EXHIBIT 10.7
SERIES D STOCKHOLDERS AGREEMENT
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This Series D Stockholders Agreement (this "Agreement") is made as of
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December 7, 1999, by and among divine interVentures, inc., a Delaware
corporation (the "Corporation"), each Person who holds Class B Common Stock (as
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defined below), or securities directly or indirectly convertible into or
exercisable for Class B Common Stock as of the date hereof (each such person to
be listed on the Management Stockholders Schedule attached hereto and to execute
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a counterpart of this Agreement) (the "Management Stockholders"), and the
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purchasers identified on the Schedule of Purchasers hereto (collectively as the
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"Purchasers" and each individually as a "Purchaser"). Certain Purchasers shall
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be defined by the defined term set forth for such Purchasers on the Schedule of
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Purchasers.
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Pursuant to that Purchase Agreement, dated as of the date hereof, by and
between the Purchasers and the Corporation (as amended and modified from time to
time, the "Purchase Agreement"), the other documents and instruments referred to
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therein and consummation of the transactions contemplated thereby, as of the
Closing Date, the Purchasers are acquiring shares of the Corporation's Series D
Senior Participating Convertible Redeemable Preferred Stock, $0.001 par value
per share or Series D-1 Senior Participating Convertible Redeemable Preferred
Stock, $0.001 par value per share (collectively, the "Series D Preferred
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Shares"). In order to induce the Purchasers to enter into the Purchase
Agreement and the other agreements contemplated thereby and to purchase the
Series D Preferred Shares in the manner contemplated thereby, the Corporation
and the Management Stockholders have agreed to the terms and conditions herein.
Except as otherwise indicated herein, capitalized terms used herein shall have
the meanings set forth in Section 1 hereof, or if not defined herein, the
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meanings for such capitalized terms set forth in the Purchase Agreement.
Notwithstanding anything to the contrary herein, this Agreement shall apply
to a party hereto only with respect to periods beginning (i) in the case of the
Company and the Management Stockholders, the date any Purchaser first acquires
Purchaser Shares under the Purchase Agreement, and (ii) in the case of a
Purchaser, the Closing Date for such Purchaser. To the extent the Purchase
Agreement is terminated in accordance with its terms with respect to any party
hereto, this Agreement shall have no further force and effect with respect to
such party, and, in the case of a termination of the Purchase Agreement with
respect to the Company, this Agreement will have no further force and effect
with respect to the Management Stockholders.
AGREEMENTS
In consideration of the recitals and the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. In addition to the capitalized terms defined elsewhere
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in this Agreement, the following capitalized terms shall have the following
meaning when used in this Agreement:
"Affiliate" of a Person means any other Person, directly or indirectly
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controlling, controlled by or under common control with such particular Person,
and any partner of a Person that is a partnership. Specifically, any entity
that is controlled by Persons that are members of Cross Creek shall be deemed an
Affiliate of BOEC.
"Approved Sale" means the sale of the Corporation, whether by merger,
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consolidation, recapitalization, sale of all or substantially all of the assets
of the Corporation or a sale of all or substantially all of the capital stock of
the Corporation, in one transaction or a series of transactions, which has been
approved by (a) a majority of the entire Board, (b) the holders of a majority of
then-outstanding Class B Common Stock, (c) so long as such Persons or their
Affiliates hold at least 25% of the Purchaser Shares originally purchased by
them hereunder in the aggregate, the holders of a majority of the then
outstanding Purchaser Shares held by the Corporate Investors, and (d) so long
as such Persons or their Affiliates hold at least 25% of the Purchaser Shares
originally purchased by them hereunder in the aggregate, the holders of a
majority of the then outstanding Purchaser Shares held by the Financial
Investors.
"Board" means the Board of Directors of the Corporation.
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"Class A Common Stock" means the class A common stock, par value $0.001 per
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share, of the Corporation.
"Class B Common Stock" means the class B common stock, par value $0.001 per
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share, of the Corporation.
"Commission" means the United States Securities and Exchange Commission or
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any successor thereto.
"Common Shares" means shares of Common Stock which have not been sold to
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the public (i) pursuant to a registration statement declared effective by the
Commission or (ii) after a Public Offering, pursuant to Rule 144. For the
purposes of this Agreement, any Person will be deemed to own, in addition to any
Common Shares such Person actually owns, any Common Shares which would then be
directly or indirectly issuable upon the conversion or exercise (whether or not
then convertible or exercisable) of any other Securities owned by such Person,
and such other Securities shall be deemed to represent such Common Shares.
