Exhibit 4.1
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
This AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"),
dated as of July 16, 2002, by and among divine, inc, a Delaware corporation,
with headquarters located at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
(the "COMPANY"), and the investors listed on the Schedule of Buyers attached
hereto (individually, a "BUYER" and collectively, the "BUYERS") amends and
restates in its entirety, subject to Section 9(e) hereof, that certain
Securities Purchase Agreement, dated as of May 29, 2002, by and between the
Company and the Buyers (the "ORIGINAL PURCHASE AGREEMENT").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance, in part, upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT"). In addition, the exchange of the Series B Preferred
Shares (as defined below) for the Exchange Preferred Shares (as defined below)
under and pursuant to this Agreement (the "EXCHANGE") is being made in reliance
upon the exemption from registration provided for by Section 3(a)(9) of the 1933
Act. (Unless otherwise indicated, capitalized terms used in this Agreement shall
have the meanings ascribed to such terms herein.)
B. The Company and the Buyers previously entered into the Original
Purchase Agreement pursuant to which those Buyers set forth under the heading
"Initial Buyers" on the Schedule of Buyers (the "INITIAL BUYERS") purchased from
the Company shares of the Company's Series B Convertible Preferred Stock, par
value $0.001 per share (the "SERIES B PREFERRED STOCK") on or prior to June 6,
2002;
C. Each Initial Buyer is the holder of that number of shares of Series B
Preferred Stock (each a "SERIES B PREFERRED SHARE" and, collectively, the
"SERIES B PREFERRED SHARES") set forth opposite its name under the heading
"SERIES B PREFERRED SHARES" on the Schedule of Buyers;
D. Prior to the closing of the transactions contemplated hereby, the
Company will have authorized the following new series of its preferred stock,
par value $0.001 per share, known as the Company's Series B-1 Convertible
Preferred Stock (the "SERIES B-1 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 Series B-1 Preferred Stock,
substantially in the form attached hereto as EXHIBIT A (the "CERTIFICATE OF
DESIGNATIONS");
E. The Company and each of the Initial Buyers wish to exchange, upon the
terms and conditions set forth in this Agreement, the Series B Preferred Shares
held by such Initial Buyer for the number of shares of Series B-1 Preferred
Stock (each an "EXCHANGE PREFERRED SHARE" and, collectively, the "EXCHANGE
PREFERRED SHARES" and, as converted, the "EXCHANGE CONVERSION SHARES") set forth
opposite its name under the heading "Exchange Preferred Shares" on the Schedule
of Buyers;
F. Subject to the terms and conditions set forth in this Agreement, each
of the Buyers set forth under the heading "Mandatory Buyers" on the Schedule of
Buyers (or, if consented to by the Company (which consent will not be
unreasonably withheld), an affiliate thereof) (the "MANDATORY BUYERS") will be
required under this Agreement to buy, and the Company will be required under
this Agreement to sell to each of the Mandatory Buyers, at the Mandatory
Closing, for a purchase price per share of Mandatory Preferred Share equal to
$1,000 (the "PURCHASE PRICE") that number of shares of Series B-1 Preferred
Stock set forth opposite its name under the heading "Number of Mandatory
Preferred Shares" on the Schedule of Buyers (the "MANDATORY PREFERRED SHARES"
and, as converted, the "MANDATORY CONVERSION SHARES"); and
G. At the Initial Closing (as defined below), the Company and the Buyers
will execute and deliver an Amended and Restated Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT B (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company will agree to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. EXCHANGE OF SERIES B PREFERRED SHARES
a. EXCHANGE OF SERIES B PREFERRED SHARES. Subject to satisfaction
(or waiver) of the conditions set forth in Sections 7(a) and 8(a), the Company
shall issue to each of the Initial Buyers that number of Exchange Preferred
Shares set forth opposite such Initial Buyer's name under the heading "Exchange
Preferred Shares" on the Schedule of Buyers in exchange for and cancellation of
the Series B Preferred Shares held by such Initial Buyer and set forth opposite
such Initial Buyer's name under the heading "Series B Preferred Shares" on the
Schedule of Buyers, and each of the Initial Buyers agrees to exchange such
number of Series B Preferred Shares for such number of Exchange Preferred Shares
(the "INITIAL CLOSING").
b. INITIAL CLOSING DATE. The date and time of the Initial Closing
(the "INITIAL CLOSING DATE") shall be 9:00 a.m. Central Time, on July 18, 2002,
subject to notification of satisfaction (or waiver) of the conditions to the
Initial Closing set forth in Sections 7(a) and 8(a). The Initial Closing shall
occur on the Initial Closing Date at the offices of Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
c. EFFECTUATION OF EXCHANGE. On the Initial Closing Date, (i) the
Company shall issue and deliver to each Initial Buyer stock certificates
representing the Exchange Preferred Shares being issued to such Initial Buyer
under this Agreement in connection with the Exchange in exchange for such
Initial Buyer's Series B Preferred Shares (the "EXCHANGE PREFERRED STOCK
CERTIFICATES"), and (ii) each Initial Buyer shall deliver to the Company stock
certificates (the "SERIES B PREFERRED STOCK CERTIFICATES") representing such
Initial Buyer's Series B Preferred Shares being exchanged under this Agreement
in connection with the Exchange.
