EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of January 22, 2002 by and between divine, inc., a Delaware
corporation ("divine"), and those Persons set forth on the Schedule of Holders
hereto who become a party hereto (collectively, the "Holders" and individually,
a "Holder").
RECITALS
WHEREAS, pursuant to that certain Subscription Agreement, dated as of
the date hereof, by and between divine and Wirecomm Systems Inc. ("Wirecomm"),
an Ontario corporation (the "Purchase Agreement"), the other documents and
instruments referred to therein, and consummation of the transactions
contemplated thereby, each of the Holders is acquiring shares of the class A
common stock, $0.001 par value per share, of divine (the "Common Stock").
WHEREAS, in order to induce the Holders to enter into the Purchase
Agreement and the other agreements contemplated thereby, divine has agreed to
provide the Holders the registration rights set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the parties hereto hereby agree as
follows:
1. DEFINITIONS. Capitalized terms not defined herein shall have the
meaning attributed to them in the Purchase Agreement. As used in this Agreement,
"Commission" means the United States Securities and Exchange Commission
or any successor thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, as the same shall be in effect from time to
time.
"Holder Registrable Shares" means the shares of Common Stock issued to
the Holders pursuant to the Purchase Agreement and then outstanding, including
any Common Stock or other security issued or issuable with respect to such
Common Stock by reason of a dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization of divine; provided, however, that Holder Registrable Shares
shall not include (a) any shares that have been disposed of pursuant to an
effective registration statement under the Securities Act, (b) any shares that
have been sold pursuant to Rule 144, or (c) with respect to any individual
Holder, any shares held by that Holder when the entire amount of then
outstanding Holder Registrable Shares held by that Holder may be sold within a
three-month period pursuant to Rule 144.
"Person" means an individual, corporation, partnership, limited
liability company, limited partnership, syndicate, person (including, without
limitation, a "Person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association, or entity or government, political subdivision, agency or
instrumentality of a government.
"Public Offering" means any offering by divine of its equity securities
to the public pursuant to an effective registration statement under the
Securities Act.
"Rule 144" means Rule 144 (including Rule 144(k)) of the Commission
under the Securities Act or any similar provision then in force under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, as the same shall be in effect from time to time.
2. REQUIRED REGISTRATION. As soon as practicable after the Closing (as
defined in the Purchase Agreement), but not more than 30 days thereafter, divine
shall file a registration statement on Form S-3 to register all of the Holder
Registrable Shares (the "Shelf Registration"). Divine shall use its reasonable
best efforts to cause such Shelf Registration to be deemed effective as soon as
possible and shall maintain the effectiveness of the Shelf Registration until
such time as divine reasonably determines that the Holders will be eligible to
sell all of the Holder Registrable Shares then owned by the Holders without the
need for continued registration of the Holder Registrable Shares in the
three-month period immediately following the termination of the effectiveness of
the Shelf Registration. Divine's obligations contained in this Section 2 shall
terminate on the second anniversary of the date on which the Holder Registrable
Shares are issued. Notwithstanding the foregoing, divine may delay filing the
Shelf Registration, and may withhold efforts to cause the Shelf Registration to
become effective, if divine determines in good faith that such registration
might (i) interfere with or affect the negotiation or completion of any
transaction that is being contemplated by divine (whether or not a final
decision has been made to undertake such transaction) at the time the right to
delay is exercised, or (ii) involve initial or continuing disclosure obligations
of divine. In no event shall divine be entitled to so delay the filing of the
Shelf Registration, or withhold efforts to cause the Shelf Registration to
become effective, for a period of more than 45 days. If, after the Shelf
Registration becomes effective, divine advises the Holders that divine considers
it appropriate for the Shelf Registration to be amended, the Holders shall
suspend any further sales of their registered shares until divine advises them
that an amendment to the Shelf Registration has been declared effective.
