Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of May 29,
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").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance 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 has authorized the following new series of its preferred
stock, par value $0.001 per share: the Company's Series B Convertible Preferred
Stock (the "PREFERRED STOCK"), which shall be 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 Preferred Stock, substantially in the form
attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATIONS").
C. Subject to the terms and conditions set forth in this Agreement, the
Buyers set forth under the heading "Initial Buyers" on the Schedule of Buyers
(the "INITIAL BUYERS") wish to purchase at the Initial Closing an aggregate of
up to 22,941 shares of the Preferred Stock (the "INITIAL PREFERRED SHARES" and,
as converted, the "INITIAL CONVERSION SHARES"), in the respective amounts set
forth opposite such Initial Buyer's name on the Schedule of Buyers, at a
purchase price per share of $1,000 (the "PURCHASE PRICE").
D. Subject to the terms and conditions set forth in this Agreement, 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) (the "MANDATORY BUYERS") will be required under
this Agreement to buy, and the Company will be required under this Agreement to
sell to the Mandatory Buyers, at the Mandatory Closing, for a purchase price per
share of Mandatory Preferred Share and related Warrant equal to the Purchase
Price, (I) that number of shares of Preferred Stock determined in accordance
with Section 1(a) hereof (the "MANDATORY PREFERRED SHARES" and, as converted,
the "MANDATORY CONVERSION SHARES"), and (II) warrants, substantially in the form
attached hereto as EXHIBIT B (the "WARRANTS"), to acquire a number of shares
(rounded up to the nearest whole share) of Preferred Stock (as exercised,
collectively, the "WARRANT PREFERRED SHARES") equal to 25% of the number of
Mandatory Preferred Shares being purchased by each such Mandatory Buyer at the
Mandatory Closing (as such Warrant Preferred Shares are converted, collectively,
the "WARRANT COMMON SHARES").
E. Contemporaneously with the execution and delivery of this Agreement,
the Company, the Initial Buyers (other than the Follow-On Initial Buyers) and
the Mandatory Buyers
(other than the Follow-On Mandatory Buyers) are executing and delivering a
Registration Rights Agreement substantially in the form attached hereto as
EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company
has agreed to provide certain registration rights under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
a. PURCHASE OF 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 6(a) and 7(a) below, the
Company shall issue and sell to each Initial Buyer, and each Initial Buyer
severally agrees to purchase from the Company, at a purchase price per share
equal to the Purchase Price, the respective number of Initial Preferred Shares
set forth opposite such Initial Buyer's name on the Schedule of Buyers (the
"INITIAL CLOSING"). Subject to the terms and conditions of this Agreement,
including, without limitation, the satisfaction (or waiver) of the conditions
set forth in Sections 1(c), 6(b) and 7(b), each Mandatory Buyer shall purchase,
and the Company shall issue and sell to each Mandatory Buyer, for a purchase
price per share of Mandatory Preferred Share and related Warrant equal to the
Purchase Price, (i) the respective number of Mandatory Preferred Shares equal to
the aggregate dollar amount payable by each such Mandatory Buyer as set forth
opposite such Mandatory Buyer's name in the appropriate column on the Schedule
of Buyers, DIVIDED BY the Purchase Price (the "MANDATORY CLOSING"), and (ii) the
related Warrants to acquire a number of Warrant Preferred Shares (rounded up to
the nearest whole share) equal to 25% of the number of Mandatory Preferred
Shares being purchased by such Mandatory Buyer at the Mandatory Closing;
provided, however, that, subject to the terms and conditions of this Agreement,
including, without limitation, the satisfaction (or waiver) of the conditions
set forth in Section 7(b) below, Oak Investment Partners X, Limited Partnership
and Oak X Affiliates Fund, Limited Partnership (collectively, "OAK") and/or
affiliates of Oak (the "OAK AFFILIATES" and, together with Oak, the "OAK FUNDS")
shall purchase at the Mandatory Closing an aggregate number of Mandatory
Preferred Shares (and the related Warrants) equal to the quotient of (i)
$60,000,000, MINUS the aggregate Purchase Price paid by the Oak Funds for
Initial Preferred Shares purchased by the Oak Funds at the Initial Closing,
(including, but not limited to, any Initial Preferred Shares purchased pursuant
to the Initial Closing True Up Amount) DIVIDED BY (ii) the Purchase Price. (The
Initial Closing and the Mandatory Closing collectively are referred to in this
Agreement as the "CLOSINGS"). The Initial Preferred Shares, the Mandatory
Preferred Shares and the Warrant Preferred Shares collectively are referred to
in this Agreement as the "PREFERRED SHARES" and the Initial Conversion Shares,
the Mandatory Conversion Shares and the Warrant Common 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 INITIAL CLOSING DATE. The date and time of the Initial
Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time on a
Business Day within two (2)
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Business Days following the date hereof, subject to the satisfaction (or waiver)
of the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) (or
such later date as is mutually agreed to by the Company and Oak). With the
exception of Oak, the Initial Buyers may execute and deliver to the Company a
signature page to this Agreement and pay to the Company the aggregate Purchase
Price payable for the Initial Preferred Shares which such Initial Buyer has
agreed to purchase under and in accordance with this Agreement (those Initial
Buyers that so execute a signature page to this Agreement after the date hereof
in accordance herewith are referred to in this Agreement collectively as the
"FOLLOW-ON INITIAL BUYERS") at any time prior to June 7, 2002 (the "INITIAL
CLOSING DEADLINE DATE"); provided, however, notwithstanding anything in this
Agreement to the contrary, if any such Follow-On Initial Buyer has not executed
and delivered to the Company a signature page to this Agreement, or paid the
aggregate Purchase Price payable thereby hereunder with respect to its
respective Initial Preferred Shares, on or prior to the Initial Closing Deadline
Date, such Follow-On Initial Buyer shall have no further right to purchase
Initial Preferred Shares under this Agreement; provided further, that,
notwithstanding anything in this Agreement to the contrary, Oak shall also pay
to the Company on the Initial Closing Deadline Date an amount equal to
$22,941,000.00, minus the aggregate Purchase Price received by the Company on or
prior to such Initial Closing Deadline Date from all Initial Buyers (including,
without limitation, Oak and the Follow-On Initial Buyers) (the "INITIAL CLOSING
TRUE UP AMOUNT"), and the Company shall issue and sell to Oak as of the Initial
Closing Date an aggregate number of Initial Preferred Shares equal to the
Initial Closing True Up Amount, DIVIDED BY the Purchase Price. The Initial
Closing shall occur on the Initial Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇. The parties hereto agree that for purposes of this Agreement, the
Transaction Documents and any other certificates, documents or agreements
entered into or delivered in connection with the transactions contemplated
hereby, with respect to the Follow-On Initial Buyers, the closing date for the
purchase of the Initial Preferred Shares purchased thereby hereunder shall be
deemed to be the Initial Closing Date.
c. THE MANDATORY CLOSING DATE. The date and time of the
Mandatory Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. Central
Time, within five (5) Business Days after the date of the stockholder meeting
referred to in Section 4(k) at which Stockholder Approval 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 6(b) and 7(b) and the conditions set forth in this Section
1(c) (or such later date as is mutually agreed to by the Company and Oak). With
the exception of Oak, the Mandatory Buyers may execute and deliver to the
Company a signature page to this Agreement (those Mandatory Buyers that execute
and deliver to the Company a signature page to this Agreement after the date
hereof in accordance herewith are referred to in this Agreement collectively as
the "FOLLOW-ON MANDATORY BUYERS") at any time prior to June 7, 2002 (the
"MANDATORY CLOSING EXECUTION DATE"); provided, however, notwithstanding anything
in this Agreement to the contrary, if any such Follow-On Mandatory Buyer has not
executed and delivered to the Company a signature page to this Agreement by the
Mandatory Closing Execution Deadline, such Follow-On Mandatory Buyer shall have
no further right to purchase Mandatory Preferred Shares or Warrants under this
Agreement. The Company shall deliver written notice (the "MANDATORY SHARE
NOTICE") to each Buyer on a date (the "MANDATORY SHARE NOTICE DATE") as soon as
commercially reasonable after the Company has received the approval of the
Company's stockholders pursuant to Section 4(k), but in no event later than
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July 31, 2002; provided that Oak may agree to an extension of such date by
providing written notice to the Company and the other Buyers of its decision to
extend such date, in which case Oak's right to terminate the parties'
obligations with respect to the Mandatory Closing under Section 8(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 (i) the
aggregate number of Mandatory Preferred Shares which such Mandatory Buyer is
required to purchase at such Mandatory Closing, (ii) the number of related
Warrant Preferred Shares subject to warrant which such Mandatory Buyer is
required to purchase at such Mandatory Closing, (iii) such Mandatory Buyer's
aggregate Purchase Price for the Mandatory Preferred Shares and the related
Warrants and (iv) the date of the Mandatory Closing Date, which shall in no
event be later than the fifth (5th) Business Day after the date of the
stockholder meeting referred to in Section 4(k) at which the 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 to issue the Conversion Shares
upon conversion of the Preferred Shares in excess of the Exchange Cap (as
defined in the Certificate of Designation).
d. FORM OF PAYMENT. On each of the Closing Dates, (i) each
Buyer shall pay the Purchase Price to the Company for the Preferred Shares and,
in the case of the Mandatory Closing, the related Warrants to be issued and sold
to such Buyer at such 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 4(h), and (ii) the Company
shall deliver to each Buyer, stock certificates (in the denominations as such
Buyer shall request) (the "PREFERRED STOCK CERTIFICATES") representing such
number of the Preferred Shares which such Buyer is then purchasing hereunder
along with warrants representing the related Warrants, if applicable, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.
2. 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
Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares,
will acquire the Conversion Shares then issuable upon conversion thereof and
(iii) upon exercise of the Warrants, will acquire the Warrant Preferred Shares
issuable upon exercise thereof (the Preferred Shares, the Conversion Shares and
the Warrants 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.
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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 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 3 and 8(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 Preferred Shares and the Warrants 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 Conversion Shares, except
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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 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 and
the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and are valid and binding
agreements of such Buyer enforceable against such Buyer in accordance with their
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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3. 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 3(b), (e) and (o) and, (ii) with
respect to all other subsections in this Section 3, 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 3(a).
b. AUTHORIZATION; ENFORCEMENT; VALIDITY. 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, the Warrants 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 Certificate of Designations, 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 Certificate of Designations by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Preferred Shares and the Warrants and the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion of the 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 such stockholder
approval as may be required by The Nasdaq Stock Market, Inc. for the issuance of
a number of shares of Common Stock which is greater than or equal to 20% of the
number of shares outstanding on the date of this Agreement). The Transaction
Documents have been duly executed and delivered by the Company. The Transaction
Documents constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their
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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
Certificate of Designations has been filed prior to the Initial Closing Date
with the Secretary of State of the State of Delaware and will be in full force
and effect, enforceable against the Company in accordance with its terms and
shall not have been amended unless in compliance with its 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 May 24, 2002, 477,952,161 shares (before giving effect to
the reverse stock split of the Common Stock effective at 12:01 a.m. on May 29,
2002) 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 500,000 shares have been designated as
Series A Junior Participating Preferred Stock (the "PARTICIPATING PREFERRED
STOCK"). As of the date hereof, no shares of Preferred Stock or Participating
Preferred Stock 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
3(c) and except for (y) the rights to purchase the Participating Preferred Stock
pursuant to the Rights Plan and (z) options to purchase 62,712,899 shares
(before giving effect to the reverse stock split of the Common Stock effective
at 12:01 a.m. on May 29, 2002) of Common Stock issued pursuant to the Company's
1999 Stock Option Plan, options to purchase 26,914,142 shares (before giving
effect to the reverse stock split of the Common Stock effective at 12:01 a.m. on
May 29, 2002) of Common Stock issued pursuant to the Company's 2001 Stock Option
Plan and 1,342,613 shares (before giving effect to the reverse stock split of
the Common Stock effective at 12:01 a.m. on May 29, 2002) of Common Stock
reserved for issuance pursuant to the Company's 2000 Employee Stock Purchase
Plan, (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 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
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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
Company does not have any certificate of designations in effect as of the date
hereof.
d. ISSUANCE OF SECURITIES. The Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof and the
Warrants, 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 Certificate of
Designations. 13,000,000 shares of Common Stock (subject to adjustment pursuant
to the Company's covenant set forth in Section 4(f) below) have been duly
authorized and reserved for issuance upon conversion of the Preferred Shares.
Upon conversion in accordance with the Certificate of Designations, the
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 2, 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 3(e), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the 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 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
3(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 3(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 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
9
would not result, either individually or in the aggregate, in a Material Adverse
Effect. Except (A) for compliance with the HSR Act 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 or (C) as may be
required by any applicable state securities laws, 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 Certificate of Designations, in each case in accordance
with the terms hereof or thereof. Except as set forth on SCHEDULE 3(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 Initial Closing Date. Except as set
forth on SCHEDULE 3(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).
g. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE
3(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,
10
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 3(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 Certificate 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 Certificate 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 Certificate 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
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 Subsidiaries, is any such dispute threatened. Except as
set forth on SCHEDULE 3(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.