2. PURCHASE AND SALE OF MANDATORY PREFERRED SHARES.
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a. PURCHASE OF MANDATORY PREFERRED SHARES. Subject to the terms and
conditions of this Agreement, including, without limitation, the satisfaction
(or waiver) of the conditions set forth in Sections 2(b), 7(b) and 8(b), each
Mandatory Buyer shall purchase, and the Company shall issue and sell to each
Mandatory Buyer the number of Mandatory Preferred Shares set forth opposite such
Mandatory Buyer's name under the heading "Number of Mandatory Preferred Shares"
on the Schedule of Buyers for a purchase price per share of Mandatory Preferred
Share equal to the Purchase Price and an aggregate purchase price equal to the
dollar amount set forth opposite such Mandatory Buyer's name under the heading
"Aggregate Mandatory Closing Purchase Price" on the Schedule of Buyers (the
"MANDATORY CLOSING"). The Initial Closing and the Mandatory Closing collectively
are referred to in this Agreement as the "CLOSINGS". The Exchange Preferred
Shares and the Mandatory Preferred Shares collectively are referred to in this
Agreement as the "PREFERRED SHARES" and the Exchange Conversion Shares and the
Mandatory Conversion Shares collectively are referred to in this Agreement as
the "CONVERSION SHARES". "BUSINESS DAYS" means any day other than Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
b. THE MANDATORY CLOSING DATE. The date and time of the Mandatory
Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. Central Time, on the
first (1st) Business Day after the date of the stockholder meeting referred to
in Section 5(k) at which Stockholder Approval is obtained and following the date
of the receipt by each Buyer of the Mandatory Share Notice, subject to
satisfaction (or waiver) of the conditions to the Mandatory Closing set forth in
Sections 7(b) and 8(b) and the conditions set forth in this Section 2(b) (or
such later date as is mutually agreed to by the Company and Oak). The Company
shall deliver written notice (the "MANDATORY SHARE NOTICE") to each Buyer on the
date (the "MANDATORY SHARE NOTICE DATE") the Company has received the approval
of the Company's stockholders pursuant to Section 5(k), but in no event later
than August 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 9(l) of this
Agreement shall automatically be modified to a date seven (7) days after such
agreed upon extended date. The Mandatory Share Notice shall set forth the date
of the Mandatory Closing Date, which shall be the first (1st) Business Day after
the date of the stockholder meeting referred to in Section 5(k) at which the
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).
c. FORM OF PAYMENT. On the Mandatory Closing Date, (i) each
Mandatory Buyer shall pay to the Company the aggregate Purchase Price payable by
such Mandatory Buyer hereunder for the Mandatory Preferred Shares to be issued
and sold to such Mandatory Buyer at the Mandatory Closing by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, less any amount withheld for expenses of Oak pursuant to Section
5(h), and (ii) the Company shall deliver to each Mandatory Buyer, stock
certificates (in the denominations as such Mandatory Buyer shall request) (the
"MANDATORY PREFERRED STOCK CERTIFICATES") representing such number of the
Mandatory Preferred Shares which such
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Mandatory Buyer is then purchasing hereunder, duly executed on behalf of the
Company and registered in the name of such Mandatory Buyer or its designee. The
Exchange Preferred Stock Certificates and the Mandatory Preferred Stock
Certificates collectively are referred to in this Agreement as the "PREFERRED
STOCK CERTIFICATES."
3. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Mandatory
Preferred Shares and (ii) upon conversion of the Mandatory Preferred Shares,
will acquire the Conversion Shares then issuable upon conversion thereof (the
Preferred Shares and the Conversion Shares collectively are referred to herein
as the "SECURITIES"), for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D and a
"qualified institutional buyer" as that term is defined in Rule 144A promulgated
under the 1933 Act.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
such Buyer to acquire the Securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials 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.
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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 0000 Xxx) 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, 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 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
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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.
j. TITLE TO SERIES B PREFERRED SHARES. Each Initial Buyer has good
and marketable title to the Series B Preferred Shares set forth opposite its
name under the heading "Series B Preferred Shares" on the Schedule of Buyers
(subject to any restrictions on transfer set forth in agreements with the
Company or under applicable securities laws). Upon the consummation of the
Exchange at the Initial Closing, good and valid title to such Series B Preferred
Shares will be conveyed to the Company, free and clear of any liens, claims,
charges, pledges, encumbrances and other restrictions of any kind whatsoever and
subject to no rescission or similar rights or equities of any kind whatsoever.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that except
to the extent (i) disclosed with reasonable specificity on the Schedules to this
Agreement, with respect to Sections 4(b), (e) and (o) and, (ii) with respect to
all other subsections in this Section 4, disclosed with reasonable specificity
on the schedules to this Agreement or the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001 and Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002 (the "2002 FILINGS") filed by the Company
(other than (x) those Sections of the 2002 Filings entitled or captioned "Risk
Factors" and (y) disclosures in those documents which are filed as exhibits to,
or incorporated by reference in, such 2002 Filings):
a. ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns fifty percent (50%) or more of the
outstanding voting securities) are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authorization to own
their properties and to carry on their business as now being conducted. Each of
the Company and its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
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Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material
adverse effect on the business, properties, assets, operations, prospects,
results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents or the
Certificate of Designations. The Company has no Subsidiaries except as set forth
on SCHEDULE 4(a).
b. AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and each of the other agreements entered
into by the parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the "TRANSACTION DOCUMENTS"), to execute and file
the 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 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 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 will have 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 June 26, 2002, 18,973,847 shares are issued and outstanding, (ii)
100,000,000 shares of the Company's Class C common stock, par value $0.001 per
share, none of which are issued and outstanding as of the date hereof and (iii)
50,000,000 shares of Preferred Stock, of which as of the date hereof 2,000,000
shares have been designated as Series A Junior Participating Preferred Stock
(the "PARTICIPATING PREFERRED STOCK"), of which, as of the date hereof, no
shares are issued and outstanding, and 100,000 shares have been designated as
Series B Preferred Stock, of which as of the date hereof, 22,941 shares are
issued and outstanding. All of such outstanding or issuable shares have been, or
upon issuance will be, validly issued and are fully paid and nonassessable.
Except as set forth in those documents listed on SCHEDULE 4(c) and except for
(y) the rights to purchase the Participating Preferred Stock pursuant to the
Rights Plan and (z) options to purchase 2,508,516 shares of Common Stock issued
pursuant to the Company's 1999 Stock Option Plan, options to purchase 1,076,565
shares of Common Stock issued pursuant to the Company's 2001 Stock Option Plan
and 53,704 shares of Common Stock reserved for issuance
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pursuant to the Company's 2000 Employee Stock Purchase Plan, as of the date
hereof, (A) no shares of the Company's capital stock are subject to preemptive
rights or any other similar rights; (B) there are no outstanding debt
instruments issued by the Company; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
for, any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable for, any
shares of capital stock of the Company or any of its Subsidiaries; (D) there are
no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (E) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement; and (F) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement. The Company has furnished to each
Buyer true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "CERTIFICATE OF
INCORPORATION"), and the Company's Amended and Restated Bylaws, as amended and
as in effect on the date hereof (the "BYLAWS"), and the terms of all securities
convertible into, or exercisable or exchangeable for, Common Stock and the
material rights of the holders thereof in respect thereto. Except for the
Certificate of Designations, Preferences and Rights of Series A Junior
Participating Preferred Stock and the Certificate of Designations, Preferences
and Rights of the Series B Preferred Stock (the "SERIES B CERTIFICATE OF
DESIGNATIONS"), 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, 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 5(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 3, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
e. NO CONFLICTS. Except as set forth on SCHEDULE 4(e), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the 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
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Merger Agreement (as such terms are defined in Section 4(w))) will not (i)
result in a violation of the Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of preferred
stock of the Company or the Bylaws; (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument (including,
without limitation, any stock option, employee stock purchase or similar plan or
any employment or similar agreement) to which the Company or any of its
Subsidiaries is a party (including, without limitation, triggering the
application of any change of control or similar provision (whether "single
trigger" or "double trigger")); or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected. Neither
the Company nor its Subsidiaries is in violation of any term of its Certificate
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or Bylaws or their
organizational charter or bylaws, respectively. Except as set forth on SCHEDULE
4(e), neither the Company or any of its Subsidiaries is in violation of any term
of or in default under any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except where such
violations and defaults would not result, either individually or in the
aggregate, in a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance or regulation of any governmental entity, except where such
violations would not result, either individually or in the aggregate, in a
Material Adverse Effect. Except (A) for compliance with the Xxxx-Xxxxx Xxxxxx
Antitrust Improvement Acts of 0000 (xxx "XXX Xxx"), if applicable, or as
specifically contemplated by this Agreement, (B) as required under the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 ACT") and the rules
and regulations promulgated thereby and the Nasdaq National Market 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 4(e), all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain as described in the preceding sentence shall have been
obtained or effected on or prior to the Initial Closing Date. Except as set
forth on SCHEDULE 4(e), the Company is not in violation of the listing
requirements of the Principal Market.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 2001, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing (including all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein) and all forms, documents and instruments filed by the Company
with the SEC pursuant to the 1933 Act (including all exhibits included therein
and financial statements and schedules thereto and documents incorporated by
reference therein) being hereinafter referred to as the "SEC DOCUMENTS"). As of
their respective dates, the SEC
9
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 0000 Xxx) 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 4(g),
since December 31, 2001 there has been no material adverse change and no
material adverse development in the business, properties, assets, operations,
prospects, results of operations or financial conditions of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Subsidiaries, except where any of the foregoing
would not result, either individually or in the aggregate, in a Material Adverse
Effect and except as set forth on SCHEDULE 4(h).
i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF PREFERRED SHARES.
The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of an arm's length purchaser with respect to the Company in
connection with the Transaction Documents and the 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.
