subsequent holder hereof may be entitled to such rights.
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SECTION 16. SUCCESSORS. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 17. GOVERNING LAW. This Warrant shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware, without
reference to the choice of law provisions thereof.
SECTION 18. CASHLESS EXERCISE.
NET ISSUE ELECTION. Notwithstanding any other provision contained
herein to the contrary, commencing 120 days after (i) the First Closing Date (in
the case of Warrants issued on the First Closing Date) (as such term is defined
in the Purchase Agreement), (ii) the Second Closing Date (in the case of
Warrants issued on the Second Closing Date) (as such term is defined in the
Purchase Agreement) or (iii) an Investor demand (in the case of Additional
Warrant Shares), so long as the Company is required under the Registration
Rights Agreement to have effected the registration of the Warrant Shares or the
Additional Warrant Shares, as the case may be, for sale to the public pursuant
to a Registration Statement (as such term is defined in the Registration Rights
Agreement), if the Warrant Shares or the Additional Warrant Shares, as the case
may be, may not be freely sold to the public for any reason (including, but not
limited to, the failure of the Company to have effected the registration of the
Warrant Shares or the Additional Warrant Shares, as the case may be, or to have
a current prospectus available for delivery or otherwise, but excluding the
inability of the Warrantholder to sell the Warrant Shares or Additional Warrant
Shares, as the case may be, due to market conditions), the Warrantholder may
elect to receive, without the payment by the Warrantholder of the aggregate
Warrant Price in respect of the shares of Common Stock to be acquired, shares of
Common Stock equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant (or such portion of this Warrant being so exercised)
together with the Net Issue Election Notice annexed hereto as Appendix B duly
executed, at the office of the Company; provided, however, that in the case of
the Additional Warrant Shares, such right shall be limited to the value of the
Additional Warrant Shares. Thereupon, the Company shall issue to the
Warrantholder such number of fully paid, validly issued and nonassessable shares
of Common Stock as is computed using the following formula:
X = Y (A - B)
---------
A
where
X = the number of shares of Common Stock which the Warrantholder has
then requested be issued to the Warrantholder;
Y = the total number of shares of Common Stock covered by this Warrant
which the Warrantholder has surrendered at such time for cash-less exercise
(including both shares to be issued to the Warrantholder and shares to be
canceled as payment therefor);
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A = the "Fair Market Value" of one share of Common Stock as at the
time the net issue election is made; and
B = the Warrant Price in effect under this Warrant at the time the net
issue election is made.
SECTION 19. CALL PROVISION. Notwithstanding any other provision contained
herein to the contrary, in the event that the closing bid price of a share of
Common Stock as traded on the Nasdaq National Market (or such other exchange as
the Common Stock may then be listed) exceeds $7.50 (appropriately adjusted for
any stock split, reverse stock split, stock dividend or other reclassification
or combination of the Common Stock occurring after the date hereof) for thirty
(30) consecutive trading sessions and all of the Warrant Shares and Additional
Warrant Shares, if any, issuable hereunder either (i) are registered pursuant to
an effective Registration Statement (as defined in the Registration Rights
Agreement) or (ii) no longer constitute Registrable Securities (as defined in
the Registration Rights Agreement), the Company, upon ten (10) days prior
written notice (the "Notice Period") following such thirty (30) day period, to
the Warrantholder, may demand that the Warrantholder exercise its rights with
regard to all Warrant Shares and Additional Warrant Shares, if any, and the
Warrantholder must exercise its rights prior to the expiration of the Notice
Period or if such exercise is not made or if only a partial exercise is made,
any and all rights to further exercise rights to acquire Warrant Shares and
Additional Warrant Shares, if any, hereunder shall cease upon the expiration of
the Notice Period.
SECTION 20. NO RIGHTS AS STOCKHOLDER. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.
SECTION 21. AMENDMENT; WAIVER. This Warrant is one of a series of Warrants
of like tenor issued by the Company pursuant to the Purchase Agreement, except
as to the number of shares of Common Stock subject thereto, and initially
covering an aggregate of 1,560,000 shares of Common Stock, in the case of
Warrants issued on the First Closing Date, and 1,240,000 shares of Common Stock,
in the case of Warrants issued on the Second Closing Date (collectively, the
"Company Warrants"). Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon
the written consent of the Company and he holders of Company Warrants
representing at least 50% of the number of shares of Common Stock then subject
to outstanding Company Warrants; PROVIDED, that (x) no such amendment effected
at or prior to the earlier to occur of (I) the Second Closing (as such term is
defined in the Purchase Agreement) or (II) the termination of the obligations of
the parties to the Purchase Agreement to effect the Second Closing in accordance
with the terms of the Purchase Agreement shall disproportionately affect the
Remaining Investors (as defined in the Purchase Agreement) without the consent
of the Required Remaining Investors (as defined in the Purchase Agreement); (y)
any such amendment or waiver must apply to all Company Warrants; and (z) the
number of Warrant Shares subject to this Warrant, the Warrant Price and the
expiration date of this Warrant may not be amended, and the right to exercise
this Warrant (including, without limitation, the provisions of Section 18 of
this Warrant) may not be altered or waived, without the written consent of the
Warrantholder.
SECTION 22. SECTION HEADINGS. The section heading in this Warrant are for
the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
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IN WITNESS WHEREOF, Artisoft, Inc. has caused this Warrant to be duly
executed, as of the ______ day of ___________, 200_.
ARTISOFT, INC.
By:___________________________
Name:
Title:
13
APPENDIX A
Artisoft, Inc.
WARRANT EXERCISE FORM
To: Artisoft, Inc.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant ("Warrant") for, and to purchase thereunder by
the payment of the Warrant Price and surrender of the Warrant, _______________
shares of Common Stock ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
______________________________________
Name
______________________________________
Address
______________________________________
______________________________________
Federal Tax ID or Social Security No.
and delivered by [ ] certified mail to the above address, or
[ ] electronically (provide DWAC Instructions:___________), or
[ ] other (specify: _____________________________________).
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.
By exercising the rights represented by this Warrant, the undersigned
hereby certifies that, as of the date of exercise of this Warrant, the
representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7,
5.8 and 5.9 of the Purchase Agreement are true and correct in all material
respects with respect to the undersigned.
Dated: ___________________, ____ Signature:_________________________________
Note: The signature must correspond with _________________________________
the name of the registered holder as Name (please print)
written on the first page of the Warrant
in every particular, without alteration _________________________________
or enlargement or any change whatever, _________________________________
unless the Warrant has been assigned. Address
_________________________________
Federal Identification or
Social Security No.
Assignee:
_________________________________
_________________________________
_________________________________
APPENDIX B
Net Issue Election Notice
To: Artisoft, Inc.
Date:_________________________
The undersigned hereby elects under Section 18 of this Warrant to surrender
the right to purchase ____________ shares of Common Stock pursuant to this
Warrant and hereby requests the issuance of _____________ shares of Common
Stock. The certificate(s) for the shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated below.
_________________________________
Signature
_________________________________
Name for Registration
_________________________________
Mailing Address