"Common Stock" means, collectively, the Class A Common Stock and the Class
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B Common Stock.
"Corporate Investors" means such parties identified on the Schedule of
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Purchasers as Corporate Investors, and the transferees of Purchaser Shares held
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by such parties permitted hereunder.
"Excluded Percentage" means up to 10% of the Securities owned by any
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Management Stockholder (or is deemed to own) on the date hereof, subject to
adjustment for any stock splits, stock combinations or stock dividends with
respect to such Securities.
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"Financial Investor" means such parties identified on the Schedule of
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Purchasers as Financial Investors, and the transferees of Purchaser Shares held
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by such parties permitted hereunder.
"IPO" means the Corporation's first underwritten Public Offering of shares
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of Common Stock.
"Management Stockholder Shares" means the Securities originally issued to
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Management Stockholders or any Securities acquired by any Management Stockholder
after the date hereof (after which time such shares shall be deemed to be
"Management Stockholder Shares" hereunder). For all purposes of this Agreement,
Management Stockholder Shares will continue to be Management Stockholder Shares
in the hands of any holder (except for the Company or any Purchaser hereunder,
and purchasers pursuant to an offering registered under the Securities Act or
purchasers pursuant to a Rule 144 transaction), and each such other holder of
Management Stockholder Shares will succeed to all rights and obligations
attributable to any Management Stockholder, as a holder of Management
Stockholder Shares hereunder. Management Stockholder Shares will also include
shares of the Company's capital stock issued with respect to any Management
Stockholder Shares by way of a stock split, stock dividend or other
recapitalization.
"Person" means an individual, corporation, partnership, limited liability
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company, limited partnership, syndicate, person (including, without limitation,
a "Person" as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
"Public Offering" means any offering by the Corporation of its equity
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securities to the public pursuant to an effective registration statement under
the Securities Act.
"Purchaser Shares" means, at any time, (i) any Series D Preferred Shares
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then outstanding, (ii) any Common Shares then outstanding which were issued
directly or indirectly upon the conversion or exercise of Series D Preferred
Shares, (iii) any Securities then outstanding which were issued as, or were
issued directly or indirectly upon the conversion or exercise of other
Securities issued as, a dividend or other distribution with respect to or in
replacement of any Securities referred to in (i) or (ii). For purposes of this
Agreement, the calculation of the number of Purchaser Shares (to the extent such
Purchaser Shares are not Common Shares) shall be determined on an as-converted
basis into Common Shares.
"Restricted Period" means the period commencing on the date hereof and
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ending on the last day of the eighteenth month following the date hereof.
"Rule 144" means Rule 144 (including Rule 144(k)) of the Commission under
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the Securities Act or any similar provision then in force under the Securities
Act.
"Securities" means Common Shares or shares of capital stock or other
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securities directly or indirectly exercisable for, or convertible into, Common
Shares; provided, however, that Securities shall not include any securities
which have been sold to the public pursuant to a registration statement declared
effective by the Commission or, after a Public Offering, pursuant to Rule 144.
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"Securities Act" means the Securities Act of 1933, as amended, or any
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similar federal statute, as the same shall be in effect from time to time.
"Series C Preferred Stock" means the series C preferred stock, par value
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$0.001 per share, of the Corporation.
2. Disposition of Securities.
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(a) No Management Stockholder will transfer, sell, convey, pledge,
exchange or otherwise dispose of (herein referred to as a "transfer") any
Securities or any interest in Securities, except (i) in compliance with Section
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3 of this Agreement or (ii) as permitted by Section 4 of this Agreement. In
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addition, as a condition precedent to any transfer of Management Stockholder
Shares (except in a Public Offering or pursuant to Rule 144) (w) any Management
Stockholder Shares so transferred shall remain subject to the restrictions of
Section 7 and Section 8 hereof, (x) the Management Stockholder must provide the
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Corporation with prior written notice of such transfer indicating the terms and
the name and reasonably detailed business background information of the proposed
transferee, and the Corporation may object to such transfer within 21 days of
receipt of such notice (in which case such transfer shall not be permitted under
this Agreement) if a majority of the non-transferring members of the Executive
Committee of the Board determines that the transfer to the proposed transferee
would have a direct and substantial detrimental effect on the Corporation, (y)
the Corporation must determine that the Corporation is not at risk, as a result
of such transfer, to be required to be a reporting company under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and (z) the transferee
agrees to be bound by this Agreement to such extent as if the transferee were
the transferring Management Stockholder.
(b) (i) During the Restricted Period, Purchaser Shares can be
transferred only with the prior written consent of a majority of the non-
transferring members of the Executive Committee of the Board, and cannot
otherwise be sold, assigned, transferred, pledged or disposed of, directly or
indirectly (except in a Public Offering or pursuant to Rule 144); provided,
however, that any Purchaser may transfer Purchaser Shares at any time, without
complying with Section 2(b)(i) or Section 2(b)(ii)(x), to (A) any Affiliate or
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(B) Purchaser's or such Affiliate's advisors, consultants, and other business
partners.
(ii) After the Restricted Period, all Purchaser Shares will be
freely transferable, provided that, as a condition precedent to any transfer of
Purchaser Shares (except in a Public Offering or pursuant to Rule 144) (w) any
Purchaser Shares so transferred shall remain subject to the restrictions of
Section 7 and Section 8 hereof, (x) the Purchaser must provide the Corporation
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with prior written notice of such transfer indicating the terms and the name and
reasonably detailed business background information of the proposed transferee,
and the Corporation may object to such transfer within 21 days of receipt of
such notice (in which case such transfer shall not be permitted under this
Agreement) if a majority of the non-transferring members of the Executive
Committee of the Board determines that the transfer to the proposed transferee
would have a direct and substantial detrimental effect on the Corporation, (y)
the Corporation must determine that the Corporation is not at risk, as a result
of such transfer, to be required to be a reporting company under Section 12(g)
of the Securities Exchange Act of 1934, as amended, and
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(z) the transferee agrees to be bound by this Agreement to such extent as if the
transferee were the transferring Purchaser.
3. Take-along.
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(a) No Management Stockholder (the "Disposing Management Stockholder")
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will transfer, at any time or from time to time, any Take-along Securities (as
defined below), except (i) as permitted by Section 4 of this Agreement, (ii) in
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a Public Offering or pursuant to Rule 144, (iii) to a transferee who purchases
such Take-along Securities as part of a transaction in which a pro rata portion
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(as hereinafter defined) of the aggregate number of Take-along Securities being
purchased by such transferee is being purchased from each holder of Purchaser
Shares who chooses to participate in such transaction. For purposes of the
preceding sentence, "pro rata portion" means, with respect to any holder of the
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Purchaser Shares, the proportion equal to (A) the number of Purchaser Shares
held by such holder, divided by (B) the sum of (1) the number of Purchaser
Shares held by all holders of Purchaser Shares who choose to participate in such
transaction; and (2) the number of Securities held by the Disposing Management
Stockholder.
(b) "Take-along Securities" means, with respect to any Management
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Stockholder, those Securities which represent Securities in excess of the
Excluded Percentage for such Management Stockholder of all Common Shares
represented by all of the Securities owned by such Management Stockholder on the
date hereof. (For example, if a Management Stockholder who owns 100 Common
Shares on the date hereof at some date in the future wishes to sell 10 of such
Common Shares, such Management Stockholder may sell such Common Shares without
complying with the provisions of this Section 3, for such Common Shares are not
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Take-along Securities. However, if at a yet later date such Management
Stockholder wishes to dispose of an additional five Common Shares, those Common
Shares will be Take-along Securities and are subject to the provisions of this
Section 3. If such Management Stockholder acquires 20 additional Common Shares
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subsequent to the date hereof before disposing of any of his initial 100 Common
Shares, only the first 10 Common Shares such Management Stockholder disposes of
would not be Take-along Securities, and the next 110 Common Shares would be.)
(c) Before the Disposing Management Stockholder accepts any offer for
the sale of any Take-along Securities to which Section 3(a)(iii) applies, such
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Disposing Management Stockholder will give written notice (the "Take-along
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Notice") to the Corporation (which will, within five (5) days of the date of
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receipt of such notice (the "Take-along Notice Date"), send or deliver a copy of
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the Take-along Notice to each Purchaser, stating the material terms of the
offer, including the number of shares to be sold, the identity of the
prospective transferee, the purchase price therefor and the timing of such sale.
