EXHIBIT 4.1
SECOND AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
This SECOND AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (the
"AGREEMENT"), dated as of July 24, 2002, by and among divine, inc, a Delaware
corporation, with headquarters located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and the investors listed on the Schedule of
Buyers attached hereto (individually, a "BUYER" and collectively, the "BUYERS")
amends and restates in its entirety, subject to Section 9(e) hereof, that
certain Amended and Restated Securities Purchase Agreement, dated as of July 16,
2002, by and between the Company and the Buyers (the "AMENDED PURCHASE
AGREEMENT").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance, in part, upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT"). (Unless otherwise indicated, capitalized terms used
in this Agreement shall have the meanings ascribed to such terms herein.);
B. The Company and the Buyers previously entered into a Securities Purchase
Agreement, dated as of May 29, 2002 (the "ORIGINAL PURCHASE AGREEMENT"),
pursuant to which certain of the Buyers (the "INITIAL BUYERS") purchased from
the Company, on or prior to June 6, 2002, shares of the Company's Series B
Convertible Preferred Stock, par value $0.001 per share (the "SERIES B PREFERRED
STOCK"), which are convertible into shares of the Company's Class A common
stock, par value $0.001 per share (the "COMMON STOCK"), in accordance with the
terms of the Company's Certificate of Designations, Preferences and Rights of
the Series B Preferred Stock filed with the Secretary of State of the State of
Delaware on May 30, 2002 (the "ORIGINAL SERIES B CERTIFICATE OF DESIGNATIONS");
C. Each Initial Buyer is the holder of that number of shares of Series B
Preferred Stock (each an "ORIGINAL PREFERRED SHARE", collectively, the "ORIGINAL
PREFERRED SHARES" and as converted, the "ORIGINAL CONVERSION SHARES"; the
Original Preferred Shares and the Original Conversion Shares are collectively
referred to herein as the "ORIGINAL SECURITIES") set forth opposite its name
under the heading "Number of Original Preferred Shares" on the Schedule of
Buyers;
D. On July 16, 2002, the Company and the Buyers entered into the Amended
Purchase Agreement, whereby the parties amended and restated in its entirety the
Original Purchase Agreement;
E. The Company and the Buyers desire to amend and restate in its entirety,
subject to Section 9(e) hereof, the Amended Purchase Agreement;
F. Subject to the terms and conditions set forth in this Agreement, each of
the Buyers set forth under the heading "Mandatory Buyers" on the Schedule of
Buyers (or, if consented to by the Company (which consent will not be
unreasonably withheld), an affiliate
thereof) (each a "MANDATORY BUYER" and, collectively, the "MANDATORY BUYERS")
will be required under this Agreement to buy, and the Company will be required
under this Agreement to sell to each of the Mandatory Buyers, at the Mandatory
Closing, for a purchase price per share of Mandatory Preferred Share equal to
$1,000 (the "PURCHASE PRICE") that number of shares of the Company's Series B-1
Convertible Preferred Stock, par value $0.001 per share (the "SERIES B-1
PREFERRED STOCK") set forth opposite its name under the heading "Number of
Mandatory Preferred Shares" on the Schedule of Buyers (the "MANDATORY PREFERRED
SHARES" and, as converted, the "MANDATORY CONVERSION SHARES"), which are
convertible into shares of Common Stock, in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Series B-1
Preferred Stock filed with the Secretary of State of the State of Delaware on
July 17, 2002 (the "ORIGINAL SERIES B-1 CERTIFICATE OF DESIGNATIONS");
G. Prior to the closing of the transactions contemplated hereby, the
Company will have amended (i) the Original Series B Certificate of Designations
pursuant to the Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series B Convertible Preferred Stock to be
substantially in the form attached hereto as EXHIBIT A (the "SERIES B
CERTIFICATE OF AMENDMENT") and (ii) the Original Series B-1 Certificate of
Designations pursuant to the Certificate of Amendment to Certificate of
Designations, Preferences and Rights of Series B-1 Convertible Preferred Stock
to be substantially in the form attached hereto as EXHIBIT B (the "SERIES B-1
CERTIFICATE OF AMENDMENT" and, together with the Series B Certificate of
Amendment, the "CERTIFICATES OF AMENDMENT"). (For purposes of this Agreement,
the term "SERIES B CERTIFICATE OF DESIGNATIONS" shall mean (a) prior to the
filing of the Series B Certificate of Amendment, the Original Series B
Certificate of Designations, and (b) after the filing of the Series B
Certificate of Amendment, the Original Series B Certificate of Designations, as
amended by the Series B Certificate of Amendment; and the term "SERIES B-1
CERTIFICATE OF DESIGNATIONS" shall mean (y) prior to the filing of the Series
B-1 Certificate of Amendment, the Original Series B-1 Certificate of
Designations, and (z) after the filing of the Series B-1 Certificate of
Amendment, the Original Series B-1 Certificate of Designations, as amended by
the Series B-1 Certificate of Amendment; and the Series B Certificate of
Designations and the Series B-1 Certificate of Designations collectively are
referred to as the "CERTIFICATES OF DESIGNATIONS".); and
H. At the Mandatory Closing (as defined below), the Company and the Buyers
will execute and deliver an Amended and Restated Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT C (the "AMENDED
REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company will agree to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws. Upon
execution of the Amended Registration Rights Agreement, it shall amend and
restate in its entirety that certain Registration Rights Agreement, dated as of
May 31, 2002, by and between the Company and the Buyers (the "ORIGINAL
REGISTRATION RIGHTS AGREEMENT"). For purposes of this Agreement, "REGISTRATION
RIGHTS AGREEMENT" shall mean (i) prior to the execution of the Amended
Registration Rights Agreement, the Original Registration Rights Agreement, and
(ii) after the execution of the Amended Registration Rights Agreement, the
Amended Registration Rights Agreement.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
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1. CERTIFICATE OF DESIGNATIONS.
By execution hereof, each of the Buyers, in its capacity as a holder of
shares of Series B Preferred Stock, irrevocably approves of, and consents to,
under and pursuant to Sections 7(b)(i) and 7(b)(iii) of the Series B Certificate
of Designations:
(a) the filing by the Company of the Series B Certificate of Amendment
with the Secretary of State of the State of Delaware.
(b) the filing by the Company of the Series B-1 Certificate of
Amendment with the Secretary of State of the State of Delaware and the issuance
of the Mandatory Preferred Shares pursuant to this Agreement.
