EXHIBIT 10.8
FOUNDERS SHARES REGISTRATION RIGHTS AGREEMENT
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THIS FOUNDERS SHARES REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made as of August 18, 1999, by and among divine interVentures, inc., a Delaware
corporation (the "Corporation"), and each Person who becomes a party hereto as
provided in Section 9.9 hereof (the "Purchasers").
R E C I T A L S
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A. In connection with the Corporation's 1999 Stock Purchase Plan, the
Purchasers have executed Subscription Agreements (the "Subscription Agreements")
in which they have agreed to purchase shares (the "Founders Shares") of Common
Stock (as defined below) at a purchase price of $0.001 per share.
B. The Corporation is requiring that the Purchasers enter into this
Agreement as a condition to the Corporation's acceptance of their subscriptions
for the Founders Shares.
C. The Corporation deems it desirable to enter into this Agreement in
order to induce the Purchasers to purchase the Founders Shares pursuant to the
Subscription Agreements.
AGREEMENTS
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In consideration of the premises and the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement.
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"Class A Common Stock" means the Class A Common Stock, $0.001 par value per
share, of the Corporation.
"Class B Common Stock" means the Class B Common Stock, $0.001 par value per
share of the Corporation.
"Commission" means the United States Securities and Exchange Commission or
any successor thereto.
"Common Stock" means the Class A Common Stock and the Class B Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, as the same shall be in effect from time to time.
"IPO" means the Corporation's first underwritten public offering of shares
of Common Stock pursuant to a registration statement filed with the Commission.
"Person" means an individual, corporation, partnership, limited liability
company, limited partnership, syndicate, person (including, without limitation,
a "Person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government.
"Public Offering" means any offering by the Corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act.
"Registrable Shares" means at any time (i) any shares of Class A Common
Stock then outstanding which are Founders Shares or were issued upon conversion
of Founders Shares, (ii) any shares of Class A Common Stock then issuable upon
conversion of outstanding Founders Shares, (iii) any shares of Class A Common
Stock then outstanding which were issued as, or were issued directly or
indirectly upon the conversion or exercise of other securities issued as, a
dividend or other distribution with respect or in replacement of any shares
referred to in (i) or (ii); and (iv) any shares of Class A Common Stock then
issuable directly or indirectly upon the conversion or exercise of other
securities which were issued as a dividend or other distribution with respect to
or in replacement of any shares referred to in (i) or (ii); provided, however,
that Registrable Shares shall not include any shares which have been (a)
disposed of pursuant to an effective registration statement under the Securities
Act, (b) sold or otherwise transferred in a transaction in which the rights
under the provisions of this Agreement have not been assigned, or (c) sold
pursuant to Rule 144. For purposes of this Agreement, a Person will be deemed
to be a holder of Registrable Shares whenever such Person has the then-existing
right to acquire such Registrable Shares (by conversion or otherwise), whether
or not such acquisition actually has been effected.
"Rule 144" means Rule 144 (including Rule 144(k)) of the Commission under
the Securities Act or any similar provision then in force under the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, as the same shall be in effect from time to time.
2. Piggyback Registration.
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2.1 Right to Piggyback. After the consummation of an IPO, whenever
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the Corporation proposes to register Common Stock under the Securities Act
(other than pursuant to a registration statement filed on Form S-8 or Form S-4,
or any successor forms, or otherwise filed in connection with a merger,
acquisition, exchange offer or other business combination transaction or an
offering of securities solely to the Corporation's existing security holders or
employees), whether for sale on its own account or pursuant to a demand for
registration by other holders of shares of Common Stock, and the registration
form to be used may be used for the registration of any Registrable Shares (a
"Piggyback Registration"), the Corporation will give prompt written notice to
all holders of the Registrable Shares of its intention to effect such a
registration and will include in such registration all Registrable Shares
(subject to, and in accordance with, the priorities set forth in Sections 2.2
and 2.3 below) with respect to which the Corporation has
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received written requests for inclusion within twenty (20) days after the
Corporation's notice. Notwithstanding the foregoing, if a Piggyback Registration
is not an underwritten registration, the Corporation shall not be required to
include any Registrable Shares held by any Person in such Piggyback Registration
if such Person, at the time of the filing of the registration statement for such
Piggyback Registration, would be permitted to sell all of the Registrable Shares
held by such Person, without registration, pursuant to Rule 144 or Rule 701
under the Securities Act.
2.2 Priority on Non-Demand Registrations. If a Piggyback
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Registration is an underwritten registration on behalf of the Corporation that
does not constitute a "demand" registration required pursuant to an agreement
with the Corporation, and the managing underwriters advise the Corporation in
writing that in their opinion the number of shares of Common Stock requested to
be included in such registration exceeds the number which can be marketed (a) at
a price per share reasonably related to the then-current market value per share
of the Common Stock, and (b) without materially and adversely affecting the
entire offering, the Corporation will include in such registration:
(i) first, the shares of Common Stock that the Corporation proposes to
sell;
(ii) second, any shares of Common Stock held by stockholders of the
Corporation requested to be included in such registration which, pursuant to the
terms of the agreements granting the registration rights applicable to such
shares (whether entered into prior to or after the date of this Agreement), are
entitled to priority in such registration over the Registrable Shares, and in
such relative priorities as they may be entitled; and
(iii) third, the Registrable Shares, and any other shares of Common
Stock held by stockholders of the Corporation which are not entitled to priority
over the Registrable Shares, requested to be included in such registration, pro
---
rata among the holders of such Registrable Shares and other shares on the basis
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of the number of shares which are owned by such holders and requested to be
included in such registration.
2.3 Priority on Demand Registrations. If a Piggyback Registration is
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an underwritten registration pursuant to a demand for registration by other
holders of shares of Common Stock and the managing underwriters advise the
Corporation in writing that in their opinion the number of shares of Common
Stock requested to be included in such registration exceeds the number which can
be marketed (a) at a price per share reasonably related to the then-current
market value per share of the Common Stock, and (b) without materially and
adversely affecting the entire offering, the Corporation will include in such
registration:
(i) first, the shares of Common Stock requested to be included therein by
the holders on behalf of whom such registration has been initially requested and
any securities that the Corporation proposes to sell, to the extent, and in such
relative priorities as, permitted in such "demand" registration;
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(ii) second, any other shares of Common Stock held by stockholders of the
Corporation requested to be included in such registration which, pursuant to the
terms of the agreements granting the registration rights applicable to such
shares (whether entered into prior to or after the date of this Agreement), are
entitled to priority in such registration over the Registrable Shares, and in
such relative priorities as they may be entitled; and
(iii) third, the Registrable Shares, and any other shares of Common Stock
held by stockholders of the Corporation which are not entitled to priority over
the Registrable Shares, requested to be included in such registration, pro rata
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among the holders of such Registrable Shares and other shares on the basis of
the number of shares which are owned by such holders and requested to be
included in such registration.
2.4 Right to Terminate Registration. The Corporation shall have the
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right to withdraw any registration initiated by it under this Section 2 prior to
the effectiveness of such registration whether or not any holder of its
securities has elected to include securities in such registration.
3. Registration Procedures. Whenever the holders of Registrable Shares
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have requested that any Registrable Shares be registered pursuant to this
Agreement, the Corporation will use its reasonable best efforts to effect the
registration and sale of such Registrable Shares and, pursuant thereto, the
Corporation will as expeditiously as reasonably possible:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Shares and use its reasonable best
efforts to cause such registration statement to become and remain effective for
the period of the distribution contemplated thereby, determined as hereinafter
provided;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement;
(c) furnish to each seller of Registrable Shares such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus(es) included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Shares owned
by such seller;
(d) notify each seller of such Registrable Shares, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, and, at the request of any such seller, the Corporation will prepare
a supplement or amendment to such
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prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading in light of the circumstances under which they were made (and
such sellers shall suspend the use of the prospectus until the requisite changes
thereto have been made);
(e) use its reasonable efforts to cause all such Registrable
Shares to be listed on each securities exchange or market on which the Common
Stock is then listed;
(f) use its reasonable efforts to cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities;
(g) provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Shares;
(i) make available for inspection by any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Corporation, and cause the Corporation's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) advise each seller of such Registrable Shares, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use all reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal if any such stop order shall be
issued (and, if such stop order shall be issued, such sellers shall suspend the
use of the prospectus until it shall be withdrawn);
(k) at the request of the managing underwriters in connection
with an underwritten offering, furnish on the date or dates provided for in the
underwriting agreement (i) an opinion of counsel, addressed to the underwriters,
covering such matters as such underwriters and sellers may reasonably request,
including such matters as are customarily furnished in connection with an
underwritten offering; and (ii) a letter or letters from the independent
certified public accountants of the Corporation addressed to the underwriters,
covering such matters as such underwriters may reasonably request, in which
letter(s) such accountants shall state, without limiting the generality of the
foregoing, that they are independent certified public accountants within the
meaning of the Securities Act and that in their opinion the financial statements
and
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other financial data of the Corporation included in the registration statement,
the prospectus(es), or any amendment or supplement thereto, comply in all
material respects with the applicable accounting requirements of the Securities
Act; and
(l) notwithstanding any provision of this Section 3 to the
contrary, the Corporation shall not be required to amend or supplement a
prospectus if (i) such amendment or supplement would require the Corporation to
disclose a material financing, acquisition or other transaction then being
pursued by the Corporation and the Corporation shall determine in good faith
that such disclosure is not in the best interests of the Corporation or would
interfere with such transaction or (ii) the Corporation shall determine in good
faith that there is a valid business purpose or reason for suspending the use of
such prospectus in accordance with Section 3(d) hereof instead of making such
amendment or supplement.
For purposes of Sections 3(a) and 3(b), the period of distribution of
Registrable Shares in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Shares
in any other registration shall be deemed to extend until the earlier of (i) the
sale of all Registrable Shares covered thereby and (ii) the end of the period of
distribution for the Corporation or the holders of its shares of Common Stock on
whose behalf the registration has initially been made.
4. Registration Expenses.
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4.1 Corporation's Expenses. All expenses incident to the
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Corporation's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses of
compliance with securities, listing fees, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Corporation and
all independent certified public accountants, underwriters (excluding discounts
and commissions) and other Persons retained by the Corporation (all such
expenses being herein called "Registration Expenses") shall be borne by the
Corporation.
4.2 Holder's Expenses. Notwithstanding anything to the contrary
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contained herein, each holder of Registrable Shares shall bear and pay all
underwriting discounts and commissions and transfer taxes applicable to the
Registrable Shares sold for such holder's account and all fees and disbursements
of counsel such holder retains in connection with the registration of
Registrable Shares.
5. Indemnification.
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5.1 By the Corporation. The Corporation agrees to indemnify, to the
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extent permitted by law, each holder of Registrable Shares, its managers,
officers and directors and each Person who controls such holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses (including without limitation, attorneys' fees) ("Liabilities")
caused by any untrue or alleged untrue statement of material fact contained in
any
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registration statement, prospectus or preliminary prospectus, or any amendment
thereof or supplement thereto, or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Corporation by such holder expressly for
use therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Corporation has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Corporation shall
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Registrable Shares. The payments required by this Section 5.1 will be made
periodically during the course of the investigation or defense, as and when
bills are received or expenses incurred.
5.2 By Each Holder. In connection with any registration statement in
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which a holder of Registrable Shares is participating, each such holder shall
furnish to the Corporation in writing such information and affidavits as the
Corporation reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify the
Corporation, its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any Liabilities
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus, or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided that the obligation to indemnify will be
several, not joint and several, among such holders of Registrable Shares, and
the liability of each such holder of Registrable Shares under this Section 5
shall be limited to the net amount received by such holder from the sale of
Registrable Shares pursuant to such registration statement.
5.3 Procedure. Any Person entitled to indemnification hereunder
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shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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5.4 Contribution. To the extent any indemnification by an
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indemnifying party provided for in this Section 5 is prohibited or limited by
law, the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such Liabilities, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
5.5 Survival. The indemnification and contribution provided for
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under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities.
6. Compliance with Rule 144. In the event that the Corporation (a)
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registers a class of securities under Section 12 of the Exchange Act, (b) issues
an offering circular meeting the requirements of Regulation A under the
Securities Act, or (c) commences to file reports under Section 13 or 15(d) of
the Exchange Act, then at the request of any holder who proposes to sell
securities in compliance with Rule 144 of the Commission, the Corporation will
(i) forthwith furnish to such holder, upon request, a written statement of
compliance with the filing requirements of the Commission as set forth in Rule
144, as such rule may be amended from time to time, and (ii) use its reasonable
best efforts to make available to the public and such holders such information
as will enable the holders to make sales pursuant to Rule 144.
7. Participation in Underwritten Registrations. No Person may
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participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its shares of Common Stock on the basis provided in
any underwriting arrangements approved by the Corporation or any other Person or
Persons entitled to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
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8. Holdback Agreements. Each holder of Registrable Shares agrees not to
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effect any public sale or distribution of equity securities of the Corporation,
or any securities convertible into or exchangeable or exercisable for such
securities, (i) during the seven (7) days prior to and during the one hundred
and eighty (180) days following the effective date of an IPO (except as part of
such underwritten registration), or (ii) during the seven (7) days prior to and
during the ninety (90) days following the effective date of an underwritten
Public Offering, other than an IPO (except as part of such underwritten
registration), in each case unless the underwriters managing the registered
Public Offering otherwise agree. Each holder of Registrable Shares agrees to
enter into customary lock-up agreements consistent with the foregoing if
requested by any underwriter of any such Public Offering.
9. Miscellaneous.
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9.1 Other Registration Rights. The Corporation may hereafter grant
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to any Person or Persons the right to request the Corporation to register any
equity securities of the Corporation, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of the Registrable Shares.
9.2 Assignment of Registration Rights. The registration rights of
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any Purchaser under this Agreement with respect to any Registrable Shares may be
assigned to any Person who acquires such Registrable Shares; provided that (a)
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the assigning Purchaser shall give the Corporation written notice at or prior to
the time of such assignment stating the name and address of the assignee and
identifying the shares with respect to which the rights under this Agreement are
being assigned; (b) such assignee shall agree in writing, in form and substance
reasonably satisfactory to the Corporation, to be bound as a Purchaser by the
provisions of this Agreement; and (c) immediately following such assignment the
further disposition of such securities by such assignee is restricted under the
Securities Act.
9.3 Successors and Assigns. Except as otherwise expressly provided
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herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective permitted successors and assigns of the parties hereto, whether so
expressed or not.
9.4 Severability. Whenever possible, each provision of this
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Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
9.5 Descriptive Headings. The descriptive headings of this Agreement
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are inserted for convenience of reference only and do not constitute a part of,
and shall not be utilized in interpreting, this Agreement.
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9.6 Notices. Any notices required or permitted to be sent hereunder
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shall be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service to the following addresses,
or such other address as any party hereto designates by written notice to the
Corporation, and shall be deemed to have been given upon delivery, if delivered
personally, three days after mailing, if mailed, or one business day after
delivery to the courier, if delivered by overnight courier service:
If to the Corporation, to:
divine interVentures, inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Executive Vice President
and Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
If to the Purchasers or other holders of Registrable Shares, to the
addresses set forth in the stock records of the Corporation,
9.7 Governing Law. All questions concerning the construction,
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validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement, shall be governed by the laws of the
State of Illinois applicable to contracts made and wholly to be performed in
that state.
9.8 Final Agreement. This Agreement, constitutes the complete and
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final agreement of the parties concerning the matters referred to herein and
supersedes all prior agreements and understandings.
9.9 Execution. A Person who has executed a Subscription Agreement
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and signs a signature page hereto shall become a party hereto upon the issuance
to such Person of Preferred Shares for which such Person has subscribed. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and such counterparts
together shall constitute one instrument.
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9.10 No Strict Construction. The language used in this Agreement will
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be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be used against any
party.
* * * * *
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IN WITNESS WHEREOF, the corporation has executed this Agreement on the date
first set forth above.
divine interVentures, inc.
By: /s/ Xxxxx X. Xxxxxxxx
____________________________________________________
Its: Secretary
__________________________________________________
divine interVentures, inc.
COUNTERPART SIGNATURE PAGE
TO
FOUNDERS REGISTRATION RIGHTS AGREEMENT
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The undersigned hereby executes the Founders Shares Registration Rights
Agreement by and among divine interVentures, inc. (the "Corporation") and
certain persons who own issued and outstanding shares of Common Stock of the
Corporation and hereby authorizes this signature page to be attached as a
counterpart of such document executed by the Corporation. The undersigned
hereby agrees to be bound by, and shall be entitled to the rights and benefits
of, the terms and provisions of the Founders Shares Registration Rights
Agreement.
Dated: August __, 1999
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(Signature)
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(Print Name of Purchaser)