If a holder of Purchaser Shares wishes to participate in such sale, such holder
of Purchaser Shares will give the Corporation and the Disposing Management
Stockholder notice to such effect within fifteen (15) days of the Take-along
Notice Date.
(d) This Section 3 shall terminate (i) one (1) year following the
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consummation of a Qualified IPO with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, and (ii)
upon the consummation of a Qualified IPO with respect to all Management
Stockholders other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
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4. Permitted Transfers. Any Management Stockholder may transfer
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Securities, without complying with Section 3, to any Permitted Transferee (as
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defined below) that consents in a writing delivered to the Corporation to be
bound by the terms of this Agreement as a Management Stockholder. With respect
to any Management Stockholder, "Permitted Transferees" means (a) the spouse or
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lineal descendants of such Management Stockholder, (b) any trust solely for the
benefit of such Management Stockholder and/or the spouse or lineal descendants
of such Management Stockholder, (c) any corporation or partnership in which such
Management Stockholder, and/or the spouse and the lineal descendants of such
Management Stockholder are the direct and beneficial owners of substantially all
of the equity interests (provided such Management Stockholder, spouse and lineal
descendants agree in writing to remain the direct and beneficial owners of all
such equity interests), and (d) the Management Stockholder's personal
representative upon such Management Stockholder's death for purposes of
administration of such Management Stockholder's estate or upon such Management
Stockholder's incompetency for purposes of the protection and management of the
assets of such Management Stockholder.
5. Board of Directors.
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(a) Voting Agreement. From and after the date hereof, each holder of
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Management Stockholder Shares shall vote all of the Management Stockholder
Shares, and each Purchaser shall vote all Purchaser Shares, in each case which
are voting securities of the Corporation, and any other voting securities of the
Corporation over which such holder has voting control and shall take all other
necessary or desirable actions within such holder's control (whether in capacity
as a stockholder, director, member of a Board committee or officer of the
Corporation or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Corporation shall take all
necessary or desirable actions within its control (including, without
limitation, calling special Board and stockholder meetings), so that:
(i) Board Composition. Frontenac shall be entitled to designate one
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(1) director (the "Frontenac Director") and shall be entitled to designate the
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Frontenac Director as a member of the Executive Committee of the Board (the
"Frontenac Committee Member"), so long as Frontenac and/or its Affiliates owns
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at least 25% of the Purchaser Shares originally purchased by Frontenac under the
Purchase Agreement (the "Frontenac Purchaser Shares"). BOEC shall be entitled
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to designate one (1) director (the "BOEC Director"), so long as BOEC and/or its
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Affiliates owns at least 25% of the Purchaser Shares originally purchased by
BOEC under the Purchaser Agreement (the "BOEC Purchaser Shares"). Dell shall be
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entitled to designate two (2) directors (each, a "Dell Director") and shall be
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entitled to designate a Dell Director as a member of the Executive Committee of
the Board (the "Dell Committee Member"), so long as Dell and/or its Affiliates
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owns at least 25% of the Purchaser Shares originally purchased by Dell under the
Purchase Agreement (the "Dell Purchaser Shares"). CBW/SK shall be entitled to
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designate one (1) director (the "CBW/SK Director"), so long as CBW/SK and/or its
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Affiliates owns at least 25% of the Purchaser Shares originally purchased by
CBW/SK under the Purchase Agreement (the "CBW/SK Purchaser Shares"). Microsoft
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shall be entitled to designate one (1) director (the "Microsoft Director"), so
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long as Microsoft and/or its Affiliates owns at least 25% of the Purchaser
Shares originally purchased by Microsoft under the Purchase Agreement (the
"Microsoft Purchaser Shares").
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(ii) Removal. The removal from the Board or the Executive Committee,
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as applicable, (with or without cause) of: (A) the Frontenac Director or the
Frontenac Committee Member, so long as Frontenac and/or its Affiliates owns at
least 25% of the Frontenac Purchaser Shares, shall be only at the written
request of Frontenac; (B) the BOEC Director, so long as BOEC and/or its
Affiliates owns at least 25% of the BOEC Purchaser Shares, shall be only at the
written request of BOEC; (C) any Dell Director or Dell Committee Member, so long
as Dell and/or its Affiliates owns at least 25% of the Dell Purchaser Shares,
shall be only at the written request of Dell; (D) the CBW/SK Director, so long
as CBW/SK and/or its Affiliates owns at least 25% of the CBW/SK Purchaser
Shares, shall be only at the written request of CBW/SK; and (E) the Microsoft
Director, so long as Microsoft and/or its Affiliates owns at least 25% of the
Microsoft Purchaser Shares, shall be only at the written request of Microsoft.
(iii) Vacancies. In the event that the Frontenac Director ceases to
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serve as a member of the Board, so long as Frontenac and/or its Affiliates owns
at least 25% of the Frontenac Purchaser Shares, the resulting vacancy on the
Board and on the Executive Committee shall be filled by Frontenac. In the event
that the BOEC Director ceases to serve as a member of the Board, so long as BOEC
and/or its Affiliates owns at least 25% of the BOEC Purchaser Shares, the
resulting vacancy on the Board shall be filled by BOEC. In the event that a Dell
Director ceases to serve as a member of the Board, so long as Dell and/or its
Affiliates owns at least 25% of the Dell Purchaser Shares, the resulting vacancy
on the Board and, if such Dell Director was the Dell Committee Member, the
resulting vacancy on the Executive Committee, shall be filled by Dell. In the
event that the CBW/SK Director ceases to serve as a member of the Board, so long
as CBW/SK and/or its Affiliates owns at least 25% of the CBW/SK Purchaser
Shares, the resulting vacancy on the Board shall be filled by CBW/SK. In the
event that the Microsoft Director ceases to serve as a member of the Board, so
long as Microsoft and/or its Affiliates owns at least 25% of the Microsoft
Purchaser Shares, the resulting vacancy on the Board shall be filled by
Microsoft.
(b) Director Fees and Expenses; Indemnification. The Corporation shall
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pay the reasonable out-of-pocket expenses incurred by each director designated
under this Section 5 in connection with attending the meetings of the Board and
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any committee thereof to the extent such expenses are paid on behalf of or
reimbursed to any other director. If, at any time, any Board representative
receives any compensation (whether in cash, securities or otherwise) for serving
on the Board or any committee thereof, then all directors having similar
responsibilities and providing comparable services in their capacity as such (as
determined by the Compensation Committee) shall be entitled to receive the same
compensation. So long as the Frontenac Director, the BOEC Director, either Dell
Director, the CBW/SK Director, or the Microsoft Director serves on the Board and
for five (5) years thereafter, the Corporation shall maintain directors and
officers indemnity insurance coverage reasonably satisfactory to Frontenac,
BOEC, Dell, CBW/SK or Microsoft, as the case may be, and the Corporation's
certificate of incorporation and bylaws shall (to the extent necessary) be
amended to provide for indemnification and exculpation of directors and officers
to the fullest extent permitted under applicable law.
(c) Failure to Designate. If any Person fails to designate a
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representative to fill a directorship or committee seat pursuant to the terms of
this Section 5, such directorship or
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committee seat shall remain vacant until such Person which failed to designate
such directorship or committee seat so directs.
(d) Board Observers. If, and for so long as, any Corporate Investor or
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Financial Investor otherwise entitled to designate a director under Section 5(a)
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does not have a representative on the Board, the Company shall invite such
Corporate Investor or Financial Investor to send one representative to attend,
in a nonvoting, nonparticipatory, observer capacity, all meetings of the Board
and, in the case of Dell and Frontenac, the executive committee thereof. The
Company shall give each such representative copies of all notices, minutes,
consents and other materials that it provides to its directors at the same time
such materials are provided to the directors; provided, however, that the
Company reserves the right to exclude such representative from access to any
material or meeting or portion thereof if (i) the Company believes, upon advice
of counsel, that such exclusion is reasonably necessary to preserve the
attorney-client privilege, (ii) the Board is addressing any rights of the
Company vis a vis such Corporate Investor or Financial Investor or the Company's
financial relationship with such Corporate Investor or Financial Investor or
(iii) the Executive Committee determines in its good faith reasonable judgment
that such Corporate Investor or Financial Investor otherwise has a conflict of
interest, contrary to the best interest of the Company, with respect to the
matters being addressed by the Board. Each Person having observation rights
under this Section 5(d) shall provide the Company notice of the identity and
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address of such Person's representative hereunder, and any change with respect
thereto.