2. PURCHASE AND SALE OF MANDATORY PREFERRED SHARES.
a. PURCHASE OF MANDATORY PREFERRED SHARES. Subject to the terms and
conditions of this Agreement, including, without limitation, the satisfaction
(or waiver) of the conditions set forth in Sections 2(b), 7 and 8, each
Mandatory Buyer shall purchase, and the Company shall issue and sell to each
Mandatory Buyer the number of Mandatory Preferred Shares set forth opposite such
Mandatory Buyer's name under the heading "Number of Mandatory Preferred Shares"
on the Schedule of Buyers for a purchase price per share of Mandatory Preferred
Share equal to the Purchase Price and an aggregate purchase price equal to the
dollar amount set forth opposite such Mandatory Buyer's name under the heading
"Aggregate Mandatory Closing Purchase Price" on the Schedule of Buyers (the
"MANDATORY CLOSING"). The Original Preferred Shares and the Mandatory Preferred
Shares collectively are referred to in this Agreement as the "PREFERRED SHARES"
and the Original Conversion Shares and the Mandatory Conversion Shares
collectively are referred to in this Agreement as the "CONVERSION SHARES".
"BUSINESS DAYS" means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law to
remain closed.
b. THE MANDATORY CLOSING DATE. The date and time of the Mandatory
Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. Central Time, on the
first (1st) Business Day after the date of the stockholder meeting referred to
in Section 5(k) at which Stockholder Approval (as defined in Section 5(k)) is
obtained and following the date of the receipt by each Buyer of the Mandatory
Share Notice, subject to satisfaction (or waiver) of the conditions to the
Mandatory Closing set forth in Sections 7 and 8 and the conditions set forth in
this Section 2(b) (or such later date as is mutually agreed to by the Company
and Oak Investment Partners X, Limited Partnership ("OAK")). The Company shall
deliver written notice (the "MANDATORY SHARE NOTICE") to each Buyer on the date
(the "MANDATORY SHARE NOTICE DATE") the Company has received the approval of the
Company's stockholders pursuant to Section 5(k), but in no event later than
September 30, 2002, unless the Company and Oak otherwise mutually agree to
extend such date, in which case the parties' right to terminate the parties'
obligations with respect to the Mandatory Closing under Section 9(l) of this
Agreement shall automatically be modified to a date seven (7) days after such
agreed upon extended date. The Mandatory Share Notice shall set forth the date
of the Mandatory Closing Date, which shall be the first (1st) Business Day after
the date of the stockholder meeting referred to in Section 5(k) at which the
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Stockholder Approval is obtained (or such later date as is mutually agreed to by
the Company and Oak). Notwithstanding the foregoing, the Company shall not be
entitled to deliver a Mandatory Share Notice unless, prior to the Mandatory
Closing Date, the Company has received the Stockholder Approval.
c. FORM OF PAYMENT. On the Mandatory Closing Date, (i) each Mandatory
Buyer shall pay to the Company the aggregate Purchase Price payable by such
Mandatory Buyer hereunder for the Mandatory Preferred Shares to be issued and
sold to such Mandatory Buyer at the Mandatory Closing by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, less any amount withheld for expenses of Oak pursuant to Section
5(h), and (ii) the Company shall deliver to each Mandatory Buyer, stock
certificates (in the denominations as such Mandatory Buyer shall request) (the
"MANDATORY PREFERRED STOCK CERTIFICATES") representing such number of the
Mandatory Preferred Shares which such Mandatory Buyer is then purchasing
hereunder, duly executed on behalf of the Company and registered in the name of
such Mandatory Buyer or its designee. The stock certificates representing the
Original Preferred Shares and the Mandatory Preferred Stock Certificates
collectively are referred to in this Agreement as the "PREFERRED STOCK
CERTIFICATES."
3. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Mandatory
Preferred Shares and (ii) upon conversion of the Mandatory Preferred Shares,
will acquire the Conversion Shares then issuable upon conversion thereof (the
Mandatory Preferred Shares and the Mandatory Conversion Shares collectively are
referred to herein as the "SECURITIES"), for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D and a "qualified
institutional buyer" as that term is defined in Rule 144A promulgated under the
1933 Act.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials
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relating to the offer and sale of the Securities which have been requested by
such Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's right to
rely on the Company's representations and warranties contained in Sections 4 and
9(m) below. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. TRANSFER OR RESALE. Such Buyer understands that except as provided
in the Registration Rights Agreement: (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel (or such other evidence reasonably acceptable to the
Company), in a generally acceptable form, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Buyer provides the Company
with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act, as amended, (or
a successor rule thereto) ("RULE 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Mandatory Preferred Shares and, until such time as
the sale of the Conversion Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Mandatory Conversion Shares, except as set forth below, shall
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE
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SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold. Such Buyer acknowledges, covenants and agrees to sell the
Securities represented by a certificate(s) from which the legend has been
removed, only pursuant to (i) a registration statement effective under the 1933
Act or (ii) advice of counsel that such sale is exempt from the registration
requirements of Section 5 of the 1933 Act, including, without limitation, a
transaction pursuant to Rule 144.
h. AUTHORIZATION; ENFORCEMENT; VALIDITY. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable against such Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies. The Registration
Rights Agreement, upon its execution and delivery to the Company hereunder,
shall have been duly and validly authorized, executed and delivered on behalf of
such Buyer and shall be a valid and binding agreement of such Buyer enforceable
against such Buyer in accordance with its terms, subject as to enforceability to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
i. RESIDENCY. Such Buyer is a resident of that jurisdiction
specified in its address on the Schedule of Buyers.
