Exhibit 10.2 - Registration Rights Agreement, dated September 23, 2003
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 23rd day of September, 2003 by and among Axeda Systems
Inc., a Delaware corporation (the "Company"), and the "Investors" named in that
certain Purchase Agreement by and among the Company and the Investors (the
"Purchase Agreement").
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any person, any other person which
directly or indirectly controls, is controlled by, or is under common control
with, such person.
"Business Day" means a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
"Common Stock" shall mean the Company's common stock, par value $0.001
per share, and any securities into which such shares may hereinafter be
reclassified.
"Investors" shall mean the Investors identified in the Purchase
Agreement and any Affiliate or permitted transferee of any Investor who is a
subsequent holder of any Warrants or Registrable Securities.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration
made by preparing and filing a Registration Statement or similar document in
compliance with the 1933 Act (as defined below), and the declaration or ordering
of effectiveness of such Registration Statement or document.
"Registrable Securities" shall mean the Shares and the shares of Common
Stock issuable (i) upon the exercise of the Warrants, if any, and (ii) any other
securities issued or issuable with respect to or in exchange for Registrable
Securities; provided, that, a security shall cease to be a Registrable Security
upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933
Act, or (B) such security becoming eligible for sale by the Investors pursuant
to Rule 144(k).
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
"Required Investors" means the Investors holding a majority of the
Registrable Securities.
"SEC" means the U.S. Securities and Exchange Commission.
---
"Shares" means the shares of Common Stock issued pursuant to the
Purchase Agreement.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Warrants" means, the warrants to purchase shares of Common Stock
issued to the Investors pursuant to the Purchase Agreement, the form of which is
attached to the Purchase Agreement as Exhibit A.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
2. Registration.
(a) Registration Statements.
(i) Promptly following the closing of the purchase
and sale of the securities
contemplated by the Purchase Agreement (the "Closing Date") but no later than
ten (10) days after the Closing Date (the "Filing Deadline"), the Company shall
prepare and file with the SEC one Registration Statement on Form S-3 (or, if
Form S-3 is not then available to the Company, on such form of registration
statement as is then available to effect a registration for resale of the
Registrable Securities, subject to the Required Investors' consent), covering
the resale of the Registrable Securities in an amount at least equal to the
number of Shares plus the number of shares of Common Stock necessary to permit
the exercise in full of the Warrants. Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. The Company shall use
its reasonable best efforts to obtain from each person who now has piggyback
registration rights a waiver of those rights with respect to the Registration
Statement; provided, however, that, for any Person who has not waived his, her
or its piggyback registration rights with respect to the Registration Statement,
all of the shares for which such Person has piggyback registration rights may be
included in any Registration Statement filed to cover the resale of the
Additional Shares. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be
provided in accordance with Section 3(c) to the Investors and their counsel
prior to its filing or other submission. If a Registration Statement covering
the Registrable Securities is not filed with the SEC on or prior to the Filing
Deadline, the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.5% of the
aggregate amount invested by such Investor for each 30-day period or pro rata
for any portion thereof following the date by which such Registration Statement
should have been filed for which no Registration Statement is filed with respect
to the Registrable Securities. Such payments shall be in partial compensation to
the Investors, and shall not constitute the Investors' exclusive remedy for such
events. Such payments shall be made to each Investor in cash.
2
(ii) Additional Registrable Securities. Upon the
written demand of any Investor
and upon any change in the Warrant Price (as defined in the Warrant) such that
additional shares of Common Stock become issuable upon the exercise of the
Warrants, the Company shall prepare and file with the SEC one or more
Registration Statements on Form S-3 or amend the Registration Statement filed
pursuant to clause (i) above, if such Registration Statement has not previously
been declared effective (or, if Form S-3 is not then available to the Company,
on such form of registration statement as is then available to effect a
registration for resale of such additional shares of Common Stock (the
"Additional Shares"), subject to the Required Investors' consent) covering the
resale of the Additional Shares, but only to the extent the Additional Shares
are not at the time covered by an effective Registration Statement. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Additional
Shares. The Company shall use its reasonable best efforts to obtain from each
person who now has piggyback registration rights a waiver of those rights with
respect to such Registration Statement; provided, however, that, for any Person
who has not waived his, her or its piggyback registration rights with respect to
the Registration Statement, all of the shares for which such Person has
piggyback registration rights may be included in any Registration Statement
filed to cover the resale of the Additional Shares. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the
Investors and their counsel prior to its filing or other submission. If a
Registration Statement covering the Additional Shares is required to be filed
under this Section 2(a)(ii) and is not filed with the SEC within five Business
Days of the request of any Investor, the Company will make pro rata payments to
each Investor, as liquidated damages and not as a penalty, in an amount equal to
1.5% of the aggregate amount invested by such Investor for each 30-day period or
pro rata for any portion thereof following the date by which such Registration
Statement should have been filed for which no Registration Statement is filed
with respect to the Additional Shares. Such payments shall be in partial
compensation to the Investors, and shall not constitute the Investors' exclusive
remedy for such events. Such payments shall be made to each Investor in cash.
(b) Expenses. The Company will pay all expenses
associated with each
registration, including filing and printing fees, counsel and accounting fees
and expenses, costs associated with clearing the Registrable Securities for
sale under applicable state securities laws, listing fees, fees and expenses of
one counsel to the Investors (subject to a cap of $5,000) and the Investors'
reasonable expenses in connection with the registration, but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals with respect to the Registrable
Securities being sold.
3
(c) Effectiveness.
(i) The Company shall use commercially reasonable
efforts to have the Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Investors with copies of
any related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A)(x) a Registration
Statement covering the Registrable Securities is not declared effective by the
SEC within ninety (90) days after the Closing Date, or (y) a Registration
Statement covering Additional Shares is not declared effective by the SEC within
ninety (90) days following the demand of an Investor relating to the Additional
Shares covered thereby, or (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company's failure to update the Registration Statement), but
excluding the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions and except as excused pursuant to
subparagraph (ii) below, then the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to 1.5%
of the aggregate amount invested by such Investor for each 30-day period or pro
rata for any portion thereof following the date by which such Registration
Statement should have been effective (the "Blackout Period"). Such payments
shall be in partial compensation to the Investors, and shall not constitute the
Investors' exclusive remedy for such events. The amounts payable as liquidated
damages pursuant to this paragraph shall be paid monthly within three (3)
Business Days of the last day of each month following the commencement of the
Blackout Period until the termination of the Blackout Period. Such payments
shall be made to each Investor in cash.
(ii) For not more than thirty (30)consecutive
days or for a total of not more than sixty (60) days in any twelve (12) month
period, the Company may delay the disclosure of material non-public information
concerning the Company, by suspending the use of any Prospectus included in any
registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "Allowed Delay"); provided,
that the Company shall promptly (a)notify the Investors in writing of the
existence of (but in no event, without the prior written consent of an Investor,
shall the Company disclose to such Investor any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay, and
(b) advise the Investors in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay.
(d) Underwritten Offering. If any offering pursuant
to a Registration Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Company shall have the right to select an investment
banker and manager to administer the offering, which investment banker or
manager shall be reasonably satisfactory to the Required Investors.
4
3. Company Obligations. The Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously
as possible:
(a) use commercially reasonable efforts to cause such
Registration Statement to
become effective and to remain continuously effective for a period that will
terminate upon the earlier of (i) the date on which all Registrable Securities
covered by such Registration Statement as amended from time to time, have been
sold, and (ii) the date on which all Registrable Securities covered by such
Registration Statement may be sold pursuant to Rule 144(k);
(b) prepare and file with the SEC such amendments and
post-effective amendments to
the Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 3(a) and
to comply with the provisions of the 1933 Act and the 1934 Act with respect to
the distribution of all of the Registrable Securities covered thereby;
(c) provide copies to and permit one counsel
designated by the Investors to review
each Registration Statement and all amendments and supplements thereto no fewer
than three (3) business days prior to their filing with the SEC and not file
any document to which such counsel reasonably objects;
(d) furnish to the Investors and their legal counsel
(i) promptly after the same
is prepared and publicly distributed, filed with the SEC, or received by the
Company (but not later than two (2) Business Days after the filing date,
receipt date or sending date, as the case may be) one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto, and each letter
written by or on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as each Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor that are
covered by the related Registration Statement;
(e) [intentionally omitted]
(f) [intentionally omitted];
(g) use commercially reasonable efforts to (i)
prevent the issuance of any stop order or other suspension of effectiveness
and, (ii) if such order is issued, obtain the withdrawal of any such order
at the earliest possible moment;
5
(h) prior to any public offering of Registrable
Securities, use commercially
reasonable efforts to register or qualify or cooperate with the Investors and
their counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions requested by the Investors and do any and all other
commercially reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(h), (ii) subject itself to general taxation in
any jurisdiction where it would not otherwise be so subject but for this
Section 3(h), or (iii) file a general consent to service of process in any such
jurisdiction;
(i) use commercially reasonable efforts to cause all
Registrable Securities
covered by a Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar securities issued
by the Company are then listed;
(j) immediately notify the Investors, at any time
when a Prospectus relating to
Registrable Securities is required to be delivered under the 1933 Act, upon
discovery that, or upon the happening of any event as a result of which, the
Prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and at the request of
any such holder, promptly prepare and furnish to such holder a reasonable
number of copies of a supplement to or an amendment of such Prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; and
(k) otherwise use commercially reasonable efforts to
comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such
other actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 3(k), "Availability Date" means the 45th day
following the end of the fourth fiscal quarter that includes the effective date
of such Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter).
6
(l) With a view to making available to the Investors
the benefits of Rule 144 (or
its successor rule) and any other rule or regulation of the SEC that may at any
time permit the Investors to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) six months after such date as all of the Registrable
Securities may be resold pursuant to Rule 144(k) or any other rule of similar
effect or (B) such date as all of the Registrable Securities shall have been
resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1934 Act; and (iii) furnish to each
Investor upon request, as long as such Investor owns any Registrable Securities,
(A) a written statement by the Company that it has complied with the reporting
requirements of the 1934 Act, (B) a copy of the Company's most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail such Investor of
any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due Diligence Review; Information. The Company shall make
available, during normal business hours, for inspection and review by the
Investors, advisors to and representatives of the Investors (who may or may not
be affiliated with the Investors and who are reasonably acceptable to the
Company), any underwriter participating in any disposition of shares of Common
Stock on behalf of the Investors pursuant to a Registration Statement or
amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review and any Investor wishing to obtain
such information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
7
5. Obligations of the Investors.
(a) Each Investor shall furnish in writing to the
Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor if
such Investor elects to have any of the Registrable Securities included in the
Registration Statement. An Investor shall provide such information to the
Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of the
Registrable Securities included in the Registration Statement. An Investor's
rights hereunder are expressly conditioned upon such Investor's compliance with
the requirements hereof.
(b) Each Investor, by its acceptance of the
Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of a Registration Statement hereunder, unless
such Investor has notified the Company in writing of its election to exclude
all of its Registrable Securities from such Registration Statement.
(c) [intentionally omitted]
(d) Each Investor agrees that, upon receipt of any
notice from the Company of
either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or
(ii) the happening of an event pursuant to Section 3(j) hereof, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities, until the
Investor's receipt of the copies of the supplemented or amended prospectus
filed with the SEC and declared effective and, if so directed by the Company,
the Investor shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all copies in
the Investor's possession of the Prospectus covering the Registrable Securities
current at the time of receipt of such notice.