10
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 0000 Xxx) in connection with the offer or sale of the
Securities.
k. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or,
except with respect to the issuance of the Series B Preferred Shares, any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor will the
Company or any of its Subsidiaries take any action or steps that would require
registration of any of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.
l. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Except as
set forth on SCHEDULE 4(l), none of the Company's or its Subsidiaries' employees
is a member of a union which relates to such employee's relationship with the
Company, neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement.
m. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights necessary
to conduct their respective businesses as now conducted, except where the
failure to own or possess such rights would not result, either individually or
in the aggregate, in a Material Adverse Effect. Except as set forth on SCHEDULE
4(m)(i), the Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service xxxx
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 xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, trade secrets or other intellectual property rights of others, or of
any development of similar or identical trade secrets or technical information
by others and, except as set forth on SCHEDULE 4(m)(ii), there is no claim,
action or proceeding being made or brought against, the Company or its
Subsidiaries regarding its trademarks, trade names, service marks, service xxxx
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
11
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
n. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing cases, the failure to so comply would not result, either
individually or in the aggregate, in a Material Adverse Effect.
o. TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except (i) such as are set forth on SCHEDULE 4(o), (ii) such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries, (iii) such liens or encumbrances against any landlord's or owner's
interest in any leased property or (iv) for taxes not yet due and payable. Any
real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.
p. INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. The Company has Director and Officer Insurance policies in customary
form and substance with an aggregate insured amount equal to or in excess of $20
million. All premiums related to such policies are paid in full through July 25,
2002.
q. REGULATORY PERMITS. Except the absence of which would not result,
either individually or in the aggregate, in a Materially Adverse Effect, the
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
r. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability and (iii) access to assets or incurrence of
liability is permitted only in accordance with management's general or specific
authorization.
12
s. TAX STATUS. Except as set forth on SCHEDULE 4(s), the Company and
each of its Subsidiaries (i) has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes), (ii) other than taxes that in
an aggregate amount would not be material (and the nonpayment of which would not
have a Material Adverse Effect), has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and for which the Company has made appropriate reserves for on its
books, and (iii) other than accruals for taxes in an aggregate amount that would
not be material (and the nonpayment of which would not have a Material Adverse
Effect), has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction.
t. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
4(t) and in the SEC Documents filed with the SEC prior to the date of this
Agreement, and other than the grant of stock options issued under the Company's
1999 Stock Option Plan or 2001 Stock Option Plan, as of the date hereof, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
u. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors have taken, or prior to the Initial Closing shall have taken, all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyers as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyers' ownership of the Securities.
v. RIGHTS AGREEMENT. The Company has amended, or prior to the
Initial Closing shall have amended, the Rights Agreement between the Company and
Computershare Investor Services, LLC, as Rights Agent (the "Rights Plan"), to
ensure that (i) none of the Buyers is intended to be or will be deemed to be an
Acquiring Person within the meaning of the Rights Plan because of the
acquisition of the Securities (including the Conversion Shares) pursuant to this
Agreement, (ii) the acquisition of the Securities (including the Conversion
Shares) pursuant to this Agreement, shall not, under any circumstances, trigger
a Distribution Date within the meaning of the Rights Plan and (iii) the
Securities (including the Conversion Shares) will not be included in determining
whether any Buyer is an Acquiring Person within the meaning of the Rights Plan;
provided, however, that only Securities (including the Conversion
13
Shares) acquired pursuant to this Agreement shall be deemed excluded from the
number of shares of Common Stock deemed beneficially owned by each Buyer in
determining whether such Buyer is an Acquiring Person within the meaning of the
Rights Plan.
w. RECENT DEVELOPMENTS. Except as set forth in SCHEDULE 4(w), the
Company has delivered to Oak true and correct copies of (i) the Agreement and
Plan of Merger and Reorganization, dated as of April 5, 2002, by and between the
Company, DVC Acquisition Company, a wholly-owned subsidiary of the Company, and
Viant Corporation, as 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.
z. NO SOLICITATION OF EXCHANGE. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has paid or given,
directly or indirectly, any commission or other renumeration to any person for
soliciting the exchange of the Series B Preferred Shares for the Exchange
Preferred Shares.
5. COVENANTS.
a. BEST EFFORTS. Subject to any party's right to terminate this
Agreement pursuant to Section 9, each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Section 7
(in the case of the Buyers) and Section 8 (in the case of the Company) of this
Agreement; provided, however, nothing in this Section 5(a) shall be deemed to
require the Mandatory Closing Buyers to purchase Mandatory Preferred Shares
unless and until the conditions set forth in Section 8(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
14
and sale of the Securities to the Buyers required under applicable securities or
"Blue Sky" laws of the states of the United States following the Mandatory
Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date which is one
year after the date as of which all of the Investors (as that term is defined in
the Registration Rights Agreement) (or permitted transferees thereof) may sell
the Conversion Shares pursuant to Rule 144 promulgated under the 1933 Act (or
successor thereto) or (ii) three (3) years from the date hereof (the "REPORTING
PERIOD"), the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would otherwise permit such termination, other
than as the result of a merger or consolidation or sale or transfer of all or
substantially all of the Company's assets where the Company is in compliance
with Section 5(l) of this Agreement.
d. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Mandatory Preferred Shares for general working capital.
e. FINANCIAL INFORMATION. The Company agrees to send the following
to each Buyer during the Reporting Period: (i) unless the following are filed
with the SEC through XXXXX and are available to the public through XXXXX, within
two (2) days after the filing thereof with the SEC, a copy of its Annual Reports
on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act; and (ii) on the same day as the release thereof copies
of any notices and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making available or giving
thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Preferred Shares.
g. LISTING. The Company shall use its best efforts to maintain the
Common Stock's authorization for quotation on the Nasdaq National Market (the
"PRINCIPAL MARKET") or to obtain and maintain a listing on The American Stock
Exchange, Inc. (as applicable, the "PRINCIPAL MARKET"). The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 5(g).
h. EXPENSES. At the 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
$90,000 (less any amounts previously paid by the Company or withheld by Oak in
connection with the issuance of the Series B Preferred Shares, but in addition
to amounts owed for legal fees pursuant to any other provision hereunder) for
all payments pursuant to this sentence and which amount may be withheld by Oak
from its Purchase Price to be paid at the applicable Closing. The Company will
pay all other expenses of the Company associated with the transactions
contemplated by this Agreement, including, without
15
limitation, fees and expenses associated with any filings or other actions
necessary under the HSR Act, if applicable.
i. FILING OF FORM 8-K. On or before the 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 and the Registration Rights
Agreement, in the form required by the 1934 Act. The Company shall file a press
release or other announcement of this Agreement or the transactions contemplated
hereby concurrently with the filing of the Initial 8-K with the SEC. On or
before the first (1st) Business Day following the Mandatory Closing Date, the
Company shall file a Form 8-K with the SEC describing the transaction
consummated or proposed on such date.
j. TRANSACTIONS WITH AFFILIATES. So long as any Preferred Shares are
outstanding, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement any agreement, transaction,
commitment or arrangement with any of its or any Subsidiary's officers,
directors, persons who were officers or directors at any time during the
previous two years, stockholders who beneficially own 5% or more of the Common
Stock, or affiliates of the Company or its Subsidiaries or with any entity in
which any such entity or individual owns a 5% or more beneficial interest (each
a "RELATED PARTY"), except for (a) customary employment arrangements and benefit
programs on reasonable terms, (b) any agreement, transaction, commitment or
arrangement on an arms-length basis on terms no less favorable than terms which
would have been obtainable from a person other than such Related Party, (c) any
agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company, or (d) except as set
forth on SCHEDULE 5(j). For purposes hereof, any director who is also an officer
of the Company or any Subsidiary shall not be a disinterested director with
respect to any such agreement, transaction, commitment or arrangement.
"AFFILIATE" for purposes hereof means, with respect to any person or entity,
another person or entity that, directly or indirectly, (i) has a 5% or more
equity interest in that person or entity, (ii) has 5% or more common ownership
with that person or entity, (iii) controls that person or entity, or (iv) shares
common control with that person or entity. "CONTROL" or "CONTROLS" for purposes
hereof means that a person or entity has the power, direct or indirect, to
conduct or govern the policies of another person or entity.
k. PROXY STATEMENT. The Company shall convene and adjourn (without
conducting any business) the stockholder meeting scheduled for July 17, 2002
under and pursuant to the Original Purchase Agreement and provide each
stockholder entitled to vote at the reconvened 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 August
31, 2002 (the "STOCKHOLDER MEETING DEADLINE"), a proxy statement supplement,
which has been previously reviewed by Oak and a counsel of their choice (and
with respect to which the Company has used its best efforts to accept the
comments of Oak and counsel), soliciting each such stockholder's affirmative
vote at such stockholder meeting for approval of 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 (including applicable
securities law, rules and regulations) and the rules and regulations of the
Principal Market (such affirmative approval being referred to herein as the
"STOCKHOLDER APPROVAL"), and the Company
16
shall solicit its stockholders' approval of such issuance of the Conversion
Shares and the granting of voting rights to the holders of Series B-1 Preferred
Shares. Such solicitation shall include the recommendation of the Board of
Directors in favor of Stockholder Approval, unless the Board of Directors
determines in good faith after consultation with counsel to the Company that
making such recommendation would be inconsistent with the Board of Directors'
fiduciary duties under applicable law, in which case, the Company shall submit
such matter to the Company's stockholders without such recommendation. The
Company shall promptly notify the Buyers of any comments by the SEC on such
proxy statement and shall provide the Buyers with a copy of such comments. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 5(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 5(k).
l. CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Preferred Shares, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, (x) except in the
event of a merger or consolidation or sale or transfer of all or substantially
all of the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under 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 May 31, 2003, such Buyer will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any of the Securities (collectively, the "RESTRICTED SECURITIES"),
enter into a transaction that would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the Restricted Securities, whether any
such aforementioned transaction is to be settled by delivery of the Restricted
Securities or other securities, in cash or otherwise, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of the Company. The foregoing sentence (i) shall not apply (A)
to dispositions to the Company pursuant to the Exchange, (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 members, Affiliates,
partners, members, former partners or members or shareholders of such Buyer in
private transactions in which the transferee agrees to be bound by the
provisions of this Section 5(m) as if such transferee were a Buyer and (ii)
shall expire, for each Buyer, in its entirety (y) immediately before the
acquisition of the Company by another person or entity, whether by merger, asset
sale or otherwise and (z) immediately (I) upon the breach by the Company of any
material obligation to the Buyers in the Transaction Documents or the
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 any of the Oak nominees 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
17
set forth in Section 4 was materially untrue when made, and such breach has had
or is reasonably likely to have a materially adverse effect on the value of the
Buyers' investment in the Company pursuant to this Agreement, and Oak has
notified the Company in writing of such conclusion and (IV) upon a material
breach by the Company of any of the protective provisions of the 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 5(n)
to this Agreement shall constitute a "TRIGGERING EVENT": Within five (5)
Business Days of the occurrence of a Triggering Event, the Company will
give notice to all Buyers of such occurrence (the "TRIGGER NOTICE").
(ii) REDEMPTION RIGHT. If any Buyer of Preferred Shares hereunder
becomes aware of a Triggering Event, such Buyer may require the Company to
redeem all or any of the Preferred Shares then held by such Buyer by
delivering written notice to the Company within thirty (30) days after the
date of the Trigger Notice (the "REDEMPTION NOTICE"), which Redemption
Notice shall indicate the number of Preferred Shares that such Buyer is
electing to redeem hereunder. Each Preferred Share subject to redemption by
the Company pursuant to this Section 5(n) shall be redeemed by the Company
at a price per Preferred Share equal to the Liquidation Preference (as
defined in the 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 Triggering Event described in paragraph C of Schedule
5(n), the Company shall only be required, in the aggregate, to redeem from
all Buyers up to that number of Preferred Shares having an aggregate
Redemption Price equal to 50% of the applicable Disposition Value. If such
amount is insufficient to redeem all Preferred Shares subject to a
Redemption Notice, the Company shall redeem shares pro rata from the Buyers
that have given a Redemption Notice (the "REDEEMING BUYERS") based upon the
aggregate number of outstanding Preferred Shares then held by each such
Redeeming Buyer relative to the aggregate number of outstanding Preferred
Shares then held by all Redeeming Buyers.
(iii) MECHANICS. Each Redeeming Buyer shall promptly submit to
the Company such Redeeming Buyer's Preferred Stock Certificates
representing the Preferred Shares which such Redeeming Buyer has elected to
have so redeemed (or a lost stock affidavit therefor reasonably acceptable
to the Company). The Company shall deliver the applicable Redemption Price
to a Redeeming Buyer from whom the Company has received a Redemption Notice
within 45 days after the date of the Trigger Notice; provided that such
Redeeming Buyer has delivered to the Company the Preferred Stock
Certificates representing the Preferred Shares being redeemed (or a lost
stock affidavit therefor reasonably acceptable to the Company). In the
event of a redemption of less than all of the Preferred Shares represented
by a particular Preferred Stock Certificate, the Company shall promptly
cause to be issued and delivered to the Redeeming Buyer holding such
Preferred Shares a preferred stock certificate representing the remaining
Preferred Shares which have not been redeemed.
18
(iv) REDEMPTION WHEN THERE IS MORE THAN ONE REDEEMING BUYER.
Notwithstanding anything in this Section 5(n) to the contrary, if the
Company receives more than one Redemption Notice and the Company is unable
to redeem all of the Preferred Shares submitted for redemption pursuant to
the Redemption Notices, then the Company shall redeem a pro rata amount
from each Redeeming Buyer based on the number of Preferred Shares submitted
for redemption by each such Redeeming Buyer and redeem from each such
Redeeming Buyer from time to time a pro rata amount of the balance of the
Preferred Shares so tendered for redemption as soon as the Company has
funds legally available for such purpose. As long as any redemption
obligation hereunder is continuing, the Company will not declare or pay any
dividends, repurchase any shares of outstanding capital stock (except
pursuant to Section 6(g) of the 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.
p. If all of the Initial Buyers consummate the Exchange such that no
Series B Preferred Shares remain outstanding after the Initial Closing, the
Company will file prior to the Mandatory Closing a certificate of termination
with respect to the Series B Certificate of Designations with the Secretary of
State of the State of Delaware.
6. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer agent
in the form attached hereto as EXHIBIT D (the "IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS"), and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by each Buyer
to the Company upon conversion of the Preferred Shares.
7. CONDITIONS TO THE COMPANY'S OBLIGATION AT CLOSING.
a. INITIAL CLOSING DATE. The obligation of the Company to consummate
the Exchange (including the issuance of the applicable number of Exchange
Preferred Shares to the Initial 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
Initial Buyer with prior written notice thereof:
(i) Such Initial Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company.
19
(ii) The Certificate of Designations shall have been filed with
the Secretary of State of the State of Delaware.
(iii) Such Initial Buyer shall have delivered to the Company the
Series B Preferred Stock Certificates representing the Series B Preferred
Shares to be exchanged hereunder at the Initial Closing.