(e) Termination. Sections 5(a), 5(c) and 5(d) shall terminate on the
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earlier to occur of (i) two (2) years following the consummation of a Qualified
IPO, (ii) with respect to Frontenac, such time as Frontenac (and/or its
Affiliates) no longer holds at least 25% of the Frontenac Purchaser Shares,
(iii) with respect to BOEC, such time as BOEC (and/or its Affiliates) no longer
holds at least 25% of the BOEC Purchaser Shares, (iv) with respect to Dell, such
time as Dell (and/or its Affiliates) no longer holds at least 25% of the Dell
Purchaser Shares, (v) with respect to CBW/SK, such time as CBW/SK (and/or its
Affiliates) no longer holds at least 25% of the CBW/SK Purchaser Shares or (vi)
with respect to Microsoft, such time as Microsoft (and/or its Affiliates) no
longer holds at least 25% of the Microsoft Purchaser Shares.
6. Representations and Warranties; Acknowledgments. Each Management
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Stockholder severally and not jointly represents and warrants to the Corporation
and the Purchasers that (i) such Management Stockholder is the record owner of
the number of Management Stockholder Shares set forth opposite his name on the
Management Stockholders Schedule, and (ii) this Agreement has been duly
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authorized, executed and delivered by such Management Stockholder and
constitutes the valid and binding obligation of such Management Stockholder,
enforceable in accordance with its terms. Each Management Stockholder
acknowledges and agrees that such Management Stockholder has not granted and is
not a party to any proxy, voting trust or other agreement or understanding
(whether written or oral, or firm or contingent) which is inconsistent with,
conflicts with or violates any provision of this Agreement (except for the
Series C Stockholders Agreement, the true and correct text of which is attached
hereto as Exhibit A) or which is the subject matter of this Agreement. No
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holder of Management Stockholder Shares shall grant any proxy or become party to
any voting trust, voting agreement or other agreement or understanding with
respect to the voting
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or transferability, or purchase or redemption of any shares of the Corporation's
capital stock or which is inconsistent with, conflicts with or violates any
provision of this Agreement.
7. Sale of the Corporation. During the period commencing on the date
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hereof and ending on the seventh (7/th/) anniversary of the date hereof, (a)
each holder of Purchaser Shares will consent to and raise no objections to an
Approved Sale, (b)(i) if the Approved Sale is structured as a sale of stock,
each holder of Purchaser Shares will agree to sell, and will sell, all of such
holder's Series D Preferred Shares on the terms and conditions (including any
escrow or indemnification provisions) of the Approved Sale; (ii) if the Approved
Sale is structured as a merger or consolidation, each holder of Series D
Preferred Shares will vote in favor thereof and will not exercise any
dissenters' rights of appraisal such holder may have under law, including
Delaware corporation law; and (iii) if the Approved Sale is structured as a sale
of all or substantially all of the assets of the Corporation and a subsequent
dissolution and liquidation of the Corporation, each holder of Purchaser Shares
will vote in favor thereof and will vote in favor of the subsequent dissolution
and liquidation of the Corporation, and (c) each holder of Purchaser Shares will
take all necessary actions in connection with consummation of the Approved Sale
as are reasonably requested by the Board; provided, however, that for all
purposes of this Section 7, the obligations of the stockholders of the
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Corporation with respect to an Approved Sale are subject to the satisfaction of
the following conditions: (i) upon the consummation of the Approved Sale, each
stockholder of the Corporation will receive the same form of consideration and
the same portion of the aggregate consideration that such stockholders of the
Corporation would have received if such aggregate consideration (whether in the
form of cash, securities or otherwise) had been distributed by the Corporation
in complete liquidation pursuant to the rights and preferences set forth in the
Corporation's Certificate of Incorporation as in effect immediately prior to
such Approved Sale; (ii) if any stockholders of the Corporation are given an
option as to the form and amount of consideration to be received, each
stockholder of such class of the Corporation will be given the same option; and
(iii) each stockholder of then currently exercisable rights to acquire shares of
a class of the Corporation will be given an opportunity to exercise such rights
prior to the consummation of the Approved Sale and participate in such sale as
stockholders of such class of the Corporation.
8. Restrictions on Transfer.
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(a) Legends. The certificates representing the Purchaser Shares and
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the Management Stockholder Shares will bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT
AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM IS
AVAILABLE AS ESTABLISHED BY A WRITTEN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION.
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THESE SECURITIES ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AND OTHER AGREEMENTS SET FORTH IN A STOCKHOLDERS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE CORPORATION. ANY SALE,
ASSIGNMENT, TRANSFER, PLEDGE OR DISPOSITION IN CONFLICT
WITH, OR IN DEROGATION OF, THE STOCKHOLDERS AGREEMENT IS
VOID AND OF NO LEGAL FORCE, EFFECT OR VALIDITY WHATSOEVER.