11
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
3(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 3(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 3(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) 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.
12
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.
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 3(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 3(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 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.
13
u. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
board of directors 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 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 Securities (including the
Conversion Shares and the Warrant Preferred Shares) pursuant to this Agreement,
(ii) the acquisition of the Securities (including the Conversion Shares and the
Warrant Preferred Shares) pursuant to this Agreement, shall not, under any
circumstances, trigger a Distribution Date within the meaning of the Rights Plan
and (iii) the Securities (including the Conversion Shares and the Warrant
Preferred 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 Securities (including the Conversion Shares and the Warrant 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. 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 in effect on
the date hereof (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 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.
4. COVENANTS.
14
a. BEST EFFORTS. Subject to any party's right to terminate
this Agreement pursuant to Section 8, each party shall use its best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Section 6 (in the case of the Buyers) and Section 7 (in the case of the Company)
of this Agreement; provided, however, nothing in this Section 4(a) shall be
deemed to require the Mandatory Closing Buyers to purchase Mandatory Preferred
Shares unless and until the conditions set forth in Section 7(b) 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 each of the Closing Dates, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the Securities for sale to the Buyers at each of the Closings
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 Closing Dates. 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 each of the Closing Dates.
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 4(l) of this Agreement.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the 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 ▇▇▇▇▇ 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 and all Warrant Preferred Shares issuable upon
exercise of all outstanding Warrants.
15
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 4(g).
h. EXPENSES. At the applicable 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 $75,000 for all payments pursuant to this sentence and which amount
may be withheld by such Buyer from its Purchase Price to be paid at the
applicable Closing. 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 (as defined in Section 6(a)).
i. FILING OF FORM 8-K. On or before the first (1st) Business
Day following the Initial Closing Date 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 Certificate of Designations, the Registration Rights
Agreement and the Form of Warrant, 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 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 or Warrants 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 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 4(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.
16
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
Initial Closing Date, but in any event on or before July 31, 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 such Buyers and
counsel), soliciting each such stockholder's affirmative vote at such
stockholder meeting for approval of the Company's issuance of Conversion Shares
in excess of the Exchange Cap (as defined in the Certificate of Designations) in
accordance with applicable law and the rules and regulations of the Principal
Market (such affirmative approval being referred to herein as the "STOCKHOLDER
APPROVAL"), and the Company shall solicit its stockholders' approval of such
issuance of the Securities. 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 4(g) 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 4(k).
l. CORPORATE EXISTENCE. So long as any Buyer beneficially owns
any Preferred Shares or Warrants, 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 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 Certificate of Designations (if
applicable).
m. LOCK-UP AGREEMENT. Each of the Buyers, severally and not
jointly, hereby agrees that from the date hereof until the date which is one
year after the Initial Closing Date, 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 dispositions to the Company pursuant to the net exercise provisions of the
Warrant, (B) 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 (C) with respect to transfers to
family
17
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 4(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 Certificate 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
either Oak nominee to the Board of Directors of the Company in accordance with
Section 7(d) of the Certificate 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 3 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 Certificate 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 4(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 "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 4(n) shall be redeemed by the Company at a price per Preferred
Share equal to the Liquidation Preference (as defined in the
Certificate 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 Disposition Triggering Event (as defined on
Schedule 4(n)(i)(C)), 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. 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.
18
(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 4(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 Certificate 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.
o. After the Initial Closing Date, and until such time as Oak
designates a nominee to the Board of Directors pursuant to the 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.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent in the form attached hereto as EXHIBIT E (the "IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS"), and any subsequent transfer agent, to issue
certificates, registered in the name of each Buyer or its
19
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.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. INITIAL CLOSING DATE. The obligation of the Company to
issue and sell the Initial Preferred Shares to each Buyer at the Initial Closing
is subject to the satisfaction, at or before the Initial Closing Date, of each
of the following conditions, provided 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 Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to
the Company.
(ii) The Certificate of Designations shall have been
filed with the Secretary of State of the State of Delaware.