3. REGISTRATION PROCEDURES.
(a) Divine shall keep each Holder advised in writing as to the
initiation of the Shelf Registration and as to the completion thereof. In
addition, divine shall at its own expense:
(i) prepare and file with the SEC such amendments and
supplements to such registration statement as may be necessary to keep such
registration effective and comply with provisions of the Securities Act with
respect to the disposition of all securities covered thereby during such period;
(ii) update, correct, amend, and supplement such registration as
necessary;
(iii) notify the Holders when the Shelf Registration is
declared effective by the SEC and furnish such number of prospectuses, including
preliminary prospectuses, and other documents incident thereto, as the Holders
may reasonably request from time to time;
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(iv) register or qualify the Holder Registrable Shares under
such other securities or blue sky laws of such jurisdictions of the United
States as the Holders may reasonably request to enable it to consummate the
disposition in such jurisdiction of the Holder Registrable Shares (provided that
divine will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
provision, or (ii) consent to general service of process in any such
jurisdiction);
(v) notify the Holders at any time when a prospectus
relating to the Holder Registrable Shares is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in the Shelf Registration contains an untrue statement of a
material fact or omits any fact necessary to make the statement therein not
misleading, and at the request of the Holders, divine will prepare a supplement
or amendment to such prospectus, so that, as thereafter delivered to purchasers
of such shares, such prospectus will not contain any untrue statements of a
material fact or omit to state any fact necessary to make the statements therein
not misleading (and such Holders shall suspend the use of the prospectus until
the requisite changes thereto have been made);
(vi) cause all Holder Registrable Shares to be listed on
each securities exchange or automated quotation system on which similar
securities issued by divine are then listed or quoted and obtain all necessary
approvals for trading thereon;
(vii) provide a transfer agent and registrar for all such
Holder Registrable Shares not later than the effective date of such registration
statement;
(viii) enter into such customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Holder Registrable Shares;
(ix) make available for inspection by any attorney,
accountant, or other agent retained by any such seller, all financial and other
records, pertinent corporate documents, and properties of divine, and cause
divine's officers, directors, employees, and independent accountants to supply
all information reasonably requested by any such seller, attorney, accountant,
or agent in connection with such registration statement; and
(x) advise each seller of such Holder Registrable Shares,
promptly after it shall receive notice or obtain knowledge thereof, of: (A) the
issuance of any stop order by the Commission suspending the effectiveness of
such registration statement, (B) the initiation or threatening of any proceeding
for such purpose, or (C) any notice from Nasdaq or any other exchange on which
divine's shares are traded that such shares are subject to a delisting
proceeding, and promptly use its reasonable efforts to prevent the issuance of
any such stop order, or to obtain its withdrawal if any such stop order shall be
issued or such proceeding be initiated (and, if such stop order shall be issued,
or such shares be delisted, such sellers shall suspend the use of the prospectus
until it shall be withdrawn).
(b) Except as required by law, all expenses incurred by divine in
complying with this Section 3, including but not limited to, all registration,
qualification, and filing fees, printing expenses, fees and disbursements of
counsel and accountants for divine, and blue sky fees and
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expenses (including fees and disbursements of counsel related to all blue sky
matters) ("Registration Expenses") incurred in connection with any registration
pursuant to this Section 3 shall be borne by divine. All discounts and selling
commissions applicable to a sale incurred in connection with any registration of
Holder Registrable Shares and the legal fees and other expenses of any Holder
shall be borne by that Holder.
(c) Notwithstanding any provision of this Section 3 to the contrary,
divine shall not be required to amend the Shelf Registration or amend or
supplement a prospectus if (i) such amendment of supplement would require divine
to disclose a material financing, acquisition, or other transaction then being
pursued by divine and the Board of Directors of divine shall determine in good
faith that such disclosure is not in the best interests of divine or would
interfere with such transaction or (ii) divine shall determine in good faith
that there is a valid business purpose or reason for suspending the use of such
prospectus in accordance with Section 3(a)(v) hereof instead of making such
amendment or supplement. Divine shall not be permitted, however, to defer any
such amendment, supplement, or use of the Shelf Registration, or the prospectus
included in the Shelf Registration, pursuant to this Section 3(d) for a period
of more than 45 days per year.
4. FURTHER INFORMATION. Each Holder shall furnish divine with such
information regarding such Holder as divine may reasonably request and as shall
be required in connection with the Shelf Registration and each Holder shall
indemnify divine with respect thereto in accordance with Section 5 of this
Agreement.
5. INDEMNIFICATION.
5.1 BY DIVINE. Divine agrees to indemnify, to the extent permitted by
law, each holder of Holder Registrable Shares, its managers, officers, and
directors, and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities, and expenses
(including without limitation, attorneys' fees) ("Liabilities") caused by any
untrue or alleged untrue statement of material fact contained in the Shelf
Registration statement or the prospectus or preliminary prospectus included in
the Shelf Registration, or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to
divine by such holder expressly for use therein or by such holder's failure to
deliver a copy of the Shelf Registration, or any prospectus included in the
Shelf Registration, or any amendments or supplements thereto after divine has
furnished such holder with a sufficient number of copies of the same. The
payments required by this Section 5.1 will be made periodically during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
5.2 BY EACH HOLDER. Each holder of Holder Registrable Shares shall
furnish to divine in writing such information and affidavits as divine
reasonably requests for use in connection with the Shelf Registration and any
prospectus included in the Shelf Registration, and, to the extent permitted by
law, shall indemnify divine, its directors and officers, and each Person who
controls divine (within the meaning of the Securities Act) against any
Liabilities resulting from any untrue or alleged untrue statement of material
fact contained in the Shelf
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Registration, any prospectus or preliminary prospectus included in the Shelf
Registration, or any amendment thereof or supplement thereto, or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder expressly for use in such registration or
prospectus; provided that the obligation to indemnify under this Section 5.2 or
to contribute under Section 5.4 below will be several, not joint and several,
among such holders of Holder Registrable Shares, and the liability of each such
holder of Holder Registrable Shares under this Section 5.2 and under Section 5.4
shall be limited to the net amount received by such holder from the sale of
Holder Registrable Shares pursuant to the Shelf Registration.