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that except
to the extent (i) disclosed with reasonable specificity on the Schedules to this
Agreement, with respect to Sections 4(b), (e) and (o) and, (ii) with respect to
all other subsections in this Section 4, disclosed with reasonable specificity
on the schedules to this Agreement or the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001 and Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002 (the "2002 FILINGS") filed by the Company
(other than (x) those Sections of the 2002 Filings entitled or captioned "Risk
Factors" and (y) disclosures in those documents which are filed as exhibits to,
or incorporated by reference in, such 2002 Filings):
a. ORGANIZATION AND QUALIFICATION. The Company and its "SUBSIDIARIES"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns fifty percent (50%) or more of the outstanding
voting securities) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power and authorization to own their properties and
to carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement, "MATERIAL
ADVERSE EFFECT" means any material adverse effect on the business, properties,
assets, operations, prospects, results of operations or financial condition of
the Company and its Subsidiaries, if any, taken as a whole, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents or the Certificate of Designations. The Company has no Subsidiaries
except as set forth on SCHEDULE 4(a).
b. AUTHORIZATION; ENFORCEMENT; VALIDITY. Subject to obtaining
Stockholder Approval, the Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"TRANSACTION DOCUMENTS"), to execute and file the Certificates of Amendment, and
to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
execution and filing of the Certificates of Amendment by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Mandatory Preferred Shares and
the reservation for issuance and the issuance of the Mandatory Conversion Shares
issuable upon conversion of the Mandatory Preferred Shares, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders (except for Stockholder Approval). This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the
7
enforcement of creditors' rights and remedies. The Registration Rights
Agreement, upon its execution and delivery to the Buyers hereunder, shall have
been duly executed and delivered by the Company and shall be a valid and binding
agreement enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Series B-1 Certificate of Amendment and, provided that Stockholder Approval is
obtained, the Series B Certificate of Amendment will have each been filed on or
before the Mandatory Closing Date with the Secretary of State of the State of
Delaware and, as of the Mandatory Closing Date, will be in full force and
effect, enforceable against the Company in accordance with their respective
terms and shall not have been amended unless in compliance with their respective
terms.
c. CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (i) 2,650,000,000 shares of Common Stock, of which as
of June 26, 2002, 18,973,847 shares are issued and outstanding, (ii) 100,000,000
shares of the Company's Class C common stock, par value $0.001 per share, none
of which are issued and outstanding as of the date hereof and (iii) 50,000,000
shares of Preferred Stock, of which as of the date hereof 2,000,000 shares have
been designated as Series A Junior Participating Preferred Stock (the
"PARTICIPATING PREFERRED STOCK"), of which, as of the date hereof, no shares are
issued and outstanding, 100,000 shares have been designated as Series B
Preferred Stock, of which as of the date hereof, 22,941 shares are issued and
outstanding, and 100,000 shares have been designated as Series B-1 Preferred
Stock, of which, as of the date hereof, no shares are issued and outstanding.
All of such outstanding or issuable shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as set forth in
those documents listed on SCHEDULE 4(c) and except for (y) the rights to
purchase the Participating Preferred Stock pursuant to the Rights Plan and (z)
options to purchase 2,508,516 shares of Common Stock issued pursuant to the
Company's 1999 Stock Option Plan, options to purchase 1,076,565 shares of Common
Stock issued pursuant to the Company's 2001 Stock Option Plan and 53,704 shares
of Common Stock reserved for issuance pursuant to the Company's 2000 Employee
Stock Purchase Plan, as of the date hereof, (A) no shares of the Company's
capital stock are subject to preemptive rights or any other similar rights; (B)
there are no outstanding debt instruments issued by the Company; (C) there are
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable for, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable for, any shares of capital stock of the Company
or any of its Subsidiaries; (D) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (F) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer true and
correct copies of the Company's
8
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "CERTIFICATE OF INCORPORATION"), and the Company's Amended and Restated
Bylaws, as amended and as in effect on the date hereof (the "BYLAWS"), and the
terms of all securities convertible into, or exercisable or exchangeable for,
Common Stock and the material rights of the holders thereof in respect thereto.
Except for the Certificate of Designations, Preferences and Rights of Series A
Junior Participating Preferred Stock, the Original Series B Certificate of
Designations and the Original Series B-1 Certificate of Designations, the
Company does not have any certificate of designations in effect as of the date
hereof.
d. ISSUANCE OF SECURITIES. The Mandatory Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issuance thereof and (iii) entitled to the
rights and preferences set forth in the Series B-1 Certificate of Designations.
40,000,000 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 5(f) below) have been duly authorized
and reserved for issuance upon conversion of the Preferred Shares. Upon
conversion in accordance with the Series B-1 Certificate of Designations, the
Mandatory Conversion Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common
Stock. Subject to accuracy of the representations set forth in Section 3, the
issuance by the Company of the Securities is exempt from registration under the
1933 Act.
e. NO CONFLICTS. Except as set forth on SCHEDULE 4(e), the execution,
delivery and performance of the Transaction Documents by the Company, the
performance by the Company of its obligations under the Series B-1 Certificate
of Designations and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Mandatory Conversion Shares) (either
individually or together with the execution, delivery and performance of the
Viant Merger Agreement and the Delano Merger Agreement (as such terms are
defined in Section 4(w))) will not (i) result in a violation of the Certificate
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the Bylaws; (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument (including, without limitation, any stock option,
employee stock purchase or similar plan or any employment or similar agreement)
to which the Company or any of its Subsidiaries is a party (including, without
limitation, triggering the application of any change of control or similar
provision (whether "single trigger" or "double trigger")); or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the Principal Market) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected. Neither the Company nor its Subsidiaries is in violation of
any term of its Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or Bylaws or their organizational charter or bylaws, respectively.
Except as set forth on SCHEDULE 4(e), neither the Company or any of its
Subsidiaries is in violation of any term of or in default under any contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or
9
regulation applicable to the Company or its Subsidiaries, except where such
violations and defaults would not result, either individually or in the
aggregate, in a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance or regulation of any governmental entity, except where such
violations would not result, either individually or in the aggregate, in a
Material Adverse Effect. Except (A) for compliance with the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇
Antitrust Improvement Acts of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), if applicable, or as
specifically contemplated by this Agreement, (B) as required under the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 ACT") and the rules
and regulations promulgated thereby and the Nasdaq National Market, (C) as may
be required by any applicable state securities laws or (D) for the filing of the
Certificates of Amendment with the Secretary of State of the State of Delaware,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents or to perform its obligations under the Certificates of Designations,
in each case in accordance with the terms hereof or thereof. Except as set forth
on SCHEDULE 4(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain as described in the
preceding sentence shall have been obtained or effected on or prior to the
Mandatory Closing Date. Except as set forth on SCHEDULE 4(e), the Company is not
in violation of the listing requirements of the Principal Market.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 2001, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing (including all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein) and all forms, documents and instruments filed by the Company
with the SEC pursuant to the 1933 Act (including all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein) being hereinafter referred to as the "SEC DOCUMENTS"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1933 Act or 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with U.S. generally
accepted accounting principles ("GAAP") and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in
accordance with GAAP, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements or as otherwise
may be permitted by the SEC on Form 10-Q under the ▇▇▇▇ ▇▇▇) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). As of the date of this Agreement, the Company meets the
requirements for use of Form S-3 for registration of the resale of Registrable
Securities (as defined in the Registration Rights Agreement).
10
g. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 4(g),
since December 31, 2001 there has been no material adverse change and no
material adverse development in the business, properties, assets, operations,
prospects, results of operations or financial conditions of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Subsidiaries, except where any of the foregoing
would not result, either individually or in the aggregate, in a Material Adverse
Effect and except as set forth on SCHEDULE 4(h).
i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF PREFERRED SHARES. The
Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of an arm's length purchaser with respect to the Company in connection
with the Transaction Documents and the Certificates of Designations and the
transactions contemplated hereby and thereby. The Company further acknowledges
that each Buyer is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
Certificates of Designations and the transactions contemplated hereby and
thereby and any advice given by any of the Buyers or any of their respective
representatives or agents in connection with the Transaction Documents and the
Certificates of Designations and the transactions contemplated hereby and
thereby is merely incidental to such Buyer's purchase of the Securities. The
Company further represents to each Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
j. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of the
Securities.
k. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or,
except with respect to the issuance of the Original Preferred Shares, any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor will the
Company or any of its Subsidiaries take any action or steps that would require
registration of any of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.
l. EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its
11
Subsidiaries, is any such dispute threatened. Except as set forth on SCHEDULE
4(l), none of the Company's or its Subsidiaries' employees is a member of a
union which relates to such employee's relationship with the Company, neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement.
m. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service ▇▇▇▇ registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights necessary
to conduct their respective businesses as now conducted, except where the
failure to own or possess such rights would not result, either individually or
in the aggregate, in a Material Adverse Effect. Except as set forth on SCHEDULE
4(m)(i), the Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights necessary to conduct their respective businesses as
now, or as contemplated to be, conducted, except where the failure to own or
possess such rights would not result, either individually or in the aggregate,
in a Material Adverse Effect. There is no infringement by the Company or its
Subsidiaries of trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, trade secrets or other intellectual property rights of others, or of
any development of similar or identical trade secrets or technical information
by others and, except as set forth on SCHEDULE 4(m)(ii), there is no claim,
action or proceeding being made or brought against, the Company or its
Subsidiaries regarding its trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, trade secrets, or infringement of other intellectual property rights,
except where any of the foregoing would not result, either individually or in
the aggregate, in a Material Adverse Effect. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties.
n. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing cases, the failure to so comply would not result, either
individually or in the aggregate, in a Material Adverse Effect.
o. TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except (i) such as are set forth on SCHEDULE 4(o), (ii) such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries, (iii) such liens or encumbrances against any landlord's or owner's
interest in any leased property or (iv)
12
for taxes not yet due and payable. Any real property and facilities held under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
facilities by the Company and its Subsidiaries.
p. INSURANCE. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. The Company has Director and Officer Insurance policies in customary
form and substance with an aggregate insured amount equal to or in excess of $20
million. All premiums related to such policies are paid in full through July 25,
2002.
q. REGULATORY PERMITS. Except the absence of which would not result,
either individually or in the aggregate, in a Materially Adverse Effect, the
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
r. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability and (iii) access to assets or incurrence of
liability is permitted only in accordance with management's general or specific
authorization.
s. TAX STATUS. Except as set forth on SCHEDULE 4(s), the Company and
each of its Subsidiaries (i) has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes), (ii) other than taxes that in
an aggregate amount would not be material (and the nonpayment of which would not
have a Material Adverse Effect), has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and for which the Company has made appropriate reserves for on its
books, and (iii) other than accruals for taxes in an aggregate amount that would
not be material (and the nonpayment of which would not have a Material Adverse
Effect), has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction.
t. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 4(t)
and in the SEC Documents filed with the SEC prior to the date of this Agreement,
and other than the grant of stock options issued under the Company's 1999 Stock
Option Plan or 2001 Stock
13
Option Plan, as of the date hereof, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
u. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors have taken, or prior to the Mandatory Closing shall have taken, all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyers as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyers' ownership of the Securities.
v. RIGHTS AGREEMENT. The Company has amended, or prior to the
Mandatory Closing shall have amended, the Rights Agreement between the Company
and Computershare Investor Services, LLC, as Rights Agent (the "Rights Plan"),
to ensure that (i) none of the Buyers is intended to be or will be deemed to be
an Acquiring Person within the meaning of the Rights Plan because of the
acquisition of the Original Securities pursuant to the Original Purchase
Agreement and the Securities (including the Mandatory Conversion Shares)
pursuant to this Agreement, (ii) the acquisition of the Original Securities
pursuant to the Original Purchase Agreement and the Securities (including the
Mandatory Conversion Shares) pursuant to this Agreement, shall not, under any
circumstances, trigger a Distribution Date within the meaning of the Rights Plan
and (iii) the Original Securities and the Securities (including the Mandatory
Conversion Shares) will not be included in determining whether any Buyer is an
Acquiring Person within the meaning of the Rights Plan; provided, however, that
only Original Securities acquired pursuant to the Original Purchase Agreement
and Securities (including the Mandatory Conversion Shares) acquired pursuant to
this Agreement shall be deemed excluded from the number of shares of Common
Stock deemed beneficially owned by each Buyer in determining whether such Buyer
is an Acquiring Person within the meaning of the Rights Plan.
w. RECENT DEVELOPMENTS. Except as set forth in SCHEDULE 4(w), the
Company has delivered to Oak true and correct copies of (i) the Agreement and
Plan of Merger and Reorganization, dated as of April 5, 2002, by and between the
Company, DVC Acquisition Company, a wholly-owned subsidiary of the Company, and
Viant Corporation, as amended by Amendment No. 1 to Agreement and Plan of Merger
and Reorganization, dated as of July 23, 2002, as in effect on the date hereof
(as amended, the "VIANT MERGER AGREEMENT"), and the schedules to the Viant
Merger Agreement, and (ii) the Combination Agreement, dated as of March 12,
2002, by and between the Company and Delano Technology Corporation, as in effect
on the date hereof (the "DELANO MERGER AGREEMENT"), and the schedules to the
Delano Merger Agreement. To the knowledge of the Company, as of the date hereof,
there are no material breaches by Viant Corporation or Delano Technology
Corporation of any of their respective
14
representations or warranties under the Viant Merger Agreement or Delano Merger
Agreement, as the case may be.
x. INVESTMENT COMPANY. The Company is not, and after giving effect to
the offering and sale of the Securities hereunder and the application of the
proceeds thereof as described in this Agreement will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
y. FULL DISCLOSURE. No representation or warranty of the Company in
this Agreement omits to state a material fact necessary to make the statements
herein, in light of the circumstances in which they were made, not misleading.
5. COVENANTS.
a. BEST EFFORTS. Subject to any party's right to terminate this
Agreement pursuant to Section 9, each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Section 7
(in the case of the Buyers) and Section 8 (in the case of the Company) of this
Agreement; provided, however, nothing in this Section 5(a) shall be deemed to
require the Mandatory Buyers to purchase Mandatory Preferred Shares unless and
until the conditions set forth in Section 8 are satisfied or waived.
b. FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D. The Company shall, on
or before the Mandatory Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Mandatory Preferred Shares for sale to the Buyers at the Mandatory
Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States, and shall provide evidence of any such
action so taken to the Buyers on or prior to the Mandatory Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Securities to the Buyers required under applicable securities or "Blue Sky" laws
of the states of the United States following the Mandatory Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date which is one
year after the date as of which all of the Investors (as that term is defined in
the Registration Rights Agreement) (or permitted transferees thereof) may sell
the Conversion Shares pursuant to Rule 144 promulgated under the 1933 Act (or
successor thereto) or (ii) three (3) years from the date hereof (the "REPORTING
PERIOD"), the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination, other
than as the result of a merger or consolidation or sale or transfer of all or
substantially all of the Company's assets where the Company is in compliance
with Section 5(l) of this Agreement.
d. USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Mandatory Preferred Shares for general working capital.
e. FINANCIAL INFORMATION. The Company agrees to send the following to
each Buyer during the Reporting Period: (i) unless the following are filed with
the SEC through
15
▇▇▇▇▇ and are available to the public through ▇▇▇▇▇, within two (2) days after
the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act; and (ii) on the same day as the release thereof copies of any
notices and other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or giving thereof
to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, no
less than 100% of the number of shares of Common Stock needed to provide for the
issuance of the shares of Common Stock upon conversion of all outstanding
Preferred Shares.
g. LISTING. The Company shall use its best efforts to maintain the
Common Stock's authorization for quotation on the Nasdaq National Market (the
"PRINCIPAL MARKET") or to obtain and maintain a listing on The American Stock
Exchange, Inc. (as applicable, the "PRINCIPAL MARKET"). The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 5(g).
h. EXPENSES. At the Mandatory Closing, the Company shall reimburse Oak
for Oak's reasonable legal fees and expenses actually incurred of one counsel in
due diligence and negotiating and preparing the Transaction Documents and
consummating the transactions contemplated thereby up to an aggregate of
$110,000 (less any amounts previously paid by the Company or withheld by Oak in
connection with the issuance of the Original Preferred Shares, but in addition
to amounts owed for legal fees pursuant to any other provision hereunder) for
all payments pursuant to this sentence and which amount may be withheld by Oak
from its Purchase Price to be paid at the Mandatory Closing; provided that Oak
shall provide the Company with customary supporting documentation for such legal
expenses. The Company will pay all other expenses of the Company associated with
the transactions contemplated by this Agreement, including, without limitation,
fees and expenses associated with any filings or other actions necessary under
the HSR Act, if applicable.
i. FILING OF FORM 8-K. On or before the second (2nd) Business Day
following the date of this Agreement, the Company shall file a Form 8-K with the
SEC (the "INITIAL 8-K") describing the terms of the transactions contemplated by
the Transaction Documents and including as exhibits to such Form 8-K this
Agreement, the form of Series B Certificate of Amendment, the form of Series B-1
Certificate of Amendment and the form of Amended Registration Rights Agreement,
in the form required by the 1934 Act. The Company shall file a press release or
other announcement of this Agreement or the transactions contemplated hereby
prior to or concurrently with the filing of the Initial 8-K with the SEC. On or
before the first (1st) Business Day following the Mandatory Closing Date, the
Company shall file a Form 8-K with the SEC describing the transaction
consummated or proposed on such date.
j. TRANSACTIONS WITH AFFILIATES. So long as any Preferred Shares are
outstanding, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement any agreement, transaction,
commitment or arrangement with any of its or any Subsidiary's officers,
directors, persons who were officers or directors at any time
16
during the previous two years, stockholders who beneficially own 5% or more of
the Common Stock, or affiliates of the Company or its Subsidiaries or with any
entity in which any such entity or individual owns a 5% or more beneficial
interest (each a "RELATED PARTY"), except for (a) customary employment
arrangements and benefit programs on reasonable terms, (b) any agreement,
transaction, commitment or arrangement on an arms-length basis on terms no less
favorable than terms which would have been obtainable from a person other than
such Related Party, (c) any agreement, transaction, commitment or arrangement
which is approved by a majority of the disinterested directors of the Company,
or (d) except as set forth on SCHEDULE 5(j). For purposes hereof, any director
who is also an officer of the Company or any Subsidiary shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "AFFILIATE" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5% or
more common ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity. "CONTROL" or
"CONTROLS" for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.
k. PROXY STATEMENT. The Company shall provide each stockholder
entitled to vote at the next meeting of stockholders of the Company, which the
Company shall cause to occur as soon as commercially reasonable after the date
of this Agreement, but in any event on or before September 30, 2002 (the
"STOCKHOLDER MEETING DEADLINE"), a proxy statement which has been previously
reviewed by Oak and a counsel of their choice (and with respect to which the
Company has used its best efforts to accept the comments of Oak and counsel),
soliciting each such stockholder's affirmative vote at such stockholder meeting
for approval of (i) the Series B Certificate of Amendment and (ii) the Company's
issuance of Conversion Shares in excess of the Exchange Cap (as defined in the
Certificates of Designations) in accordance with applicable law (including
applicable securities law, rules and regulations) and the rules and regulations
of the Principal Market (such affirmative approvals being referred to herein
collectively as the "STOCKHOLDER APPROVAL"), and the Company shall solicit its
stockholders' approval of the Series B Certificate of Amendment and such
issuance of the Conversion Shares and the granting of voting rights to the
holders of Preferred Shares. Such solicitation shall include the recommendation
of the Board of Directors in favor of Stockholder Approval, unless the Board of
Directors determines in good faith after consultation with counsel to the
Company that making such recommendation would be inconsistent with the Board of
Directors' fiduciary duties under applicable law, in which case, the Company
shall submit such matter to the Company's stockholders without such
recommendation. The Company shall promptly notify the Buyers of any comments by
the SEC on such proxy statement and shall provide the Buyers with a copy of such
comments. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 5(k) and reimburse the Buyers for
the fees and expenses of one counsel to the Buyers in connection with such
counsel's review of the proxy statement referred in the first sentence of this
Section 5(k).
l. CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Preferred Shares, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, (x) except in the
event of a merger or consolidation or sale or transfer of all or substantially
all of the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under
17
the agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on the Nasdaq National Market, the Nasdaq SmallCap Market, The American
Stock Exchange, Inc. or The New York Stock Exchange, Inc. and (y) the Company
complies with Section 5 of the Certificates of Designations (if applicable).
m. LOCK-UP AGREEMENT. Each of the Buyers, severally and not jointly,
hereby agrees that from the date hereof until May 31, 2003, such Buyer will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any of the Securities (collectively, the "RESTRICTED SECURITIES"),
enter into a transaction that would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the Restricted Securities, whether any
such aforementioned transaction is to be settled by delivery of the Restricted
Securities or other securities, in cash or otherwise, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of the Company. The foregoing sentence (i) shall not apply (A)
to transactions relating to the Restricted Securities acquired by the such Buyer
(I) prior to the execution of this Agreement or (II) in the open market after
the date of this Agreement, or (B) with respect to transfers to family members,
Affiliates, partners, members, former partners or members or shareholders of
such Buyer in private transactions in which the transferee agrees to be bound by
the provisions of this Section 5(m) as if such transferee were a Buyer and (ii)
shall expire, for each Buyer, in its entirety (y) immediately before the
acquisition of the Company by another person or entity, whether by merger, asset
sale or otherwise and (z) immediately (I) upon the breach by the Company of any
material obligation to the Buyers in the Transaction Documents or the
Certificates of Designations, unless such breach is capable of being and is
cured within ten (10) Business Days of written notice to the Company of such
breach from the Buyers, (II) upon the failure to elect any of the Oak nominees
to the Board of Directors of the Company in accordance with Section 7(d) of the
Certificates of Designations (if Oak has exercised its right to elect such
director), (III) upon Oak reasonably concluding that any representation or
warranty set forth in Section 4 was materially untrue when made, and such breach
has had or is reasonably likely to have a materially adverse effect on the value
of the Buyers' investment in the Company pursuant to this Agreement, and Oak has
notified the Company in writing of such conclusion and (IV) upon a material
breach by the Company of any of the protective provisions of the Certificates of
Designations, unless such breach is capable of being and is cured within ten
(10) Business Days of written notice to the Company of such breach from the
Buyers.
n. RIGHTS OF REDEMPTION.
(i) TRIGGERING EVENT. Each of the events listed on SCHEDULE 5(n)
to this Agreement shall constitute a "TRIGGERING EVENT": Within five (5)
Business Days of the occurrence of a Triggering Event, the Company will
give notice to all Buyers of such occurrence (the "TRIGGER NOTICE").
(ii) REDEMPTION RIGHT. If any Buyer of Preferred Shares hereunder
becomes aware of a Triggering Event, such Buyer may require the Company to
redeem all or any of the Preferred Shares then held by such Buyer by
delivering written notice to the Company within thirty (30) days after the
date of the Trigger Notice (the
18
"REDEMPTION NOTICE"), which Redemption Notice shall indicate the number of
Preferred Shares that such Buyer is electing to redeem hereunder. Each
Preferred Share subject to redemption by the Company pursuant to this
Section 5(n) shall be redeemed by the Company at a price per Preferred
Share equal to the Liquidation Preference (as defined in the Certificates
of Designations) of such Preferred Share as in effect on the date of the
Redemption Notice (the "REDEMPTION PRICE"); provided that if a Buyer has
delivered a Redemption Notice to the Company as a result of a Triggering
Event described in paragraph C of Schedule 5(n), the Company shall only be
required, in the aggregate, to redeem from all Buyers up to that number of
Preferred Shares having an aggregate Redemption Price equal to 50% of the
applicable Disposition Value (as defined in Schedule 5(n)). If such amount
is insufficient to redeem all Preferred Shares subject to a Redemption
Notice, the Company shall redeem shares pro rata from the Buyers that have
given a Redemption Notice (the "REDEEMING BUYERS") based upon the aggregate
number of outstanding Preferred Shares then held by each such Redeeming
Buyer relative to the aggregate number of outstanding Preferred Shares then
held by all Redeeming Buyers.
(iii) MECHANICS. Each Redeeming Buyer shall promptly submit to
the Company such Redeeming Buyer's Preferred Stock Certificates
representing the Preferred Shares which such Redeeming Buyer has elected to
have so redeemed (or a lost stock affidavit therefor reasonably acceptable
to the Company). The Company shall deliver the applicable Redemption Price
to a Redeeming Buyer from whom the Company has received a Redemption Notice
within 45 days after the date of the Trigger Notice; provided that such
Redeeming Buyer has delivered to the Company the Preferred Stock
Certificates representing the Preferred Shares being redeemed (or a lost
stock affidavit therefor reasonably acceptable to the Company). In the
event of a redemption of less than all of the Preferred Shares represented
by a particular Preferred Stock Certificate, the Company shall promptly
cause to be issued and delivered to the Redeeming Buyer holding such
Preferred Shares a preferred stock certificate representing the remaining
Preferred Shares which have not been redeemed.
(iv) REDEMPTION WHEN THERE IS MORE THAN ONE REDEEMING BUYER.