(iv) The representations and warranties of such Initial 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
Initial 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
Initial Buyer at or prior to the Initial Closing Date.
b. MANDATORY CLOSING DATE. The obligation of the Company hereunder
to issue and sell the Mandatory Preferred Shares to each Mandatory Buyer at the
Mandatory Closing is subject to the satisfaction, at or before such Mandatory
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Mandatory Buyer with prior
written notice thereof:
(i) Such Mandatory Buyer shall have delivered to the Company the
Purchase Price for the Mandatory Preferred Shares being purchased by such
Mandatory Buyer at the Mandatory Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(ii) The representations and warranties of such Mandatory Buyer
shall be true and correct in all material respects as of the date when made
and as of the Mandatory Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date), and
such Mandatory Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by
such Mandatory Buyer at or prior to the Mandatory Closing Date.
8. CONDITIONS TO EACH BUYER'S OBLIGATION AT CLOSING.
a. INITIAL CLOSING DATE.
The obligation of each Initial Buyer hereunder to tender the
Series B Preferred Shares to the Company for exchange 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.
20
(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 the
representations and warranties made by the Company herein that speak
as of a specific date and except to the extent that any of such
representations and warranties is already qualified as to materiality
in Section 4 above, in which case, such representations and warranties
shall be true and correct without further qualification) 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 4(c) above.
Notwithstanding anything in this Agreement to the contrary, the
parties hereto hereby agree that neither the consummation nor the
failure to consummate the transactions contemplated by either the
Viant Merger Agreement or the Delano Merger Agreement shall be deemed
to be (A) a material adverse change pursuant to Section 4(g) or (B) a
breach of any of the representations and warranties made by the
Company pursuant to Section 4 of this Agreement.
(D) Such Initial Buyer shall have received the opinion of Xxxxxx
Xxxxxx Xxxxx Xxxxxxxx dated as of the Initial Closing Date, in form,
scope and substance reasonably satisfactory to Oak and in
substantially the form of EXHIBIT C attached hereto.
(E) The Company shall have executed and delivered to such
Initial Buyer the Exchange Preferred Stock Certificates (in such
denominations as such Initial Buyer shall request) for the Exchange
Preferred Shares issued in exchange for the Buyer's Series B Preferred
Shares (as set forth in Section 1(b)) at the Initial Closing.
(F) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 4(b) 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 Exchange Preferred
Shares, at least 3,825,000 shares of Common Stock.
21
(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
secretary's certificate, dated as of the Initial Closing Date,
certifying as to the Resolutions, as in effect at the Initial Closing.
(J) Unless an Oak nominee shall have been previously appointed
to serve on the Company's Board of Directors under and pursuant to the
Series B Certificate of Designations if requested by Oak on or prior
to 1:00 p.m. Central Time, on July 17, 2002, 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, the Company
shall have executed an indemnification agreement with respect to such
nominee, effective as of the Initial Closing Date and in a form
provided by Oak prior to the execution of this Agreement.
b. MANDATORY CLOSING DATE. The obligation of each Mandatory Buyer
hereunder to purchase the Mandatory Preferred Shares from the Company at the
Mandatory Closing is subject to the satisfaction, at or before the Mandatory
Closing Date, of each of the following conditions, provided that these
conditions are for each Mandatory Buyer's sole benefit and may be waived by such
Mandatory Buyer at any time in its sole discretion:
(i) The Company shall have complied with and satisfied all of
the requirements of Section 2(b).
(ii) The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as
of the Mandatory Closing Date as though made at that time (except for the
representations and warranties made by the Company herein that speak as of
a specific date and except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 4 above,
in which case, such representations and warranties shall be true and
correct without further qualification) (provided that any material adverse
development, change or amendment after the date of this Agreement in any
matter set forth on the Schedules to this Agreement or set forth in the
2002 Filings will not qualify as or otherwise constitute an exception for
purposes of determining whether any representations and warranties of the
Company are true and correct as of the Mandatory Closing Date) and the
Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Mandatory Closing Date. Such Mandatory Buyer
shall have received a certificate, executed by the Chief Executive Officer
or Chief Financial Officer of the Company, dated as of the Mandatory
Closing Date and including an update as of the Mandatory Closing Date of
the representation contained in Section 4(c) above. Notwithstanding
anything in this Agreement to the contrary, the parties hereto hereby agree
that neither the consummation nor the failure to consummate the
transactions contemplated by either the Viant Merger Agreement or the
Delano Merger Agreement shall be deemed to be (A) a material adverse change
pursuant
22
to Section 4(g) or (B) a breach of any of the representations and
warranties made by the Company pursuant to Section 4 of this Agreement.
(iii) Such Mandatory Buyer shall have received the opinion of
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx dated as of the Mandatory Closing Date, in
form, scope and substance reasonably satisfactory to Oak and in
substantially the form of EXHIBIT C attached hereto.
(iv) The Company shall have executed and delivered to such
Mandatory Buyer the Mandatory Preferred Stock Certificates (in such
denominations as such Mandatory Buyer shall request) for the Mandatory
Preferred Shares 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.
(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) At Oak's election, one (1) 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.
(xii) The Company shall not have materially breached the
Transaction Documents or the Certificate of Designations.
(xiii) No Triggering Event shall have occurred.