5.3 PROCEDURE. Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
5.4 CONTRIBUTION. To the extent any indemnification by an indemnifying
party provided for in this Section 5 is prohibited or limited by law, the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Liabilities in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such Liabilities, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph;
provided that the limits in the final proviso of Section 5.2 shall apply to this
Section 5.4. 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.
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5.5 OTHER INDEMNIFICATION PROVISIONS. The indemnification and
contribution provided for under this Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling Person of such indemnified party
and will survive the transfer of securities.
6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may participate
in any offering under the Shelf Registration which is underwritten unless divine
consents, in its sole discretion, to such an offering and such Holder (a) agrees
to sell its Holder Registrable Shares on the basis provided in any underwriting
arrangements approved by divine or any other Person or Persons entitled to
approve such arrangements, and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements,
and other documents reasonably required under the terms of such underwriting
arrangements. Each Holder agrees that, upon receipt of any notice from divine of
the happening of any event of the kind described in Section 3(a)(v) above, such
Person will forthwith discontinue the disposition of its Holder Registrable
Shares pursuant to the Shelf Registration until such Holder's receipt of the
copies of a supplemented or amended prospectus as contemplated by such Section
3(a)(v).
7. HOLDBACK AGREEMENTS. Each holder of Holder Registrable Shares agrees
not to effect any public sale or distribution of equity securities of divine, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to the effective date of any
underwritten Public Offering (except as part of such underwritten registration),
unless the underwriters managing the Public Offering otherwise agree to a
shorter period and unless any of the directors and/or officers, of divine are
subject to a shorter period.
8. MISCELLANEOUS.
8.1 OTHER REGISTRATION RIGHTS. Divine may hereafter grant to any Person
or Persons the right to request divine to register any equity securities of
divine, or any securities convertible or exchangeable into or exercisable for
such securities, without the prior written consent of the holders of the Holder
Registrable Shares.
8.2 ASSIGNMENT OF REGISTRATION RIGHTS. The registration rights of any
Holder under this Agreement with respect to any Holder Registrable Shares may be
assigned to any Person who acquires such Holder Registrable Shares; provided
that (a) the assigning Holder shall give divine written notice at or prior to
the time of such assignment stating the name and address of the assignee and
identifying the shares with respect to which the rights under this Agreement are
being assigned; (b) such assignee shall agree in writing, in form and substance
reasonably satisfactory to divine, to be bound as a Holder by the provisions of
this Agreement; and (c) immediately following such assignment the further
disposition of such securities by such assignee is restricted under the
Securities Act.
8.3 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 permitted successors and assigns of the parties hereto, whether so
expressed or not.
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8.4 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
8.5 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.
8.6 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 to
divine, and shall be deemed to have been given upon delivery, if delivered
personally, three days after mailing, if mailed, or one business day after
delivery to the courier, if delivered by overnight courier service:
If to divine, to:
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
with a copy to:
Xxxx, Xxxx & Xxxxx LLC
00 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: D. Xxxx XxXxxxxx, Esq.
If to the Holders of Holder Registrable Shares, to the addresses
set forth in the stock records of divine.
8.7 GOVERNING LAW. All questions concerning the construction, validity,
and interpretation of this Agreement, and the performance of the obligations
imposed by this Agreement, shall be governed by the laws of the State of
Illinois applicable to contracts made and wholly to be performed in that state.
8.8 AMENDMENTS AND WAIVERS. The provisions of this Agreement may be
amended upon the written agreement of divine and the holder or holders of a
majority of the Holder Registrable Shares. Any waiver, permit, consent, or
approval of any kind or character on the part of any holders of any provision or
condition of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in writing.
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8.9 FINAL AGREEMENT. This Agreement, constitutes the complete and final
agreement of the parties concerning the matters referred to herein and
supersedes all prior agreements and understandings.
8.10 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.
8.11 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be used against any
party.
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SIGNATURE PAGES FOLLOWS]
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IN WITNESS WHEREOF, divine has executed this Agreement as of the date
first set forth above.
divine, inc.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and General
Counsel
Holder: Wirecomm Systems Inc.
By: /s/ Authorized Signatory
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Name:
----------------------------------------
Title:
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Holder: Launchworks Inc.
By: /s/ Authorized Signatory
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Name:
----------------------------------------
Title:
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SCHEDULE OF HOLDERS
NAME ADDRESS
---- -------
Wirecomm Systems Inc. 00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxx Xxxxxxx X0X 0X0
Launchworks Inc. 0000X - 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
DIVINE, INC.
COUNTERPART SIGNATURE PAGE
TO
REGISTRATION RIGHTS AGREEMENT
The undersigned hereby executes the Registration Rights Agreement by
and among divine, inc. ("divine") and certain persons who own issued and
outstanding shares of Common Stock of divine and hereby authorizes this
signature page to be attached as a counterpart of such document executed by
divine. The undersigned hereby agrees to be bound by, and shall be entitled to
the rights and benefits of, the terms and provisions of the Registration Rights
Agreement.
Dated: , 2002
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(Signature)
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(Print Name of Holder)