Notwithstanding anything in this Section 5(n) to the contrary, if the
Company receives more than one Redemption Notice and the Company is unable
to redeem all of the Preferred Shares submitted for redemption pursuant to
the Redemption Notices, then the Company shall redeem a pro rata amount
from each Redeeming Buyer based on the number of Preferred Shares submitted
for redemption by each such Redeeming Buyer and redeem from each such
Redeeming Buyer from time to time a pro rata amount of the balance of the
Preferred Shares so tendered for redemption as soon as the Company has
funds legally available for such purpose. As long as any redemption
obligation hereunder is continuing, the Company will not declare or pay any
dividends, repurchase any shares of outstanding capital stock (except
pursuant to Section 6(g) of the Certificates of Designations and except
repurchases from employees, directors or consultants at cost pursuant to
contracts approved by the Board of Directors) or make any other
distribution with respect to its capital stock.
19
o. After the date of this Agreement, and until such time as Oak
designates a nominee to the Board of Directors pursuant to the Series B
Certificate of Designations or the Series B-1 Certificate of Designations,
the Company will allow an Oak designee to attend all meetings of the Board
of Directors and to receive all materials distributed to members of the
Board of Directors in preparation for such meetings or at such meetings.
The Company will pay the reasonable costs and expenses of the Oak designee
associated with such attendance.
p. The Company shall use reasonable efforts to file the Series B
Certificate of Amendment on the Mandatory Closing Date.
6. TRANSFER AGENT INSTRUCTIONS.
At or prior to the Mandatory Closing, the Company shall issue
irrevocable instructions to its transfer agent in the form attached hereto as
EXHIBIT D (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"), and any subsequent
transfer agent, to issue certificates, registered in the name of each Buyer or
its respective nominee(s), for the Conversion Shares in such amounts as
specified from time to time by each Buyer to the Company upon conversion of the
Preferred Shares.
7. CONDITIONS TO THE COMPANY'S OBLIGATION AT CLOSING.
The obligation of the Company hereunder to issue and sell the
Mandatory Preferred Shares to each Mandatory Buyer at the Mandatory Closing is
subject to the satisfaction, at or before such Mandatory Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Mandatory Buyer with prior written notice thereof:
(i) Such Mandatory Buyer shall have delivered to the Company the
Purchase Price for the Mandatory Preferred Shares being purchased by such
Mandatory Buyer at the Mandatory Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(ii) The Series B Certificate of Amendment shall have been filed
with the Secretary of State of the State of Delaware.
(iii) The Series B-1 Certificate of Amendment shall have been
filed with the Secretary of State of the State of Delaware.
(iv) The representations and warranties of such Mandatory Buyer
shall be true and correct in all material respects as of the date when made
and as of the Mandatory Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date), and
such Mandatory Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by
such Mandatory Buyer at or prior to the Mandatory Closing Date.
8. CONDITIONS TO EACH BUYER'S OBLIGATION AT CLOSING.
20
The obligation of each Mandatory Buyer hereunder to purchase the
Mandatory Preferred Shares from the Company at the Mandatory Closing is subject
to the satisfaction, at or before the Mandatory Closing Date, of each of the
following conditions, provided that these conditions are for each Mandatory
Buyer's sole benefit and may be waived by such Mandatory Buyer at any time in
its sole discretion:
(i) The Company shall have complied with and satisfied all of the
requirements of Section 2(b).
(ii) The Series B Certificate of Amendment shall have been filed
with the Secretary of State of the State of Delaware, and a copy thereof
certified by such Secretary of State shall have been delivered to such
Mandatory Buyer.
(iii) The Series B-1 Certificate of Amendment shall have been
filed with the Secretary of State of the State of Delaware, and a copy
thereof certified by such Secretary of State shall have been delivered to
such Mandatory Buyer.
(iv) The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as
of the Mandatory Closing Date as though made at that time (except for the
representations and warranties made by the Company herein that speak as of
a specific date and except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 4 above,
in which case, such representations and warranties shall be true and
correct without further qualification) (provided that any material adverse
development, change or amendment after the date of this Agreement in any
matter set forth on the Schedules to this Agreement or set forth in the
2002 Filings will not qualify as or otherwise constitute an exception for
purposes of determining whether any representations and warranties of the
Company are true and correct as of the Mandatory Closing Date) and the
Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Mandatory Closing Date. Such Mandatory Buyer
shall have received a certificate, executed by the Chief Executive Officer
or Chief Financial Officer of the Company, dated as of the Mandatory
Closing Date and including an update as of the Mandatory Closing Date of
the representation contained in Section 4(c) above. Notwithstanding
anything in this Agreement to the contrary, the parties hereto hereby agree
that neither the consummation nor the failure to consummate the
transactions contemplated by either the Viant Merger Agreement or the
Delano Merger Agreement shall be deemed to be (A) a material adverse change
or development pursuant to Section 4(g) or (B) a breach of any of the
representations and warranties made by the Company pursuant to Section 4 of
this Agreement.
(v) Such Mandatory Buyer shall have received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of the Mandatory Closing Date, in
form, scope and substance reasonably satisfactory to Oak and in the form of
EXHIBIT E attached hereto.
(vi) The Company shall have executed and delivered to such
Mandatory Buyer the Mandatory Preferred Stock Certificates (in such
denominations as
21
such Mandatory Buyer shall request) for the Mandatory Preferred Shares
being purchased by such Mandatory Buyer at the Mandatory Closing.
(vii) The Board of Directors of the Company shall have adopted,
and shall not have amended, resolutions consistent with Section 4(b) above
and in a form reasonably acceptable to such Mandatory Buyer (the
"RESOLUTIONS").
(viii) The Irrevocable Transfer Agent Instructions shall have
been delivered to and acknowledged in writing by the Company's Transfer
Agent and the Company shall deliver a copy thereof to such Mandatory Buyer.
(ix) The Company shall have delivered to such Mandatory Buyer a
certificate evidencing the incorporation and good standing of the Company
in Delaware issued by the Secretary of State of the State of Delaware as of
a date within ten (10) days of the Mandatory Closing Date.
(x) The Company shall have delivered to such Mandatory Buyer a
certified copy of its Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware within ten (10) days of the
Mandatory Closing Date.
(xi) The Company shall have delivered to such Mandatory Buyer a
secretary's certificate certifying as to (A) the Resolutions, (B) the
Certificate of Incorporation and (C) the Bylaws, each as in effect at the
Mandatory Closing.
(xii) The Company shall have delivered to such Mandatory Buyer a
letter from the Company's transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five (5) days of the Mandatory
Closing Date.
