EXHIBIT 99.2
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REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (the "Agreement") is made and
entered into as of this ___ day of October, 2001 by and among ON Technology
Corporation, a Delaware corporation (the "Company"), and the "Investors" named
in that certain Purchase Agreement, dated as of October 24, 2001, 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.
"Agreement" has the meaning ascribed thereto in the preamble
hereof.
"Allowed Delay" has the meaning ascribed thereto in Section
2(c)(ii) hereof.
"Availability Date" has the meaning ascribed thereto in Section
3(k) hereof.
"Blackout Period" has the meaning ascribed thereto in Section
2(c)(i) hereof.
"Blue Sky Application" has the meaning ascribed thereto in
Section 6(a) hereof.
"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.
"Closing Date" has the meaning ascribed thereto in Section 2(a)
hereof.
"Closing Price" as of any date means (a) the closing bid price of
one share of Common Stock as reported on The Nasdaq Stock Market, Inc. National
Market System ("Nasdaq") on such date, (b) if no closing bid price is available,
the average of the high bid and the low asked price quoted on Nasdaq on such
date, or (c) if the shares of Common Stock are not
then quoted on Nasdaq, the value of one share of Common Stock on such date as
shall be determined in good faith by the Board of Directors of the Company and
the Investors' Representative, provided, that if the Board of Directors of the
Company and the Required Investors are unable to agree upon the value of a share
of Common Stock pursuant to this subpart (c), the Company and the Required
Investors shall jointly select an appraiser who is experienced in such matters
to determine the Closing Price. The decision of such appraiser shall be final
and conclusive, and the cost of such appraiser shall be borne one half by the
Company and one half by the Investors.
"Common Stock" shall mean the Company's common stock, par value
$0.01 per share.
"Company" has the meaning ascribed thereto in the preamble
hereof.
"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 Registrable Securities.
"Investors' Representative" shall mean the representative of the
Investors selected by the Required Investors upon written notice duly given to
the Company in accordance with the terms of this Agreement, who shall initially
be Special Situations Fund III, L.P.
"Nasdaq" has the meaning ascribed thereto in the definition of
Closing Price above.
"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.
"Purchase Agreement" has the meaning ascribed thereto in the
preamble hereof.
"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, and the declaration or ordering of
effectiveness of such Registration Statement or document.
"Registrable Securities" shall mean the shares of Common Stock
issuable (i) pursuant to the Purchase Agreement and (ii) pursuant to the
provisions of Sections 2(a) and 2(c) below, and any other securities issued or
issuable with respect to or in exchange for Registrable
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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" shall have the meaning ascribed to such term
in the Purchase Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"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.
2. Registration.
(a) Registration Statements. Promptly following the closing of
the purchase and sale of shares of Common Stock contemplated by the Purchase
Agreement (the "Closing Date") (but no later than thirty (30) days thereafter),
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), covering the resale of the Registrable
Securities in an amount equal to the number of shares of Common Stock issued to
the Investors on the Closing Date; provided, that each Investor shall have
timely provided to the Company the information that each Investor is obligated
to deliver to the Company pursuant to Section 5(a) hereof. 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. 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 within thirty (30)
days of the Closing Date, 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%
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of the aggregate amount paid by such Investor on the Closing Date to the Company
for shares of Common Stock still held by such Investor, for any 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 payment shall be made to each
Investor in cash or, at the option of such Investor, in additional fully paid
and non-assessable shares of Common Stock not later than five (5) Business Days
following the end of 30-day period. For the purpose of determining such number
of shares, each share of Common Stock shall be deemed to have a value equal to
the arithmetic mean of the Closing Prices for the ten (10) trading days
beginning twenty (20) trading days prior to the issuance of such shares.
(b) Expenses. The Company will pay all expenses associated with
each registration hereunder, 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 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.
(c) Effectiveness.
(i) The Company shall use best efforts take all actions
reasonably required to have the Registration Statement declared effective as
soon as practicable. If a Registration Statement covering the Registrable
Securities is not declared effective by the SEC within one hundred and twenty
(120) days after the Closing Date (subject to extension for an additional thirty
(30) day period in the case of any Registration Statement which receives full
review by the SEC staff), 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 paid by such Investor on the Closing Date to the Company
for shares of Common Stock still held by such Investor, for any 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 five (5)
Business Days of the last day of each month following the commencement of the
Blackout Period until the termination of the Blackout Period. Such payment shall
be made to each Investor in cash or, at the option of such Investor, in
additional fully paid and non-assessable shares of Common Stock. For the purpose
of determining such number of shares, each share of Common Stock shall be deemed
to have a value equal to the arithmetic mean of the Closing Prices for the ten
(10) trading days beginning twenty (20) trading days prior to the issuance of
such shares. The Blackout Period shall terminate upon the effectiveness of the
Registration Statement. The Company shall not be obligated to pay any amounts
payable as liquidated damages hereunder to any Investor (i) from and after such
time as such Investor no longer holds Registrable Securities or (ii) to the
extent any such Investor has elected to exclude all of its Registrable
Securities from a Registration Statement pursuant to Section 5(b) hereof.
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(ii) For not more than twenty (20) consecutive days or for
a total of not more than forty-five (45) 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.
3. Company Obligations. In addition to its obligations under Section
2(c) hereof, the Company will use its best efforts to take all actions
reasonable required to:
(a) cause such Registration Statement 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) hereof 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 counsel designated by the
Investors' Representative to review each Registration Statement and all
amendments and supplements thereto no fewer than seven (7) days prior to their
filing with the SEC and not file any document to which such counsel reasonably
objects;
(d) furnish to the Investors' Representative and its 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
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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) in the event the Company selects an underwriter for the
offering, the Company shall enter into and perform its reasonable obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
(f) if required by the underwriter, or if any Investor is
described in the Registration Statement as an underwriter, the Company shall
furnish, on the effective date of the Registration Statement (except with
respect to clause (i) below) and on the date that Registrable Securities are
delivered to an underwriter, if any, for sale in connection with the
Registration Statement (including any Investor deemed to be an underwriter), (i)
(A) in the case of an underwritten offering, an opinion, dated as of the closing
date of the sale of Registrable Securities to the underwriters, from independent
legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and the Investors
participating in such underwritten offering or (B) in the case of an "at the
market" offering, an opinion, dated as of or promptly after the effective date
of the Registration Statement to the Investors, from independent legal counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in a public offering, addressed to
the Investors, and (ii) a letter, dated as of the effective date of such
Registration Statement and confirmed as of the applicable dates described above,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters
(including any Investor deemed to be an underwriter);
(g) (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;
(h) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the Investors' Representative and its
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;
(i) 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
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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) 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
(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).
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
pertinent 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; provided, however, that each such recipient of due diligence
documents shall hold in confidence and shall not make any disclosure (except to
an Investor) of any such information, unless (i) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required to be disclosed in such
Registration Statement to permit an Investor to sell under such Registration
Statement, (ii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or is otherwise required by applicable law or legal process, or
(c) such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement (to the knowledge of
the relevant Investor). The Company shall not be required to disclose any
confidential information to any Investor or its advisors or representatives
until and unless such person has
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entered into a confidentiality agreement (in form and substance reasonably
satisfactory to the Company). Each Investor agrees that it shall, upon learning
that disclosure of any such information is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
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.
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.
(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) In the event the Company, at the request of the Investors'
Representative, determines to engage the services of an underwriter, such
Investor agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities.
(d) Each Investor agrees that, upon receipt of any notice from
the Company of either (A) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (B) 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
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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) No Investor may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions. Notwithstanding the foregoing, no Investor shall be
required to make any representations to such underwriter, other than those with
respect to itself and the Registrable Securities owned by it, including its
right to sell the Registrable Securities, and any indemnification in favor of
the underwriter by the Investors shall be several and not joint and limited in
the case of any Investor, to the proceeds received by such Investor from the
sale of its Registrable Securities. The scope of any such indemnification in
favor of an underwriter shall be limited to the same extent as the indemnity
provided in Section 6(b) hereof.
6. Indemnification. In the event that Registrable Securities are
included in a Registration Statement under this Agreement:
(a) Indemnification by the Company. To the extent permitted by
applicable law, 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 such Investor, officer, director, member, or controlling
person 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, in light of
the circumstances under which such statements were made, 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
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any such loss, claim, damage or liability arises out of or is based upon 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.
(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 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 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 or such omission is omitted from such
information. 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
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.
(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 separate 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
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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 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.
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 (other than direct
competitors of the Company) 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.
(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 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
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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.
(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 hereto 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 and the Purchase Agreement
(and the Exhibits and Schedules annexed thereto) are intended by the parties
hereto 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 and therein. This Agreement
and the Purchase Agreement (and the Exhibits and Schedules annexed thereto)
supersede 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
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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.
[signature page follows]
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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: ON TECHNOLOGY CORPORATION
By: ________________________________
Name:
Title:
The Investors: SPECIAL SITUATIONS FUND III, L.P.
By: ________________________________
Name:
Title:
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: ________________________________
Name:
Title:
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: ________________________________
Name:
Title:
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: ________________________________
Name:
Title:
