Exhibit 10.10
ART TECHNOLOGY GROUP, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
DECEMBER 23, 1996
TABLE OF CONTENTS
Page
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1. Authorization and Sale of Shares 1
2. The Closing 1
3. Representations of the Company 2
4. Representations of the Purchasers 7
5. Conditions to the Obligations of the Purchasers 8
6. Conditions to the Obligations of the Company 9
7. Covenants 10
8. Transfer of Shares 11
9. Miscellaneous 13
SCHEDULES AND EXHIBITS
Exhibit A Terms of Series B Preferred Stock
Exhibit B Form of Warrant
Exhibit C Disclosure Schedule
Exhibit D Form of Stockholders Agreement
Exhibit E Form of Opinion of Xxxx and Xxxx
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement dated as of December
23, 1996, is entered into by and among Art Technology Group, Inc., a
Massachusetts corporation (the "Company") and SOFTBANK Ventures, Inc., a
Japanese corporation (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1 AUTHORIZATION AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has, or before the Closing (as defined in
Section 2) will have, duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of up to 425,532 shares (the "Shares")
of its Series B Convertible Preferred Stock, $.01 par value per share
(the "Series B Preferred"), having the rights, restrictions, privileges
and preferences set forth in EXHIBIT A hereto.
1.2 SALE OF SHARES. Subject to the terms and conditions of this Agreement,
at the Closing, the Company will sell and issue to the Purchaser, and
the Purchaser will purchase 425,532 shares for a purchase price of
$7.05 per share.
1.3 SALE OF WARRANTS. Subject to the terms and conditions of this
Agreement, at the Closing the Company will sell and issue to the
Purchaser, and the Purchaser will purchase, a Performance Warrant
substantially in the form attached hereto as EXHIBIT B (the "Warrant")
to acquire, for $7.05 per share, up to 425,532 shares of Series B
Preferred. The shares of Series B Preferred issuable upon the exercise
of the Warrants are referred to herein as the "Warrant Shares".
1.4 USE OF PROCEEDS. The Company will use the proceeds from the sale of the
Shares and Warrants for product development and other working capital
purposes.
2 THE CLOSING.
The closing (the "Closing") of the sale and purchase of the Shares and
the Warrants under this Agreement shall take place at the offices of
Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at such
time, date and place as are mutually agreeable to the Company and the
Purchaser. At the Closing, the Company shall deliver to the Purchaser a
certificate evidencing the number of Shares being purchased registered
in the name of the Purchaser, against payment to the Company of the
purchase price therefor, by wire transfer, check or other method
acceptable to the Company, and a Warrant, registered in the name of the
Purchaser. The date of the Closing is hereinafter referred to as the
"Closing Date." If at the Closing any of the conditions specified in
Section 5 shall not
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have been fulfilled, the Purchaser shall, at its election, be relieved
of its obligations to purchase the Shares and the Warrant at the
Closing without thereby waiving any other rights it may have by reason
of such failure or such non-fulfillment.
3 REPRESENTATIONS OF THE COMPANY.
Subject to and except as disclosed by the Company in EXHIBIT C hereto
(the "Disclosure Schedule"), the Company hereby represents and warrants
to the Purchasers as follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has full corporate power and
authority to conduct its business as presently conducted and as
proposed to be conducted by it and to enter into and perform this
Agreement and to carry out the transactions contemplated by this
Agreement. The Company is duly qualified to do business as a foreign
corporation in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the operations or
financial condition of the Company.
3.2 CAPITALIZATION. The authorized capital stock of the Company
(immediately prior to the Closing) consists of 12,000,000 shares of
common stock, $.01 par value per share (the "Common Stock"), of which
5,900,000 shares are issued and outstanding, and 1,000,000 shares of
Preferred Stock, $.01 par value per share, 130,000 of which shares have
been designated as Series A Convertible Preferred Stock (all of which
are issued and outstanding and which are convertible into an aggregate
of 1,300,000 shares of Common Stock), 851,064 shares have been
designated as Series B Preferred (none of which are issued or
outstanding) and 18,936 shares remain available for future designation.
All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth in the Disclosure Schedule or as
contemplated by this Agreement, (i) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is
authorized or outstanding, (ii) the Company has no obligation
(contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company, and (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. All
of the issued and outstanding shares of capital stock of the Company
have been offered, issued and sold by the Company in compliance with
applicable Federal and state securities laws.
3.3 SUBSIDIARIES, ETC. The Company has no subsidiaries and does not own or
control, directly or indirectly, any shares of capital stock of any
other corporation or any interest in any partnership, joint venture or
other non-corporate business enterprise.
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3.4 STOCKHOLDER LIST AND AGREEMENTS. Set forth in the Disclosure Schedule
is a true and complete list of the stockholders of the Company, showing
the number of shares of Common Stock or other securities of the Company
held by each stockholder as of the date of this Agreement. Except as
provided in, or contemplated by, this Agreement, or as set forth on the
Disclosure Schedule, there are no agreements, written or oral, between
the Company and any holder of its capital stock, or, to the best of the
Company's knowledge, among any holders of its capital stock, relating
to the acquisition (including without limitation rights of first
refusal or pre-emptive rights), disposition, registration under the
Securities Act of 1933, as amended (the "Securities Act"), or voting of
the capital stock of the Company.
3.5 ISSUANCE OF SHARES. The issuance, sale and delivery of the Shares and
the Warrants in accordance with this Agreement, and the issuance and
delivery of the shares of Common Stock issuable upon conversion of the
Shares and the Warrant Shares issuable upon exercise of the Warrants,
have been, or will be on or prior to the Closing, duly authorized by
all necessary corporate action on the part of the Company, and all such
shares have been duly reserved for issuance. The Shares when so issued,
sold and delivered against payment therefor in accordance with the
provisions of this Agreement, and the shares of Common Stock issuable
upon conversion of the Shares and the Warrant Shares issuable upon
exercise of the Warrants, when issued upon such conversion or exercise,
will be duly and validly issued, fully paid and non-assessable.
3.6 AUTHORITY FOR AGREEMENT. The execution, delivery and performance by the
Company of this Agreement, the Warrants, and the Stockholders Agreement
(as defined in Section 5.3 below), and the consummation by the Company
of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action. This Agreement, the
shares, the Warrants and the Stockholders Agreement have been duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company enforceable in accordance with their
respective terms. The execution of and performance of the transactions
contemplated by this Agreement, the Warrants and the Stockholders
Agreement and compliance with their provisions by the Company will not
violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or
constitute a default under, or require a consent or waiver under, its
Articles of Organization or By-Laws (each as amended to date) or any
indenture, lease, agreement or other instrument to which the Company is
a party or by which it or any of its properties is bound, or any
decree, judgment, order, statute, rule or regulation applicable to the
Company.
3.7 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing
with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the
Stockholders Agreement or the Warrants, the offer, issuance, sale and
delivery of the Shares or the Warrants, or the other transactions to be
consummated at the Closing, as contemplated by this Agreement, except
such filings as shall have been made
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prior to and shall be effective on and as of the Closing. Based on the
representations made by each of the Purchaser in Section 4 of this
Agreement, the offer and sale of the Shares and the Warrants to the
Purchaser will be in compliance with applicable Federal and state
securities laws.
3.8 LITIGATION. There is no action, suit or proceeding, or governmental
inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company,
which questions the validity of this Agreement or the right of the
Company to enter into it, or which might result, either individually or
in the aggregate, in any material adverse change in the business or
financial condition of the Company.
3.9 TAXES. The Company has filed all Federal, state, county, local and
foreign tax returns which are required to be filed by it, such returns
are true and correct and all taxes, if any, shown thereon to be due
have been timely paid with exceptions not material to the Company.
3.10 PROPERTY AND ASSETS. The Company has good title to all of its material
properties and assets, except those disposed of since the date thereof
in the ordinary course of business, and none of such properties or
assets is subject to any mortgage, pledge, lien, security interest,
lease, charge or encumbrance.
3.11 INTELLECTUAL PROPERTY. Set forth on the Disclosure Schedule is a true
and complete list of all patents, patent applications, trademarks,
service marks, trademark and service xxxx applications, trade names and
copyright registrations owned by the Company (the "Intellectual
Property Rights"). The Company owns, or has the right to use, all third
party technology and intellectual property necessary for the conduct of
the company's business. The Company has taken all actions reasonably
necessary to protect the Intellectual Property Rights. To the best of
the Company's knowledge, the business conducted or proposed by the
Company does not and will not cause the Company to infringe or violate
any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other intellectual property rights of any
other person or entity. No other person or entity (including without
limitation any prior employer of any employee of the Company) has any
right to or interest in any inventions, improvements, discoveries or
other confidential information of the Company.
3.12 FINANCIAL STATEMENTS. The Company has furnished to the Purchaser its
unaudited balance sheet (the "Balance Sheet") as at June 30, 1996 (the
"Balance Sheet Date") and the related statements of operations and cash
flow for the six months then ended (collectively, the "financial
Statements"). The Financial Statements are complete and correct, are in
accordance with the books and records of the Company and present fairly
the financial condition and results of operations of the company, as at
the dates and for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles consistently
applied, except that the Financial Statements have been prepared
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for the internal use of management and may not be in accordance with
generally accepted accounting principles because of the absence of
footnotes normally contained therein and are subject to normal year-end
audit adjustments which in the aggregate will not be material.
3.13 ABSENCE OF LIABILITIES. Except as disclosed in the Disclosure Schedule,
the company did not have, at the Balance Sheet Date, any liabilities of
any type which in the aggregate exceeded $50,000 whether absolute or
contingent, which were not reflected on the Balance Sheet, and since
the Balance Sheet Date, the company has not incurred or otherwise
become subject to any such liabilities or obligations except in the
ordinary course of business.
3.14 ABSENCE OF CHANGES. Since the Balance Sheet Date, there has been no
material adverse change in the condition, financial or otherwise, net
worth or results of operations of the Company, other than changes
occurring in the ordinary course of business which changes have not,
individually or in the aggregate, had a materially adverse effect on
the business, prospects, properties or condition, financial or
otherwise of the Company.
3.15 COMPLIANCE. The Company has, in all material respects, complied with
all laws, regulations and orders applicable to its business and has all
material permits and licenses required thereby.
3.16 EMPLOYEES. The Company's relations with its employees are good. All
employees of the Company whose employment responsibility requires
access to confidential or proprietary information of the Company have
executed and delivered nondisclosure and assignment of invention
agreements, the form of which has been made available to the Purchaser
for review.
3.17 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974 other than a medical benefit
plan with respect to which the Company has made all required
contributions and has complied with all applicable laws.
3.18 COMPLIANCE WITH OTHER INSTRUMENTS. The company is not in violation of
any term of its Articles of Organization or its Bylaws or any mortgage,
indebtedness, indenture, judgment or decree to which it is a party or
by which it or any of its properties is bound, and is not in violation
of any material respect of any term or provision of any material
contact, agreement or instrument to which it is a party or by which it
or any of its properties is bound.
3.19 PERMITS. The Company has all franchises, permits, licenses and other
governmental authority necessary for its business as now being
conducted and believes it can obtain, without undue burden or expense,
any similar authority for its business as planned to be conducted. The
Company is not in default in any material respect under any such
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franchise, permit, license or other authority.
3.20 DISCLOSURES. Neither this Agreement nor any Schedule or Exhibit hereto,
nor any information furnished in writing by or on behalf of the Company
to the Purchaser at or prior to the Closing, when read together,
contains or will contain any untrue statement of a material fact or
merits or will omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. The Company
knows of no information or fact which has or would have a material
adverse effect on the business, prospects, assets or condition,
financial or otherwise, of the Company which has not been disclosed to
the Purchaser.
4 REPRESENTATIONS OF THE PURCHASERS.
The Purchaser represents and warrants to the Company as follows:
4.1 INVESTMENT. The Purchaser is acquiring the Shares, the Warrants, the
Warrant Shares, and the shares of Common Stock into which the Shares
and the Warrant Shares may be converted, for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or
selling the same; and the Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof.
4.2 AUTHORITY. The Purchaser has full power and authority to enter into and
to perform this Agreement in accordance with its terms. The Purchaser
that is a corporation, partnership or trust represents it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3 EXPERIENCE. The Purchaser has carefully reviewed the representations
concerning the Company contained in this Agreement and has made
detailed inquiry concerning the Company, its business and its
personnel; the officers of the Company have made available to such
Purchaser business and financial data concerning the Company any and
all other written information which he or it has requested and have
answered to such Purchaser's satisfaction all inquiries made by such
Purchaser. Such Purchaser has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to
evaluate the risks and merits of its investment in the Company and is
able financially to bear the risks thereof. Such Purchaser's overall
commitment to investments which are not readily marketable is not
disproportionate to the Purchaser's net worth and the Purchaser's
investment in the Company will not cause such overall commitment to
become excessive. The Purchaser has adequate net worth and means of
providing for current needs and personal contingencies to sustain a
complete loss of the Purchaser's investment in the Company, and the
Purchaser has no need for liquidity in this investment.
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4.4 SECURITIES LAWS. The Purchaser acknowledges that no federal or state
agency has made any finding or determination as to the fairness of the
terms of this offering. Neither the Shares nor the Warrants have been
recommended or endorsed by any federal or state securities commission
or regulatory agency nor have any of the foregoing authorities
confirmed the accuracy or determined the adequacy of the materials and
information provided to the Purchaser by the Company.
4.5 RISK. The Purchaser understands that an investment in the Company
involves significant risks, and the Purchaser has carefully reviewed
and is aware of all of the risk factors related to the purchase of the
Shares and the Warrants.
4.6 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended.
5 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
The obligation of the Purchaser to purchase the Shares and the Warrants
at the Closing is subject to the fulfillment, or the waiver by the
Purchaser, of each of the following conditions on or before the
applicable Closing:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation and
warranty contained in Section 3 shall be true on and as of the Closing
Date with the same effect as though such representation and warranty
had been made on and as of that date.
5.2 PERFORMANCE. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
5.3 STOCKHOLDERS AGREEMENT. A Stockholders Agreement among the Purchaser,
the Company and certain of its stockholders, substantially in the form
attached hereto as EXHIBIT D (the "Stockholders Agreement") shall have
been executed and delivered by the Company and by each of the
Stockholders (as defined therein).
5.4 CERTIFICATES AND DOCUMENTS. The Company shall have delivered to the
Purchaser:
(a) A Certificate, as of a recent date, as to the corporate good
standing of the Company issued by the Secretary of State of the
Commonwealth of Massachusetts;
(b) The Articles of Organization of the Company, as amended and in
effect as of the Closing Date, certified by its Clerk or
Assistant Clerk as of the Closing Date;
(c) By-laws of the Company, certified by its Clerk or Assistant
Clerk as of the Closing Date; and
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(d) Resolutions of the Board of Directors of the Company
authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified
by its Clerk or Assistant Clerk as of the Closing Date.
5.5 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate, executed by the President of the Company,
dated the Closing Date, certifying to the fulfillment of the conditions
specified in Sections 5.1 and 5.2 of this Agreement.
5.6 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have received from
counsel to the Company an opinion addressed to the Purchaser, dated the
date of the Closing, substantially in the form attached hereto as
EXHIBIT E.
5.7 OTHER MATTERS. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel,
and the Purchaser and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as
they may reasonably request.
6 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to issue and sell the Shares and
Warrants to a Purchaser under Section 1 of this Agreement are subject
to fulfillment, or the waiver, of the following conditions on or before
the Closing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 4 shall be true on and
as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date.
7 COVENANTS
7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION.
The Company shall deliver to each Purchaser:
(a) within 90 days after the end of each fiscal year of
the Company, an audited balance sheet of the Company
as at the end of such year and audited statements of
income and of cash flows of the Company for such
year, certified by reputable certified public
accountants selected by the Company, and prepared in
accordance with generally accepted accounting
principles;
(b) within 45 days after the end of each fiscal quarter
of the Company, an unaudited balance sheet of the
Company as at the end of such quarter,
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and unaudited statements of income and of cash flows
of the Company for such fiscal quarter and for the
current fiscal year to the end of such fiscal
quarter; and
(c) no later than 30 days prior to the beginning of each
fiscal year of the Company, an annual business plan
and annual operating budget of the Company.
7.2 BOARD OF DIRECTORS.
(a) SIZE AND COMPOSITION OF BOARD. The size of the Company's Board
of Directors shall not exceed seven (7) directors without the
prior written consent of the holders of a majority of the
then-outstanding Shares. At all times, at least one (1)
director of the Company shall not be an employee of the
Company.
(b) COMPENSATION COMMITTEE. The Company shall have a compensation
committee of its Board of Directors, a majority of the members
of which committee shall constitute non-employee directors of
the Company. Such committee shall review and approve all
salaries in excess of $150,000, stock option grants and
employment agreements.
7.3 RESERVATION OF COMMON STOCK. The Company shall reserve and maintain a
sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares and Warrant Shares and a
sufficient number of shares of Series B Preferred for issuance upon
exercise of the Warrants.
7.4 ADDITIONAL PURCHASES. No Purchaser shall, without the prior written
consent of the Company, purchase, receive or otherwise acquire any
securities of the Company except (a) pursuant to the exercise of a
Warrant or the conversion of Shares or Warrant Shares, (b) pursuant to
the exercise of its rights described in Articles III or IV of the
Stockholders Agreement.
7.5 TERMINATION OF COVENANTS. The covenants of the Company and the
Purchasers contained in Sections 7.1 through 7.4 shall terminate and be
of no further force or effect on the earlier to occur of (a) the
closing of a registration statement filed by the Company under the
Securities Act covering the Company's first public offering of Common
Stock or (b) the date on which the Purchasers and any transferees to
which they have transferred Shares in accordance with the provisions of
this Agreement collectively hold less than ten percent (10%) of the
Shares purchased by the Purchasers at the Closing.
8 TRANSFER OF SHARES.
8.1 RESTRICTED SHARES. "Restricted Shares" means (i) the Shares, the
Warrants and the Warrant Shares, (ii) the shares of Common Stock issued
or issuable upon conversion of the Shares
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or the Warrant Shares, (iii) any shares of capital stock of the Company
acquired by the Purchaser pursuant to the Stockholders Agreement, and
(iv) any other shares of capital stock of the Company issued in respect
of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); PROVIDED,
HOWEVER, that shares of Common Stock which are Restricted Shares shall
cease to be Restricted Shares (i) upon any sale pursuant to a
registration under the Securities Act, under Section 4(1) of the
Securities Act or Rule 144 under the Securities Act or (ii) at such
time as they become eligible for sale under Rule 144(k) under the
Securities Act.
8.2 REQUIREMENTS FOR TRANSFER.
(a) Restricted Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the
Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for transfer by the Purchaser to one
or more of its affiliated corporations or partnerships.
8.3 TRANSFEREES. Any permitted transferee to whom Shares are transferred by
a Purchaser shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be
bound by the obligations imposed upon the Purchaser under this
Agreement to the same extent as if such transferee were a party hereto
and, to the extent that such transferee will receive confidential
information from the Company and to the extent that such transferee is
not at such time a party to a confidentiality agreement with the
Company, shall execute and deliver to the Company a confidentiality
agreement in form and substance acceptable to the Company. A permitted
transferee to whom rights are transferred pursuant to this Section 8
may not again transfer such rights to any other person or entity.
8.4 LEGEND. Each certificate representing Restricted Shares shall bear a
legend substantially in the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to the Company
is obtained to the effect that such registration is not
required."
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The foregoing legend shall be removed from the certificates
representing any Restricted Shares, at the request of the holder
thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Securities Act.
8.5 RULE 144A INFORMATION. The Company shall, at all times during which it
is neither subject to the reporting requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), nor exempt from reporting pursuant to Rule 12g3-2(b) under the
Exchange Act, upon the written request of a Purchaser, provide in
writing to the Purchaser and to any prospective transferee of any
Restricted Shares the information concerning the Company described in
Rule 144A(d)(4) under the Securities Act ("Rule 144A Information"). The
Company also shall, upon the written request of a Purchaser, cooperate
with and assist the Purchaser or any member of the National Association
of Securities Dealers, Inc. PORTAL system in applying to designate and
thereafter maintain the eligibility of the Restricted Shares for
trading through PORTAL. The Company's obligations under this Section
8.5 shall at all times be contingent upon receipt from the prospective
transferee of Restricted Shares of a written agreement to take all
reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than persons who will assist such transferee
in evaluating the purchase of any Restricted Shares.
9 MISCELLANEOUS.
9.1 SUCCESSORS AND ASSIGNS. Except as provided in Section 8 hereof, the
rights granted pursuant to this Agreement may not be transferred or
assigned, and any transfer in violation of the provisions of this
Section 9.1 shall be null and void and of no force or effect. Subject
to the foregoing, the provisions of this Agreement shall be binding
upon, and inure to the benefit of, the respective successors, assigns,
heirs, executors and administrators of the parties hereto.
9.2 CONFIDENTIALITY. Each Purchaser agrees that it will keep confidential
and will not disclose or divulge any confidential, proprietary or
secret information which it may obtain from the Company pursuant to
financial statements, reports and other materials provided by the
Company to the Purchaser pursuant to this Agreement, unless such
information is known, or until such information becomes known, to the
public; PROVIDED, HOWEVER, that the Purchaser may disclose such
information (i) to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in
connection with its investment in the Company, (ii) to any prospective
purchaser of any Shares from the Purchaser as long as such prospective
purchaser agrees in writing to be bound by the provisions of this
Section or (iii) to any affiliate of the Purchaser or to a partner,
shareholder or subsidiary of the Purchaser.
9.3 NOTICES. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be delivered by hand,
telecopy or overnight courier (by a
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nationally recognized carrier) or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:
If to the Company: Art Technology Group, Inc.
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President,
with a copy to Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
If to a Purchaser: SOFTBANK Ventures, Inc.
00-0, Xxxxxxxxxx-Xxxxxxxxxxx
Xxxx-xx, Xxxxx 000, Xxxxx
Attention: President
with a copy to: Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
or at such other address or addresses as may have been furnished by the
parties in accordance with this Section 9.3. Notices provided in
accordance with this Section 9.3 shall be deemed delivered upon
personal delivery, upon receipt of a telecopy confirmation, one day
after deposit with an overnight delivery service or three business days
after deposit in the mail.
9.4 BROKERS. The Company and the Purchaser (i) represent and warrant to the
other parties hereto that it has retained no finder or broker in
connection with the transactions contemplated by this Agreement, and
(ii) will indemnify and save the other parties harmless from and
against any and all claims, liabilities or obligations with respect to
brokerage or finders' fees or commissions, or consulting fees in
connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any statement or representation
alleged to have been made by such indemnifying party.
9.5 LEGAL FEES. The Company shall pay the reasonable fees and expenses of
legal counsel for the Purchaser in connection with the purchase and
sale of the Shares and Warrants, and the negotiation of this Agreement
and the other agreements and documents referred to herein, up to a
maximum amount of $20,000.
12
9.6 ENTIRE AGREEMENT. This Agreement (including the Schedule and Exhibits
hereto) embodies the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
9.7 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with
the written consent of the Company and the holder(s) of a majority of
the Shares. Any amendment or waiver effected in accordance with this
Section 9.7 shall be binding upon the Purchaser and each holder of any
Shares, Warrants or Warrant Shares (including shares of Common Stock
into which such Shares or Warrant Shares have been converted), each
future holder of all such securities and the Company. No waivers of or
exceptions to any term, condition or provision of this Agreement, in
any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.
9.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which shall be one and the same document.
9.9 SECTION HEADINGS. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit or restrict the
contractual obligations of the parties.
9.10 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
9.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts,
excluding its choice of law rules.
9.12 PUBLICITY. All publicity and press releases relating to the
transactions contemplated by this Agreement shall be coordinated and
approved by the Company, on the one hand, and the Purchaser.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMPANY:
ART TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxxxxxxxx Xxxxx
-------------------------
Name: Xxxxxxxxxxxx Xxxxx
Title: President
PURCHASER:
SOFTBANK VENTURES, INC.
By: /s/ Yoshitaka Kitao
------------------------
Name: Yoshitaka Kitao
Title: President and Chief Executive Officer
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
TERMS OF SERIES B PREFERRED STOCK
PREFERENCES, VOTING POWERS, QUALIFICATIONS,
AND SPECIAL OR RELATIVE RIGHTS AND PRIVILEGES OF
SERIES B CONVERTIBLE PREFERRED STOCK
VOTED: That 851,064 shares of the authorized and unissued Preferred
Stock of the Corporation be and hereby are hereby designated
Series B Convertible Preferred Stock" (the "Series B Preferred
Stock"), having the rights, preferences, powers, privileges
and restrictions, qualifications and limitations set forth
below:
1. DIVIDENDS.
(a) The holders of shares of Series B Preferred Stock shall be entitled
to receive, out of funds legally available therefor, dividends of $0.3525 per
share per annum (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), payable when and as declared by the Board of Directors of the
Corporation. Such dividends shall accrue and shall be cumulative from the date
of issuance of each share of Series B Preferred Stock, whether or not declared.
(b) The Corporation shall not declare or pay any distributions (as
defined below) on shares of Common Stock, or any other class or series of stock
ranking on liquidation junior to the Series B Preferred Stock, until the holders
of the Series B Preferred Stock then outstanding shall have first received a
distribution at the rate specified in paragraph (a) of this Section 1.
(c) For purposes of this Section 1, unless the context requires
otherwise, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock or other securities of the Corporation, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common Stock
held by employees or directors of, or consultants to, the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase at a price equal to the original issue price of such shares and
other than redemptions in liquidation or dissolution of the Corporation) for
cash or property, including any such transfer, purchase or redemption by a
subsidiary of this Corporation.
Continuation Sheet 2A
2. LIQUIDATION, DISSOLUTION OR WINDING UP: CERTAIN MERGERS, CONSOLIDATIONS
AND ASSET SALES.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series B Preferred Stock, but before
any payment shall be made to the holders of Common Stock or Series A Preferred
Stock, or any other class or series of stock ranking on liquidation junior to
the Series B Preferred Stock, by reason of their ownership thereof, an amount
equal to the greater of (i) $7.05 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), plus any accrued but unpaid dividends
thereon, or (ii) such amount per share as would have been payable had each such
share been converted into Common Stock pursuant to Section 4 immediately prior
to such liquidation, dissolution or winding up. If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the holders of shares of Series B Preferred Stock the full amount to
which they shall be entitled, the holders of shares of Series B Preferred Stock
and any class or series of stock ranking on liquidation on a parity with the
Series B Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of Series B Preferred Stock and any other class or series of
stock of the Corporation ranking on liquidation on a parity with the Series B
Preferred Stock, upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Common Stock and Series A Preferred Stock
then outstanding shall be entitled to receive the remaining assets and funds of
the Corporation available for distribution to its stockholders.
(c) In the event of any merger or consolidation of the Corporation into
or with another corporation (except one in which the shares of capital stock of
the Corporation outstanding immediately prior to such merger or consolidation
represent, or are exchanged for or converted into, securities that represent at
least 80% by voting power of the capital stock of the resulting or surviving
corporation), or the sale of all or substantially all the assets of the
Corporation, if the holders of at least 80% of the then outstanding shares of
Series B Preferred Stock so elect by giving written notice thereof to the
Corporation at least three days before the effective date
Continuation Sheet 2B
of such event, then such merger, consolidation or asset sale shall be deemed to
be a liquidation of the Corporation, and all consideration payable to the
stockholders of the Corporation (in the case of a merger or consolidation), or
all consideration payable to the Corporation, together with all other available
assets of the Corporation (in the case of an asset sale), shall be distributed
to the holders of capital stock of the Corporation in accordance with
Subsections 2(a) and 2(b) above. The Corporation shall promptly provide to the
holders of shares of Series B Preferred Stock such information concerning the
terms of such merger, consolidation or asset sale and the value of the assets of
the Corporation as may reasonably be requested by the holders of Series B
Preferred Stock in order to assist them in determining whether to make such an
election. If the holders of the Series B Preferred Stock make such an election,
the Corporation shall use its best efforts to amend the agreement or plan of
merger or consolidation to adjust the rate at which the shares of capital stock
of the Corporation are converted into or exchanged for cash, new securities or
other property to give effect to such election. The amount deemed distributed to
the holders of Preferred Stock upon any such merger or consolidation shall be
the cash or the value of the property, rights or securities distributed to such
holders by the acquiring person, firm or other entity. The value of such
property, rights or other securities shall be determined in good faith by the
Board of Directors of the Corporation. If no notice of the election permitted by
this Subsection 2(c) is given, the provisions of Subsection 4(i) shall apply.
3. VOTING.
(a) Each holder of outstanding shares of Series B Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series B Preferred Stock held by such holder are
then convertible (as adjusted from time to time pursuant to Section 4 hereof),
at each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration. Except
as provided by law, by the provisions of Subsection 3(b) below or by the
provisions establishing any other series of preferred stock, holders of Series B
Preferred Stock shall vote together with the holders of Common Stock and other
series of Preferred Stock as a single class.
(b) The holders of record of the shares of Series B Preferred Stock,
exclusively and as a separate class, shall be entitled to elect one director of
the Corporation. At any meeting held for the purpose of electing directors, the
presence in person or by proxy of the holders of a majority of the shares of
Series B Preferred Stock then outstanding shall constitute a quorum of the
Series B Preferred Stock for the purpose of electing a director by holders of
the Series B Preferred Stock. A vacancy in any directorship filled by the
holders of Series B Preferred Stock shall be filled only by vote or written
consent in lieu of a meeting of the holders of the Series B Preferred Stock. The
rights of the holders of the Series B Preferred Stock under this
Continuation Sheet 2C
Subsection 3(b) shall terminate on the first date on which (i) there are issued
and outstanding less than 50,000 shares of Series B Preferred Stock (subject to
appropriate adjustment in the event of any dividend, stock split, combination or
other similar recapitalization affecting such shares) or (ii) the outstanding
shares of Series B Preferred Stock represent less than 5% of the outstanding
shares of Common Stock, after giving effect to the conversion into Common Stock
of all outstanding shares of convertible Preferred Stock.
(c) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series B Preferred Stock so as to affect
adversely the Series B Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series B Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization of any shares of
capital stock with preference or priority senior to the Series B Preferred Stock
as to the right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up of the Corporation shall be deemed to
affect adversely the Series B Preferred Stock, and the authorization of any
shares of capital stock junior to or on parity with the Series B Preferred Stock
as to the right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up of the Corporation shall not be deemed to
affect adversely the Series B Preferred Stock. The number of authorized shares
of Series B Preferred Stock may be increased or decreased (but not below the
number of shares then outstanding) by the directors of the Corporation pursuant
to Section 26 of Chapter 156B of the Massachusetts General Laws or by the
affirmative vote of the holders of a majority of the then outstanding shares of
the Common Stock and Preferred Stock and all other classes or series of stock of
the Corporation entitled to vote thereon, voting as a single class, irrespective
of the provisions of Section 70 of Chapter 156B of the Massachusetts General
Laws.
4. OPTIONAL CONVERSION. The holders of the Series B Preferred Stock shall have
conversion rights as follows (the "Conversion Rights")
(a) RIGHT TO CONVERT. Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time, and without the payment of additional consideration by the holder thereof,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $7.05 by the Conversion Price (as defined below) in
effect at the time of conversion. The "Conversion Price" for the Series B
Preferred Stock shall initially be $7.05. Such initial Conversion Price, and the
rate at which shares of Series B Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below. In the event of
a liquidation of the Corporation, the Conversion Rights shall terminate at the
close of business on the first full day
Continuation Sheet 2D
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series B Preferred Stock.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder of Series B Preferred Stock to
convert shares of Series B Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of Series
B Preferred Stock, at the office of the transfer agent for the Series B
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the Series B
Preferred Stock represented by such certificate or certificates. Such notice
shall state such holder's name or the names of the nominees in which such holder
wishes the certificate or certificates for shares of Common Stock to be issued.
If required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series B
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series B
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series B Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Series B Preferred Stock. Before taking any action which
would cause an adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock issuable upon conversion of the Series B Preferred
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
Continuation Sheet 2E
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any accrued but unpaid dividends on the
Series B Preferred Stock surrendered for conversion or on the Common Stock
delivered upon conversion.
(iv) All shares of Series B Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange there for and payment of any dividends
accrued but unpaid thereon. Any shares of Series B Preferred Stock so converted
shall be retired and canceled and shall not be reissued, and the Corporation
(without the need for stockholder action) may from time to time take such
appropriate action as may be necessary to reduce the authorized Series B
Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock upon conversion of shares of Series B Preferred Stock pursuant to
this Section 4. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than that in which the shares
of Series B Preferred Stock so converted were registered, and no such issuance
or delivery shall be made unless and until the person or entity requesting such
issuance has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES:
(i) SPECIAL DEFINITIONS. For purposes of this Subsection 4(d),
the following definitions shall apply:
(A) "OPTION" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding options described in Subsection 4(d)(i)(D)(IV) below.
(B) "ORIGINAL ISSUE DATE" shall mean the date on
which a share of Series B Preferred Stock was first issued.
(C) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly convertible
into or exchangeable for Common Stock.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean
all shares of Common Stock issued (or, pursuant to Subsection 4(d) (iii) below,
deemed to be
Continuation Sheet 2F
issued) by the Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(I) upon conversion of any Convertible
Securities outstanding on the
Original Issue Date, or upon
exercise of any Options outstanding
on the Original Issue Date;
(II) as a dividend or distribution on the
Series B Preferred Stock;
(III) by reason of a dividend, stock
split, split-up or other
distribution on shares of Common
Stock that is covered by Subsection
4(e) or 4(f) below;
(IV) shares of Common Stock, and options
and warrants therefor, issued or
issuable to employees, directors,
consultants or strategic partners of
or to the Corporation, as approved
by a majority of the Board of
Directors; or
(V) shares issued upon exercise of the
Performance Warrant (and the shares
issued upon conversion of such
shares) issued by the Corporation to
the original holder of the Series B
Preferred Stock.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
number of shares of Common Stock into which the Series B Preferred Stock is
convertible shall be made, by adjustment in the applicable Conversion Price
thereof: (a) unless the consideration per share (determined pursuant to
Subsection 4 (d) (v)) for an Additional Share of Common Stock issued or deemed
to be issued by the Corporation is less than the applicable Conversion Price in
effect on the date of, and immediately prior to, the issue of such Additional
Shares of Common Stock, or (b) if prior to such issuance, the Corporation
receives written notice from the holders of at least 50% of the then outstanding
shares of Series B Preferred Stock as to which such adjustment would apply
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Shares of Common Stock.
(iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK. If the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without
Continuation Sheet 2G
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 4(d) (v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) If such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Corporation, upon the exercise, conversion or
exchange thereof, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase becoming
effective, be recomputed to reflect such increase insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;
(C) Upon the expiration or termination of any
unexercised Option, the Conversion Price shall not be readjusted, but the
Additional Shares of Common Stock deemed issued as the result of the original
issue of such Option shall not be deemed issued for the purposes of any
subsequent adjustment of the Conversion Price;
(D) In the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Conversion Price then
in effect shall forthwith be readjusted to such Conversion Price as would have
obtained had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change; and
(E) No readjustment pursuant to clause (B) or (D)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the
Continuation Sheet 2H
lower of (i) the Conversion Price on the original adjustment date, or (ii) the
Conversion Price that would have resulted from any issuances of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date.
In the event the Corporation, after the Original Issue Date, amends the
terms of any Options or Convertible Securities (whether such Options or
Convertible Securities were outstanding on the Original Issue Date or were
issued after the Original Issue Date), then such Options or Convertible
Securities, as so amended, shall be deemed to have been issued after the
Original Issue Date and the provisions of this Subsection 4(d) (iii) shall
apply.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation shall at any
time after the Original Issue Date issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Subsection 4(d) (iii), but excluding shares issued as a stock split or
combination as provided in Subsection 4(e) or upon a dividend or distribution as
provided in Subsection 4(f)), without consideration or for a consideration per
share less than the applicable Conversion Price in effect on the date of and
immediately prior to such issue, then and in such event such Conversion Price
shall be reduced, concurrently with such issue, to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by a fraction, (A)
the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of shares of
Common Stock which the aggregate consideration received or to be received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Conversion Price; and (B) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such Additional Shares of Common Stock so issued;
PROVIDED THAT, (i) for the purpose of this Subsection 4(d)(iv), all shares of
Common Stock issuable upon exercise or conversion of Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding, and (ii) the number of shares of Common Stock deemed issuable upon
exercise or conversion of such outstanding Options and Convertible Securities
shall not give effect to any adjustments to the conversion price or conversion
rate of such Options or Convertible Securities resulting from the issuance of
Additional Shares of Common Stock that is the subject of this calculation.
(v) DETERMINATION OF CONSIDERATION. For purposes of this
Subsection 4(d), the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
Continuation Sheet 2I
(A) CASH AND PROPERTY: Such consideration shall:
(I) insofar as it consists of cash, be
computed at the aggregate of cash
received by the Corporation,
excluding amounts paid or payable
for accrued interest;
(II) insofar as it consists of property
other than cash, be computed at the
fair market value thereof at the
time of such issue, as determined in
good faith by the Board of
Directors; and
(III) in the event Additional Shares of
Common Stock are issued together
with other shares or securities or
other assets of the Corporation for
consideration which covers both, be
the proportion of such consideration
so received, computed as provided in
clauses (I) and (11) above, as
determined in good faith by the
Board of Directors.
(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 4(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) MULTIPLE CLOSING DATES. In the event the Corporation
shall issue on more than one date Additional Shares of Common Stock which are
comprised of shares of the same series or class of Series B Preferred Stock, and
such issuance dates occur within a period of no more than 120 days, then the
Conversion Price shall be
Continuation Sheet 2J
adjusted only once on account of such issuances, with such adjustment to occur
upon the final such issuance and to give effect to all such issuances as if they
occurred on the date of the final such issuance.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Corporation
shall at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the Original Issue Date
combine the outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series B Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for the Series B Preferred Stock then in effect by a fraction:
(1) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date, and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for the Series B Preferred Stock shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Series B Preferred Stock shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Series B Preferred Stock
simultaneously receive a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
Continuation Sheet 2K
have received if all outstanding shares of Series B Preferred Stock had been
converted into Common Stock on the date of such event.
(g) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event the
Corporation at any time or from time to time after the Original Issue Date for
the Series B Preferred Stock shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of the Series B Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation that they would have received had the
Series B Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period, giving application to all adjustments called
for during such period under this paragraph with respect to the rights of the
holders of the Series B Preferred Stock; and provided further, however, that no
such adjustment shall be made if the holders of Series B Preferred Stock
simultaneously receive a dividend or other distribution of such securities in an
amount equal to the amount of such securities as they would have received if all
outstanding shares of Series B Preferred Stock had been converted into Common
Stock on the date of such event.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. If the
Common Stock issuable upon the conversion of the Series B Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the holder of each such share
of Series B Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(i) ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is covered by
Subsection 2(c)), each share of Series B Preferred Stock shall thereafter be
convertible (or shall be converted into a security which shall be convertible)
into the kind and amount of shares of stock or other securities or property to
which a holder of the number of shares of
Continuation Sheet 2L
Common Stock of the Corporation deliverable upon conversion of such Series B
Preferred Stock would have been entitled upon such consolidation, merger or
sale; and, in such case, appropriate adjustment (as determined in good faith by
the Board of Directors) shall be made in the application of the provisions in
this Section 4 set forth with respect to the rights and interest thereafter of
the holders of the Series B Preferred Stock, to the end that the provisions set
forth in this Section 4 (including provisions with respect to changes in and
other adjustments of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series B Preferred
Stock.
(j) NO IMPAIRMENT. The Corporation will not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(k) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series B Preferred Stock subject to such adjustment a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred Stock, furnish or cause
to be furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which then would be received upon the conversion of Series B Preferred
Stock.
(l) NOTICE OF RECORD DATE. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock
Continuation Sheet 2M
or a stock dividend or stock distribution thereon), or of any consolidation or
merger of the Corporation into or with another corporation, or of the sale of
all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the date specified in (A) below or twenty days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding up.
5. MANDATORY CONVERSION.
(a) (1) Upon the closing of the sale of shares of Common Stock, at a
price of at least $15.00 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares), in a public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, resulting
in at least $10,000,000 of gross proceeds to the Corporation, (i) all
outstanding shares of Series B Preferred Stock shall automatically be converted
into shares of Common Stock, at the then effective Conversion Price, and (ii)
the number of authorized shares of Preferred Stock of the Company shall be
automatically reduced by the number of shares of Series B Preferred Stock, and
all provisions included under the caption "Series B Preferred Stock", and all
references to the Series B Preferred Stock shall be deleted and shall be of no
further force or effect.
(2) Upon the affirmative vote of the holders of a majority of
the Series B Preferred Stock, (i) all outstanding shares of Series B Preferred
Stock shall automatically be converted into shares of Common Stock, at the then
effective Conversion Price, and (ii) the number of authorized shares of Series B
Preferred Stock of the Company shall be automatically reduced by the number of
shares of Series B
Continuation Sheet 2N
Preferred Stock so converted, and all references to the Series B Preferred
Stock, shall be deleted and shall be of no further force or effect.
(3) The date of conversion specified in paragraphs (1) and (2)
above shall be termed the "Mandatory Conversion Date".
(b) All holders of record of shares of Series B Preferred Stock to be
converted pursuant to this Section 5 shall be given written notice of the
Mandatory Conversion Date and the place designated for mandatory conversion of
all such shares of Series B Preferred Stock pursuant to this Section 5. Such
notice need not be given in advance of the occurrence of the Mandatory
Conversion Date. Such notice shall be sent by first class or registered mail,
postage prepaid, to each record holder of such Series B Preferred Stock at such
holder's address last shown on the records of the transfer agent for the Series
B Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent). Upon receipt of such notice, each holder of shares of Series B
Preferred Stock so converted shall surrender his or its certificate or
certificates for all such shares to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Common Stock to which such holder is entitled pursuant to this Section 5. On
the Mandatory Conversion Date, all rights with respect to the Series B Preferred
Stock so converted, including the rights, if any, to receive notices and vote
(other than as a holder of Common Stock) will terminate, except only the rights
of the holders thereof, upon surrender of their certificate or certificates
therefor, to receive certificates for the number of shares of Common Stock into
which such Series B Preferred Stock has been converted, and payment of any
accrued but unpaid dividends thereon. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his or its attorney
duly authorized in writing. As soon as practicable after the Mandatory
Conversion Date and the surrender of the certificate or certificates for Series
B Preferred Stock, the Corporation shall cause to be issued and delivered to
such holder, or on his or its written order, a certificate or certificates for
the number of full shares of Common Stock issuable on such conversion in
accordance with the provisions hereof and cash as provided in Subsection 4(b) in
respect of any fraction of a share of Common Stock otherwise issuable upon such
conversion.
(c) All certificates evidencing shares of Series B Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Date, be deemed
to have been retired and canceled and the shares of Series B Preferred Stock
represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. The Corporation may thereafter take such
appropriate action (without the need for
Continuation Sheet 2O
stockholder action) as may be necessary to reduce the authorized Series B
Preferred Stock accordingly.
6. MANDATORY REDEMPTION
(a) Provided that the Corporation receives notice from the holders of
not less than 25% of the then-outstanding Series B Preferred Stock no later than
sixty (60) days prior to one of the Mandatory Redemption Dates listed below, the
Corporation will, subject to the conditions set forth in Subsection 6(b) below,
redeem from each holder of shares of Series B Preferred Stock giving such
notice, at a price equal to $7.05 per share, plus any dividends accrued but
unpaid thereon, subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares (the "Mandatory Redemption Price"), the following respective
portions of the number of shares of Series B Preferred Stock held by such holder
(or such lesser percentage specified by such holder) on the applicable Mandatory
Redemption Date:
Portion of Shares of
Series B Preferred Stock
Mandatory Redemption Date That May Be Redeemed
------------------------------------------------------- -------------------------------------------------------
December 31, 2001 25%
December 31, 2002 50%
December 31, 2003 75%
December 31, 2004 and
each December 31 thereafter 100%
(b) The Corporation shall not, on any Mandatory Redemption Date, be
required to pay more than 10% of its consolidated net income, before taxes, for
the immediately preceding fiscal year to redeem shares of the Series B Preferred
Stock pursuant to Subsection 6(a) above. If the Corporation cannot by
application of this Subsection 6(b) redeem all of the shares subject to
mandatory redemption on a particular Mandatory Redemption Date, it shall redeem
the maximum possible number of whole shares of Series B Preferred Stock ratably
on the basis of the number of shares of Series B Preferred Stock which would be
redeemed on such date if the Corporation were not prevented by this Subsection
6(b) from redeeming any shares.
(c) If the funds of the Corporation legally available for redemption of
Series B Preferred Stock on any Mandatory Redemption Date are insufficient to
redeem the number of shares of Series B Preferred Stock required under this
Section 6 to be redeemed on such date, those funds which are legally available
will be used to
Continuation Sheet 2P
redeem the maximum possible number of such shares of Series B Preferred Stock
ratably on the basis of the number of shares of Series B Preferred Stock which
would be redeemed on such date if the funds of the Corporation legally available
therefor had been sufficient to redeem all shares of Series B Preferred Stock
required to be redeemed on such date. At any time thereafter when additional
funds of the Corporation become legally available for the redemption of Series B
Preferred Stock, such funds will be used, at the end of the next succeeding
fiscal quarter, to redeem the balance of the shares which the Corporation was
theretofore obligated to redeem, ratably on the basis set forth in the preceding
sentence.
(d) The Corporation shall be entitled, at its option, to credit against
the number of shares of Series B Preferred Stock required to be redeemed from
any holder on any Mandatory Redemption Date, (i) any shares of Series B
Preferred Stock previously redeemed from such holder pursuant to Section 6 and
not previously so credited, and (ii) any shares of Series B Preferred Stock
previously converted by such holder into Common Stock pursuant to Section 4 and
not previously so credited.
(e) The Corporation shall provide notice of any redemption of Series B
Preferred Stock pursuant to this Section 6 specifying the time and place of
redemption and the Mandatory Redemption Price, by first class or registered
mail, postage prepaid, to each holder of record of Series B Preferred Stock at
the address for such holder last shown on the records of the transfer agent
therefor (or the records of the Corporation, if it serves as its own transfer
agent), not more than 60 nor less than 30 days prior to the date on which such
redemption is to be made. If less than all Series B Preferred Stock owned by
such holder is then to be redeemed, the notice will also specify the number of
shares which are to be redeemed. Upon mailing any such notice of redemption, the
Corporation will become obligated to redeem at the time of redemption specified
therein all Series B Preferred Stock specified therein (other than such shares
of Series B Preferred Stock as are duly converted pursuant to Section 4 prior to
the close of business on the fifth full day preceding the Mandatory Redemption
Date). In case less than all Series B Preferred Stock represented by any
certificate is redeemed in any redemption pursuant to this Section 6, a new
certificate will be issued representing the unredeemed Series B Preferred Stock
without cost to the holder thereof.
(f) Unless there shall have been a default in payment of the Mandatory
Redemption Price, no share of Series B Preferred Stock shall be entitled to any
dividends declared after its Mandatory Redemption Date, and on such Mandatory
Redemption Date all rights of the holder of such share as a stockholder of the
Corporation by reason of the ownership of such share will cease, except the
right to receive the Mandatory Redemption Price of such share, without interest,
upon presentation and surrender of the certificate representing such share, and
such share will not from and after such Mandatory Redemption Date be deemed to
be outstanding.
Continuation Sheet 2Q
(g) Any Series B Preferred Stock redeemed pursuant to this Section 6
will be canceled and will not under any circumstances be reissued, sold or
transferred and the Corporation may from time to time take such appropriate
action as may be necessary to reduce the authorized Series B Preferred Stock
accordingly.
EXHIBIT B
FORM OF WARRANT
ART TECHNOLOGY GROUP, INC.
PERFORMANCE WARRANT
Art Technology Group, Inc., a Massachusetts corporation (the
"Company"), for value received, hereby grants SOFTBANK Ventures, Inc., a
Japanese corporation (the "Holder"), a warrant (this "Warrant"), subject to the
terms set forth below, to purchase the Warrant Shares (as hereinafter defined)
at a purchase price of $7.05 per share (the "Purchase Price"), exercisable upon
sixty (60) days prior written notice, at any time on or after February 28, 1998
and prior to the earlier of (i) the closing of the initial public offering of
shares of Common Stock of the Company ("Common Stock") at a price to the public
of at least $15.00 per share (subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization
affecting the Common Stock) and resulting in gross proceeds to the Company of at
least $10,000,000 (the "IPO") and (ii) February 28, 1999 (or, if later, the
delivery to the Holder of a copy of the Company's audited financial statements
for the year ending December 31, 1998). If the IPO occurs prior to February 28,
1998, this Warrant may be exercised coincident with the IPO, in which case the
Warrant Shares shall consist of shares of Common Stock of the Company based on
the rate at which Series B Convertible Preferred Stock of the Company ("Series B
Stock") is converted into Common Stock of the Company.
The Company shall not be required upon the exercise of this Warrant to
issue any fractional shares, but shall make an adjustment therefor in cash on
the basis of the fair market value per Warrant Share, as determined in good
faith by the Company's Board of Directors.
1. CERTAIN DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following respective meanings:
(a) The term "Revenue" shall mean all revenue, whether from
the sale of products, the provision of services or other sources, recognized by
the Company in accordance with generally accepted accounting practices
consistently applied.
(b) The term "Qualifying Softbank Revenue" shall mean all
Revenue recognized during the Measurement Period and attributable to the sale of
products or provision of services by the Company to Softbank Entities.
(c) The term "Softbank Entities" shall mean the Holder, any
subsidiary of the Holder and any corporation or other entity in which the Holder
holds an equity interest.
(d) The term "Measurement Period" shall mean the period from
January 1, 1997 through the close of business on the date on which the Holder
notifies the Company of its exercise of this Warrant.
(e) The term "ATG Revenue" shall mean all Revenue other than
Qualifying Softbank Revenue recognized during the Measurement Period by the
Company.
(f) The term "Warrant Shares" shall mean 425,532 shares of
Series B Stock multiplied by the ratio of the Qualifying Softbank Revenue to 50%
of the ATG Revenue. The Warrant Shares shall be subject to adjustment as
described herein.
2. EXERCISE.
(a) This Warrant may be exercised by the Holder, in whole or
in part, by surrendering this Warrant at the principal office of the Company, or
at such other office or agency as the Company may designate, accompanied by
payment in full, in lawful money of the United States, of the Purchase Price
payable in respect of the number of Warrant Shares purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in Section 2(a)
above. At such time, the Holder shall be deemed to have become the holder of
record of the Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within 10 days thereafter, the Company, at
its expense, will cause to be issued in the name of, and delivered to, the
Holder:
(i) a certificate or certificates for the number of
full Warrant Shares to which the Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which the Holder would otherwise be
entitled, cash in an amount determined as set forth herein; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased
by the Holder upon such exercise.
-2-
3. ADJUSTMENTS.
(a) If outstanding shares of the Series B Stock shall be
subdivided into a greater number of shares or a dividend in Series B Stock shall
be paid in respect of Series B Stock, the Purchase Price in effect immediately
prior to such subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Series B Stock shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of Warrant Shares purchasable upon the exercise of this Warrant shall be
changed to the number determined by dividing (i) an amount equal to the number
of shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Purchase Price in effect immediately prior to such
adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) If there shall occur any capital reorganization or
reclassification of the Series B Stock (other than a change in par value or a
subdivision or combination as provided for in Section 3 (a) above), or any
consolidation or merger of the Company with or into another corporation, or a
transfer of all or substantially all of the assets of the Company, then, as part
of any such reorganization, reclassification, consolidation, merger or sale, as
the case may be, lawful provision shall be made so that the Holder shall have
the right thereafter to receive upon the exercise hereof the kind and amount of
shares of stock or other securities or property which the Holder would have been
entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger or sale, as the case may be, the Holder
had held the number of shares of Series B Stock which were then purchasable upon
the exercise of this Warrant. In any such case, appropriate adjustment (as
reasonably determined in good faith by the Board of Directors of the Company)
shall be made in the application of the provisions set forth herein with respect
to the rights and interests thereafter of the Holder, such that the provisions
set forth in this Section 3 (including provisions with respect to adjustment of
the Purchase Price) shall thereafter be applicable, as nearly as is reasonably
practicable, in relation to any shares of stock or other securities or property
thereafter deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase
Price, the Company shall promptly mail to the Holder a certificate setting forth
the Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Such certificate shall also set forth the
kind and amount of stock or other securities or property into which this Warrant
shall be exercisable following the occurrence of any of the events specified in
Section 3(a) or 3(b) above.
-3-
4. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Holder represents, warrants and
covenants that:
(i) The Warrant Shares purchased upon exercise of
this Warrant, and the shares issuable upon conversion of the
Warrant Shares, shall be acquired for the Holder's account for
investment only and not with a view to, or for sale in
connection with, any distribution of the shares in violation
of the Securities Act of 1933, as amended (the "Securities
Act"), or any rule or regulation under the Securities Act.
(ii) The Holder has had such opportunity as it has
deemed adequate to obtain from representatives of the Company
such information as is necessary to permit the Holder to
evaluate the merits and risks of its investment in the
Company.
(iii) The Holder is able to bear the economic risk of
holding shares acquired pursuant to the exercise of this
Warrant for an indefinite period.
(iv) The Holder understands that (A) the shares
acquired pursuant to the exercise of this Warrant will not be
registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the
Securities Act; (B) such shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is
then available; (C) in any event, an exemption from
registration under Rule 144 or otherwise under the Securities
Act may not be available for at least two years and even then
will not be available unless a public market then exists for
the Warrant Shares, adequate information concerning the
Company is then available to the public and other terms and
conditions of Rule 144 are complied with; and (D) there is now
no registration statement on file with the Securities and
Exchange Commission with respect to any stock of the Company
and the Company has no obligation or current intention to
register any shares acquired pursuant to the exercise of this
Warrant under the Securities Act.
(v) The Holder agrees that, if the Company offers for
the first time any of its Common Stock for sale pursuant to a
registration statement under the Securities Act, the Holder
will not, without the prior written consent of the Company,
publicly offer, sell, contract to sell or otherwise dispose
of, directly or indirectly, any shares purchased
-4-
upon exercise of this Warrant for a period of 90 days after
the effective date of such registration statement.
By making payment upon exercise of this Warrant, the Holder shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 4.
(b) LEGENDS ON STOCK CERTIFICATES. Each certificate
representing Warrant Shares shall bear a legend substantially in the following
form:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 and may not
be transferred, sold or otherwise disposed of in the absence
of an effective registration statement with respect to the
shares evidenced by this certificate, filed and made effective
under the Securities Act of 1933, or an opinion of counsel
satisfactory to the Company to the effect that registration
under such Act is not required."
5. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant or the Common
Stock issuable upon conversion of the Warrant Shares.
6. NOTICES. All notices and other communications from the Company to
the Holder shall be mailed by first-class certified or registered mail, postage
prepaid, to the address furnished to the Company in writing by the Holder. All
notices and other communications from the Holder or in connection herewith to
the Company shall be mailed by first-class certified or registered mail, postage
prepaid, to the Company at its principal office.
7. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.
8. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
9. HEADINGS. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
-5-
10. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without reference
to conflict of laws principles.
Date of Grant: December 23, 1996
ART TECHNOLOGY GROUP, INC.
By:____________________________________
Xxxxxxxxxxxx Xxxxx
President
HOLDER
SOFTBANK VENTURES, INC.
By:____________________________________
Yoshitaka Kitao
President and Chief Executive
Officer
-6-
EXHIBIT C
DISCLOSURE SCHEDULE
Each disclosure contained in this Disclosure Schedule shall be deemed to have
been made with respect to each applicable representation and warranty contained
in Section 3 of the Agreement, irrespective of the section of this Disclosure
Schedule in which such disclosure appears.
3.2 CAPITALIZATION.
A. The Company has reserved a total of 1,000,000 shares of Common
Stock for issuance pursuant to the Company's 1996 Stock Option
Plan (the "Plan"). Options to purchase 734,600 shares of
Common Stock have been granted under the Plan. Shortly after
the closing, the Company intends to grant an option to
purchase 200 shares to each employee.
B. The Company has been informed that one of its former employees
intends to exercise an option to purchase 500 shares of Common
Stock for a purchase price of $0.20 per share. Options to
purchase an additional 3,500 shares of Common Stock held by
such employee will be terminated following such exercise in
connection with the cessation of such person's employment with
the Company.
3.4 STOCKHOLDER LIST AND AGREEMENTS.
A. See Stockholder List attached hereto.
B Agreements.
1. Stock Purchase Agreement dated as of July, 1995,
among the Corporation, Xxxxxxxxx Xxxxx and B.U.
Xxxxx.
2. Stock Restriction Agreement dated as of December 31,
1991 between the Corporation and Xxxxxxxxxxxx Xxxxx.
3. Stock Restriction Agreement dated as of December 31,
1991 between the Corporation and Xxxxxx X. Xxxxx.
3.11 INTELLECTUAL PROPERTY.
A. Trademarks
The Company has filed applications to register its marks ATG
(Serial No. 75/150643, filed August 15, 1996) and DYNAMO (Serial No. 75/722198,
filed August 29, 1996).
3.12 ABSENCE OF LIABILITIES.
A. The Company has entered into agreements for a $500,000
revolving line of credit and $500,000 in term loans with Fleet
Bank. Such debts will be secured by all the assets of the
Company.
B. The Company is a party to a four-year sublease agreement
(through October 31, 2000) with Sybase Inc. for office
premises at 000 Xxxxxxxxxx Xxx., Xxxxxx, XX, providing for
annual rent of $669,084.
C. The Company is a party to a three year lease agreement
(through October 31, 1997) with First Church of Xxxxxx
Scientist for office premises at 000 Xxxxxxxxxxxxx Xxx.,
Xxxxxx, XX, providing for annual rent of $117,468.
3.16 EMPLOYEES.
A. The Company was unable to make its scheduled payroll payments
on December 13, 1996.
EXHIBIT D
FORM OF STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT
THIS AGREEMENT, dated as of December 23, 1996, is entered into by and
among Art Technology Group, Inc., a Massachusetts corporation (the "Company"),
SOFTBANK Ventures, Inc., a Japanese corporation (the "Purchaser"), Xxxxxxxxxxxx
Xxxxx and Xxxxxx X. Xxxxx (individually, a "Founder" and collectively, the
"Founders"), and Xxxxxxxxx Xxxxx and B.U. Xxxxx (individually, a "Series A
Holder" and collectively, the "Series A Holders")
BACKGROUND
WHEREAS, the Company and the Purchaser have entered into a Series B
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement") pursuant to which the Purchaser is purchasing 425,532 shares (the
"Series B Shares") of Series B Convertible Preferred Stock, $.01 par value per
share of the Company ("Series B Preferred Stock");
WHEREAS, the Company wishes to grant the Purchaser certain rights with
respect to the registration of shares of capital stock of the Company under the
Securities Act of 1933, as amended;
WHEREAS, the Company wishes to grant the Purchaser certain rights of
first refusal with respect to the issuance of securities of the Company; and
WHEREAS, the Founders wish to grant each other, the Series A Holders,
the Company and the Purchaser, in such order of priority, certain rights of
first refusal and, alternatively, rights of co-sale with respect to the sale of
capital stock of the Company by the Founders;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and the consummation of the sale and purchase of
the Series B Preferred Stock pursuant to the Purchase Agreement, and for other
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"COMMISSION" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the Common Stock, $.01 per share, of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"FOUNDER SHARES" shall mean all shares of Common Stock of the Company
held by the Founders, whether now owned or hereafter acquired.
"INITIAL PUBLIC OFFERING" means the initial public offering of shares
of Common Stock pursuant to a Registration Statement at a price to the public of
at least $15.00 per share (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization
affecting the Common Stock) and resulting in gross proceeds to the Company of at
least $10,000,000.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation, or any registration statement
covering only securities to be sold for the account of stockholders of the
Company other than the Purchaser).
"REGISTRATION EXPENSES" means the expenses described in Section 4 of
Article II below.
"REGISTRABLE SHARES" means (i) the shares of Common Stock issued or
issuable upon conversion of the Series B Shares, (ii) any shares of Common
Stock, and any shares of Common Stock issued or issuable upon the conversion or
exercise of any other securities, acquired by the Purchaser pursuant to Article
III of this Agreement, and (iii) any other shares of Common Stock issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); PROVIDED, HOWEVER,
that shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares (a) upon any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act, or (b) upon any sale in any manner to a
person or entity which, by virtue of Section 2 of Article V of this Agreement,
is not entitled to the rights provided by this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"SHARES" shall mean all shares of Common Stock of the Company held by
the Founders, the Series A Holders and the Purchaser, whether now owned or
hereafter acquired. For purposes of calculating the pro rata ownership of Shares
by a Founder, a Series A Holder or the Purchaser, all shares of Preferred Stock
of the Company
2
shall be deemed to have been converted into Common Stock of the Company.
ARTICLE II. REGISTRATION RIGHTS
1. REQUIRED REGISTRATIONS.
(a) At any time after the closing of the Company's first
underwritten public offering of shares of Common Stock pursuant to a
Registration Statement, the Purchaser may request, in writing, that the Company
effect the registration on Form S-1 or Form S-2 (or any successor form) of
Registrable Shares owned by the Purchaser and having an offering price of at
least $5,000,000 (based on the then current public market price or fair value).
If the Purchaser intends to distribute the Registrable Shares by means of an
underwriting, the Purchaser shall so advise the Company in its request.
Thereupon, the Company shall, as expeditiously as possible, use its reasonable
best efforts to effect the registration on Form S-1 or Form S-2 (or any
successor form) of all Registrable Shares which the Company has been requested
to so register.
(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), the Purchaser may request the Company, in writing, to effect the
registration on Form S-3 (or such successor form), of Registrable Shares having
an aggregate offering price of at least $1,000,000 (based on the then current
public market price). Thereupon, the Company shall, as expeditiously as
possible, use its reasonable best efforts to effect the registration on Form S-3
(or such successor form) of all Registrable Shares which the Company has been
requested to so register.
(c) The Company shall not be required to effect more than
two registrations pursuant to Section 1(a) above or more than one registration
during any period of twelve consecutive months pursuant to Section 1(b) above;
PROVIDED, HOWEVER, that such obligation shall be deemed satisfied only when a
registration statement covering the applicable Registrable Shares shall have
become effective and, if such method of disposition is a firm commitment
underwritten public offering, all such Registrable Shares have been sold
pursuant thereto. In addition, the Company shall not be required to effect any
registration (other than on Form S-3 or any successor form relating to secondary
offerings) within six months after the effective date of any other Registration
Statement on Form S-1 of the Company.
(d) If at the time of any request to register Registrable
Shares pursuant to this Section 1, the Company is engaged or has plans to engage
within 90 days of the time of the request in a registered public offering of
securities for its own account or is engaged in any other activity which, in the
good faith determination of the Company's Board of Directors, would be adversely
affected by the requested registration to the material detriment of the Company,
then the Company may at its
3
option direct that such request be delayed for a period not in excess of six
months from the effective date of such offering or the date of commencement of
such other material activity, as the case may be, such right to delay a request
to be exercised by the Company not more than once in any twelve-month period.
2. INCIDENTAL REGISTRATIONS.
(a) Whenever the Company proposes to file a Registration
Statement at any time and from time to time, it will, prior to such filing, give
written notice to the Purchaser of its intention to do so and, upon the written
request of the Purchaser, given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to cause
all Registrable Shares which the Company has been requested by the Purchaser to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of the Purchaser; PROVIDED, HOWEVER,
that the Company shall have the right to postpone or withdraw any registration
effected pursuant to this Section 2 without obligation to the Purchaser.
(b) In connection with any registration under this Section 2
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the Purchaser accepts the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it. If in the opinion of the managing underwriter it is desirable
because of marketing factors to limit the number of Registrable Shares to be
included in the offering, then the Company shall be required to include in the
registration only that number of Registrable Shares, if any, which the managing
underwriter believes should be included therein; PROVIDED, HOWEVER, that no
persons or entities other than the Company, the Purchaser and other persons or
entities holding registration rights shall be permitted to include securities in
the offering. If the number of Registrable Shares to be included in the offering
in accordance with the foregoing is less than the total number of shares which
the holders of Registrable Shares have requested to be included, then the
holders of Registrable Shares who have requested registration and other holders
of securities entitled to include them in such registration shall participate in
the registration pro rata based upon their total ownership of shares of Common
Stock (giving effect to the conversion into Common Stock of all securities
convertible thereinto). If any holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata in the manner described in the
preceding sentence.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:
4
(a) File with the Commission a Registration Statement with
respect to such Registrable Shares and use its reasonable best efforts to cause
that Registration Statement to become and remain effective;
(b) As expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Shares covered
thereby or 120 days after the effective date thereof;
(c) As expeditiously as possible furnish to the Purchaser
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Purchaser may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Shares owned by the
Purchaser; and
(d) As expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the Purchaser shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Purchaser to consummate the public sale or
other disposition in such states of the Registrable Shares owned by the
Purchaser; PROVIDED, HOWEVER, that the Company shall not be required in
connection with this paragraph (d) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Purchaser and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Purchaser and, if requested, the Purchaser shall immediately cease making offers
of Registrable Shares and return all prospectuses then in their possession to
the Company. The Company shall promptly provide the Purchaser with revised
prospectuses and, following receipt of the revised prospectuses, the Purchaser
shall be free to resume making offers of the Registrable Shares.
Notwithstanding the foregoing, the Purchaser shall cease making offers
or sales pursuant to a Registration Statement during any period (not to exceed
90 days) in which the Company determines, by notice to the Purchaser, that it is
in possession of material non-public information.
4. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. For purposes of this Section
4,
5
the term "Registration Expenses" shall mean all expenses incurred by the Company
in complying with Article II, including without limitation all registration and
filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company and the fees and expenses (not to exceed $10,000) of one
counsel selected by the Purchaser to represent the Purchaser, state Blue Sky
fees and expenses, and the expense of any special audits incident to or required
by any such registration, but excluding underwriting discounts, commissions and
the fees and expenses of the Purchaser's counsel (to the extent the fees and
expenses of such counsel exceed $10,000).
5. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or any violation by the Company of the
Securities Act or the Exchange Act or the securities act of any state or any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, each
seller of Registrable Shares,
6
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement, or arise out of or are based upon any violation by such seller of
the Securities Act or the Exchange Act or the securities act of any state or any
rule or regulation thereunder applicable to such seller and relating to action
or inaction required of such seller in connection with any such registration,
qualification or compliance; PROVIDED, HOWEVER, that the obligations of such
seller of Registrable Shares shall be limited to an amount equal to the proceeds
to such seller of the Registrable Shares sold in connection with such
registration.
(c) Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; PROVIDED, HOWEVER, that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld); and, PROVIDED FURTHER, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5. The Indemnified
Party may participate in such defense at such party's expense; PROVIDED,
HOWEVER, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional
7
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 5 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any seller of
Registrable Shares or any such controlling person in circumstances for which
indemnification is provided under this Section 5; then, in each such case, the
Company and the seller of Registrable Shares will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportions as is appropriate to reflect the
relative fault of the Company, on the one hand, and of the seller, on the other,
in connection with the statements or omissions which resulted in such claim,
loss, damage, liability or expense as well as any other relevant equitable
considerations. The relative fault of the Company and of the seller shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or by the seller and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such statement or omissions. Notwithstanding the foregoing, in any such
case, (A) no such holder will be required to contribute any amount in excess of
the proceeds to it of all Registrable Shares sold by it pursuant to such
Registration Statement, and (B) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
6. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to this Article II, the Company agrees to enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering.
7. INFORMATION BY HOLDER. The Purchaser shall furnish to the Company
8
such information regarding the Purchaser and the distribution proposed by the
Purchaser as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8. "STAND-OFF" AGREEMENT. The Purchaser, if requested by the Company
and the managing underwriter of an offering by the Company of Common Stock or
other securities of the Company pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer or dispose of any Registrable
Shares or other securities of the Company held by the Purchaser for a specified
period of time (not to exceed 180 days) following the effective date of such
Registration Statement; PROVIDED, that:
(a) such agreement shall only apply to the first
Registration Statement covering Common Stock to be sold on its behalf to the
public in an underwritten offering; and
(b) all officers and directors of the Company enter into
similar agreements.
9. RULE 144 REQUIREMENTS. After the earliest of (a) the closing of the
sale of securities of the Company pursuant to a Registration Statement, (b) the
registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (c) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(i) Comply with the requirements of Rule 144(c) under
the Securities Act with respect to current public information about the Company;
(ii) Use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements); and
(iii) Furnish to any holder of Registrable Shares
upon request (A) a written statement by the Company as to its compliance with
the requirements of said Rule 144(c), and the reporting requirements of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (B) a copy of the most recent annual or quarterly
report of the Company, and (C) such other reports and documents of the Company
as such holder may reasonably request to avail itself of any similar rule or
regulation of the Commission allowing it to sell any such securities without
registration.
ARTICLE III. RIGHTS OF FIRST REFUSAL FROM THE COMPANY
9
1. RIGHTS OF FIRST REFUSAL
(a) The Company shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
(i) any shares of its Common Stock, (ii) any other equity securities of the
Company, including, without limitation, shares of preferred stock, (iii) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any equity securities of the Company, or (iv) any debt securities convertible
into capital stock of the Company (collectively, the "Company Securities"),
unless in each such case the Company shall have first complied with this Article
III. The Company shall deliver to the Purchaser a written notice of any proposed
or intended issuance, sale or exchange of Company Securities (the "Offer"),
which Offer shall (i) identify and describe the Company Securities, (ii)
describe the price and other terms upon which they are to be issued, sold or
exchanged, and the number or amount of the Company Securities to be issued, sold
or exchanged, (iii) identify the persons or entities, if known, to which or with
which the Company Securities are to be offered, issued, sold or exchanged, and
(iv) offer to issue and sell to or exchange with the Purchaser such portion of
the Company Securities as the number of shares of Common Stock (including shares
of Common Stock issuable upon conversion of the Series B Shares even if such
conversion has not yet been effected) then held by the Purchaser bears to the
total number of shares of Common Stock then outstanding (including shares of
Common Stock issuable upon conversion of outstanding convertible securities
without the payment of additional consideration even if such conversion has not
yet been effected) (the "Preemptive Amount"). The Purchaser shall have the
right, for a period of 10 days following delivery of the Offer, to purchase or
acquire, at the price and upon the other terms specified in the Offer, the
number or amount of Company Securities described above. The Offer by its term
shall remain open and irrevocable for such 10-day period.
(b) To accept an Offer, in whole or in part, the Purchaser
must deliver a written notice to the Company prior to the end of the 10-day
period of the Offer, setting forth the portion of the Preemptive Amount that the
Purchaser elects to purchase (the "Notice of Acceptance").
(c) In the event that a Notice of Acceptance is not given by
the Purchaser in respect of all the Company Securities, the Company shall have
90 days from the expiration of the period set forth in Section 1(a) to issue,
sell or exchange all or any part of such Company Securities as to which a Notice
of Acceptance have not been given by the Purchaser (the "Refused Securities"),
but only to the offerees or purchasers described in the Offer and only upon
terms and conditions (including, without limitation, unit prices and interest
rates) which are not more favorable, in the aggregate, to the acquiring person
or persons or less favorable to the Company than those set forth in the Offer.
10
(d) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 1(c)), then the Purchaser may, at its sole option and in
its sole discretion, reduce the number or amount of the Company Securities
specified in the Notice of Acceptance to an amount that shall be not less than
the number or amount of the Company Securities that the Purchaser elected to
purchase pursuant to Section 1(b), multiplied by a fraction (i) the numerator of
which shall be the number or amount of Company Securities the Company actually
proposes to issue, sell or exchange (including Company Securities to be issued
or sold to the Purchaser pursuant to Section 1(b) prior to such reduction) and
(ii) the denominator of which shall be the amount of all Company Securities. In
the event that the Purchaser so elects to reduce the number or amount of Company
Securities specified in the Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the Company
Securities unless and until such securities have again been offered to the
Purchaser in accordance with Section 1(a).
(e) Upon the closing of the issuance, sale or exchange of
all or less than all the Refused Securities, the Purchaser shall acquire from
the Company, and the Company shall issue to the Purchaser, the number or amount
of Company Securities specified in the Notice of Acceptance, as reduced pursuant
to Section 1(d) if the Purchaser has so elected, upon the terms and conditions
specified in the Offer. The purchase by the Purchaser of any Company Securities
is subject in all cases to the preparation, execution and delivery by the
Company and the Purchaser of a purchase agreement relating to such Company
Securities reasonably satisfactory in form and substance to the Purchaser and
its counsel.
(f) Any Company Securities not acquired by the Purchaser or
other persons in accordance with Section 1 may not be issued, sold or exchanged
until they are again offered to the Purchaser under the procedures specified in
this Article III.
2. EXCLUDED ISSUANCES. The rights of the Purchaser under this Article
III shall not apply to:
(a) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares of Common Stock;
(b) the issuance of any shares of Common Stock upon
conversion of convertible preferred stock;
(c) shares of Common Stock issued or issuable, or options
therefor, to employees, officers or directors of, or consultants to, the Company
or any subsidiary of the Company pursuant to a plan, agreement or other
arrangement approved by the Board of Directors of the Company, provided that the
aggregate number of such shares after the date hereof shall not exceed 1,000,000
shares (subject
11
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting the Common Stock);
(d) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity;
(e) shares of Common Stock sold by the Company in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act;
(f) shares of Common Stock issued by the Company, with the
approval of the Board of Directors of the Company, in connection with strategic
alliances, equipment lease financings;
(g) the Series B Shares issued by the Company pursuant to
the Purchase Agreement; or
(h) shares issued upon exercise of the Performance Warrant
issued by the Company pursuant to the Purchase Agreement.
ARTICLE IV. RIGHTS OF FIRST REFUSAL AND CO-SALE FROM THE
FOUNDERS
1. RESTRICTIONS ON TRANSFER.
(a) Any sale or other disposition of any Founder Shares by a
Founder, other than according to the terms of this Article IV, shall be void and
shall not transfer any right, title or interest in or to any of such Founder
Shares to the purported transferee.
(b) An original copy of this Agreement, duly executed by
each of the parties hereto, shall be maintained at the principal executive
office of the Company and made available for inspection by any person requesting
it.
(c) Each Founder agrees to present the certificates
representing the Founder Shares presently owned or hereafter acquired by him to
the Company and to cause the Company to stamp on the certificate the following
legend:
"The sale or other disposition of any of the shares
represented by this certificate is restricted by a
Stockholders Agreement among the Company and certain
stockholders of the Company. A copy of such agreement is
available for inspection without charge at
12
the office of the Secretary of the Company."
2. TRANSFERS NOT SUBJECT TO RESTRICTIONS.
(a) Any Founder may sell, assign or transfer Founder Shares
to his spouse, children, grandchildren or parents, or to a trust established for
the benefit of his spouse, children, grandchildren, parent or himself, or
dispose of them under his will, without compliance with Sections 2 through 5
hereof, provided that each such transferee agrees in writing to be bound, to the
same extent as the transferor, by this Article IV.
(b) The rights of a Buying Founder (as defined below), the
Series A Holders, the Company and the Purchaser (individually, an "RFR Holder"
and collectively, the "RFR Holders") under Sections 3 and 4 hereof shall not
apply to any pledge of Founder Shares by a Founder which creates a mere security
interest, provided the pledgee provides the RFR Holders with a written agreement
to be bound hereby to the same extent as the pledging Founder.
3. OFFER OF SALE; NOTICE OF PROPOSED SALE. If a Founder (a "Selling
Founder") desires to sell, transfer or otherwise dispose of any of his Founder
Shares, or of any interest in such Founder Shares, whether voluntarily or by
operation of law, in any transaction other than pursuant to Section 2, the
Selling Founder shall first deliver written notice of his desire to do so (the
"Notice") to the RFR Holders. The Notice must specify: (i) the name and address
of the party to which the Selling Founder proposes to sell or otherwise dispose
of Founder Shares or an interest in the Founder Shares (the "Offeree"), (ii) the
number of Founder Shares the Selling Founder proposes to sell or otherwise
dispose of (the "Offered Shares"), (iii) the consideration per Founder Share to
be delivered to the Selling Founder for the proposed sale, transfer or other
disposition, and (iv) all other material terms and conditions of the proposed
transaction.
4. OPTIONS TO PURCHASE.
(a) For the consideration per share and on the terms and
conditions specified in the Notice, and subject to Section 5, (i) the Founder
other than the Selling Founder (the "Buying Founder") shall have the first
option to purchase all or any part of the Offered Shares, (ii) the Series A
Holders shall have the second option (on a pro rata basis according to the
number of Shares owned by each Series A Holder relative to the number of Shares
held by all Series A Holders) to purchase all or any part of the Offered Shares,
(iii) the Company shall have the third option to purchase all or any part of the
Offered Shares and (iv) the Purchaser shall have the fourth option to purchase
all or any part of the Offered Shares. Any RFR Holder wishing to exercise its
option must so notify the Selling Founder and the other RFR Holders within 10
days after the Notice. In the event there are two or more RFR Holders that
choose to
13
exercise their options for a total number of Offered Shares in excess of the
number available, the Offered Shares available for each such RFR Holder's option
shall be allocated among such RFR Holders in accordance with the priorities set
forth in the first sentence of this Section 4(a). Alternatively, each RFR Holder
may within the same 10-day period notify the Selling Founder of its desire to
participate in the sale of the Offered Shares on the terms set forth in the
Notice and the number of Shares it desires to sell.
(b) In the event options to purchase have been exercised by
the RFR Holders with respect to some but not all of the Offered Shares, those
RFR Holders who have exercised their options within the 10-day period specified
in Section 4(a) shall have an additional option, for a period of five days next
succeeding the expiration of such 10-day period, to purchase all or any part of
the balance of such Offered Shares on the terms set forth in the Notice, which
option shall be exercised by the delivery of written notice to the Selling
Founder and the other RFR Holders. In the event there are two or more RFR
Holders that choose to exercise the last-mentioned option for a total number of
Offered Shares in excess of the number available, the Offered Shares available
for each such RFR Holder's option shall be allocated among such RFR Holders in
accordance with the priorities set forth in the first sentence of Section 4(a).
(c) If the options to purchase the Offered Shares are
exercised in full by the RFR Holders, the Selling Founder shall immediately
notify all of the RFR Holders of that fact. The closing of the purchase of the
Offered Shares shall take place at the offices of the Company no later than five
days after the date of such notice to the RFR Holders. To the extent that the
consideration proposed to be paid by the Offeree for the Offered Shares consists
of property other than cash or a promissory note, the consideration required to
be paid by the RFR Holders exercising their options under this Section 4 may
consist of cash equal to the value of such property, as determined in good faith
by agreement of the Selling Founder and the RFR Holders acquiring such Offered
Shares.
(d) Notwithstanding anything to the contrary herein, no RFR
Holder shall have any right to purchase any of the Offered Shares hereunder
unless the RFR Holders exercise their options to purchase all of the Offered
Shares.
5. FAILURE TO FULLY EXERCISE OPTIONS; CO-SALE.
(a) If the RFR Holders do not exercise their options to
purchase all of the Offered Shares within the period described in this Article
IV (the "Option Period"), then all options of the RFR Holders to purchase the
Offered Shares, whether exercised or not, shall terminate, but each RFR Holder
which has, pursuant to Section 4(a), expressed a desire to sell Shares in the
transaction (a "Participating RFR Holder"), shall be entitled to do so pursuant
to this Section 5. The Selling Founder
14
shall use his best efforts to interest the Offeree in purchasing, in addition to
the Offered Shares, the Shares the Participating RFR Holders wish to sell. If
the Offeree does not wish to purchase all of the shares made available by the
Selling Founder and the Participating RFR Holders, then each Participating RFR
Holder and the Selling Founder shall be entitled to sell, at the price and on
the terms and conditions set forth in the Notice, a portion of the Offered
Shares being sold to the Offeree, with the number of Shares to be sold by each
Participating RFR Holder based on the priorities set forth in the first sentence
of Section 4(a) and the allocation between the Selling Founder, on the one hand,
and the Participating RFR Holders, on the other hand, to be pro rata based on
number of Shares owned by the Selling Founder and such Participating RFR
Holders. The transaction contemplated by the notice shall be consummated not
later than five days after the expiration of the Option Period.
(b) If the Participating RFR Holders do not elect to sell
the full number of Shares which they are entitled to sell pursuant to Section
5(a), the Selling Founder shall be entitled to sell to the Offeree, according to
the terms set forth in the Notice, that number of his own Founder Shares which
equals the difference between the number of Shares desired to be purchased by
the Offeree and the number of Shares the Participating RFR Holders wish to sell.
If the Selling Founder wishes to sell, transfer or otherwise dispose of any such
Founder Shares at a price per share which differs from that set forth in the
Notice, upon terms different from those previously offered to the RFR Holders,
or more than five days after the expiration of the Option Period, such Founder
Shares must, as a condition precedent to such transaction, first be offered to
the RFR Holders on the same terms and conditions as given the Offeree, and in
accordance with the procedures and time periods set forth above.
6. PARTIAL LIQUIDITY. Notwithstanding any other provision of this
Article IV, the Purchaser recognizes that the Founders may desire to achieve
some partial liquidity in the future, and the Purchaser agrees to work
reasonably with the Founders to achieve this.
ARTICLE V. GENERAL
1. TERMINATION. All of the Company's obligations to register
Registrable Shares under Article II of this Agreement shall terminate in its
entirety on the tenth anniversary of the Initial Public Offering. Article III of
this Agreement shall terminate upon the earlier of, and shall not apply with
respect to, (i) the sale of all or substantially all of the assets or business
of the Company, by merger, sale of assets or otherwise, and (ii) the closing of
an Initial Public Offering. Article IV of this Agreement shall terminate upon
the earlier of, and shall not apply with respect to the events described in the
following clauses (i) and (ii), (i) the sale of all or substantially all of the
assets or business of the Company, by merger, sale of assets or otherwise, (ii)
the closing of an Initial Public Offering, (iii) the fifth anniversary of the
date
15
hereof and (iv) the first date on which all Series B Shares have been converted
into Common Stock at the election of the holders thereof.
2. TRANSFER OF RIGHTS. This Agreement, and the rights and obligations
of the parties hereunder, may not be assigned or transferred, except that the
Purchaser may assign its rights and obligations hereunder to one or more
affiliates to which Registrable Shares are transferred by the Purchaser, and
such transferees shall be deemed a "Purchaser" for purposes of this Agreement,
provided that each such transferee agrees in writing to be bound, to the same
extent as the Purchaser, by this Agreement.
3. SEVERABILITY. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
4. SPECIFIC PERFORMANCE. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, the
parties hereto shall be entitled to specific performance of the agreements and
obligations of the other parties hereto and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
5. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Massachusetts
(without reference to the conflicts of law provisions thereof).
6. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand, via
facsimile or a reputable nationwide overnight courier service, or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at Art Technology Group, Inc. 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 00, Xxxxxx, XX 00000, Attention: President, or at such other address or
addresses as may have been furnished in writing by the Company to the other
parties hereto, with a copy to Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxxxxxx, Esquire;
If to the Purchaser, at SOFTBANK Ventures, Inc., 00-0,
Xxxxxxxxxx-Xxxxxxxxxxx, Xxxx-xx, Xxxxx 000, Xxxxx, Attention: President, or at
such other address as the Purchaser may have furnished in writing to the other
parties hereto, with a copy to Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: Xxxxxxx X. Xxxxx, Esquire; or
If to a Founder or Series A Holder, at the respective address set forth
below, or
16
at such other address as such Founder or Series A Holder may have furnished in
writing to the other parties hereto.
Notices provided in accordance with this Section 6 shall be deemed
delivered (a) on the date delivered, if delivered personally or upon
confirmation of receipt by facsimile or overnight courier, or (b) five days
after deposit in the mail.