(e) [intentionally omitted]
8
6. Indemnification.
(a) Indemnification by the Company. The Company will
indemnify and hold harmless
each Investor and its officers, directors, members, employees and agents,
successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof; (ii) any blue sky
application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document or
information herein called a "Blue Sky Application"); (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iv) any violation
by the Company or its agents of any rule or regulation promulgated under the
1933 Act applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such registration; or (v)
any failure to register or qualify the Registrable Securities included in any
such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investor's behalf (the undertaking of
any underwriter chosen by the Company being attributed to the Company) and will
reimburse such Investor, and each such officer, director or member and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Investor or any such controlling person in
writing specifically for use in such Registration Statement or Prospectus, (ii)
an untrue statement or alleged untrue statement or omission in the Registration
Statement or any prospectus that is corrected in any subsequent amendment or
supplement to the Registration Statement or prospectus that was delivered to
the selling Investor a reasonable time before the pertinent sale or sales by
the selling Investor and which the Company advised the Investor in writing must
be used in lieu of any prior prospectus or amendment or supplement thereto that
had previously been provided to the Investor, (iii) the failure of the Investor
to comply with the prospectus delivery requirements of the 1933 Act, provided
that the Company had met its obligations hereunder to furnish the Investor with
copies of the applicable prospectus, or (iv) arises out of or is based upon
sales by the Investor pursuant to the Registration Statement during an Allowed
Delay, provided that the Company had complied in all respects with the
provisions of Section 2(c)(ii) hereof.
9
(b) Indemnification by the Investors. In connection
with any registration
pursuant to the terms of this Agreement, each Investor will furnish to the
Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities or the proposed manner of
distribution for use in connection with any Registration Statement or
Prospectus and agrees, severally but not jointly, to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors,
officers, employees, stockholders and each person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expense (including reasonable attorney fees) resulting from (i)
such Investor's failure to comply with the prospectus delivery requirements of
the 1933 Act, (ii) any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement
thereto, (iii) an untrue statement or alleged untrue statement or omission in
the Registration Statement or any prospectus that is corrected in any
subsequent amendment or supplement to the Registration Statement or prospectus
that was delivered to the selling Investor a reasonable time before the
pertinent sale or sales by the selling Investor and which the Company advised
the Investor in writing must be used in lieu of any prior prospectus or
amendment or supplement thereto that had previously been provided to the
Investor, or (iv) sales by the Investor pursuant to the Registration Statement
during an Allowed Delay, provided that the Company had complied in all respects
with the provisions of Section 2(c)(ii) hereof. In no event shall the liability
of an Investor be greater in amount than the dollar amount of the proceeds (net
of all expense paid by such Investor in connection with any claim relating to
this Section 6 and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue statement or omission) received by
such Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
10
(c) Conduct of Indemnification Proceedings. Any
person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
(d) Contribution. If for any reason the
indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation.
In no event shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder in connection with any claim relating to this
Section 6 and the amount of any damages such holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission) received by it upon the sale of the Registrable Securities
giving rise to such contribution obligation.
11
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be
amended only by a writing
signed by the Company and the Required Investors. The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.
(b) Notices. All notices and other communications
provided for or permitted
hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement.
(c) Assignments and Transfers by Investors. The
provisions of this Agreement
shall be binding upon and inure to the benefit of the Investors and their
respective successors and assigns. An Investor may transfer or assign, in whole
or from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Investor to such
person, provided that such Investor complies with all laws applicable thereto
and provides written notice of assignment to the Company promptly after such
assignment is effected and the transferee agrees in writing to be bound by the
terms of this Agreement and the Purchase Agreement.
(d) Assignments and Transfers by the Company. This
Agreement may not be assigned
by the Company (whether by operation of law or otherwise) without the prior
written consent of the Required Investors, provided, however, that the Company
may assign its rights and delegate its duties hereunder to any surviving or
successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company's assets to another corporation,
without the prior written consent of the Required Investors, after notice duly
given by the Company to each Investor.
(e) Benefits of the Agreement. The terms and
conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(f) Counterparts; Faxes. This Agreement may be
executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(g) Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
12
(h) Severability. Any provision of this Agreement
that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.
(i) Further Assurances. The parties shall execute and
deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by
the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Governing Law; Consent to Jurisdiction. This
Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
13
IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.
The Company: AXEDA SYSTEMS INC.
By: /s/ Xxxxxx X Xxxxxxx
--------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
14
The Investors: SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P.
By: /s/ Xxxxxx Xxxxxx
------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
15
