Exhibit 99.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of this 8th day of August, 2001 by and among Artisoft, Inc., a Delaware
corporation (the "Company"), and the "Investors" named in that certain Purchase
Agreement of even date herewith by and between 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.
"COMMON STOCK" shall mean the Company's common stock, par value $.01 per
share.
"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.
"PREFERRED STOCK" shall mean the Series B Convertible Preferred Stock, par
value $1.00 per share, of the Company.
"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 of Common Stock issuable (i)
upon the conversion of the Preferred Stock issued pursuant to the Purchase
Agreement and (ii) upon the exercise of the Warrants, and any other securities
issued or issuable with respect to or in exchange for the shares of Common Stock
described in the foregoing clauses (i) and (ii) (because of stock splits, stock
dividends, reclassifications, recapitalizations, combinations or similar
events); provided, that, shares of Common Stock that are Registrable Securities
shall cease to be Registrable Securities upon (A) sale pursuant to a
Registration Statement or Rule 144 under the 1933 Act, or (B) such shares
becoming eligible for sale by the Investors pursuant to Rule 144(k).
Unless the context otherwise requires, "Registrable Securities" includes
both the Initial Registrable Securities and the Remaining Registrable Securities
(as such terms are defined herein).
"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.
"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.
"WARRANTS" mean 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 B.
2. REGISTRATION.
(a) REGISTRATION STATEMENTS.
(i) Promptly following the First Closing Date (as defined in the
Purchase Agreement) (but no later than sixty (60) days after the First Closing
Date), 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
all of the Registrable Securities issuable upon the conversion or exercise, as
applicable, of the Initial Securities (as defined in the Purchase Agreement)
(the "Initial Registrable Securities"). 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 Initial Registrable Securities. The Company
shall use its 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 Initial
Registrable Securities is not filed with the SEC within sixty (60) days of the
First 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% of the
aggregate amount invested by such Investor in the Initial Securities for any
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month 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 Initial Registrable Securities.
(ii) Promptly following the Second Closing Date (as defined in the
Purchase Agreement) (but no later than sixty (60) days after the Second Closing
Date), 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
all of the Registrable Securities issuable upon the conversion or exercise, as
applicable, of the Remaining Securities (as defined in the Purchase Agreement)
(the "Remaining Registrable Securities"). 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 Remaining Registrable Securities. The Company
shall use its 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 Remaining
Registrable Securities is not filed with the SEC within sixty (60) days of the
Second 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% of the
aggregate amount invested by such Investor in the Remaining Securities for any
month 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 Remaining Registrable Securities.
(iii) ADDITIONAL REGISTRABLE SECURITIES. Upon the written demand of
any Investor and upon the issuance or deemed issuance by the Company of shares
of Common Stock such as to trigger the anti-dilution provisions contained in the
Warrants or the Preferred Stock regarding issuances or deemed issuances by the
Company of shares of Common Stock at a price per share less than the then
effective Warrant Price (as defined in the Warrants) or Conversion Price (as
defined in the Certificate of Designations, Preferences and Rights creating the
Preferred Stock), or any other change in the Warrant Price or Conversion Price
such that additional shares of Common Stock become issuable pursuant to the
Warrants or the Preferred Stock, the Company shall prepare and file with the SEC
one or more Registration Statements 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 such additional shares of
Common Stock (the "Additional Shares") covering the resale of the Additional
Shares. 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 best efforts to obtain from each
person who now has piggyback registration rights a waiver of those rights with
respect to such 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
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Investor and its counsel prior to its filing or other submission. If a
Registration Statement covering the Additional Shares is not filed with the SEC
within thirty (30) 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 such portion of the aggregate amount invested by
such Investor in the Initial Securities and the Remaining Securities as is
represented by such Additional Shares for any month 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.
(b) EXPENSES. The Company will pay all expenses associated with each
registration, including filing and printing fees, reasonable accounting fees and
expenses, reasonable fees and expenses of one counsel for the Investors, 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 commercially reasonable efforts to have the
Registration Statement declared effective as soon as practicable. If (A) (x) a
Registration Statement covering Initial Registrable Securities is not declared
effective by the SEC within 120 days after the First Closing Date, (y) a
Registration Statement covering Remaining Registrable Securities is not declared
effective by the SEC within 120 days after the Second Closing Date, or (z) a
Registration Statement covering Additional Shares is not declared effective by
the SEC within 120 days following the demand of an Investor relating to the
Additional Shares covered thereby, (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 in the Initial Securities
and/or the Remaining Securities, as applicable, for any month or pro rata for
any portion thereof following the date by which such Registration Statement
should have been effective as described in (A) or (B) above (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
Blackout Period shall terminate upon (x) the effectiveness of the applicable
Registration Statement in the case of (A) above; and (y) the Registration
Statement again being available for sales by the Investors in the case of (B)
above. The amounts payable as liquidated damages pursuant to this paragraph
shall be payable in lawful money of the United States, and amounts payable as
liquidated damages 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.
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(ii) For not more than fifteen (15) consecutive trading days or for a
total of not more than thirty (30) trading days in any twelve (12) month period,
the Company may delay the disclosure of material non-public information
concerning the Company, by terminating or suspending effectiveness of 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 Investors.
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 counsel designated by the Investors
to review each Registration Statement and all amendments and supplements thereto
no fewer than five (5) 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
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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) 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) an opinion, dated as
of the closing date of any sales of Registrable Securities, 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 underwriter and the Investors and
(ii) a letter, dated such date, 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) make effort to prevent the issuance of any stop order or other
suspension of effectiveness and, 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, 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 Investor 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 to state any material
fact required to be stated therein or necessary to make the statements therein
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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 (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 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.
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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, the
intended method of disposition of the Registrable Securities held by it and such
other information, 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 ten (10)
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,
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 the happening of any event rendering a Registration Statement no
longer effective, 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) 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
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favor of an underwriter shall be limited to the same extent as the indemnity
provided in Section 6(b) hereof.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will indemnify and
hold harmless each Investor and their respective 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 seller, 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 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 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 or
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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 and that such information was
substantially relied upon by the Company in preparation of the Registration
Statement or Prospectus or any amendment or supplement thereto. 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
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 and the amount of any damages such holder has otherwise been
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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 holders of at least 50% of the Registrable
Securities (determined (i) in the case of any amendment prior to the Second
Closing Date (as defined in the Purchase Agreement), without giving effect to
the issuance of the Remaining Securities and (ii) in the case of any amendment
on or after the Second Closing Date, after giving effect to the issuance of the
Remaining Securities); provided, however that 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). 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 holders of
at least 50% of the Registrable Securities (determined (i) in the case of any
consent given prior to the Second Closing Date, without giving effect to the
issuance of the Remaining Securities and (ii) in the case of any consent given
on or after the Second Closing Date, after giving effect to the issuance of the
Remaining Securities) provided, however that no such action or omission effected
at or prior to the Second Closing shall disproportionately affect the Remaining
Investors without the consent of the Required Remaining 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 it rights hereunder
in connection with the transfer of shares of Registrable Securities by such
Investor to such person, provided that such Investor complies with all laws
applicable thereto, the transferee agrees in writing to be bound by the terms of
this Agreement and the Investor provides written notice of assignment and of the
transferee's notice information 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 without the prior written consent of the holders of
at least 50% of the Registrable Securities (determined (i) in the case of any
consent given prior to the Second Closing Date, without giving effect to the
issuance of the Remaining Securities and (ii) in the case of any consent given
on or after the Second Closing Date, after giving effect to the issuance of the
Remaining Securities).
11
(e) BENEFITS OF THE AGREEMENT. Subject to Section 7(d), 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.
(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) APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without regard to
principles of conflicts of law.
12
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: ARTISOFT, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and C.E.O.
The Investors: SPECIAL SITUATIONS FUND III, L.P.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
SPECIAL SITUATIONS CAYMAN FUND, L.P.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: General Partner
13
LAGUNITAS PARTNERS, LP
By: Xxxxxx & XxXxxxx Capital Management, LLC,
Its General Partner
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
XXXXXX & MCBAINE INTERNATIONAL
By: Xxxxxx & XxXxxxx Capital Management, LLC,
Attorney-in-Fact
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title: Manager
/s/ Xxx X. Xxxxxx
------------------------------
Xxx X. Xxxxxx
F/B/O/ XXXXXXX XXXXX XXXXXX TRUST
DATED DECEMBER 27, 1976
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title: Trustee
F/B/O/ XXXXXXXX XXXXX XXXXXX TRUST
DATED DECEMBER 30, 1975
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title: Trustee
14