23
(xiv) The Company shall have delivered to the Mandatory Buyers a
certificate signed by the Company's Chief Executive Officer or Chief
Financial Officer confirming that, (v) for purposes of the definition of
Initial Conversion Price in the Certificate of Designations, the Mandatory
Closing has occurred, (w) the Oak nominees appointed to serve on the Board
of Directors pursuant to Section 7(d) of the Certificate of Designations,
if any, have been added as an insured party under the Company's Director
and Officers Insurance Policy; provided that Oak has elected to appoint
such Oak nominees and has given the Company notice of such election at
least two (2) Business Days prior to the Mandatory Closing Date, (x) Oak IX
Affiliates Fund A, Limited Partnership, Oak IX Affiliates Fund, Limited
Partnership, Oak Investment Partners IX, Limited Partnership, Oak X
Affiliates Fund, Limited Partnership, Oak Investment Partners X, Limited
Partnership (and any Affiliate of the foregoing that purchases Preferred
Shares at the Mandatory Closing) have been added as an insured party under
the Company's Directors and Officers Insurance Policy, to the extent
permitted by such policy; provided that the foregoing shall only be added
to the Company's Directors and Officers Insurance Policy if Oak and its
Affiliates will hold more than 50% of the voting power of the Common Stock
(including the right of the holders of the Preferred Shares to vote with
the Common Stock on an as converted basis) immediately following the
Mandatory Closing, (y) in determining that the Stockholder Approval was
obtained, it was not necessary for the Company to include in the
calculation any of the votes cast on Old Proxy Cards, and (z) a quorum of
the Company's stockholders was present (in person or by proxy) at the
reconvened stockholder meeting at which the Stockholder Approval was
obtained (for such purposes, not including any stockholders present at the
adjourned stockholder meeting but not present (in person or by proxy) at
the reconvened stockholder meeting). For purposes of this Agreement, "Old
Proxy Cards" means the proxy cards submitted to the Company's stockholders
on or around June 17, 2002 related to the Stockholder Approval under the
Original Purchase Agreement.
(xv) The Company shall have delivered to Oak a revised forecast
to Oak for the Company's third and fourth quarters.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Delaware, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the Delaware, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a
24
copy thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective, with respect to a particular party, when
counterparts have been signed by such party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. Except for the representations and
warranties made by the Buyers and the Company pursuant to Sections 3 and 4,
respectively, of the Original Purchase Agreement at the closing for the issuance
of the Series B Preferred Shares, 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
Preferred Shares on the Initial Closing Date or, if prior to the Initial Closing
Date, the holders of at least two-thirds (2/3) of the Series B Preferred Shares
on such date, and no provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought.
f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to
25
receive the same; or (iv) five (5) days after deposit in the U.S. Mail. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
With a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
If to the Transfer Agent:
Computershare Investor Services LLC
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
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) (or, if prior
to the Initial Closing Date, the holders of at least two-thirds (2/3) of the
Series B
26
Preferred Shares on such date), including by merger or consolidation, except
pursuant to a Change of Control (as defined in Section 5(c) of the Certificate
of Designations) with respect to which the Company is in compliance with Section
5(l) of this Agreement. No Buyer shall assign any of its rights hereunder
without the consent of the Company.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section 9(l),
the representations and warranties of the Company and the Buyers contained in
Sections 3 and 4, and the agreements and covenants set forth in Sections 5, 6
and 9 shall survive the Closings; provided, however, that the covenants of the
Company set forth in Sections 5, 6 and 9 shall terminate at such time as all of
the 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 7(a) and 8(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 2(a), 2(b), 7(b)
and 8(b) if the Mandatory Closing does not occur on or before September 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.
27
m. CERTIFICATE OF DESIGNATIONS. Each of the Buyers, in its capacity
as a holder of Series B Preferred Shares, irrevocably approves of, and consents
to, the filing of the Certificate of Designations and the issuance of the
Preferred Shares pursuant to this Agreement.
n. PLACEMENT AGENT. The Company acknowledges that it has not engaged
a placement agent in connection with the sale of the Preferred Shares. The
Company shall be responsible for the payment of any placement agent's fees or
broker's commissions relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, attorneys' fees and
out of pocket expenses) arising in connection with any such claim.
o. 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.
p. 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.
q. PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Buyers hereunder or pursuant to the Registration Rights
Agreement or the Certificate of Designations or the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, by a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
* * * * * *
28
IN WITNESS WHEREOF, the Buyers and the Company have caused this Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
COMPANY:
divine, inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and
General Counsel
IN WITNESS WHEREOF, the Buyers and the Company have caused this Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
OAK INVESTMENT PARTNERS IX, LIMITED
PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
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 Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
OAK IX AFFILIATES FUND, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
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 Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
OAK IX AFFILIATES FUND-A, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
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 Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
OAK INVESTMENT PARTNERS X LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
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 Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
OAK X AFFILIATES FUND, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
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 Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxxxx
IN WITNESS WHEREOF, the Buyers and the Company have caused this Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
THE XXXXX X. XXXXX CHARITABLE REMAINDER TRUST
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Its: Trustee
------------------------------------
IN WITNESS WHEREOF, the Buyers and the Company have caused this Amended and
Restated Securities Purchase Agreement to be duly executed as of the date first
written above.
BUYERS:
THE XXXXX FOUNDATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Its: Trustee
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