7. COMPLETE AGREEMENT; AMENDMENTS. This Agreement constitutes the full
and complete agreement of the parties hereto with respect to the subject matter
hereof. This Agreement may be amended at any time by a written instrument signed
by the Company and (i) in the case of amendments to Articles II or III or this
Section 7 with respect to Articles II or III, the holders of at least a majority
of the Registrable Shares then outstanding, (ii) in the case of amendments to
Article IV or this Section 7 with respect to Article IV, the Founders, the
Series A Holders and the holders of at least a majority of the Registrable
Shares and (iii) in the case of amendments to any other provision of this
Agreement, the holders of at least a majority of the Registrable Shares.
Wherever reference is made in this Agreement to a request or consent of holders
of a certain percentage of Registrable Shares, the determination of such
percentage shall include shares of Common Stock issuable upon conversion of the
Series B Shares even if such conversion has not yet been effected. No waivers of
or exceptions to any term, condition or provision of this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
8. PRONOUNS. Whenever the content may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one Agreement binding on all the parties hereto.
10. CAPTIONS. Captions of sections have been added only for convenience
and shall not be deemed to be a part of this Agreement.
17
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
ART TECHNOLOGY GROUP, INC.
By:
-------------------------------------------
Xxxxxxxxxxxx Xxxxx
President
SOFTBANK VENTURES, INC.
By:
-------------------------------------------
Yoshitaka Kitao
President and Chief Executive Officer
XXXXXXXXXXXX XXXXX
----------------------------------------------
Xxxxxxxxxxxx Xxxxx
Address: 00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
XXXXXX X. XXXXX
----------------------------------------------
Xxxxxx X. Xxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx 0
Xxxxxx, XX 00000
18
XXXXXXXXX XXXXX
-----------------------------------------------
Xxxxxxxxx Xxxxx
Address: 00 Xxxx xx Xxxxxxxx
Xxxxx, Xxxxxx 00000
B.U. XXXXX
-----------------------------------------------
B.U. Xxxxx
Address: Xxxxx 0
Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
19
EXHIBIT E
FORM OF LEGAL OPINION
XXXX AND XXXX LLP
COUNSELLORS AT LAW
00 XXXXX XXXXXX, XXXXXX, XXXXXXXXXXXXX 00000
000-000-0000 - FAX 000-000-0000
December 23, 1996
SOFTBANK Ventures, Inc.
00-0, Xxxxxxxxxx-Xxxxxxxxxxx
Xxxx-xx, Xxxxx 000, Xxxxx
Re: SALE OF SERIES B CONVERTIBLE PREFERRED STOCK
Ladies/Gentlemen:
This opinion is furnished to you pursuant to Section 5.6 of the Series
B Preferred Stock Purchase Agreement dated as of December 23, 1996 (the
"Purchase Agreement") between you and Art Technology Group, Inc., a
Massachusetts corporation (the "Company"), in connection with the issuance and
sale by the Company to you of 425,532 shares of Series B Preferred Stock (the
"Shares"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Purchase Agreement.
We have acted as counsel for the Company in connection with the
preparation, execution and delivery of the Purchase Agreement and the
transactions contemplated therein.
In connection with this opinion, we have examined and relied upon the
following:
1. an executed copy of the Purchase Agreement;
2. an executed copy of the Stockholders Agreement;
3. an executed copy of the Warrant;
4. the Company's Articles of Organization, as amended (the
"Articles of Organization");
5. the Company's By-Laws (the "By-Laws");
Washington, DC Boston, MA London, UK*
XXXX AND XXXX LLP INCLUDES PROFESSIONAL CORPORATIONS
*XXXXXXX XXXX AND XXXX INTERNATIONAL (AN INDEPENDENT JOINT VENTURE LAW FIRM)
SOFTBANK Ventures, Inc.
December 23, 1996
Page 2
6. a certificate, dated December 23, 1996, of the Secretary of
State of the Commonwealth of Massachusetts certifying to the
legal existence and good standing of the Company in
Massachusetts (the "'Good Standing Certificate");
7. a Certificate of the Company, executed on behalf of the
Company by the Treasurer of the Company, dated of even date
herewith, certifying as to the filing of all tax returns and
payment of all taxes by the Company (the "Tax Certificate");
8. Certificate of the Company, executed on behalf of the Company
by the Clerk of the Company, dated of even date herewith,
certifying, among other things, as to (a) the Articles of
Organization, (b) the By-Laws and (c) certain resolutions of
the Board of Director's of the Company relating to the
Purchase Agreement and the transactions contemplated thereby;
9. the Company's corporate minute and stock record books; and
10. such other agreements, documents, corporate records,
certificates and materials as we have deemed necessary for the
purposes of the opinions rendered herein.
In our examination of the documents described above, we have assumed
the genuineness of all signatures, the completeness of all corporate records
provided to us, the authenticity of all documents submitted to us as originals,
the conformity to original documents of documents submitted to us as certified,
telecopied or photostatic copies, the authenticity of the originals of such
latter documents and the legal competence of all signatories to such documents.
In rendering this opinion, we have relied, as to all questions of fact
material to this opinion, upon certificates of public officials and officers of
the Company and upon the representations and warranties made by the Company and
you in the Purchase Agreement. We have not attempted to verify independently
such facts, although we know of no facts which lead us to question the accuracy
of such certificates or representations and warranties.
Any reference herein to "our knowledge," "known to us," "know" or to
any matter "coming to our attention" or any variation of any of the foregoing
shall mean the conscious awareness of the attorneys in this firm who have
rendered substantive attention to the transactions contemplated by the Purchase
Agreement of the existence or absence of any facts which would contradict our
opinions set forth below. We have not undertaken any independent investigation
to determine the existence or absence of such facts, and no inference as to our
knowledge of the existence or absence of such facts should be drawn from the
fact of our
SOFTBANK Ventures, Inc.
December 23, 1996
Page 3
representation of the Company. Without limiting the foregoing, we have not
conducted a search of any computerized or electronic databases or the dockets of
any court, administrative or regulatory body, agency or other filing office in
any jurisdiction.
For purposes of this opinion, we have assumed that the Purchase
Agreement, the Stockholders Agreement and the Warrant (collectively, the
"Transaction Agreements") have been duly authorized, executed and delivered by
you, and that you have all requisite power and authority to effect the
transactions contemplated by the Transaction Agreements. We have also assumed
that the Transaction Agreements are your valid and binding obligations,
enforceable against you in accordance with their respective terms. We do not
render any opinion as to the application of any foreign, federal or state law or
regulation to your power, authority or competence.
Our opinions set forth below are qualified to the extent that they may
be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, public policy, fraudulent conveyance or similar laws
relating to or affecting the rights of creditors generally, (ii) statutory or
decisional law concerning recourse by creditors to security in the absence of
notice or hearing, (iii) duties and standards imposed on creditors and parties
to contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing, (iv) the enforceability of remedies for
breaches which are determined by a court to be immaterial, and (v) provisions
which purport to grant remedies which are wholly disproportionate to the damages
suffered or expenses incurred by a party, or which provide that rights or
remedies are not exclusive and are cumulative. Furthermore, we express no
opinion as to the availability of any equitable or specific remedy upon any
breach of such documents or any of the agreements, documents or obligations
referred to therein, or to the successful assertion of any equitable defenses,
inasmuch as the availability of such remedies or the success of any equitable
defense may be subject to the discretion of a court. We express no opinion
herein as to the enforceability of Sections 5 and 6 of Article II of the
Stockholders Agreement.
For purposes of our opinion expressed in the first sentence of
paragraph 1 below, we have relied solely upon the Good Standing Certificate and
the Tax Certificate, and such opinion is limited accordingly and is made as of
the date of the Good Standing Certificate and the Tax Certificate. We express no
opinion as to the tax good standing of the Company.
For purposes of our opinion in paragraph 5 below, we have relied upon
representations made by you in Section 4 of the Purchase Agreement, and have
assumed (without any independent investigation) the accuracy of such
representations.
SOFTBANK Ventures, Inc.
December 23, 1996
Page 4
We express no opinion with respect to any securities anti-fraud laws or
fraudulent transfer laws.
We express no opinion concerning the treatment for tax purposes of the
transactions contemplated by the Purchase Agreement
We express no opinion with regard to any foreign or state securities or
"Blue Sky" laws.
We are opining herein only with respect to the state laws of the
Commonwealth of Massachusetts and the federal laws of the United States of
America as in our experience are normally applicable to transactions of the type
contemplated by the Transaction Agreements and, with your permission, our
opinions exclude the applicability and effect of (i) any foreign, city or county
laws and (ii) antitrust and unfair competition laws.
Furthermore, we express no opinion as to any filing, permit,
authorization, consent or approval (i) which may be required by or otherwise
applicable to the Company as a result of the involvement of you in the
transactions contemplated by the Transaction Agreements because of your legal or
regulatory status or because of any other facts specifically pertaining to you,
or (ii) which does not have any material adverse effect on you and does not
deprive you of any material benefit under the Transaction Agreements.
For the purposes of this opinion, we have assumed that the facts and
law governing the performance by the parties of their respective obligations
under the Transaction Agreements will be identical to the facts and law
governing such performance as of the date of this opinion.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. The Company
has the corporate power and authority to carry on its business as, to our
knowledge, it is now conducted and to own and operate its properties in
connection therewith.
2. The Shares will be, when issued and paid for in accordance with the
Purchase Agreement, duly authorized, validly issued, fully paid and
nonassessable. The shares issuable upon conversion of the Shares have been duly
reserved for issuance upon conversion of the Shares and, when so issued, will be
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock. The Warrant Shares have been duly reserved for issuance upon exercise of
the Warrant and, when so issued and paid for, will be duly authorized, validly
issued, fully paid and
SOFTBANK Ventures, Inc.
December 23, 1996
Page 5
nonassessable. The shares issuable upon conversion of the Warrant Shares have
been duly reserved for issuance upon conversion of the Warrant Shares and, when
so issued, will be duly authorized, validly issued, fully paid and
nonassessable.
3. The Company has all requisite corporate power and authority to
execute and deliver the Transaction Agreements and to perform its respective
obligations thereunder. The execution and delivery of the Transaction Agreements
and the consummation of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate action on the part of the Company.
The Transaction Agreements have been duly and validly executed and delivered by
the Company and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms (other
than Sections 5 and 6 of Article II of the Stockholders Agreement, as to which
we express no opinion).
4. Except as set forth in the Transaction Agreements, neither the
Company's execution and delivery of the Transaction Agreements, nor the
Company's consummation of the transactions contemplated thereby, (i) conflicts
with or violates any provision of the Articles of Organization or the By-Laws,
(ii) to our knowledge, requires on the part of the Company any filing with, or
permit, authorization, consent or approval of, any federal or state governmental
agency, (iii) to our knowledge, violates any order, writ, injunction or decree
specifically naming the Company or any of its properties or assets or (iv) to
our knowledge, violates any statute, rule or regulation applicable to the
Company.
5. The authorized capital stock of the Company (immediately prior to
the Closing) consists of 12,000,000 shares of common stock, $.01 par value per
share (the "Common Stock"), of which 5,900,000 shares are issued and outstanding
of record, and 1,000,000 shares of Preferred Stock, $.01 par value per share, of
which 130,000 shares have been designated as Series A Convertible Preferred
Stock (all of which are issued and outstanding of record), 851,064 shares have
been designated as Series B Preferred (none of which are issued or outstanding
of record), and 18,936 shares remain available for future designation and
issuance in accordance with the Articles of Organization and applicable law.
6. Based on the representations made by you in Section 4 of the
Purchase Agreement, the issuance of the Shares to you pursuant to the Purchase
Agreement will be exempt from the registration provisions of Section 5 of the
Securities Act of 1933, as amended.
7. To our knowledge, there is no action, suit or proceeding, or
governmental inquiry or investigation, pending against the Company.
SOFTBANK Ventures, Inc.
December 23, 1996
Page 6
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions, and we disclaim any obligation to advise you
of any change in any of these sources of law or subsequent legal or factual
developments which might affect any matters or opinions set forth herein.
Please note that we are opining only as to the matters expressly set
forth herein, and no opinion should be inferred as to any other matters. This
opinion is solely for your benefit in connection with the transactions
contemplated by the Purchase Agreement and may not be quoted or relied upon by
any other person or used for any other purpose without our prior written
consent.
Very truly yours,
XXXX AND XXXX