(xiii) At Oak's election by written notice to the Company prior
to 1:00 p.m., Central Time, on the Business Day prior to the Mandatory
Closing Date, one (1) additional Oak nominee (or two Oak nominees if Oak
did not previously elect a nominee prior to the Mandatory Closing) shall
have been appointed to serve on the Company's Board of Directors effective
as of the Mandatory Closing Date, and such nominee(s) and the Company shall
have executed an indemnification agreement, with respect to such nominee(s)
in a form provided by Oak prior to the execution of this Agreement.
(xiv) The Company shall not have materially breached the
Transaction Documents or the Certificates of Designations.
(xv) No Triggering Event shall have occurred.
(xvi) The Company shall have delivered to the Mandatory Buyers a
certificate signed by the Company's Chief Executive Officer or Chief
Financial Officer confirming that, (y) the Oak nominees appointed to serve
on the Board of Directors pursuant to Section 7(d) of the Certificate of
Designations, if any, have been added as an insured party under the
Company's Director and Officers Insurance Policy; provided that Oak has
elected to appoint such Oak nominees and has given the Company notice of
such election at least two (2) Business Days prior to the Mandatory Closing
Date and (z) Oak
22
IX Affiliates Fund A, Limited Partnership, Oak IX Affiliates Fund, Limited
Partnership, Oak Investment Partners IX, Limited Partnership, Oak X
Affiliates Fund, Limited Partnership, Oak Investment Partners X, Limited
Partnership (and any Affiliate of the foregoing that purchases Mandatory
Preferred Shares at the Mandatory Closing) have been added as an insured
party under the Company's Directors and Officers Insurance Policy, to the
extent permitted by such policy; provided that the foregoing shall only be
added to the Company's Directors and Officers Insurance Policy if Oak and
its Affiliates will hold more than 50% of the voting power of the Common
Stock (including the right of the holders of the Preferred Shares to vote
with the Common Stock on an as converted basis) immediately following the
Mandatory Closing.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Delaware, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the Delaware, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective, with respect to a particular party, when
counterparts have been signed by such party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
c. HEADINGS. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
23
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. Except for the representations
and warranties made by the Buyers and the Company pursuant to Sections 2 and 3,
respectively, of the Original Purchase Agreement at the closing for the issuance
of the Original Preferred Shares which shall survive in accordance with their
respective terms, this Agreement and the instruments referenced herein
supersedes all other prior oral or written agreements between each Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein (including the term sheet related hereto and the
Original Purchase Agreement and the Amended Purchase Agreement), and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. This Agreement may only be amended by an instrument in writing
signed by the Company and the holders of at least two-thirds (2/3) of the
Preferred Shares on such date, and no provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.
f. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same; or (iv) five (5) days
after deposit in the U.S. Mail. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
divine, inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
24
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to the Transfer Agent:
Computershare Investor Services LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer's representatives as set forth on
the Schedule of Buyers, or at such other address and/or facsimile number and/or
to the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least two-thirds (2/3) of the Preferred
Shares and the Conversion Shares then outstanding (on an as converted basis),
held by holders or former holders of Preferred Shares, including by merger or
consolidation, except pursuant to a Change of Control (as defined in Section
5(c) of the Certificate of Designations) with respect to which the Company is in
compliance with Section 5(l) of this Agreement. No Buyer shall assign any of its
rights hereunder without the consent of the Company.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 3 and 4,
25
and the agreements and covenants set forth in Sections 5, 6 and 9 shall survive
the Mandatory Closing; provided, however, that the covenants of the Company set
forth in Sections 5, 6 and 9 shall terminate at such time as all of the
Mandatory Preferred Shares issued pursuant to this Agreement shall have been
converted into Conversion Shares registered under a Registration Statement (as
defined in the Registration Rights Agreement) (provided that such termination
shall apply only to events occurring after such date). Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
j. PUBLICITY. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although Oak shall be consulted by
the Company (and be given a reasonable opportunity to comment) in connection
with any such press release or other public disclosure prior to its release and
shall be provided with a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Mandatory Closing shall not
have occurred with respect to a Mandatory Buyer on or before September 30, 2002
due to the Company's or such Mandatory Buyer's failure to satisfy the conditions
set forth in Sections 7 and 8 above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party. Oak will have the option to terminate the obligations of all parties with
respect to the Mandatory Closing under Sections 2(a), 2(b), 7 and 8 if the
Mandatory Closing does not occur on or before September 30, 2002, provided that
such option shall not be available to Oak if Oak has materially breached or
otherwise not complied with its obligations under this Agreement and such breach
or failure to comply is the cause of the failure of the Mandatory Closing to
occur on or before such date.
m. PLACEMENT AGENT. The Company acknowledges that it has not
engaged a placement agent in connection with the sale of the Mandatory Preferred
Shares. The Company shall be responsible for the payment of any placement
agent's fees or broker's commissions relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
n. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
26
o. REMEDIES. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and the
Certificates of Designations and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
p. PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to the Registration
Rights Agreement or the Certificates of Designations or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, by a trustee, receiver or any other person under any
law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
* * * * * *
27
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
COMPANY:
divine, inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
OAK INVESTMENT PARTNERS IX, LIMITED
PARTNERSHIP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Member of Oak
Associates IX, LLC
The General Partner of Oak
Investment Partners IX,
Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
OAK IX AFFILIATES FUND, LIMITED
PARTNERSHIP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Member of Oak IX
Affiliates, LLC
The General Partner of Oak IX
Affiliates Fund, Limited
Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
OAK IX AFFILIATES FUND-A, LIMITED
PARTNERSHIP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Member of Oak IX
Affiliates, LLC
The General Partner of Oak IX
Affiliates Fund-A, Limited
Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
OAK INVESTMENT PARTNERS X LIMITED
PARTNERSHIP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Member of Oak
Associates X, LLC
The General Partner of Oak Investment
Partners X, Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
OAK X AFFILIATES FUND, LIMITED
PARTNERSHIP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Member of Oak X
Affiliates, LLC
The General Partner of Oak X
Affiliates Fund, Limited
Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
THE ▇▇▇▇▇ ▇. ▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
By:
-----------------------------------
Name: -----------------------------
Its: -----------------------------
IN WITNESS WHEREOF, the Buyers and the Company have caused this Second
Amended and Restated Securities Purchase Agreement to be duly executed as of the
date first written above.
BUYERS:
THE ▇▇▇▇▇ FOUNDATION
By:
-----------------------------------
Name:
------------------------------
Its:
-------------------------------