ARTISOFT, INC.
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
February 1, 2000
X. Xxxx Xxxxxx
c/o Artisoft, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Re: MORTGAGE LOAN
Dear Xx. Xxxxxx,
Artisoft, Inc. (the "Company") is today making a loan (the "Mortgage Loan")
to you ("Executive") and your spouse (collectively, "Maker") in the principal
amount of Four Hundred Ninety-Thousand One Hundred Thirty-Three and 09/100
Dollars ($490,133.09). The Mortgage Loan is evidenced by a Promissory Note of
even date herewith made by Maker in the principal amount of the Mortgage Loan
(the "Note") and is secured by a Deed of Trust of even date herewith (the "Deed
of Trust"). The proceeds of the Mortgage Loan will be used by Maker to purchase
residential real property described in the Deed of Trust. The Mortgage Loan is
payable in one installment of principal in the amount of One Hundred Twenty-Two
Thousand Five Hundred Thirty-Three and 49/100 Dollars ($122,533.49) due on
February 1, 2001, and thirty six (36) monthly installments of principal in the
amount of Ten Thousand Two Hundred Eleven and 10/100 Dollars ($10,211.10) each
due on the first day of each month thereafter, commencing on March 1, 2001 and
ending on February 1, 2004, in each case together with accrued and unpaid
interest through the date of repayment on the principal amount of the Mortgage
Loan outstanding from time to time (each such installment date, an "Installment
Date" and each such installment of principal and interest, an "Installment").
The forms of the Note and Deed of Trust are attached as Exhibits hereto.
The Company agrees that it will, at its election, either discharge on
Maker's behalf and/or irrevocably forgive, the principal of and interest on the
Mortgage Loan and Note in accordance with the following provisions of this
Letter Agreement:
1. If Executive remains employed by the Company and its Affiliates from the
date hereof through the first Installment Date under the Note (that is, February
1, 2001), the Company shall discharge and/or forgive in full the first, annual
installment under the Note.
2. On each monthly Installment Date commencing on March 1, 2001 on which
Executive remains employed by the Company and its Affiliates, the Company shall
discharge and/or forgive in full the monthly Installment falling due on such
Installment Date.
X. Xxxx Xxxxxx
February 1, 2000
Page 2
3. Notwithstanding (1) and (2) above, if Executive's employment with the
Company and its Affiliates is terminated by the Company other than for Cause (as
defined below), the Company shall discharge and/or forgive all then outstanding
principal of and accrued and unpaid interest on the Mortgage Loan and Note
contemporaneously with the termination of Executive's employment or the death of
Executive.
4. Notwithstanding (1) and (2) above, upon the occurrence of a Change in
Control (as defined below), the Company shall discharge and/or forgive all then
outstanding principal of and accrued and unpaid interest on the Mortgage Loan
and Note, provided that Executive remains employed by the Company and its
Affiliates on the date of such Change in Control. Such discharge and/or
forgiveness shall occur contemporaneously with the occurrence of the Change in
Control.
5. If the principal of the Mortgage Loan and Note becomes due and payable
in full (because of acceleration, the occurrence of any Early Repayment Event,
as defined below, or otherwise) prior to the final Installment Date, then except
as provided in (3) and (4) above, the Corporation's obligation to discharge
and/or forgive principal of and interest on the Mortgage Loan and Note will
apply only to Installments falling due prior to such early repayment date, and
Maker shall remain liable for payment of all Installments falling due after such
early repayment date. In such circumstances, the Company's discharge and/or
forgiveness of principal and interest shall be made contemporaneously with
Maker's payment of the remaining principal balance of and interest, if any, on
the Mortgage Loan and Note.
6. In connection with any discharge and/or forgiveness of the Mortgage Loan
and Note described in (1)through (5) above, the Company shall also pay Maker an
amount (the "Gross-up Amount") equal to the product of (a) the amount of
principal and interest so discharged and/or forgiven times (b) fifty percent
(50%), representing an approximation of the sum of the highest marginal rates
for federal, state and local income taxes to which Maker is subject. Such
payment shall be made net of all required withholdings on the amount of
principal and interest forgiven and the related Gross-up Amount. If the amount
of required withholdings is greater than the Gross-up Amount, Executive shall
reimburse the Company for the difference.
As used herein, the terms below shall have the following definitions:
"Affiliate" means any entity controlled by or under common control with the
Company.
"Cause" shall mean the termination of Executive's employment with the
Company and its Affiliates which is a result of (i) Executive's felony
conviction, (ii) Executive's willful and detrimental disclosure to third parties
of material trade secrets or other material confidential information related to
the business of the Company and its Affiliates, or (iii) Executive's willful and
continued failure substantially to perform Executive's duties with the Company
(other than any such failure resulting from Executive's incapacity due to
physical or mental illness) after a written demand for substantial performance
is delivered to Executive by the Board of Directors of the Company (the
"Board"), which demand specifically identifies the manner in which the Board
believes that Executive has not substantially performed Executive's duties, and
which performance is not substantially corrected by Executive within ten (10)
days of receipt of such demand. For purposes of the previous sentence, no act or
failure to act on Executive's part shall be deemed "willful" unless done, or
omitted to be done, by Executive not in good faith and without reasonable belief
that Executive's action or omission was in the best interest of the Company.
X. Xxxx Xxxxxx
February 1, 2000
Page 3
"Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities and Exchange Act
of 1934 (the "Exchange Act"), whether or not the Company is then subject to such
reporting requirements; provided, however, that, anything in this Letter
Agreement to the contrary notwithstanding, a Change in Control shall be deemed
to have occurred if:
(a) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act, is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company's then
outstanding securities entitled to vote in the election of directors of the
Company;
(b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Letter Agreement) individuals who at
the beginning of such period constituted the Board of Directors of the
Company (the "Board") and any new directors, whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least three-fourths (3/4ths) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof;
(c) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company (a "Transaction"), in each
case, with respect to which the stockholders of the Company immediately
prior to such Transaction do not, immediately after the Transaction, own
more than fifty percent (50%) of the combined voting power of the Company
or other corporation resulting from such Transaction;
(d) all or substantially all of the assets of the Company are sold,
liquidated or distributed; or
(e) there is a "change in control" of the Company within the meaning
of Section 280G of the Code and the Regulations.
X. Xxxx Xxxxxx
February 1, 2000
Page 4
"Early Repayment Events" means the any of the following circumstances: (a)
Executive's employment with the Company or an Affiliate of the Company is
terminated for any reason, whether by Executive or by the Company or its
Affiliates, (b) the property secured by the Deed of Trust is sold or transferred
or (c) of a Change in Control occurs.
Very truly yours,
ARTISOFT, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Controller
Accepted and agreed as of the
date first above written:
/s/ X. Xxxx Xxxxxx
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X. Xxxx Xxxxxx