(b) Securities Act. No holder of Purchaser Shares or Management
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Stockholder Shares may sell, transfer, or dispose of any of such Purchaser
Shares or Management Stockholder Shares (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Corporation an opinion of counsel or such other evidence reasonably acceptable
in form and substance to the Corporation that registration under the Securities
Act is not required in connection with such transfer.
(c) Holdback Agreements. Each holder of Management Stockholder Shares
-------------------
agrees not to effect any public sale or distribution of equity securities of the
Corporation, or any securities convertible into or exchangeable or exercisable
for such securities, (A) during the seven (7) days prior to, and during the one
hundred and eighty (180) days following, the effective date of an IPO, (except
as part of such underwritten registration), or (B) during the seven (7) days
prior to, and during the ninety (90) days following, the effective date of any
underwritten Public Offering, other than an IPO, (except as part of such
underwritten registration), in the case of each of Section 8(c)(A) and Section
--------------- -------
8(c)(B) unless the underwriters managing the Public Offering otherwise agree to
-------
a shorter period. Each holder of Management Stockholder Shares agrees to enter
into customary lock-up agreements consistent with the foregoing if requested by
any underwriter of any such Public Offering. For purposes of this Section 8(c)
------------
only, following an IPO, the term Management Stockholder Shares shall not include
any shares which have been (x) disposed of pursuant to an effective registration
statement under the Securities Act or (y) sold pursuant to Rule 144.
9. Transfers in Violation of Agreement. Any transfer or attempted
-----------------------------------
transfer of any Purchaser Shares or Management Stockholder Shares in violation
of any provision of this Agreement shall be void, and the Corporation shall not
record such transfer on its books or treat any purported transferee of such
Purchaser Shares or Management Stockholder Shares as the owner of such shares
for any purpose.
10. Amendments to Series C Stockholders Agreement. In the event that the
---------------------------------------------
Series C Stockholders Agreement is amended or modified after the date hereof,
the Corporation will provide prompt (and in any event, within five business
days) notice of such amendment or modification to the Purchasers, and will
provide a copy to the Purchasers of such amended or modified Series C
Stockholders Agreement (marked to show changes). Neither the Company nor any
Management Stockholder shall amend or modify the Series C Stockholders
Agreement, or enter into, amend or modify any other agreement with any holder of
Series C Preferred Stock with respect to such Series
-10-
C Preferred Stock, without first offering to the Purchasers similar or more
favorable (to the Purchasers) terms as are proposed to be offered to any such
stockholder in such agreement.
11. Execution: Counterparts. This Agreement may be executed in any
-----------------------
number of counterparts, each of which when so executed and delivered will be
deemed an original, and such counterparts together will constitute one
instrument.
12. Remedies. Each of the parties to this Agreement will be entitled to
--------
enforce its rights under this Agreement specifically (without the necessity of a
bond), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance or injunctive relief (without the necessity of a bond)
in order to enforce or prevent any violations of the provisions of this
Agreement.
13. Notices. Any notices desired, required or permitted to be given
-------
hereunder shall be delivered personally or mailed, certified or registered mail,
return receipt requested, or delivered by overnight courier service, to the
following addresses, or such other addresses as shall be given by notice
delivered hereunder, and shall be deemed to have been given upon delivery, if
delivered personally, three (3) days after mailing, if mailed, or one (1)
business day after delivery to the overnight courier service, if delivered by
overnight courier service:
If to the Corporation, to:
divine interVentures, inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Management Stockholders, to the addresses set forth on the stock
record books of the Corporation.
If to the Purchasers, to the addresses set forth on the stock record books
of the Corporation.
-11-
14. Amendments and Waivers. The provisions of this Agreement may be
----------------------
amended upon the written agreement of the Corporation and the holder or holders
of (a) at least a majority of the outstanding Purchaser Shares held by the
Corporate Investors, and (b) a majority of the outstanding Purchaser Shares held
by the Financial Investors, and (c) the holder or holders of a majority of the
outstanding Management Stockholder Shares. Any waiver, permit, consent or
approval of any kind or character on the part of any holders of any provision or
condition of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in writing. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
15. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed, and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
16. Complete Agreement. This Agreement supersedes and preempts any prior
------------------
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
17. Successors and Assigns. All covenants and agreements in this Agreement
-------------- -------
by or on behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto, and each
transferee of all or any portion of the Securities held by the parties hereto,
whether so expressed or not.
18. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Delaware, without giving effect to provisions thereof regarding
conflict of laws.
19. Headings. The captions set forth in this Agreement are for
--------
convenience only and shall not be considered as part of this Agreement or as in
any way limiting the terms and provisions hereof.
20. Termination. Subject to the more specific termination provisions set
-----------
forth in Sections 3(d) and 5(e), Sections 2, 3, 4, 5 and 7 of this Agreement
------------- ---- -------- - - - - -
shall terminate upon the closing of a Qualified IPO (as defined in the
Certificate of Designation).
[Remainder of page intentionally left blank.
Signature pages follow.]
-12-
IN WITNESS WHEREOF, this Series D Stockholders Agreement was executed as of
the date first set forth above.
DIVINE INTERVENTURES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ as Joint Tenant with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Joint Tenant with ▇▇▇▇ ▇. ▇▇▇▇▇
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
The undersigned is executing this Series D Stockholders Agreement as a
Management Stockholder; provided that for purposes of Section 4 of this Series D
---------
Stockholders Agreement, all Securities held by the undersigned shall be deemed
to be held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
▇▇▇▇▇ FLOWER INVESTMENTS I
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Partner
The undersigned is executing this Series D Stockholders Agreement as a
Management Stockholder; provided that for purposes of Section 4 of this Series D
---------
Stockholders Agreement, all Securities held by the undersigned shall be deemed
to be held by ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ LIVING TRUST dated
10/3/91
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, not individually, but solely
as trustee of the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ LIVING TRUST
dated 10/3/91
The undersigned is executing this Series D Stockholders Agreement as a
Management Stockholder; provided that for purposes of Section 4 of this Series D
---------
Stockholders Agreement, all Securities held by the undersigned shall be deemed
to be held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
FLIP DIVINE TRUST U/A/D 9/9/99
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, not individually, but solely as
trustee of the FLIP DIVINE TRUST U/A/D 9/9/99
FRONTENAC VII LIMITED PARTNERSHIP
By: Frontenac Company VII, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Its: Member
-------------------------
FRONTENAC MASTERS VII LIMITED
PARTNERSHIP
By: Frontenac Company VII, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Its: Member
-------------------------
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
FIRST CHICAGO INVESTMENT CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: Attorney In Fact
-----------------------
CROSS CREEK PARTNERS X, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: General Partner
-----------------------
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
MICROSOFT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Its: Chief Financial Officer
-----------------------------
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
MESIROW CAPITAL PARTNERS VII,
an Illinois Limited Partnership
By: Mesirow Financial Services, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
SUMITOMO CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Its: Financial Investor
--------------------------
▇▇▇▇ ▇▇▇▇▇▇
Media Division
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
SUMITOMO CORPORATION OF AMERICA
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Its: ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Vice President, Investment Management
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
DELL USA L.P.
By: Dell Gen. P. Corp.
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: VP, Business Development
--------------------------
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
CBW/SK DIVINE INVESTMENTS,
a New York general partnership
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, a general partner
(SIGNATURE PAGE FOR SERIES D STOCKHOLDERS AGREEMENT)
Management Stockholders Schedule
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, as Joint Tenant with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ Flower Investments I
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Living Trust dated 10/3/91
Flip Divine Trust U/A/D 9/9/99
Schedule of Purchasers
----------------------
A. Financial Investors.
-------------------
Frontenac VII Limited Partnership
Frontenac Masters VII Limited Partnership (together with Frontenac VII
Limited Partnership, "Frontenac")
First Chicago Investment Corporation
Cross Creek Partners X, LLC ("Cross Creek" and, together with First
Chicago Investment Corporation, "BOEC")
Mesirow Capital Partners VII ("Mesirow")
Sumitomo Corporation of America
Sumitomo Corporation (together with Sumitomo Corporation of America,
"Sumitomo")
B. Corporate Investors.
-------------------
Dell USA L.P. ("Dell")
Microsoft Corporation ("Microsoft")
CBW/SK divine Investments ("CBW/SK")
EXHIBIT A
---------
Series C Stockholders Agreement
-------------------------------
See attached text of the Series C Stockholders Agreement consisting of 8 pages.