(iii) Such Buyer shall have delivered to the Company
the Purchase Price (less the amounts withheld pursuant to Section 4(h)
in the case of Oak) for the Initial Preferred Shares being purchased by
such Initial Buyer at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided
by the Company.
(iv) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
such 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 Buyer at or prior to the Initial Closing Date.
(v) The waiting period(s) (and any extension thereof)
under the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvement Acts of ▇▇▇▇ (▇▇▇
"▇▇▇ ▇▇▇"), if applicable, shall have expired or been terminated
without any condition attached to such expiration or termination.
b. MANDATORY CLOSING DATE. The obligation of the Company
hereunder to issue and sell the Mandatory Preferred Shares and the Warrants 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 and the
Warrants 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.
20
(ii) 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.
(iii) The waiting period(s) (and any extension
thereof) under the HSR Act, if applicable, shall have expired or been
terminated without any condition attached to such expiration or
termination.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. INITIAL CLOSING DATE.
(i) INITIAL BUYERS (OTHER THAN FOLLOW-ON INITIAL
BUYERS). The obligation of each Initial Buyer (other than a Follow-On
Initial Buyer) hereunder to purchase the Initial Preferred Shares from
the Company at the Initial Closing is subject to the satisfaction, at
or before the Initial Closing Date, of each of the following
conditions, provided that these conditions are for each such Initial
Buyer's sole benefit and may be waived by such Initial Buyer at any
time in its sole discretion by providing the Company with prior written
notice thereof:
(A) The Company shall have executed each of
the Transaction Documents and delivered the same to such
Initial Buyer.
(B) The Certificate of Designations, 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 Initial Buyer.
(C) 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 Closing Date as though
made at that time (except for representations and warranties
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 3 above, in which case,
such representations and warranties shall be true and correct
without further qualification) 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 Initial Closing Date.
Such Initial Buyer shall have received a certificate, executed
by the Chief Executive Officer or Chief Financial Officer of
the Company, dated as of the Initial Closing Date and
including an update as of the Initial Closing Date of the
representation contained in Section 3(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
21
Merger Agreement or the Delano Merger Agreement shall be
deemed to be (i) a material adverse change pursuant to Section
3(g) or (ii) a breach of any of the representations and
warranties made by the Company pursuant to Section 3 of this
Agreement.
(D) Such Initial Buyer shall have received
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of the
Initial Closing Date, in form, scope and substance reasonably
satisfactory to such Initial Buyer and in substantially the
form of EXHIBIT D attached hereto.
(E) The Company shall have executed and
delivered to such Initial Buyer the Preferred Stock
Certificates (in such denominations as such Initial Buyer
shall request) for the Initial Preferred Shares being
purchased by such Initial Buyer at the Initial Closing.
(F) The Board of Directors of the Company
shall have adopted resolutions consistent with Section
3(b)(ii) above and in a form reasonably acceptable to such
Initial Buyer (the "RESOLUTIONS").
(G) As of the Initial Closing Date, the
Company shall have reserved out of its authorized and unissued
Common Stock, solely for the purpose of effecting the
conversion of the Initial Preferred Shares, at least 3,825,000
shares of Common Stock.
(H) 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 Initial Buyer.
(I) The Company shall have delivered to such
Initial 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 Initial Closing Date.
(J) The Company shall have delivered to such
Initial Buyer a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the
State of Delaware as of a date within ten days of the Initial
Closing Date.
(K) The Company shall have delivered to such
Initial Buyer a secretary's certificate, dated as the Closing
Date, certifying as to (A) the Resolutions, (B) the
Certificate of Incorporation and (C) the Bylaws, each as in
effect at the Initial Closing.
(L) [Intentionally Omitted]
22
pursuant to which each such person agrees to vote all shares
of Common Stock held by such person in favor of the matters
described in Section 4(k).
(M) The waiting period(s) (and any extension
thereof) under the HSR Act, if applicable, shall have expired
or been terminated without any condition attached to such
expiration or termination.
(N) If requested by Oak, an Oak nominee
shall have been appointed to serve on the Company's Board of
Directors effective as of the Initial Closing Date, and, if
requested by Oak, such nominee and the Company shall have
entered into an indemnification agreement, effective as of the
Initial Closing Date and in a form acceptable to Oak.
