EXHIBIT 99.2
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (as amended, modified, supplemented or restated
in accordance with its terms from time to time, this "Agreement"), dated as of
October 31, 2001, is among divine, inc., a Delaware corporation ("divine"),
RoweCom Inc., a Delaware corporation ("RoweCom"), the Persons listed on Exhibit
A hereto attached (the "Mandatory Participants"), the Persons listed on Exhibit
B hereto attached (the "Optional Participants"), and the Persons listed on
Exhibit C hereto attached (the "Warrantholders"). Capitalized terms used but not
otherwise immediately defined shall have the meanings set forth in Article VI.
RECITALS
A. Pursuant to an Agreement and Plan of Merger and Reorganization,
dated as of July 6, 2001, between divine, Knowledge Resources Acquisition Corp.,
a Delaware corporation and wholly-owned subsidiary of divine (the "Merger Sub"),
and RoweCom (the "Merger Agreement"), Merger Sub will merge with and into
RoweCom (the "Merger") upon satisfaction or waiver of the closing conditions set
forth therein, as a result of which RoweCom shall become a wholly-owned
subsidiary of divine.
B. Each Mandatory Participant currently holds (a) a Secured Promissory
Note of RoweCom dated May 26, 2000 (an "Old Note") in the principal amount set
forth next to such Mandatory Participant's name on Exhibit A, and (b) Stock
Purchase Warrants, dated May 26, 2000 and/or October 24, 2000 ("Old Warrants"),
to purchase, in the aggregate, the number of shares of RoweCom Common Stock set
forth next to such Mandatory Participant's name on Exhibit A.
C. Each Optional Participant currently holds (a) an Old Note in the
principal amount set forth next to such Optional Participant's name on Exhibit B
and (b) Old Warrants to purchase, in the aggregate, the number of shares of
RoweCom Common Stock set forth next to such Optional Participant's name on
Exhibit B.
D. Each Warrantholder currently holds Old Warrants to purchase, in the
aggregate, the number of shares of RoweCom Common Stock set forth next to such
Warrantholder's name on Exhibit C.
E. It is a condition to divine and Merger Sub's obligation to
consummate the Merger that (a) the Mandatory Participants exchange the Old Notes
for new promissory notes of RoweCom in the form attached hereto as Exhibit D
(the "New Notes") and (b) the Mandatory Participants, the Optional Participants
and the Warrantholders (collectively the "Holders") exchange the Old Warrants
for new stock purchase warrants to purchase shares of divine's Class A Common
Stock in the form attached hereto as Exhibit E (the "New Warrants").
F. The Holders desire to enter into this Agreement in order to induce
divine and Merger Sub to consummate the Merger.
AGREEMENTS
In consideration of the recitals and the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
EXCHANGE OF THE NOTES AND WARRANTS
1.1. Exchange with Mandatory Participants. At the closing of the Merger
(the "Merger Closing"), each Mandatory Participant shall exchange the Old Note
and Old Warrants held by him or it for (a) a New Note in the principal amount
set forth next to such Mandatory Participant's name on Exhibit A, (b) a New
Warrant to purchase the number of shares of Class A Common Stock of divine set
forth next to such Mandatory Participant's name on Exhibit A at an exercise per
share equal to $0.52 (the "Incentive Exercise Price"), and (c) a stock purchase
warrant, in the form attached hereto as Exhibit F ("Incentive Warrants"), to
purchase the number of shares of Class A Common Stock of divine set forth next
to such Mandatory Participant's name on Exhibit A at an exercise price per share
equal to the Incentive Exercise Price.
1.2. Exchange With Electing Optional Participants. At the Merger
Closing, each Optional Participant that elects to exchange the Old Note held by
him or it for a New Note (an "Electing Optional Participant") shall exchange the
Old Note and Old Warrants held by him or it for (a) a New Note in the principal
amount set forth next to such Electing Optional Participant's name on Exhibit B,
(b) a New Warrant to purchase the number of shares of Class A Common Stock of
divine set forth next to such Electing Optional Participant's name on Exhibit B
at an exercise price per share equal to the Incentive Exercise Price, and (c) an
Incentive Warrant to purchase the number of shares of Class A Common Stock of
divine set forth next to such Electing Optional Participant's name on Exhibit B
at an exercise price per share equal to the Incentive Exercise Price.
1.3. Exchange with Non-Electing Optional Participants. At the Merger
Closing, each Optional Participant that does not elect to exchange the Old Note
held by him or it for a New Note (a "Non-Electing Optional Participant") shall
exchange the Old Warrants held by him or it for a New Warrant to purchase the
number of shares of Class A Common Stock of divine set forth next to such
Non-Electing Optional Participant's name on Exhibit B at an exercise price per
share equal to $0.52.
1.4. Exchange with Warrantholders. At the Merger Closing, each
Warrantholder shall exchange the Old Warrants held by him or it for a New
Warrant to purchase the number of shares of Class A Common Stock of divine set
forth next to such Warrantholder's name on Exhibit C at an exercise price per
share equal to $0.52.
1.5. Closing Deliveries.
(a) At the Merger Closing, in exchange for the Old Notes and the
Old Warrants held by the Mandatory Participants and the Electing
Optional Participants, which shall be delivered to RoweCom for
cancellation:
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(i) RoweCom will deliver to each Mandatory Participant and Electing
Optional Participant a New Note, executed by RoweCom, in the principal amount
set forth next to such Mandatory Participant's or Electing Optional
Participant's name on Exhibit A or Exhibit B, respectively, and pay to each
Mandatory Participant and Electing Optional Participant all accrued and unpaid
interest on the Old Note held by such Mandatory Participant or Electing Optional
Participant, as the case may be, through the date which the Merger Closing
occurs.
(ii) divine will deliver to each Mandatory Participant and Electing
Optional Participant (A) a New Warrant, executed by divine, to purchase the
number of shares of Class A Common Stock of divine set forth next to such
Mandatory Participant's or Electing Optional participant's name on Exhibit A or
Exhibit B, respectively, at an exercise price per share equal to the Incentive
Exercise Price, and (B) an Inventive Warrant, executed by divine, to purchase
the number of shares of Class A Common Stock of divine set forth next to such
Mandatory Participant's or Electing Optional Participant's name on Exhibit A or
Exhibit B, respectively, at an exercise price per share equal to the Incentive
Exercise Price.
(iii) RoweCom will deliver to Zero Stage Capital VI, L.P., as agent for
the Mandatory Participants and the Electing Optional Participants (the "Agent"),
an irrevocable letter of credit issued by LaSalle National Bank, N.A., in the
form attached hereto as Exhibit G (the "LOC").
(iv) divine will deliver to the Agent a guaranty, executed by divine,
in the form attached hereto as Exhibit H (the "Guaranty").
(b) At the Merger Closing, in exchange for the Old Notes and Old
Warrants held by the Non-Electing Optional Participants which shall be
delivered to RoweCom for cancellation:
(i) RoweCom will pay to each Non-Electing Optional Participant the
outstanding principal amount of the Old Note held by such Non-Electing Optional
Participant and all accrued and unpaid interest on such Old Note through the
date on which the Merger Closing occurs.
(ii) divine will deliver to each Non-Electing Optional Participant a
New Warrant, executed by divine, to purchase the number of shares of Class A
Common Stock of divine set forth next to such Non-Electing Optional
Participant's name on Exhibit B at an exercise price per share equal to $0.52.
(iii) At the Merger Closing, in exchange for the Old Warrants held by
the Warrantholder which shall be delivered to RoweCom for cancellation, divine
will deliver to each Warrantholder a New Warrant, executed by divine, to
purchase the number of shares of Class A Common Stock of divine set forth next
to such Warrantholder's name on Exhibit C at an exercise price per share equal
to $0.52.
(c) At the Merger Closing, each Holder shall deliver to RoweCom
the Old Notes and/or the Old Warrants, as applicable, together with
any instruments of assignment requested by divine or RoweCom necessary
to transfer the Old Notes and/or Old Warrants, as applicable, to
RoweCom, and take all actions necessary to release and terminate any
security interests granted to the Holders or any of them, to secure
the obligations of RoweCom or any of its subsidiaries under the Old
Notes including but not
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limited to the execution and delivery of such UCC-3 termination
statements, in each case as divine or RoweCom may request.
1.6. Registration of Shares.
(a) Within sixty (60) days following the Merger Closing, divine
will file with the Commission a registration statement (the
"Registration Statement") on Form S-3 or other appropriate form for
the purpose of registering under the Securities Act the public resale
of all of the Registrable Shares by the Holders in a non-underwritten
offering. For purposes of this Agreement, "Registrable Shares" means
shares of Class A Common Stock of divine issuable upon conversion of
the New Notes or exercise of the New Warrants or the Incentive
Warrants. Thereafter, divine will use its reasonable best efforts to
cause the Registration Statement to become effective as promptly as
practicable and (subject to the rest of this Section 1.6) to remain
effective with respect to a Registrable Share until such time at which
such Registrable Shares: (i) has been resold pursuant to the
Registration Statement or otherwise or (ii) is eligible for resale
pursuant to Rule 144 under the Securities Act without any volume
restrictions. The registration expenses (exclusive of underwriting or
broker-dealer discounts and commissions of the Holders and any
transfer taxes relating to Registrable Shares sold by such Holder) and
the reasonable legal fees and expenses of one counsel for the Holders
with respect to the Registration Statement shall be borne by divine.
(b) Notwithstanding the foregoing or any other provision of the
New Notes, New Warrants, or the Incentive Warrants, divine, from time
to time, may suspend the effectiveness of the Registration Statement
and/or the rights of the Holder to sell Registrable Shares pursuant to
the Registration Statement if divine determines in good faith the
Registration Statement or prospectus included therein (the
"Prospectus") should be amended (including amendments to be made by
filing with the SEC any document(s) that will be incorporated into the
Registration Statement and Prospectus) or supplemented or that such
effectiveness or sales is or are reasonably likely (i) to adversely
affect any material acquisition, financing, or other transaction then
contemplated by divine, or (ii) to involve disclosure obligations
which divine has a bona fide business purpose for keeping
confidential; provided, that divine may not exercise this suspension
right for more than sixty (60) days in any six-month period. If divine
exercises this suspension right, no Holder will sell any Registrable
Shares pursuant to the Registration Statement until divine advises
that the relevant transaction has been abandoned or disclosed and/or
that Registration Statement or Prospectus has been appropriately
amended or supplemented, divine will use its reasonable best efforts
to cause any amendment or supplement to the Registration Statement or
Prospectus to be made as promptly as practicable (but in any event
within sixty (60) days) after the date on which it exercises such
suspension right. For purposes of this paragraph, "Holder" includes
any subsequent transferee of Registrable Shares.
(c) It shall be a condition precedent to the obligation of divine
to include any Registrable Shares of a Holder in the Registration
Statement or Prospectus pursuant to this Section 1.6 that such Holder
shall furnish to divine such information regarding itself, the
securities of divine, including such Registrable Shares, beneficially
owned by it, and
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the intended method of disposition of such Registrable Shares as shall
be reasonably requested by divine to effect the registration of such
Registrable Shares. Each Holder that has included Registrable Shares
in a Registration Statement shall thereafter furnish promptly to
divine all information required to make the information previously
furnished to divine by such Holder not materially misleading and shall
promptly notify divine of the sale of such Holder's Registrable Shares
pursuant to the Registration Statement, including the number of
Registrable Shares so sold.
(d) Indemnification. In the event any Registrable Shares are
included in a Registration Statement in accordance with Section
1.6(a), then:
(i) By divine. divine agrees to indemnify and hold harmless each
Holder and each person, if any, who controls any Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), from and against all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by such Holder or controlling person in
connection with defending any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which such
Holder's Registrable Shares were registered under the Securities Act, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any related Prospectus (as amended or supplemented if divine shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
were caused by any such untrue statement or omission or alleged untrue statement
or omission based upon written information furnished to divine by, or on behalf
of, such Holder for use therein; provided, however, that the foregoing indemnity
with respect to any Prospectus shall not inure to the benefit of any Holder from
whom the person asserting any such losses, claims, damages or liabilities
acquired Registrable Shares, or any person controlling such Holder, if, after
divine has furnished such Holder with a sufficient number of copies of the final
Prospectus (as then amended or supplemented if divine shall have furnished any
amendments or supplements thereto) ), a copy of such final Prospectus was not
sent by, or delivered on behalf of, such Holder to such person at or prior to
the written confirmation of the sale of the Registrable Shares to such person
and the final Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(ii) By Holders. Each Holder agrees, severally and not jointly, to
indemnify and hold harmless divine and each of its directors, each of its
officers who sign the applicable Registration Statement and each person if any,
who controls divine within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from divine to the Holders pursuant to Section 1.6(d)(i), but only
with respect to an untrue statement or alleged untrue statement or an omission
or alleged omission based upon written information furnished to divine in
writing by, or on behalf of, such Holder for use in the applicable Registration
Statement (or any amendment hereto) or any related Prospectus (or any amendments
or supplement thereto). Notwithstanding the foregoing, the obligation of any
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Holder pursuant to this section 1.6(d)(ii) shall be limited to the net amount of
proceeds received by such Holder from the sale of Registrable Shares pursuant to
such Registration Statement.
(iii) Procedures. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 1.6(d)(i) or 1.6(d)(ii)
above, such person (the "Indemnified Party") shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and, unless in such Indemnified Party's and its counsel's reasonable judgment a
conflict of interest between such Indemnified Party and Indemnifying Party
exists with respect to such proceeding, shall permit the Indemnifying Party to
assume the defense of such proceeding with counsel reasonably satisfactory to
the Indemnified Party and the Indemnifying Party shall pay the fees and
disbursements of such counsel related to such proceeding. It is understood that
if an Indemnifying Party does not assume the defense of a proceeding, such
Indemnifying Party shall not, in connection with such proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for (i) divine,
its directors, its officers who signed the applicable Registration Statement and
each person, if any, who controls divine or (ii) all Holders and all persons, if
any, who control any Holders, as the case may be, and that all such fees and
expenses shall be reimbursed as they are incurred, provided that such
Indemnifying Party shall be liable for the expenses of more than one counsel if,
in an Indemnified Party's and its counsel's reasonable judgment a conflict of
interest between such Indemnified Party and the other Indemnified Parties exists
with respect to such proceeding. In such case involving Holders and such persons
who control Holders, such firm shall be designated in writing by the Holders of
a majority of the Registrable Shares involved in such case. The Indemnified
Party shall cooperate with the Indemnifying Party and shall furnish the
Indemnifying Party all information available to the Indemnified Party which
relate to such action or claim that the Indemnifying Party may reasonably
request. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which such Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
(iv) Contribution. If the indemnification provided for in Section
1.6(d)(i) or 1.6(d)(ii) is unavailable to an Indemnified Party, then the
Indemnifying Party under such Section, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and of the Indemnified Party, on the other
hand, in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as other relevant equitable
considerations. The relative fault of divine and the Holders shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by divine or by the Holders and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. divine and each Holder agree
that it would not be just or equitable if contribution pursuant this Section
1.6(d)(iv) were determined
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by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the foregoing paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the foregoing paragraph shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with defending any such action or claim.
Notwithstanding the provisions of this Section 1.6(d)(iv), (i) in no case shall
any one Indemnified Party be liable or responsible for any amount in excess of
the net proceeds received by such Indemnified Party from the offering of
Registrable Shares and (ii) divine shall be liable and responsible for any
amount in excess of such proceeds; provided, however, that 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. The remedies provided for in
Section 1.6 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any Indemnified Party at law or in equity. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 1.6(d)(iv), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve such party from any other
obligation it or they may have thereunder or otherwise under this Section
1.6(d)(iv). No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed.
1.7. Waivers. The Holders hereby irrevocably waive any and all of the
following:
(a) the requirement in Section 6 of the Old Warrants which
required RoweCom to give the Holders notice of any merger or sale of
RoweCom;
(b) the obligation in Section 13 of the Old Warrants to maintain
the effectiveness of a Registration Statement with respect to shares
of Common Stock of RoweCom issuable upon exercise of the Old Warrants
and any penalties and other remedies resulting from the failure to
maintain such effectiveness;
(c) any right to accelerate the maturity of the Old Notes held by
the Holders as a result of or in connection with the Merger; and
(d) any defaults or, events of default under the Old Notes or any
agreements entered into in connection therewith that exist at any time
prior to the Merger Closing.
1.8. Election by Optional Participants. Any Optional Participant may
elect to exchange the Old Note, in whole but not in part, held by him or it for
a New Note in the principal amount set forth next to such Optional Participant's
name on Exhibit B by delivering to RoweCom and divine written notice, in the
form attached hereto as Exhibit I, of such election prior to the Merger Closing.
If any Optional Participant does not give RoweCom and divine written notice of
such election prior to the Merger Closing, such Optional Participant shall be
deemed to have not made such election and shall be treated as a Non-Electing
Participant for purposes of this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DIVINE
divine hereby represents and warrants to the Holders, as of the date
hereof and as of the Merger Closing, as follows:
2.1. Organization and Standing. divine is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
2.2. Corporate Power. divine has all requisite corporate power and
authority to enter into this Agreement and the Guaranty, to issue the New
Warrants, the Incentive Warrants and the LOC and to carry out and perform its
obligations under the terms of this Agreement, the New Warrants, the Incentive
Warrants and the Guaranty.
2.3. Authorization. All corporate action on the part of divine
necessary for the authorization, execution, delivery and performance by divine
of this Agreement and the Guaranty and the consummation of the transactions
contemplated hereby and thereby, and for the authorization, issuance and
delivery of the New Warrants and the Incentive Warrants has been taken. This
Agreement is the legal, valid and binding obligation of divine, enforceable
against divine in accordance with its terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROWECOM
RoweCom hereby represents and warrants to the Holders, as of the date
hereof and as of the Merger Closing, as follows:
3.1. Organization and Standing. RoweCom is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. Corporate Power. RoweCom has all requisite corporate power and
authority to enter into this Agreement, to issue the New Notes and to carry out
and perform its obligations under the terms of this Agreement and the New Notes.
3.3. Authorization. All corporate action on the part of RoweCom
necessary for the authorization, execution, delivery and performance by RoweCom
of this Agreement and the consummation of the transactions contemplated hereby,
and for the authorization, issuance and delivery of the New Notes has been
taken. This Agreement is the legal, valid and binding obligation of RoweCom,
enforceable against divine in accordance with its terms.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Each Holder represents and warrants to divine and RoweCom, as of the
date hereof and as of the Merger Closing, as follows:
4.1. Organization and Standing. Each of the Holders which is an entity
is duly organized, validly existing and in good standing under the laws of the
state of its organization.
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4.2. Authorization; Power. Each of the Holders has all requisite power
to enter into this Agreement, and to carry out and perform its obligations under
the terms of this Agreement. All action on the part of the Holders necessary for
the authorization, execution, delivery and performance by the Holders of this
Agreement, and the consummation of the transactions contemplated hereby, has
been taken. This Agreement is the legal, valid and binding obligation of the
Holders, enforceable against the Holders in accordance with its terms.
4.3. Purchase for Investment. Each of the Holders will acquire the New
Notes, the New Warrants and the Incentive Warrants acquired by him or it
hereunder for its own account for investment and not with a view to distributing
all or any part thereof in any transaction which would constitute a
"distribution" within the meaning of the Securities Act. The Holders acknowledge
that the New Notes, the New Warrants and the Incentive Warrants have not been
registered under the Securities Act, divine is under no obligation to file a
registration statement with the Commission with respect to the New Notes, the
New Warrants and the Incentive Warrants, and as such these securities may be
resold without registration under the Securities Act only in certain limited
circumstances described therein.
4.4. Investor Qualifications. Each of the Holders (a) has such
knowledge and experience in financial and business matters that he or it is
capable of evaluating the merits and risks of his or its investment in the
securities acquired by him or it hereunder, including but not limited to the
shares of divine Class A Common Stock issuable upon exercise of New Warrants and
Incentive Warrants and/or conversion of New Notes; (b) is able to bear the
complete loss of his or its investment in the securities acquired by him or it
hereunder, including, but not limited to the shares of divine Class A Common
Stock upon exercise of New Warrants and Incentive Warrants and/or conversion of
New Notes and (c) has had the opportunity to ask questions of, and receive
answers from, divine, RoweCom and their management concerning the terms and
conditions of the Merger and the securities acquired hereunder and the business
and prospects of RoweCom and divine, respectively, and to obtain any additional
information, to the extent available without unreasonable effort and without a
breach of confidentiality obligations; (d) is an accredited investor within the
meaning of Rule 501 of the Securities Act; and (e) acknowledges that in
connection with the decision to (1), if such Holder is a Mandatory Participant,
enter into this Agreement and participate in the Exchange or (2), if such Holder
is an Optional Participant, be an Electing Optional Participant or a
Non-Electing Participant, that such Holder has (i) received and had the
opportunity to review a copy of the Proxy Statement/Prospectus dated September
17, 2001 issued by divine and RoweCom to RoweCom's stockholders in connection
with the Merger, (ii) had the opportunity to review copies of (1) divine's
Annual Report on Form 10-K for the year ended December 31, 2000, (2) divine's
quarterly reports on Forms 10-Q for the quarterly periods ended March 30, 2001
and June 30, 2001, respectively, and (3) such forms, reports and documents of
divine, including any Form 8-k filed since December 31, 2000, as are available
through the Electronic Data Gathering and Retrieval System of the Commission and
as such Holder believed appropriate to review in connection with his, her or its
decision hereunder.
4.5. Ownership. Each Holder owns, beneficially and of record, an Old
Note in the principal amount set forth next to such Holder's name on Exhibit A
or Exhibit B, as the case may be, and Old Warrants to purchase, in the
aggregate, the number of shares of RoweCom Common Stock set forth next to such
Holder's name on Exhibit A, Exhibit B or Exhibit C, as the case may
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be, and such Holder has not sold, transferred, assigned, conveyed or pledged
such Old Note or Old Warrants or any rights therein.
ARTICLE V
COVENANTS
5.1. Legend.
(a) Until (i) the New Notes, the New Warrants or the Incentive
Warrants are effectively registered under the Securities Act and
applicable state securities laws or (ii) the Holder of such New Notes,
New Warrants or Incentive Warrants delivers to divine a written
opinion of counsel to such Holder to the effect that such legend is no
longer necessary under the Securities Act and applicable state
securities laws, divine will cause each New Note, New Warrant and
Incentive Warrant to be stamped or otherwise imprinted with a legend
to substantially the following effect:
"THIS [WARRANT/NOTE] HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO
TRANSFER, SALE, OR OTHER DISPOSITION OF THIS [WARRANT/NOTE] MAY BE
MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
PURSUANT TO THE SECURITIES ACT OR UNLESS THE HOLDER HEREOF SHALL HAVE
DELIVERED TO DIVINE A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE ACCEPTABLE TO DIVINE, THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE FOR SUCH TRANSFER, SALE OR OTHER
DISPOSITION."
(b) Until (i) the shares of divine Class A common stock issuable
upon conversion or exercise of the New Notes, the New Warrants or the
Incentive Warrants are effectively registered under the Securities Act
and applicable state securities laws or (ii) the Holder of the shares
of divine Class A common stock issuable upon conversion or exercise of
the New Notes, New Warrants or Incentive Warrants delivers to divine a
written opinion of counsel to such Holder to the effect that such
legend is no longer necessary under the Securities Act and applicable
state securities laws, divine will cause each certificate representing
the shares of divine Class A common stock issuable upon exercise or
conversion of New Note, New Warrant or Incentive Warrant to be stamped
or otherwise imprinted with a legend to substantially the following
effect:
"THESE SHARES OF DIVINE CLASS A COMMON STOCK HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER DISPOSITION OF
THESE SHARES OF DIVINE CLASS A COMMON STOCK MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT TO THE
SECURITIES ACT OR UNLESS THE HOLDER HEREOF SHALL HAVE DELIVERED TO
DIVINE A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
ACCEPTABLE TO DIVINE,
10
THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE FOR SUCH
TRANSFER, SALE OR OTHER DISPOSITION."
5.2. Cash Distributions. Prior to the repayment of the New Notes,
divine shall not make any cash distributions on its capital stock without the
prior written consent of Holders holding at least two-thirds (2/3rds) of the
aggregate principal amount of the New Notes then outstanding.
ARTICLE VI
DEFINITIONS
6.1. Definitions. In addition to the capitalized terms defined
elsewhere in this Agreement, the following capitalized terms shall have the
following meanings when used in this Agreement:
"Commission" means the United States Securities and Exchange
Commission.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or a
governmental entity or any department, agency or political subdivision
thereof.
"Securities Act" means the Securities Act of 1933, as amended.
6.2. Rules of Construction. The following provisions shall be applied
wherever appropriate herein:
(a) "herein," "hereby," "hereunder," "hereof" and other
equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such
word is used;
(b) all definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the
plural;
(c) wherever used herein, any pronoun or pronouns shall be deemed
to include both the singular and plural and to cover all genders;
(d) neither this Agreement nor any other agreement, document or
instrument referred to herein or executed and delivered in connection
herewith shall be construed against either party as the principal
draftsperson hereof or thereof;
(e) all references or citations in this Agreement to statutes or
regulations or statutory or regulatory provisions shall generally be
considered citations to such statutes, regulations or provisions as in
effect on the date hereof, except that when the context otherwise
requires, such references shall be considered citations to such
statutes, regulations or provisions as in effect from time to time,
including any successor statutes,
11
regulations or provisions directly or indirectly superseding such
statutes, regulations or provisions;
(f) any references herein to a particular Section, Article,
Exhibit or Schedule means a Section or Article of, or an Exhibit or
Schedule to, this Agreement unless another agreement is specified; and
(g) the Exhibits and Schedules attached hereto are incorporated
herein by reference and shall be considered part of this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1. Legal Fees. Each of the parties to this Agreement shall bear its
own legal fees and other expenses with respect to this Agreement and the
transactions contemplated hereby; provided, however that divine shall reimburse
the Holders for the reasonable legal fees and disbursements of Seyfarth Xxxx,
counsel to Zero Stage Capital VI, L.P., which will not exceed $10,000 in the
aggregate.
7.2. Consent to Amendments; Waivers. Any of the provisions of this
Agreement or the New Notes may be amended or waived with the written consent of
divine, RoweCom and the Holders of two-thirds (2/3) of the outstanding principal
balance of the New Notes. Any of the provisions of the New Warrants may be
amended or waived with the written consent of divine, RoweCom and the Holders of
two-thirds (2/3) of shares of the Class A Common Stock then issuable upon
exercise of the New Warrants and the Incentive Warrants.
7.3. Representations and Warranties. All representations and
warranties contained herein will survive the execution and delivery of this
Agreement and any investigation made at any time by or on behalf of any of the
parties hereto.
7.4. Successors and Assigns. Except as otherwise expressly provided
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 successors and permitted assigns of the parties hereto, whether so
expressed or not. If any permitted transferee of any Holder shall acquire New
Warrants, Incentive Warrants, New Notes or Registrable Shares, whether by
operation of law or otherwise, such securities shall be held subject to the
terms of this Agreement.
7.5. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of
and shall not be utilized in interpreting this Agreement.
7.6. Notices. Any notices required or permitted to be sent hereunder
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, and
shall be deemed to have been given upon delivery, if delivered personally, five
(5) days after mailing, if mailed, or one (1) business day after delivery to the
courier, if delivered by overnight courier service:
12
If to divine, to:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to the Holders, then to the address listed on Exhibit A or Exhibit
B hereto.
7.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
7.8. Execution. 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. This
Agreement shall be binding on the Mandatory Participants and the Optional
Participants upon the execution of this Agreement by all of the Mandatory
Participants and the Optional Participants and shall only be binding, upon
execution, on those Warrantholder who execute this Agreement.
7.9. Entire Agreement. This Agreement supersedes all prior agreements
between the parties hereto with respect to its subject matter and constitutes
(along with the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter.
7.10. Reproduction of Documents. This Agreement and all documents
relating hereto, including, but not limited to, (i) consents, waivers,
amendments and modifications which may hereafter be executed and (ii)
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
7.11. Termination. This Agreement, and all rights and obligations
hereunder shall terminate and be void and of no effect in the event the Merger
Agreement is terminated at any time prior to the consummation of the Merger.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
13
The parties hereto have executed this Exchange Agreement as of the
date first set forth above.
DIVINE, INC.
/s/ Xxxx Xxxxxxxx
------------------------------------------
By: Xxxx Xxxxxxxx
--------------------------------------
Its: Senior Vice President, Secretary and
General Counsel
--------------------------------------
ROWECOM INC.
/s/ Xxxxxxx X. Xxxx
------------------------------------------
By: Xxxxxxx X. Xxxx
--------------------------------------
Its: CEO and Chairman
--------------------------------------
THE MANDATORY PARTICIPANTS:
ZERO STAGE CAPITAL VI, L.P.
By: ZERO STAGE CAPITAL ASSOCIATES VI, LLC
Its: General Partner
/s/ Xxxxxxx Xxxx
------------------------------------------
By: Xxxxxxx Xxxx
--------------------------------------
Its: Managing Member
--------------------------------------
WORKING VENTURE CANADIAN FUND, INC.
/s/ X. Xxxxxxxx
------------------------------------------
By: Xxx Xxxxxxxx
--------------------------------------
Its: Senior Vice President, Investments
--------------------------------------
/s/ Xxxxxxx X. Xxxx
------------------------------------------
Xx. Xxxxxxx X. Xxxx, individually
/s/ Xxxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxxx Xxxxxxx, individually
THE OPTIONAL PARTICIPANTS:
XXXXXXX XXXXXXX TRUST
/s/ Xxxxxxx Xxxxxxx Trust
------------------------------------------
By: Xxxxxxxx Xxxxxxx
--------------------------------------
Its: Trustee
--------------------------------------
/s/ Xxxxxx Xxxxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxxxx, individually
/s/ Brizio Xxxxxx
------------------------------------------
Brizio Xxxxxx, individually
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx, individually
/s/ Xxxx Xxxxxxx
------------------------------------------
Xxxx Xxxxxxx, individually
/s/ Xxxxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxxxx Xxxxxxx, individually
/s/ Xxxx Xxxxxxx
------------------------------------------
Xxxx Xxxxxxx, individually
WARRANTHOLDERS:
------------------------------------------
Xxxxxx Xxxxxx, individually
/s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx, individually
/s/ C. Xxxxxxxx Xxxxx
------------------------------------------
Xxxx Xxxxx, individually
EXHIBIT A
Number of Number of Number of Number of
Shares of Shares of shares of shares of
RoweCom RoweCom divine Class A divine Class A
Common Stock Common Stock Common Stock Common Stock
purchasable purchasable purchasable purchasable
Principal under Old under Old under New Warrant under
Name and address of Mandatory Amount Warrant (ISSUED Warrant (ISSUED (TO BE ISSUED Incentive
Participant of Old Note MAY 26, 2000) OCTOBER 24, 2000) OCTOBER __, 2001) Warrant
-----------------------------------------------------------------------------------------------------------------------------------
Zero Stage Capital VI, L.P. $2,350,000 235,000 150,384 289,038 903,846
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxxxxx $1,350,000 135,000 102,390* 178,043* 519,231
-----------------------------------------------------------------------------------------------------------------------------------
Working Ventures Canadian Fund, Inc. $1,000,000 100,000 63,993 122,995 384,615
-----------------------------------------------------------------------------------------------------------------------------------
Dr. Xxxxxxx Xxxx $1,000,000 100,000 63,993 122,995 384,615
-----------------------------------------------------------------------------------------------------------------------------------
* The parties agree that the Old Warrant issued to Xxxxxxxx Xxxxxxx on October
24, 2000 entitled him to purchase 86,391 shares of RoweCom Common Stock, not
102,390 shares. Consequently, the New Warrant issued to Xx. Xxxxxxx will entitle
him to purchase 166,044 shares of divine Class A Common Stock, not 178,043
shares.
EXHIBIT B
Number of
shares of
divine Class A
Common Stock
Number of Number of Number of purchasable
Shares of Shares of shares of under Incentive
RoweCom RoweCom divine Class A Warrant
Common Stock Common Stock Common Stock Optional
purchasable purchasable purchasable Participant
Principal under Old under Old under New Warrant is an Electing
Name and address of Mandatory Amount Warrant (ISSUED Warrant (ISSUED (TO BE ISSUED Optional
Participant of Old Note MAY 26, 2000) OCTOBER 24, 2000) OCTOBER __, 2001) Participant)
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxxxxx $100,000 10,000 6,395 12,296 38,462
-----------------------------------------------------------------------------------------------------------------------------------
Brizio Xxxxxx $100,000 10,000 6,395 12,296 38,462
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx $75,000 7,500 4,799 9,224 28,846
-----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx $65,000 6,500 4,159 7,994 25,000
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxxx Xxxxxxx $50,000 5,000 3,199 6,149 19,231
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx Trust $35,000 3,500 2,239 4,304 13,462
-----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx $10,000 1,000 639 1,229 3,846
-----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C
--------------------------------------------------------------------------------------------------------------------
Number of Shares of RoweCom Number of shares of
Common Stock purchasable under divine Class A Common
Old Warrant Stock purchasable under
Name and address of Optional Participant (ISSUED MAY 26, 2000) New Warrant
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx 2,000 1,500
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 1,000 750
--------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 1,000 750
--------------------------------------------------------------------------------------------------------------------
EXHIBIT D
FORM OF NEW NOTES
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER DISPOSITION OF
THIS NOTE MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED PURSUANT TO THE SECURITIES ACT OR UNLESS THE HOLDER HEREOF SHALL HAVE
DELIVERED TO DIVINE A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
ACCEPTABLE TO DIVINE, THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE FOR SUCH
TRANSFER, SALE OR OTHER DISPOSITION.
SECURED PROMISSORY NOTE
$_________ October __, 2001
RoweCom Inc. (the "Maker"), a Delaware corporation, hereby promises to pay
to the order of _______________ (including any subsequent holder of this Note,
the "Payee"), on the Maturity Date (as hereinafter defined) (subject to
acceleration as provided below), the principal amount of ____________ dollars
($_____________), with simple interest on the unpaid principal amount from time
o time outstanding hereunder at an annual rate equal to six per cent (6%),
calculated on the basis of the actual number of days elapsed and a 365-day year.
If the Holder is unable to collect the proceeds of the LOC (as hereinafter
defined) at any time after an Event of Default (as hereinafter defined) has
occurred, the outstanding principal amount of this Note shall bear interest from
and after the occurrence of the Event of Default at a rate of eight percent
(8%). For purposes of this Note, (x) "Maturity Date" means the earlier of (a)
December 31, 2002, and (b) the date on which a Liquidity Event is consummated,
and (y) "Liquidity Event" means (1) a liquidation, dissolution or winding up of
the Maker or divine, inc., a Delaware corporation ("divine"), whether voluntary
or not, (2) the sale, lease, license, assignment, transfer, conveyance or
disposal of all or substantially all of the assets of the Maker or divine, or
(3) the acquisition of the Maker or divine by another entity by means of
consolidation, corporate reorganization, merger or other transaction or series
of related transactions, in which more than 50% of the outstanding voting power
of the Maker or divine is acquired by such entity, other than the acquisition of
the Maker by divine.
This Note is one of a series of Notes, in similar form and an aggregate
principal amount of $ _________, issued by the Maker on the date hereof
(collectively, the "Bridge Notes") in exchange for certain promissory notes of
the Maker dated May 26, 2000. All partial payments in respect of the Bridge
Notes will be made pro rata in proportion to the relative outstanding principal
amounts thereof.
EVENTS OF DEFAULT. At the Payee's option, the entire outstanding principal
amount of this Note and all accrued interest thereon immediately will become due
and payable upon written notice of acceleration given to the Maker by the
registered holders of at least two-thirds (2/3) of the aggregate principal
amount of the Bridge Notes then outstanding following the occurrence of and
during the continuance of any Event of
Default. For purposes of this Note, "Event of Default" means (i) failure of the
Maker to pay any amount of principal or interest under this Note when and as
due, including but not limited to any payments required as a result of a
Liquidity Event; (ii) appointment of a receiver for the Maker or its assets;
(iii) assignment by the Maker for the benefit of its creditors; (iv) institution
by or against the Maker of any proceedings under bankruptcy, insolvency, or
similar laws, which, in the case of any such proceeding not instituted by the
Maker, are not dismissed within 90 days; (v) the Maker or divine becoming
insolvent or generally unable to pay its debts as they become due, (vi)
acceleration prior to maturity of any indebtedness under any credit facility of
the Maker or divine or failure of the Maker or divine to pay any indebtedness in
an aggregate amount in excess of $500,000 when due; (vii) the suspension or
discontinuance of the business or operations of the Maker; (viii) failure to pay
the outstanding principal and interest due under the Bridge Notes at least 30
days prior to the expiration or the LOC (as hereinafter defined), provided that
the failure to make a payment of the outstanding principal and interest at least
30 days prior to the expiration of the LOC shall not constitute an event of
default pursuant to this subparagraph (viii) if such LOC is being replaced upon
expiration by another letter of credit (A) issued either by LaSalle National
Bank, N.A., or another financial institution with comparable financial resources
reasonably acceptable to the Holders) and (B) expiring no earlier than January
31, 2003 or (ix) divine's cash (determined in accordance with U.S. generally
accepted accounting principles) as presented in the consolidated financial
statements of divine and its subsidiaries included in any Form 10-K or 10-Q
filed by divine after the date hereof or otherwise publicly disclosed by divine
after the date hereof is less than $80,000,000.
PREPAYMENT. The Maker will have the right to prepay the unpaid principal
amount of this Note in full at any time, or in part from time to time, with the
prior written consent of the registered holders of at least two-thirds (2/3) of
the aggregate principal amount of the Bridge Notes than outstanding. In
connection with any such prepayment, such prepayment shall be accompanied by a
payment of all accrued and unpaid interest on the principal amount being
prepaid.
SECURITY. This Note is secured by an irrevocable letter of credit issued by
LaSalle National Bank, N.A. (the "LOC") and the Payee is entitled to all of the
benefits of that irrevocable letter of credit.
SUBORDINATION. This Note is subordinated in right of payment to any
indebtedness of the Maker to any bank, institutional lender unaffiliated with
the Maker and those certain lenders under the Note Purchase Agreement, dated
January 31, 2001 among the Maker and the signatories thereto (whether such
indebtedness is now outstanding or hereafter incurred); provided, however that
the Payee's right to receive proceeds from the LOC shall not be subject to such
subordination. The Payee, by acceptance of this Note, agrees that upon the
Maker's request to subordinate this Note to any such indebtedness that the Payee
will execute and deliver a subordination agreement reasonably acceptable to each
such bank or financial institution.
CONVERSION. Subject to the requirements of this Section, at any time or
from time to time after the thirtieth (30) day following the consummation of the
Merger (as defined in that certain Exchange Agreement, dated October __, 2001
among divine, the Maker, the Payee and certain other signatories thereto), the
Payee shall be entitled to convert, by delivering the Note to divine, duly
endorsed or assigned in blank, accompanied by written notice of such conversion
to divine
(the "Conversion Notice"), any or all of the principal amount then outstanding
under this Note plus any accrued but unpaid interest thereon into a number of
shares of Class A Common Stock of divine, par value $0.001 per share ("Parent
Common Stock"), determined by dividing the sum of the principal amount of this
Note and accrued but unpaid interest thereon being converted into shares of
Parent Common Stock by the Conversion Price as of the date on which the
Conversion Notice is given. The "Conversion Price" means $0.52 (such amount to
be appropriately and proportionately adjusted to reflect any subdivision of the
Parent Common Stock, whether by stock split, stock dividend or otherwise (a
"Subdivision"), or any combination of the Parent Common Stock, whether by
reverse stock split or otherwise (a "Combination"), with a record date occurring
after the date hereof and prior to such conversion. The Conversion Notice shall
state the principal amount of this Note and accrued interest thereon to be
converted pursuant to this Section, which amount, if less than the total
principal amount and accrued interest then outstanding under this Note, shall be
at least $50,000. The conversion pursuant to such Conversion Notice shall occur
on the date on which such Conversion Notice is given to divine (the "Conversion
Date").
If a Conversion Notice is given with respect to less than the total
principal and accrued interest outstanding under this Note, the Maker shall
issue to the Payee a new Note in the principal amount outstanding after such
conversion and otherwise in a form identical to this Note; provided, however, in
the event the principal amount of such new Note is less than $50,000, divine
may, at its option, add such amount to the amount of principal specified for
conversion in the Conversion Notice in lieu of the Maker issuing such new Note.
In the event of any conversion of this Note pursuant to this Section, such
conversion shall be deemed to have been made on the Conversion Date (whether or
not this Note has been surrendered to divine as provided herein); and after such
Conversion Date, the Payee shall be entitled to receive the shares of Parent
Common Stock issuable upon such conversion and shall be treated for all purpose
as the record holder of such shares. Interest shall cease to accrue on the
Conversion Date for any principal amount with respect to which a Conversion
Notice has been given and unless converted such interest shall be paid on the
Maturity Date.
As promptly as practicable after a Conversion Date (but in any event no
later than five trading days after delivery of the applicable Conversion
Notice), divine will issue and deliver to the Payee a certificate or
certificates for the number of shares of Parent Common Stock issuable upon
conversion pursuant to this Section. divine may pay cash in lieu of the issuance
of a fractional share, based on the applicable Conversion Price.
divine shall at all times reserve and keep available out of its authorized
but unissued shares of Parent Common Stock, solely for the purpose of effecting
the conversion of this Note, such number of shares of Parent Common Stock as
shall from time to time be sufficient to effect the conversion of this Note.
In the case of any consolidation or merger of divine with another entity,
or the sale of all or substantially all of its assets to another entity, or any
reorganization or reclassification of the Parent Common Stock or other equity
securities of divine (except a Subdivision or Combination), then, as a condition
of such consolidation, merger, sale, reorganization or reclassification, lawful
and adequate provision shall be made whereby the holder of this Note
shall thereafter have the right to receive upon conversion of this Note in lieu
of or in addition to the shares of Parent Common Stock, such shares of stock,
securities or assets as may (by virtue of such consolidation, merger, sale,
reorganization or reclassification) be issued or payable with respect to or in
exchange for a number of outstanding shares of Parent Common Stock equal to the
number of shares of Parent Common Stock immediately theretofore so issuable upon
such conversion hereunder had such consolidation, merger, sale, reorganization
or reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the holder of this
Note to the end that the provisions hereof shall thereafter be applicable as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon conversion of this Note.
EXPENSES. In case any payment herein provided for shall not be paid
when due, the Maker promises to pay all costs of collection or enforcement of
this Note, including, without limitation, court costs and all reasonable
attorney's fees and expenses incurred or paid by the Payee in enforcing the
obligations of the Maker, provided, however, that Maker shall have no
obligations under this provision unless the issuer of the LOC described under
"Security" shall have failed to tender funds to the Payee or its agent upon a
request for payment complying with the terms of the LOC.
AMENDMENT. The terms of this Note may be amended by written agreement
of the Maker and the registered holders of at least two-thirds (2/3) of the
aggregate principal amount of the Bridge Notes then outstanding, provided, that
any such amendment will affect all Bridge Notes in the same manner.
Executed and delivered as an instrument under seal governed by the
internal, substantive laws of the Commonwealth of Massachusetts (without
reference to principles of conflicts or choice of law) as of the date first
above written.
ROWECOM INC.
By
----------------------------------
Name:
Title:
5
EXHIBIT E
FORM OF NEW WARRANTS
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER
DISPOSITION OF THIS WARRANT MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED PURSUANT TO THE SECURITIES ACT OR UNLESS THE HOLDER
HEREOF SHALL HAVE DELIVERED TO DIVINE A WRITTEN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE ACCEPTABLE TO DIVINE, THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS IS AVAILABLE FOR SUCH TRANSFER, SALE OR OTHER DISPOSITION.
STOCK PURCHASE WARRANT
NO. ____________ OCTOBER __, 2001
divine, inc. (the "Company"), a Delaware corporation, hereby certifies that
subject to the terms and conditions set forth herein, ____________. is entitled,
at any time and from time to time before 5:00 P.M. (Boston time) on October 24,
2010 (the "Expiration Date") to purchase from the Company up to _______ fully
paid and non-assessable shares of the Company's Class A Common Stock, par value
$0.001 per share ("Common Stock"), for a purchase price of $0.52 per share (such
purchase price, subject to adjustment as provided herein, the "Exercise Price").
1. EXERCISE OF WARRANT.
(a) MECHANICS OF EXERCISE. This Warrant may be exercised by the
registered holder hereof by surrender to the Company of this Warrant, with
the attached form of subscription agreement duly executed by such holder,
accompanied by payment, by check payable to the order of the Company or by
wire transfer to its account, in an amount equal to the product of (i) the
number of shares of Common Stock for which this Warrant is then being
exercised (such shares, the "Exercise Shares") multiplied by (ii) the
Exercise Price.
Alternatively, the registered holder hereof at such holder's option may
exercise this Warrant without further payment by surrendering such holder's
rights to receive a portion of the Exercise Shares having a fair market
value (determined by reference to the closing sale price of a share of
Common Stock on the trading day immediately preceding the date of exercise,
as reported by NASDAQ) in excess of the Exercise Price of such Exercise
Shares equal to the aggregate Exercise Price for all of the Exercise
Shares, and shall receive upon such exercise the excess of (i) the number
of Exercise Shares to which such holder would otherwise be entitled upon
such exercise, minus (ii) the number of Exercise Shares so surrendered.
(b) WARRANT AGENT. In the event that a bank or trust company is
appointed as trustee for the holder of this Warrant pursuant to Section
3(b) hereof, such bank or trust company shall have all the powers and
duties of a warrant agent appointed pursuant to Section 8 hereof and shall
accept, in its own name for the account of the Company or
such successor entity as may be entitled thereto, all amounts otherwise
payable to the Company or such successor, as the case may be, upon exercise
of this Warrant.
(c) EXPIRATION. This Warrant and the holder's rights hereunder shall
expire as of 5:00 P.M. (Boston time), on the Expiration Date.
2. DELIVERY OF STOCK CERTIFICATES; FRACTIONAL SHARES.
(a) DELIVERY OF STOCK CERTIFICATES. As soon as is practicable after
any exercise of this Warrant, the Company, at its own expense, shall
deliver to the registered holder hereof a stock certificate representing
the shares of Common Stock, other securities, cash, and/or property to
which such holder is entitled in respect of such exercise. In the case of
any partial exercise hereof, the Company will also deliver to such holder a
similar form of warrant covering the shares of Common Stock, other
securities, cash, and/or property constituting the difference, if any,
between (i) the respective quantities, of shares of Common Stock, other
securities, cash, and/or property for which this Warrant was exercisable
immediately before such partial exercise, minus (ii) the respective
quantities of shares of Common Stock, other securities, cash, and/or
property delivered to such holder by reason of such partial exercise.
(b) FRACTIONAL SHARES. In the event that any exercise of this Warrant
would, but for the provisions of this Section 2(b), result in the issuance
of any fractional share of Common Stock, then in lieu of such fractional
share the registered holder hereof shall be entitled to cash equal to the
fair market value of such fractional share, as determined in good faith by
the Company's Board of Directors.
3. ADJUSTMENT FOR REORGANIZATIONS, CONSOLIDATIONS, MERGERS, ETC.
(a) CERTAIN ADJUSTMENTS. In case at any time or from time to time
prior to the exercise of this Warrant, the Company shall (i) effect a
capital reorganization, reclassification, or recapitalization, (ii)
consolidate with or merge with or into any other person or entity, or (iii)
transfer all or substantially all of its properties or assets to any other
person or entity under any plan or arrangement contemplating the
dissolution of the Company, then in each such case, the registered holder
of this Warrant, upon exercise hereof at any time after or simultaneously
with the consummation of such reorganization, recapitalization,
consolidation, or merger or the effective date of such dissolution, as the
case may be, shall receive, in lieu of the shares of Common Stock issuable
upon such exercise before such consummation or effective date, the stock,
other securities, cash, and/or property to which such holder would have
been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment thereafter as
provided herein.
(b) APPOINTMENT OF TRUSTEE FOR WARRANT HOLDERS UPON DISSOLUTION. In
the event of any dissolution of the Company, the Company, prior to such
dissolution, shall, at its expense, deliver or cause to be delivered the
stock, other securities, property, and/or cash receivable by the registered
holder of this Warrant after the effective date of
2
such dissolution pursuant to this Section 3 to a bank or trust company, as
trustee for the registered holder of this Warrant.
(c) CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger, or transfer (and any dissolution following any transfer) referred
to in this Section 3, this Warrant shall continue in full force and effect
and the terms hereof shall be applicable to the stock, other securities,
cash, and/or property receivable on the exercise of this Warrant after or
simultaneously with the consummation of such reorganization, consolidation,
or merger or the effective date of dissolution following any such transfer,
as the case may be, and shall be binding upon the issuer of any such stock
or other securities, including, in the case of any such transfer, the
person or entity acquiring all or substantially all of the properties or
assets of the Company, whether or not such person or entity shall have
expressly assumed the terms of this Warrant as provided in Section 5
hereof.
4. ADJUSTMENTS FOR STOCK SPLITS, ETC. If at any time or from time to time
there shall occur any stock split, stock dividend, reverse stock split, or other
combination or subdivision of the Common Stock (a "Stock Event"), then the
number of shares of Common Stock issuable upon exercise hereof shall be
appropriately adjusted such that the proportion of the number of shares issuable
hereunder immediately after such Stock Event to the total number of shares of
Common Stock of the Company outstanding immediately after such Stock Event is
equal to the proportion of the number of shares of Common Stock issuable
hereunder immediately before such Stock Event to the total number of shares of
Common Stock of the Company outstanding immediately before such Stock Event. The
Exercise Price shall be proportionately decreased or increased upon the
occurrence of any Stock Event.
5. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise,
(ii) shall take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock upon exercise of this Warrant from time to time, and (iii) shall not
transfer all or substantially all of its properties and assets to any other
person or entity or consolidate into or merge with or into any other person or
entity (if the Company is not the surviving entity), unless such other person or
entity shall expressly agree in writing (naming the registered holder hereof, as
such, as an intended third-party beneficiary) to assume and be bound by all the
terms of this Warrant applicable to the Company.
6. NOTICES OF RECORD DATE, ETC. In the event from time to time of any
proposed or contemplated:
(a) (taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, or otherwise
3
acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any transfer of
all or substantially all the assets of the Company to, or any consolidation
or merger of the Company with or into, any other person or entity; or
(c) voluntary or involuntary dissolution, liquidation, or winding-up
of the Company:
then, and in each such event, the Company shall mail or cause to be mailed to
the registered holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution,
or right, and stating the amount and character of such dividend, distribution,
or right, or (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation, or
winding-up is anticipated to take place, and the time, if any is to be fixed, as
of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for the stock, other securities, cash, and/or other
property deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation, or winding-up. Such
notice shall be mailed at least thirty days prior to the earliest date specified
in such notice on which any such action or transaction is to be taken or
consummated.
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company at all
times and from time to time shall reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, a number of shares of
Common Stock equal to the aggregate number of shares of Common Stock from time
to time issuable upon exercise of this Warrant. If at any time the Company does
not have sufficient authorized shares to comply with the foregoing sentence, the
Company promptly shall take all steps necessary to amend its Certificate of
Incorporation to provide a reserved number of shares of Common Stock sufficient
to effect the exercise in full of this Warrant.
8. WARRANT AGENT. The Company may, by written notice to the registered
holder of this Warrant, appoint an agent for the purpose of issuing Common Stock
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such, issuance, exchange, or replacement, as
the case may be, shall be made at such office by such agent.
9. CAPTIONS. The captions of sections or subsections of this Warrant are
for reference only and shall not affect the interpretation or construction of
this Warrant.
10. EQUITABLE RELIEF. The Company hereby acknowledges that any breach by it
of its obligations under this Warrant would cause substantial and irreparable
damage to the registered holder hereof, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that, in
addition to any other rights and remedies to which the registered holder hereof
may be entitled in respect of any breach of such obligations, such
4
holder shall be entitled to an injunction, specific performance, and/or other
equitable relief to prevent the breach of such obligations.
11. WAIVERS. No waiver of any breach or default hereunder shall be valid
unless in a writing signed by the registered holder hereof. No failure or other
delay by the registered holder hereof exercising any right, power, or privilege
hereunder shall be or operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege.
12. GOVERNING LAW. This Warrant shall be governed by and interpreted and
construed in accordance with the internal laws of the State of Delaware (without
reference to principles of conflicts or choice of law).
13. AMENDMENT. Any of the provisions of this Warrant may be amended or
waived with the written consent of divine, RoweCom Inc. and the Holders of
two-thirds (2/3) of the share of Class A Common Stock then issuable upon
exercise of the New Warrants (as defined in that certain Exchange Agreement,
dated October __, 2001 (the "Exchange Agreement"), among divine, RoweCom, Inc.
and the other signatories thereto) and the Incentive Warrants (as defined in the
Exchange Agreement) issued pursuant to the Exchange Agreement.
5
IN WITNESS WHEREOF, the Company has executed and delivered this Warrant as
of the date first above written.
divine, inc.
By
------------------------------------
Name:
Title:
FORM OF SUBSCRIPTION
(To be signed only on exercise of Stock Purchase Warrant)
TO: divine, inc.
The undersigned, the Holder of the enclosed Stock Purchase Warrant, hereby
irrevocably elects to exercise such Warrant for, and to purchase thereunder
______________ shares of the Common Stock of divine, inc. and herewith makes
payment of $________________ therefor(1) and requests that the certificates
for such shares be issued in the name of, and delivered to
_______________________, whose address is .
Dated
---------------------------------- -------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
-------------------------------------
(Address)
-------------------
(1) Appropriate changes to be made in the case of a "cashless" exercise of the
Warrant pursuant to Section I(a) hereof
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers to
______________________________ (the "Assignee") the rights represented by the
enclosed Stock Purchase Warrant of divine, inc., a Delaware corporation (the
"Company"), and appoints _______________________ as the undersigned's attorney
to transfer such rights on the books of the Company, with full power of
substitution in the premises.
Dated
---------------------------------- -------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
-------------------------------------
(Address)
2
EXHIBIT F
FORM OF INCENTIVE WARRANTS
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER
DISPOSITION OF THIS WARRANT MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED PURSUANT TO THE SECURITIES ACT OR UNLESS THE HOLDER
HEREOF SHALL HAVE DELIVERED TO DIVINE A WRITTEN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE ACCEPTABLE TO DIVINE, THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS IS AVAILABLE FOR SUCH TRANSFER, SALE OR OTHER DISPOSITION.
STOCK PURCHASE WARRANT
NO. ____________ OCTOBER __, 2001
divine, inc. (the "Company"), a Delaware corporation, hereby certifies that
subject to the terms and conditions set forth herein, _______________ is
entitled, at any time and from time to time before 5:00 P.M. (Boston time) on
October ____, 2011 (the "Expiration Date") to purchase from the Company up to
_________ fully paid and non-assessable shares of the Company's Class A Common
Stock, par value $0.001 per share ("Common Stock"), for a purchase price of
$0.52 per share (such purchase price, subject to adjustment as provided herein,
the "Exercise Price").
1. EXERCISE OF WARRANT.
(a) MECHANICS OF EXERCISE. This Warrant may be exercised by the
registered holder hereof by surrender to the Company of this Warrant, with
the attached form of subscription agreement duly executed by such holder,
accompanied by payment, by check payable to the order of the Company or by
wire transfer to its account, in an amount equal to the product of (i) the
number of shares of Common Stock for which this Warrant is then being
exercised (such shares, the "Exercise Shares") multiplied by (ii) the
Exercise Price.
Alternatively, the registered holder hereof at such holder's option may
exercise this Warrant without further payment by surrendering such holder's
rights to receive a portion of the Exercise Shares having a fair market
value (determined by reference to the closing sale price of a share of
Common Stock on the trading day immediately preceding the date of exercise,
as reported by NASDAQ) in excess of the Exercise Price of such Exercise
Shares equal to the aggregate Exercise Price for all of the Exercise
Shares, and shall receive upon such exercise the excess of (i) the number
of Exercise Shares to which such holder would otherwise be entitled upon
such exercise, minus (ii) the number of Exercise Shares so surrendered.
(b) WARRANT AGENT. In the event that a bank or trust company is
appointed as trustee for the holder of this Warrant pursuant to Section
3(b) hereof, such bank or trust company shall have all the powers and
duties of a warrant agent appointed pursuant to Section 8 hereof and shall
accept, in its own name for the account of the Company or
such successor entity as may be entitled thereto, all amounts otherwise
payable to the Company or such successor, as the case may be, upon exercise
of this Warrant.
(c) EXPIRATION. This Warrant and the holder's rights hereunder shall
expire as of 5:00 P.M. (Boston time), on the Expiration Date.
2. DELIVERY OF STOCK CERTIFICATES; FRACTIONAL SHARES.
(a) DELIVERY OF STOCK CERTIFICATES. As soon as is practicable after
any exercise of this Warrant, the Company, at its own expense, shall
deliver to the registered holder hereof a stock certificate representing
the shares of Common Stock, other securities, cash, and/or property to
which such holder is entitled in respect of such exercise. In the case of
any partial exercise hereof, the Company will also deliver to such holder a
similar form of warrant covering the shares of Common Stock, other
securities, cash, and/or property constituting the difference, if any,
between (i) the respective quantities, of shares of Common Stock, other
securities, cash, and/or property for which this Warrant was exercisable
immediately before such partial exercise, minus (ii) the respective
quantities of shares of Common Stock, other securities, cash, and/or
property delivered to such holder by reason of such partial exercise.
(b) FRACTIONAL SHARES. In the event that any exercise of this Warrant
would, but for the provisions of this Section 2(b), result in the issuance
of any fractional share of Common Stock, then in lieu of such fractional
share the registered holder hereof shall be entitled to cash equal to the
fair market value of such fractional share, as determined in good faith by
the Company's Board of Directors.
3. ADJUSTMENT FOR REORGANIZATIONS, CONSOLIDATIONS, MERGERS, ETC.
(a) CERTAIN ADJUSTMENTS. In case at any time or from time to time
prior to the exercise of this Warrant, the Company shall (i) effect a
capital reorganization, reclassification, or recapitalization, (ii)
consolidate with or merge with or into any other person or entity, or (iii)
transfer all or substantially all of its properties or assets to any other
person or entity under any plan or arrangement contemplating the
dissolution of the Company, then in each such case, the registered holder
of this Warrant, upon exercise hereof at any time after or simultaneously
with the consummation of such reorganization, recapitalization,
consolidation, or merger or the effective date of such dissolution, as the
case may be, shall receive, in lieu of the shares of Common Stock issuable
upon such exercise before such consummation or effective date, the stock,
other securities, cash, and/or property to which such holder would have
been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment thereafter as
provided herein.
(b) APPOINTMENT OF TRUSTEE FOR WARRANT HOLDERS UPON DISSOLUTION. In
the event of any dissolution of the Company, the Company, prior to such
dissolution, shall, at its expense, deliver or cause to be delivered the
stock, other securities, property, and/or cash receivable by the registered
holder of this Warrant after the effective date of
2
such dissolution pursuant to this Section 3 to a bank or trust company, as
trustee for the registered holder of this Warrant.
(c) CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger, or transfer (and any dissolution following any transfer) referred
to in this Section 3, this Warrant shall continue in full force and effect
and the terms hereof shall be applicable to the stock, other securities,
cash, and/or property receivable on the exercise of this Warrant after or
simultaneously with the consummation of such reorganization, consolidation,
or merger or the effective date of dissolution following any such transfer,
as the case may be, and shall be binding upon the issuer of any such stock
or other securities, including, in the case of any such transfer, the
person or entity acquiring all or substantially all of the properties or
assets of the Company, whether or not such person or entity shall have
expressly assumed the terms of this Warrant as provided in Section 5
hereof.
4. ADJUSTMENTS FOR STOCK SPLITS, ETC. If at any time or from time to time
there shall occur any stock split, stock dividend, reverse stock split, or other
combination or subdivision of the Common Stock (a "Stock Event"), then the
number of shares of Common Stock issuable upon exercise hereof shall be
appropriately adjusted such that the proportion of the number of shares issuable
hereunder immediately after such Stock Event to the total number of shares of
Common Stock of the Company outstanding immediately after such Stock Event is
equal to the proportion of the number of shares of Common Stock issuable
hereunder immediately before such Stock Event to the total number of shares of
Common Stock of the Company outstanding immediately before such Stock Event. The
Exercise Price shall be proportionately decreased or increased upon the
occurrence of any Stock Event.
5. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise,
(ii) shall take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock upon exercise of this Warrant from time to time, and (iii) shall not
transfer all or substantially all of its properties and assets to any other
person or entity or consolidate into or merge with or into any other person or
entity (if the Company is not the surviving entity), unless such other person or
entity shall expressly agree in writing (naming the registered holder hereof, as
such, as an intended third-party beneficiary) to assume and be bound by all the
terms of this Warrant applicable to the Company.
6. NOTICES OF RECORD DATE, ETC. In the event from time to time of any
proposed or contemplated:
(a) taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, or otherwise
3
acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any transfer of
all or substantially all the assets of the Company to, or any consolidation
or merger of the Company with or into, any other person or entity; or
(c) voluntary or involuntary dissolution, liquidation, or winding-up
of the Company:
then, and in each such event, the Company shall mail or cause to be mailed to
the registered holder of this Warrant a notice specifying (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution,
or right, and stating the amount and character of such dividend, distribution,
or right, or (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation, or
winding-up is anticipated to take place, and the time, if any is to be fixed, as
of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for the stock, other securities, cash, and/or other
property deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation, or winding-up. Such
notice shall be mailed at least thirty days prior to the earliest date specified
in such notice on which any such action or transaction is to be taken or
consummated.
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company at all
times and from time to time shall reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, a number of shares of
Common Stock equal to the aggregate number of shares of Common Stock from time
to time issuable upon exercise of this Warrant. If at any time the Company does
not have sufficient authorized shares to comply with the foregoing sentence, the
Company promptly shall take all steps necessary to amend its Certificate of
Incorporation to provide a reserved number of shares of Common Stock sufficient
to effect the exercise in full of this Warrant.
8. WARRANT AGENT. The Company may, by written notice to the registered
holder of this Warrant, appoint an agent for the purpose of issuing Common Stock
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such, issuance, exchange, or replacement, as
the case may be, shall be made at such office by such agent.
9. CAPTIONS. The captions of sections or subsections of this Warrant are
for reference only and shall not affect the interpretation or construction of
this Warrant.
10. EQUITABLE RELIEF. The Company hereby acknowledges that any breach by it
of its obligations under this Warrant would cause substantial and irreparable
damage to the registered holder hereof, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that, in
addition to any other rights and remedies to which the registered holder hereof
may be entitled in respect of any breach of such obligations, such
4
holder shall be entitled to an injunction, specific performance, and/or other
equitable relief to prevent the breach of such obligations.
11. WAIVERS. No waiver of any breach or default hereunder shall be valid
unless in a writing signed by the registered holder hereof. No failure or other
delay by the registered holder hereof exercising any right, power, or privilege
hereunder shall be or operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege.
12. GOVERNING LAW. This Warrant shall be governed by and interpreted and
construed in accordance with the internal laws of the State of Delaware (without
reference to principles of conflicts or choice of law).
13. AMENDMENT. Any of the provisions of this Warrant may be amended or
waived with the written consent of divine, RoweCom Inc. and the Holders of
two-thirds (2/3) of the shares of Class A Common Stock then issuable upon
exercise of the New Warrants (as defined in that certain Exchange Agreement,
dated October __, 2001 (the "Exchange Agreement"), among divine, RoweCom, Inc.
and the other signatories thereto) and the Incentive Warrants (as defined in the
Exchange Agreement) issued pursuant to the Exchange Agreement.
5
IN WITNESS WHEREOF, the Company has executed and delivered this Warrant as
of the date first above written.
divine, inc.
By
----------------------------------
Name:
Title:
FORM OF SUBSCRIPTION
(To be signed only on exercise of Stock Purchase Warrant)
TO: divine, inc.
The undersigned, the Holder of the enclosed Stock Purchase Warrant, hereby
irrevocably elects to exercise such Warrant for, and to purchase thereunder
______________ shares of the Common Stock of divine, inc. and herewith makes
payment of $________________ therefor(2) and requests that the certificates
for such shares be issued in the name of, and delivered to
_______________________, whose address is .
Dated
---------------------------------- -------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
-------------------------------------
(Address)
-------------------
(2) Appropriate changes to be made in the case of a "cashless" exercise of the
Warrant pursuant to Section I(a) hereof
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
to ______________________________ (the "Assignee") the rights represented by the
enclosed Stock Purchase Warrant of divine, inc., a Delaware corporation (the
"Company"), and appoints _______________________ as the undersigned's attorney
to transfer such rights on the books of the Company, with full power of
substitution in the premises.
Dated
---------------------------------- -------------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
-------------------------------------
(Address)
EXHIBIT G
FORM OF LETTER OF CREDIT
000 XXXX XXXXXX XXXXXX
XXXXXXX, XX 00000
PHONE:
---------------------------------
FAX:
----------------------------------
DATE: NOVEMBER __, 2001
EXPIRATION DATE: JANUARY 31, 2003
LETTER OF CREDIT NO.
-------------------
AMOUNT: U.S. $6,135,000 (SIX MILLION ONE HUNDRED THIRTY-FIVE THOUSAND AND
NO/100 U.S. DOLLARS)
Beneficiary:
Zero Stage Capital, as Agent
000 Xxxx Xxxxxx, 17th Floor, Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
LADIES/GENTLEMEN:
AT THE REQUEST AND ON THE INSTRUCTIONS OF OUR CUSTOMER, DIVINE, INC., THE
UNDERSIGNED, LASALLE BANK, N.A. (THE "ISSUER"), HEREBY ESTABLISHES IN YOUR FAVOR
THIS IRREVOCABLE LETTER OF CREDIT.
A DRAWING MAY BE MADE BY YOU HEREUNDER ONLY IN THE FOLLOWING CIRCUMSTANCES.
SUBJECT TO THE OTHER PROVISIONS OF THIS LETTER OF CREDIT, YOU ARE HEREBY
IRREVOCABLY AUTHORIZED TO MAKE ONE DRAWING HEREUNDER (ON ONE OCCASION ONLY) BY
PRESENTATION TO THE ISSUER AT ITS ABOVE ADDRESS OF (i) A DULY COMPLETED SIGNED
CERTIFICATE IN THE FORM OF EXHIBIT A ATTACHED HERETO, (ii) THIS ORIGINAL LETTER
OF CREDIT AND ANY SUBSEQUENT AMENDMENTS, AND (iii) THE SECURED PROMISSORY NOTES
OF ROWECOM INC. DATED NOVEMBER __, 2001 ISSUED IN CONNECTION WITH THAT CERTAIN
EXCHANGE AGREEMENT DATED NOVEMBER __, 2001 AMONG DIVINE, INC., ROWECOM INC. AND
THE OTHER SIGNATORIES THERETO (THE "SECURED NOTES"). (i, ii, AND iii TOGETHER,
THE "DRAWING DOCUMENTS").
PRESENTATION OF SUCH DRAWING DOCUMENTS MUST BE MADE ON A BUSINESS DAY (AS
HEREINAFTER DEFINED) DURING OUR NORMAL BUSINESS HOURS ON OR BEFORE THE
EXPIRATION DATE (AS HEREINAFTER DEFINED) AT OUR OFFICE LOCATED AT LASALLE BANK
N.A., 000 XXXX XXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000, ATTENTION: GLOBAL TRADE &
ADVISORY SUPPORT, OR AT ANY PRINCIPAL OFFICE IN, WHICH MAY BE DESIGNATED BY US
IN A WRITTEN NOTICE DELIVERED TO YOU. AS USED HEREIN, THE TERM "BUSINESS DAY"
MEANS A DAY OTHER THAN A SATURDAY OR SUNDAY ON WHICH BANKS ARE OPEN FOR BUSINESS
IN CHICAGO, ILLINOIS.
IF A DRAWING IS MADE BY YOU HEREUNDER AT OR PRIOR TO 11:00 A.M., CHICAGO TIME,
ON A BUSINESS DAY, AND PROVIDED THAT SUCH DRAWING AND DRAWING DOCUMENTS
PRESENTED IN CONNECTION THEREWITH CONFORM TO THE TERMS AND CONDITIONS HEREOF,
PAYMENT SHALL BE MADE TO YOU, OR TO YOUR DESIGNEE OR DESIGNEES, OF THE AMOUNT
SPECIFIED, IN IMMEDIATELY AVAILABLE FUNDS, ON THE NEXT BUSINESS DAY. IF A
DRAWING IS MADE BY YOU HEREUNDER AFTER 11:00 A.M., CHICAGO TIME, ON A BUSINESS
DAY, AND PROVIDED THAT SUCH DRAWING AND DRAWING DOCUMENTS PRESENTED IN
CONNECTION THEREWITH CONFORM TO THE TERMS AND CONDITIONS THEREOF, PAYMENT SHALL
BE MADE TO YOU, , OF THE AMOUNT SPECIFIED, IN IMMEDIATELY AVAILABLE FUNDS, ON
THE SECOND SUCCEEDING BUSINESS DAY.
IF A DRAWING MADE BY YOU HEREUNDER DOES NOT, IN ANY INSTANCE, CONFORM TO THE
TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, WE SHALL GIVE YOU PROMPT WRITTEN
NOTICE THAT THE PURPORTED DRAWING WAS NOT IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT, STATING THE SPECIFIC REASONS THEREFOR, AND
THAT WE ARE HOLDING ALL DOCUMENTS SUBMITTED AT YOUR DISPOSAL. UPON BEING
NOTIFIED THAT THE PURPORTED DRAWING WAS NOT IN ACCORDANCE WITH THIS LETTER OF
CREDIT, YOU MAY ATTEMPT TO CORRECT ANY SUCH NON-CONFORMING DRAWING IF, AND TO
THE EXTENT THAT, YOU ARE ENTITLED (WITHOUT REGARD TO THE PROVISIONS OF THIS
SENTENCE) AND ABLE TO DO SO ON OR BEFORE THE EXPIRATION DATE.
THIS LETTER OF CREDIT SHALL EXPIRE AT THE ISSUER'S CLOSE OF BUSINESS AT ITS
AFORESAID ADDRESS IN CHICAGO, ILLINOIS, OR SUBSTITUTE PRINCIPAL OFFICE, ON THE
EARLIER OF THE FOLLOWING DATES (THE "EXPIRATION DATE") (A) JANUARY 31, 2003 OR
(B) THE DATE ON WHICH THE OUTSTANDING PRINCIPAL AMOUNT OF THE SECURED NOTES AND
ALL ACCRUED AND UNPAID INTEREST THEREON ARE PAID IN FULL AS INDICATED TO US BY
THE AGENT (BUT IN NO EVENT AFTER JANUARY 31, 2003). IF THE ISSUER IS NOT THEN IN
DEFAULT HEREUNDER BY REASON OF ITS HAVING WRONGFULLY FAILED TO HONOR A DEMAND
FOR PAYMENT HEREUNDER, THIS LETTER OF CREDIT SHALL BE PROMPTLY SURRENDERED BY
YOU TO THE ISSUER UPON THE EXPIRATION OF THIS LETTER OF CREDIT PURSUANT TO THE
IMMEDIATELY PRECEDING SENTENCE.
THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND OUR
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN EXCEPT THE UNIFORM
CUSTOMS (AS HEREINAFTER DEFINED) AND EXHIBIT A, ATTACHED HERETO AND ANY SUCH
REFERENCE SHALL BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT,
INSTRUMENT OR AGREEMENT (EXCEPT FOR THE UNIFORM CUSTOMS (AS HEREINAFTER DEFINED)
AND EXHIBIT A ATTACHED HERETO).
ALL DOCUMENTS PRESENTED TO THE ISSUER IN CONNECTION WITH ANY DEMAND FOR PAYMENT
HEREUNDER, AS WELL AS ALL NOTICES AND OTHER COMMUNICATIONS TO THE ISSUER IN
RESPECT OF THIS LETTER OF CREDIT, SHALL BE IN WRITING AND ADDRESSED AND
PRESENTED TO THE ISSUER AT ITS ABOVE ADDRESS OR SUBSTITUTE PRINCIPAL OFFICE AND
SHALL MAKE SPECIFIC REFERENCE TO THIS LETTER OF CREDIT BY NUMBER. SUCH
DOCUMENTS, NOTICES AND OTHER COMMUNICATIONS SHALL BE PERSONALLY DELIVERED TO THE
ISSUER.
THIS LETTER OF CREDIT IS TRANSFERABLE IN ACCORDANCE WITH INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION NO. 500. ANY TRANSFER REQUEST MUST BE EFFECTED BY
PRESENTING TO US THE COMPLETED TRANSFER FORM IN THE FORM OF EXHIBIT B ATTACHED
HERETO ALONG WITH THE ORIGINAL LETTER OF CREDIT AND ANY SUBSEQUENT AMENDMENTS.
IF THE TRANSFER IS NOT EFFECTED FOR ANY REASON, ISSUER SHALL IMMEDIATELY RETURN
THE TRANSFER FORM AND THE ORIGINAL LETTER OF CREDIT ALONG WITH A WRITTEN NOTICE
STATING THE SPECIFIC REASONS FOR THE TRANSFER DENIAL.
PAYMENT OF OUR TRANSFER COMMISSION OF 0.25%, MINIMUM USD 200.00, IN THE FORM OF
A CERTIFIED CHECK OR WIRE TRANSFER IS DUE AT THE TIME THE TRANSFER IS ISSUED. IF
THE TRANSFER IS BEING ADVISED BY MEANS OF TELECOMMUNICATION, PLEASE INCLUDE AN
ADDITIONAL USD 55.00 TO COVER THE COSTS.
IN ORDER FOR US TO COMPLY WITH THE UNITED STATES TREASURY AND THE UNITED STATES
DEPARTMENT OF COMMERCE, OFFICE OF FOREIGN ASSETS CONTROL REGULATIONS, ANY
TRANSFER UNDER THIS CREDIT WILL ONLY BE EFFECTED AFTER VERIFICATION THAT THE
TRANSFEREE DOES NOT APPEAR ON THE LIST OF BLOCKED AND/OR DESIGNATED NATIONALS.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (COLLECTIVELY THE "UNIFORM CUSTOMS"). THIS LETTER OF CREDIT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF ILLINOIS
AND SHALL, AS TO MATTER NOT GOVERNED BY THE UNIFORM CUSTOMS, BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES TO CONFLICTS OF LAW.
LASALLE BANK, N.A.
-------------------------------------------------------
AUTHORIZED SIGNATURE
BY:
TITLE:
EXHIBIT A
TO LETTER OF CREDIT NO. ___________
ISSUED BY
LASALLE NATIONAL BANK, N.A.
CERTIFICATE OF DRAWING
TO:
LASALLE BANK, N.A.
ATTN:
-----------------------------
------------------------------------
------------------------------------
CHICAGO, IL __________
GENTLEMEN:
THE UNDERSIGNED, DULY AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY (THE "AGENT")
UNDER YOUR LETTER OF CREDIT NO. ____________ (THE "LETTER OF CREDIT") HEREBY
REFERS TO YOUR LETTER OF CREDIT AND CERTIFIES TO YOU THAT:
1. THE AGENT IS (i) THE AGENT OF THE PAYEES UNDER THOSE CERTAIN SECURED
PROMISSORY NOTES OF ROWECOM INC., A DELAWARE CORPORATION (THE "MAKER"),
IN THE AGGREGATE PRINCIPAL AMOUNT OF $____________ ISSUED IN CONNECTION
WITH THAT CERTAIN EXCHANGE AGREEMENT, DATED NOVEMBER __, 2001 AMONG
DIVINE, INC. THE MAKER AND THE OTHER SIGNATORIES THERETO (THE "SECURE
NOTES") AND (ii) THE AGENT UNDER YOUR LETTER OF CREDIT.
2. THE AGENT HAS NOT ASSIGNED OR TRANSFERRED ANY INTEREST IN YOUR LETTER
OF CREDIT. NO PAYEE UNDER ANY SECURED NOTE HAS ASSIGNED OR TRANSFERRED
ANY INTEREST THEREIN. THE ORIGINAL SECURED NOTES ARE ATTACHED TO THIS
CERTIFICATE OF DRAWING AS ATTACHMENT 1.
3. EITHER (i) AN EVENT OF DEFAULT (AS DEFINED IN THE SECURED NOTES), OTHER
THAN AN EVENT OF DEFAULT RESULTING FROM THE FAILURE TO PAY THE
PRINCIPAL OF THE SECURED NOTES OR ACCRUED INTEREST THEREON WHEN DUE,
HAS OCCURRED AND CONTINUED FOR 30 DAYS WITHOUT BEING CURED OR WAIVED
PRIOR TO THE DATE HEREOF, (ii) AN EVENT OF DEFAULT (AS DEFINED IN THE
SECURED NOTES) RESULTING FROM THE FAILURE TO PAY THE PRINCIPAL OF THE
SECURED NOTES OR ACCRUED INTEREST THEREON WHEN DUE HAS OCCURRED OR
(iii) MAKER HAS FAILED TO PAY ALL PRINCIPAL AND ACCRUED BUT UNPAID
INTEREST DUE AND OWING UNDER THE SECURED NOTES ON DECEMBER 31, 2002.
4. WE HEREBY MAKE DEMAND FOR PAYMENT UNDER THE LETTER OF CREDIT IN THE
AMOUNT OF $_____________, WHICH DEMAND IS EVIDENCED HEREIN.
5. THE AMOUNT DEMANDED HEREUNDER DOES NOT EXCEED THE AGGREGATE UNPAID
PRINCIPAL AMOUNT OF THE SECURED NOTES AND THE AGGREGATE AMOUNT OF
ACCRUED BUT UNPAID INTEREST THEREIN AT THE TIME OF THIS DRAWING.
PLEASE [DEPOSIT] [WIRE TRANSFER] THE AMOUNT HEREBY DEMANDED [IN OUR ACCOUNT NO.
______________________ WITH] [TO]_________________________________________AT
______________________________________________________________________________.
IN WITNESS WHEREOF, THIS CERTIFICATE HAS BEEN EXECUTED THIS___ DAY OF
_______________, 200_.
BENEFICIARY NAME, AS AGENT.
BY:
---------------------------------------
ITS:
---------------------------------------
EXHIBIT B
TO LETTER OF CREDIT NO. __________
ISSUED BY
LASALLE NATIONAL BANK, N.A.
REQUEST FORM FOR FULL TRANSFER
____________________, 19___
LASALLE NATIONAL BANK, N.A.
---------------------------
---------------------------
CHICAGO, ILLINOIS _________
RE: CREDIT NO.___________
ISSUED BY: LASALLE BANK N.A.
GENTLEMEN:
FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY
TRANSFERS TO:
------------------------------------
(NAME OF TRANSFEREE)
------------------------------------
(ADDRESS)
------------------------------------
(CITY, STATE, ZIP CODE)
ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY UNDER THE ABOVE LETTER OF
CREDIT IN ITS ENTIRETY.
BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH
LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE AND THE TRANSFEREE SHALL HAVE
THE SOLE RIGHTS AS AGENT THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY
AMENDMENTS WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS AND WHETHER NOW
EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE
TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED
BENEFICIARY.
THE ORIGINAL OF SUCH LETTER OF CREDIT AND ANY SUBSEQUENT AMENDMENTS ARE
RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE
THEREOF, AND FORWARD IT DIRECT TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF
TRANSFER.
ENCLOSED IS REMITTANCE OF $___________________* IN PAYMENT OF YOUR
TRANSFER COMMISSION AND IN ADDITION THERETO, WE AGREE TO PAY TO YOU ON DEMAND
ANY EXPENSES WHICH MAY BE INCURRED BY YOU IN CONNECTION WITH THIS TRANSFER.
YOURS VERY TRULY,
BENEFICIARY'S NAME
------------------------------------
The above signature with title as stated SIGNATURE OF BENEFICIARY
conforms with that on file with us and is BY:
authorized for the execution of said TITLE:______________________________
instruments.
-----------------------------------
(Bank)
-----------------------------------
(Authorized Signature)
-THIS FORM MUST BE EXECUTED IN DUPLICATE-
Transfer fee: 0.25% of the amount of transfer - minimum $200.00 per transfer
EXHIBIT H
FORM OF GUARANTY
GUARANTY
This Guaranty ("Guaranty") is made as of October __, 2001 by divine,
inc., a Delaware corporation ("Guarantor"), in favor of the holders (the
"Holders") of certain secured promissory notes of RoweCom Inc., a Delaware
corporation ("RoweCom"), due on December 31, 2002 in the aggregate principal
amount of $__________ issued pursuant to the Exchange Agreement referred to
below (the "Notes").
Factual Background
A. Pursuant to that certain Agreement and Plan of Merger and
Reorganization (the "Merger Agreement"), dated as of July 6, 2001, by and among
Guarantor, Knowledge Resources Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Guarantor ("Merger Sub"), and RoweCom, Merger Sub
will merge with and into RoweCom (the "Merger") subject to the satisfaction of
the conditions set forth in the Merger Agreement.
B. After the consummation of the Merger, RoweCom will be a wholly-owned
subsidiary of Guarantor.
C. It is a condition to Guarantor's obligation to consummate the Merger
pursuant to the Merger Agreement that the Holders exchange certain Promissory
Notes of RoweCom due __________, 2001 and warrants to purchase shares of RoweCom
Common Stock for promissory notes of RoweCom due December 31, 2002 and warrants
to purchase shares of divine's Class A Common Stock.
D. Guarantor is executing this Guaranty in order to induce the Holders
to enter into that certain Exchange Agreement of even date herewith between
RoweCom and the Holders (the "Exchange Agreement"), pursuant to which such
exchange shall occur.
GUARANTY
1. Guaranty of Obligations. Guarantor unconditionally guaranties to the
Holders the full payment of all monetary obligations of RoweCom under the Notes
("Obligations"), and unconditionally agrees to pay the Holders all of the
Obligations. This is a guaranty of payment, not of collection. If RoweCom
defaults in the payment when due of all or any part of the Obligations,
Guarantor shall in lawful money of the United States pay to the Holders, on
demand, all sums due and owing for the Obligations, provided, that any liability
of the Guarantor hereunder shall not be discharged except to the extent that the
Guarantor or RoweCom has made payment in respect of the Obligations.
2. Guarantor's Waivers. Guarantor waives:
(a) Any right it may have to require the Holders to proceed
against RoweCom, to proceed against or exhaust any security held from
RoweCom, or to pursue any other remedy in the Holders' power to pursue;
(b) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of RoweCom;
(c) Any defense based on: (i) any legal disability of RoweCom,
(ii) any release, discharge, modification, impairment or limitation of
the liability of RoweCom to the Holders from any cause, whether arising
by operation of law or from any bankruptcy or other voluntary or
involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships ("Insolvency Proceeding") and (iii) any
rejection or disaffirmance of the Obligations, or any part of the
Obligations, or any security held for the Obligations, in any such
Insolvency Proceeding;
(d) Any defense based on any action taken or omitted by the
Holders in any Insolvency Proceeding involving RoweCom, including any
election to have the Holders' claim allowed as being secured, partially
secured or unsecured, any extension of credit by the Holders to RoweCom
in any Insolvency Proceeding, and the taking and holding by the Holders
of any security for any such extension of credit; and
(e) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty and of the existence, creation,
or incurring of new or additional indebtedness, and demands and notices
of every kind except for any demand or notice by the Holders to
Guarantor expressly provided for in Section 1.
3. Waivers of Subrogation and Other Rights and Defenses. Regardless of
whether Guarantor may have made any payments to the Holders, Guarantor hereby
waives: (i) all rights of subrogation, indemnification, contribution and any
other rights to collect reimbursement from RoweCom or any other party, for any
sums paid to the Holders, whether contractual or arising by operation of law
(including the United States Bankruptcy Code or any successor or similar
statute) or otherwise, (ii) all rights to enforce any remedy that the Holders
may have against RoweCom, and (iii) all rights to participate in any security
now or later to be held by the Holders for the Obligations. The waivers given in
this Section 3 shall be effective until the Obligations have been paid and
performed in full.
4. Revival and Reinstatement. If the Holders are required to pay,
return or restore to RoweCom or any other person any amounts previously paid on
the Obligations because of any Insolvency Proceeding of RoweCom, any stop notice
or any other reason, the obligations of Guarantor shall be reinstated and
revived and the rights of the Holders shall continue with regard to such
amounts, all as though they had never been paid.
5. No Waiver; Consents; Cumulative Remedies. Each waiver by the Holders
must be in writing, and no waiver shall be construed as a continuing waiver. No
waiver shall be implied from the Holders' delay in exercising or failure to
exercise any right or remedy against RoweCom, Guarantor or any security. Consent
by the Holders to any act or omission by RoweCom or Guarantor shall not be
construed as a consent to any other or subsequent act or omission, or as a
waiver of the requirement for the Holders' consent to be obtained in any future
or other instance. All remedies of the Holders against RoweCom and Guarantor are
cumulative.
2
6. No Release. Guarantor shall not be released from the performance of
its obligations under this Guaranty except by a writing signed by the Holders.
7. Heirs, Successors and Assigns. The terms of this Guaranty shall bind
and benefit the heirs, legal representatives, successors and assigns of the
Holders and Guarantor; provided, however, that Guarantor may not assign or
delegate any of its rights or obligations under this Guaranty, without the prior
written consent of the Holders in each instance.
8. Notices. Any notices required or permitted to be sent hereunder
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, and shall be deemed to have been given upon delivery, if delivered
personally, five days after mailing, if mailed, or one business day after
delivery to the courier, if delivered by overnight courier service:
If to divine, to:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to the Holders, to the addresses of the Holders listed on
the Exhibits to the Exchange Agreement.
9. Rules of Construction. In this Guaranty, the word "person" includes
any individual, company, trust or other legal entity of any kind. The word
"include(s)" means "include(s) without limitation," and the word "including"
means "including, but not limited to." When the context and construction so
require, all words used in the singular shall be deemed to have been used in the
plural and vice versa. No listing of specific instances, items or matters in any
way limits the scope or generality of any language of this Guaranty. All
headings appearing in this Guaranty are for convenience only and shall be
disregarded in construing this Guaranty.
10. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
11. Integration; Modifications. This Guaranty (a) integrates all the
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor and the Holders as the final expression of the
agreement with respect to the terms and conditions set forth in this Guaranty
and as the complete and exclusive statement of the terms agreed to by Guarantor
and the Holders. No representation, understanding, promise or condition shall be
enforceable against any party hereto unless it is contained in this Guaranty.
This Guaranty may not be modified except in a writing signed by both the Holders
and Guarantor. No course of prior dealing, usage of trade, parol or extrinsic
evidence of any nature shall be used to supplement, modify or vary any of the
terms hereof.
3
12. Miscellaneous. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision. This Guaranty
may be executed in counterparts, and all counterparts shall constitute but one
and the same document. Time is of the essence in the performance of this
Guaranty by Guarantor.
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of
the date first above written.
Guarantor:
divine, inc.
By:
----------------------------------------
Name:
Title:
4
EXHIBIT I
NOTICE OF PARTICIPATION
Name of holder of Note:
-----------------------------------------------------
Aggregate Principal Amount of Note:
--------------------------------------------
The undersigned hereby elects to participate in the Exchange (as defined in that
certain Letter, dated October __, 2001 from divine, inc. to the undersigned).
Name:
--------------------------------------------
Signature:
--------------------------------------------