(ii) FOLLOW-ON INITIAL BUYERS. The obligation of each
Follow-On Initial Buyer hereunder to purchase the Initial Preferred
Shares from the Company as of the Initial Closing is subject to the
satisfaction, at or before the Initial Closing Deadline Date, of each
of the following conditions, provided that these conditions are for
each Follow-On Initial Buyer's sole benefit and may be waived by such
Follow-On Initial Buyer at any time in its sole discretion by providing
the Company with prior written notice thereof:
(A) The Company shall have executed each of
the Transaction Documents and delivered the same to such
Follow-On Initial Buyer.
(B) The Initial Closing shall have occurred.
(C) Such Follow-On Initial Buyer shall have
received a copy of the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
delivered to the Initial Buyers at the Initial Closing dated
as of the Initial Closing Date.
(D) Such Follow-On Initial Buyer shall have
received a copy of the secretary's certificate and officer's
certificate of the Company delivered to the Initial Buyers at
the Initial Closing, each dated as of the Initial Closing
Date.
(E) The Company shall have executed and
delivered to such Follow-On Initial Buyer the Preferred Stock
Certificates (in such denominations as such Follow-On Initial
Buyer shall request) for the Initial Preferred Shares being
purchased by such Follow-On Initial Buyer at the Initial
Closing.
b. MANDATORY CLOSING DATE. The obligation of each Mandatory
Buyer hereunder to purchase the Mandatory Preferred Shares and the Warrants 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 1(c).
23
(ii) 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 representation related to capitalization set
forth in Section 3(c) which shall be true as of the date of this
Agreement and except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 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 hereof in any
matter set forth on the Disclosure Letter 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
3(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
(i) a material adverse change pursuant to Section 3(g) or (ii) a breach
of any of the representations and warranties made by the Company
pursuant to Section 3 of this Agreement.
(iii) Such Mandatory Buyer shall have received the
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of the Mandatory
Closing Date, in form, scope and substance reasonably satisfactory to
such Mandatory Buyer and in substantially the form of EXHIBIT D
attached hereto.
(iv) The Company shall have executed and delivered to
such Mandatory Buyer the Preferred Stock Certificates and the Warrants
(in such denominations as such Mandatory Buyer shall request) for the
Mandatory Preferred Shares and the Warrants being purchased by such
Mandatory Buyer at the Mandatory Closing.
(v) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
(vi) The Irrevocable Transfer Agent Instructions
shall remain in effect as of the Mandatory Closing Date and the Company
shall cause its Transfer Agent to deliver a letter to the Mandatory
Buyers to that effect.
(vii) 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.
24
(viii) 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.
(ix) 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.
(x) 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.
(xi) The waiting period(s) (and any extension
thereof) under the HSR Act, if applicable, shall have expired or been
terminated without any condition attached to such expiration or
termination.
(xii) At Oak's election, an additional Oak nominee
(or two Oak nominees if Oak did not elect a nominee at the Initial
Closing or thereafter) 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 entered into an
indemnification agreement in form acceptable to Oak, effective as of
the Mandatory Closing Date.
(xiii) The Company shall not have materially breached
the Transaction Documents or the Certificate of Designations.
(xiv) No Triggering Event shall have occurred.
8. 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
25
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.
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. 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 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 Initial Preferred Shares on the Initial Closing
Date or, if prior to the Initial Closing Date, the Buyers listed on the Schedule
of Buyers as being obligated to purchase at least two-thirds (2/3) of the
Initial Preferred Shares, 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:
26
If to the Company:
divine, inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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),
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 4(l) of this Agreement. No Buyer
shall assign any of its rights hereunder without the consent of the Company.
27
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
8(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5
and 8 shall survive the Closings; provided, however, that the covenants of the
Company set forth in Sections 4, 5 and 8 shall terminate at such time as all of
the 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 Initial Closing shall
not have occurred with respect to a Buyer on or before ten (10) Business Days
from the date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6(a) and 7(a) 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 1(a), 1(c), 6(b)
and 7(b) if the Mandatory Closing does not occur on or before August 7, 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 Preferred Shares
and the related Warrants. 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,
28
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.
o. REMEDIES. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
the Certificate 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, the Certificate of Designations or Warrants 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.
* * * * * *
29
IN WITNESS WHEREOF, the Buyers and the Company have caused this
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
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
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
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
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
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
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
Securities Purchase Agreement to be duly executed as of the date first written
above.
BUYERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
BUYERS:
--------------------------------------------
By:_________________________________________
Name:
Its: