Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of May 31, 2002,
is by and among divine, inc., a Delaware corporation, with headquarters located
at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "COMPANY"), and the
undersigned buyers (each, a "BUYER" and collectively, the "BUYERS").
RECITALS
A. In connection with, and pursuant to, that certain Securities Purchase
Agreement dated as of May 29, 2002 by and among the parties hereto (the
"SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyers at the Initial Closing shares of Series B Convertible
Preferred Stock, par value $0.001 per share (the "SERIES B PREFERRED STOCK"), of
the Company (the "INITIAL PREFERRED SHARES"), which shall be convertible into
shares of Class A Common Stock, par value $0.001 per share (the "COMMON STOCK"),
of the Company (as converted, the "INITIAL CONVERSION SHARES") in accordance
with the terms of the Company's Certificate of Designations, Preferences and
Rights of the Series B Convertible Preferred Stock (the "CERTIFICATE OF
DESIGNATIONS"). Capitalized terms used, and not otherwise defined, herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
B. In connection with, and pursuant to the Securities Purchase Agreement,
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers shares of the
Company's Series B Preferred Stock (the "MANDATORY PREFERRED SHARES"), which
shall be convertible into shares of Common Stock (as converted, the "MANDATORY
CONVERSION SHARES") in accordance with the terms of the Certificate of
Designations, and warrants (the "WARRANTS") to purchase shares of the Company's
Series B Preferred Stock (as exercised, the "WARRANT PREFERRED SHARES"), which
Warrant Preferred Shares shall be convertible into shares of Common Stock (as
converted, the "WARRANT CONVERSION SHARES") in accordance with the terms of the
Certificate of Designations.
C. To induce the Buyers to execute, deliver and perform the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
1. DEFINITIONS.
In addition to the capitalized terms elsewhere defined herein, the
following terms, when used herein, shall have the following meanings, unless the
context otherwise requires:
a. "ADDITIONAL REGISTRABLE SECURITIES" means (i) the Warrant
Conversion Shares issued or issuable upon conversion of the Warrant Preferred
Shares and (ii) any shares of capital stock issued or issuable with respect to
the Warrant Conversion Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise; PROVIDED, HOWEVER,
that Additional Registrable Securities shall not include any such shares (a)
which have been disposed of pursuant to an effective registration statement
under the 1933 Act, (b) sold or otherwise transferred in a transaction in which
the rights under the provisions of this Agreement have not been assigned, or (c)
which have been sold under Rule 144.
b. "ADDITIONAL REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering the Additional Registrable Securities.
c. "EFFECTIVENESS DEADLINE" means the Initial Effectiveness Deadline
and the Additional Effectiveness Deadline, as applicable.
d. "FILING DEADLINE" means the Initial Filing Deadline or any
Additional Filing Deadline, as applicable.
e. "INITIAL REGISTRABLE SECURITIES" means (i) the Initial Conversion
Shares issued or issuable upon conversion of the Initial Preferred Shares, (ii)
the Mandatory Conversion Shares issued or issuable upon conversion of the
Mandatory Preferred Shares and (iii) any shares of capital stock issued or
issuable with respect to the Initial Conversion Shares and the Mandatory
Conversion Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise; PROVIDED, HOWEVER,
that Initial Registrable Securities shall not include any such shares (a) which
have been disposed of pursuant to an effective registration statement under the
1933 Act, (b) sold or otherwise transferred in a transaction in which the rights
under the provisions of this Agreement have not been assigned, or (c) which have
been sold under Rule 144.
f. "INITIAL REGISTRATION STATEMENT" means a registration statement
or registration statements of the Company filed under the 1933 Act covering the
Initial Registrable Securities.
g. "INVESTOR" means a Buyer, any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 8(b) and
any transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 8(b).
h. "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, other entity, an
unincorporated organization and a governmental or any department or agency
thereof.
i. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for
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offering securities on a continuous or delayed basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.
j. "REGISTRABLE SECURITIES" means the Initial Registrable Securities
and the Additional Registrable Securities, as applicable.
k. "REGISTRATION STATEMENT" means the Initial Registration Statement
and the Additional Registration Statement, as applicable.
l. "RULE 144" means Rule 144 promulgated by the SEC.
m. "SEC" means the United States Securities and Exchange Commission.
2. REGISTRATION.
a. MANDATORY REGISTRATION.
(i) INITIAL MANDATORY REGISTRATION. The Company shall prepare,
and, as soon as reasonably practicable but in no event later than the
earlier of (i) 45 days prior to the first anniversary of the Initial
Closing Date or (ii) 30 days after the expiration of the lock-up provisions
set forth in Section 4(m) of the Securities Purchase Agreement pursuant to
Section 4(m)(i)(2) therein (the "LOCK-UP EXPIRATION") if Form S-3 is
available for the Initial Registration Statement or 60 days after the
Lock-Up Expiration if Form S-3 is unavailable for such registration (the
"INITIAL FILING DEADLINE"), file with the SEC the Initial Registration
Statement on Form S-3 covering the resale of all of the Initial Registrable
Securities. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for
such a registration, subject to the provisions of Section 2(d). The Initial
Registration Statement prepared pursuant hereto shall register for resale
at least that number of shares of Common Stock equal to the aggregate
number of Initial Registrable Securities issued and outstanding or deemed
issued and outstanding on an as-converted basis as of the trading day
immediately preceding the date the Initial Registration Statement is
initially filed with the SEC (as if all of the Initial Preferred Shares and
the Mandatory Preferred Shares then issuable under the Securities Purchase
Agreement were issued and outstanding on such date), subject to adjustment
as provided in Section 2(e). The Company shall use its best efforts to have
the Initial Registration Statement declared effective by the SEC as soon as
reasonably practicable, but in no event later than the first anniversary of
the Initial Closing Date (the "INITIAL EFFECTIVENESS DEADLINE").
(ii) ADDITIONAL MANDATORY REGISTRATION. The Company shall
prepare, and, as soon as practicable but in no event later than the later
of (i) the date which is 30 days after the exercise date of any Warrants if
Form S-3 is available for such registration and 60 days after the exercise
date of any Warrants if Form S-3 is unavailable for such registration and
(ii) the earlier of (x) 30 days after the Lock-Up Expiration if Form S-3 is
available for such registration or 60 days after the Lock-Up Expiration if
Form S-3 is unavailable for such registration and (y) the first anniversary
of the Initial Closing Date (each, an "ADDITIONAL FILING DEADLINE"), file
with the SEC an Additional Registration
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Statement on Form S-3 covering the resale of all of the Additional
Registrable Securities relating to such exercised Warrants. In the event
that Form S-3 is unavailable for such a registration, the Company shall use
such other form as is available for such a registration, subject to the
provisions of Section 2(d). Each such Additional Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the aggregate number of Additional
Registrable Securities relating to such exercised Warrants issued and
outstanding or deemed issued and outstanding on an as-converted basis as of
the trading day immediately preceding the date the Additional Registration
Statement is initially filed with the SEC subject to adjustment as provided
in Section 2(e). The Company shall use its best efforts to have each such
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the later of (i) the date which is
90 days after the exercise date of the applicable Warrants and (ii) the
first anniversary of the Mandatory Closing Date (each an "ADDITIONAL
EFFECTIVENESS DEADLINE").
b. [INTENTIONALLY OMITTED]
c. LEGAL COUNSEL. Subject to Section 5 hereof, the Buyers holding a
majority of the Registrable Securities, Preferred Shares and Warrants (on an as
converted, as exercised basis) shall have the right to select one legal counsel
to review and oversee any offering pursuant to this Section 2 ("LEGAL COUNSEL"),
which shall be Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx or such other counsel as
thereafter designated by the holders of a majority of the Registrable
Securities. The Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement.
d. INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holder of a
majority of the Registrable Securities and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.
e. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event that the
number of shares available under a Registration Statement filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration Statement, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least 110% of the
aggregate number of the Registrable Securities required to be covered by such
Registration Statement as of the trading day immediately preceding the date of
the filing of such amendment or new Registration Statement, in each case, as
soon as practicable, but in any event not later than fifteen (15) days after the
necessity therefor arises. The Company shall use it best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
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f. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS
OF REGISTRATION STATEMENT. If (i) a Registration Statement covering Registrable
Securities required to be filed by the Company pursuant to this Agreement is not
declared effective by the SEC on or before the applicable Effectiveness Deadline
or (ii) on any day after the Registration Statement has been declared effective
by the SEC sales of the Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(m))) pursuant to the Registration Statement
(including, without limitation, because of a failure to keep the Registration
Statement effective, to disclose such information as is necessary for sales to
be made pursuant to the Registration Statement or to register sufficient shares
of Common Stock), then, as partial relief for the damages to any holder by
reason of any such delay in or reduction of its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each Buyer
then holding Registrable Securities (or Preferred Shares or Warrants that are
exercisable for, directly or indirectly, Registrable Securities) covered by such
Registration Statement an amount in cash equal to two percent (2%) of the
portion of the Purchase Price attributable to such Registrable Securities (or
Preferred Shares or Warrants that are exercisable for, directly or indirectly,
Registrable Securities) then held by such Buyer, for each thirty (30) day period
the applicable Registration Statement is not effective or available (other than
during an Allowable Grace Period) for the sale of at least all the Registrable
Securities required to be included on such Registration Statement (or a lesser
pro rata payment amount if such period is less than thirty (30) days); provided
however, that notwithstanding anything in this Agreement to the contrary, the
parties hereto hereby agree that, with respect to any underwritten registration
hereunder, the applicable Effectiveness Deadline and Allowable Grace Period, as
the case may be, shall be automatically extended to the extent a delay is caused
by the underwriter or the underwriting process, including, but not limited to,
any failure to register any Registrable Securities in said registration as a
result of an underwriter's cut-back under Section 2(h) hereof. The payments to
which a holder shall be entitled pursuant to this Section 2(f) are referred to
herein as "REGISTRATION DELAY PAYMENTS." Registration Delay Payments shall be
paid on the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third Business Day after
the event or failure giving rise to the Registration Delayed Payments is cured.
g. SELECTION OF UNDERWRITERS. The Buyers holding a majority of the
Registrable Securities, Preferred Shares and Warrants (on an as converted, as
exercised basis) shall have the right to select an underwriter(s), if any, for
the Registrable Securities to be registered pursuant to Section 2(a), subject to
the Company's written approval of such underwriter, such written approval not to
be unreasonably withheld.
h. In the event that a registration hereunder is underwritten, if a
representative of the underwriters advises the Investors in writing that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) because the number of securities
to be underwritten is likely to have an adverse effect on the price, timing or
the distribution of securities to be offered, then the number of securities that
may be included in the underwriting shall be allocated, first, to the Investors
on a pro rata basis based on the total number of Registrable Securities held by
the Investors and second to the Company and other holders of registration rights
to the extent they are participating in such offering. Any
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Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2(a) or 2(e), the Company will use
its best efforts to effect the registration of the Registrable Securities
covered by such Registration Statement in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following
obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the applicable Registrable Securities
(but in no event later than the applicable Filing Deadline) and use its best
efforts to cause such Registration Statement relating to the applicable
Registrable Securities to become effective as soon as practicable after such
filing (but in no event later than the applicable Effectiveness Deadline). The
Company shall use its best efforts to keep each Registration Statement effective
pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) (or successor
thereto) promulgated under the 1933 Act or (ii) the date on which the Investors
shall have sold all the Registrable Securities covered by such Registration
Statement (each, a "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), the Company shall have incorporated such report by reference into
the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement the
Registration Statement.
c. The Company shall permit Legal Counsel to review and comment upon
(i) the Initial Registration Statement and any Additional Registration Statement
prior to its filing
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with the SEC and (ii) all other Registration Statements and all amendments and
supplements to all Registration Statements (except for Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any
similar or successor reports) prior to their filing with the SEC. The Company
shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be withheld unless Legal
Counsel has reasonable objections to disclosures in the Registration Statement
relating to (I) the Registrable Securities, the Preferred Shares or the Warrants
or (II) the Investors. The Company shall furnish to Legal Counsel, without
charge, (i) any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of any
Registration Statement, such number of copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) as they may reasonably
request and (iii) such other documents, including copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.
e. The Company shall use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities pursuant to a Registration Statement; provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction.
f. The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of
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such supplement or amendment to Legal Counsel and each Investor as Legal Counsel
or such Investor may reasonably request. The Company shall also promptly notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
h. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request and
registered in such names as the Investors may request.
i. The Company shall provide a transfer agent and registrar of all
such Registrable Securities not later than the effective date of the applicable
Registration Statement.
j. The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
k. Within five (5) Business Days after a Registration Statement
which covers applicable Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as EXHIBIT A.
l. The Company shall take all other actions reasonably necessary to
expedite and facilitate disposition by Investors of Registrable Securities
pursuant to a Registration Statement.
m. Notwithstanding anything to the contrary in Section 3(g), at any
time after the applicable Registration Statement has been declared effective by
the SEC, the Company may suspend the use or effectiveness of any Registration
Statement (a "GRACE PERIOD") (and the Investors hereby agree not to offer or
sell any Registrable Securities pursuant to such
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Registration Statement during such Grace Period) if there is material non-public
information about the Company that the Company reasonably determines not to be
in the best interests of the Company to disclose and that the Company is not
otherwise required to disclose; provided, that the Company shall promptly (i)
notify the Investors in writing of such suspension and the date on which the
Grace Period will begin and (ii) notify the Investors in writing of the date on
which the Grace Period ends; and, provided further, that no Grace Period shall
exceed forty-five (45) consecutive days and during any 365 day period such Grace
Periods shall not exceed an aggregate of ninety (90) days provided that no Grace
Period arising out of the same set of facts, circumstances or transactions shall
be permitted for consecutive forty-five (45) day periods of days (an "ALLOWABLE
GRACE PERIOD"). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the holders receive the
notice referred to in clause (i) and shall end on and include the later of the
date the holders receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during any Allowable Grace Period. Upon expiration of the Grace
Period, the Company shall again be bound by the first sentence of Section 3(f)
with respect to the information giving rise thereto unless such material
non-public information is no longer applicable.
n. In the event of any underwritten public offering, the Company
shall enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of such offering.
Each Investor participating in such underwriting shall also enter into and
perform its obligations pursuant to such an agreement.
o. The Company shall obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any) in customary
form addressed to the Investors and the underwriters, if any, covering such
matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the Investors
and such underwriters (it being agreed that the matters to be covered by such
opinion or a written statement by such counsel delivered in connection with such
opinions shall include, without limitation, an opinion, subject to reasonable
and customary qualifications as of the date of the opinion and as of the
effective date of the Registration Statement relating to the registration or
most recent post-effective amendment thereto, as the case may be, regarding the
absence from such registration statement and the prospectus included therein, as
then amended or supplemented, including the documents incorporated by reference
therein, of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading).
p. The Company shall obtain "comfort letters" and updates thereof
from the independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to the Investors and the underwriters, in customary form and covering
matters of the type customarily covered in comfort letters in connection with
primary underwritten offerings.
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q. The Company shall deliver such other customary documents and
certificates as may be reasonably requested by the Investors and the managing
underwriters, if any, including those to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
r. Promptly after the filing of a Registration Statement hereunder,
the Company shall promptly secure the listing of all of the Registrable
Securities covered by such Registration Statement upon each national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock shall be so listed (subject to notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such listing of
such Registrable Securities.
4. OBLIGATIONS OF THE INVESTORS.
a. At least three (3) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Investor
in writing of the information the Company reasonably requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor no longer holds any Registrable
Securities or has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required and, if so directed by the Company, such Investor shall deliver to the
Company, or destroy all copies in such Investor's possession, any prospectus
covering such Registrable Securities current at the time of receipt of such
notice. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any
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event of the kind described in Section 3(g) or the first sentence of 3(f) and
for which the Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
fees and disbursements of Legal Counsel (up to an aggregate of $10,000) in
connection with registration filing or qualification pursuant to Sections 2 and
3 of this Agreement and fees and disbursements of counsel for the Company shall
be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. The Company agrees to indemnify, to the fullest extent permitted
by law, each Investor participating in the registration, and each of its
partners, members, managers, officers and directors and each Person who controls
such holders (within the meaning of the 0000 Xxx) against all losses, claims,
damages, liabilities and expenses (including without limitation, attorneys'
fees) ("LIABILITIES") caused by (i) any untrue or alleged untrue statement of
material fact contained in any Registration Statement or any prospectus or
preliminary prospectus or amendment thereof or supplement thereto, (ii) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any violation
or alleged violation by the Company of the 1933 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the 1933 Act, 1934
Act, or any state securities law, in each case in connection with such
registration, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Investor expressly for
use therein or by such Investor's failure to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements thereof or thereto
after the Company has furnished such Investor with a sufficient number of copies
of the same. The payments required by this Section 6(a) will be made
periodically during the course of the investigation or defense, as and when
bills are received or expenses incurred.
b. Each Investor participating in a registration shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests relating to information about the Investor for use in connection with
any Registration Statement or any prospectus, preliminary prospectus, amendment
or supplement thereof or thereto relating thereto and, to the fullest extent
permitted by law, shall indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the 0000 Xxx)
against any Liabilities resulting from any untrue or alleged untrue statement of
material fact contained in such Registration Statement or any prospectus,
preliminary prospectus, amendment or supplement thereof or thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the
11
extent that such untrue statement or omission related to such Investor and is
contained in any information or affidavit so furnished in writing by such
Investor specifically for use in such Registration Statement or any prospectus,
preliminary prospectus, amendment or supplement thereof or thereto; PROVIDED
that the obligation to indemnify hereunder will be several, not joint and
several, among the Investors holding such Registrable Securities, and the
liability of each such Investor under this Section 6 shall be limited to the net
amount received by such Investor from the sale of Registrable Securities
pursuant to such Registration Statement.
c. PROCEDURE. Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, provided any such failure shall not
relieve the indemnifying party of liability hereunder, except to the extent that
the indemnifying party is prejudiced or injured by such failure, and (ii) unless
in such indemnified party's reasonable judgment an actual or potential conflict
of interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party an actual or potential conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect to which (x) any
indemnified party is or could have been a party and (y) indemnity has or could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
for claims that are the subject matter of such proceeding.
d. CONTRIBUTION. To the extent any indemnification by an
indemnifying party provided for in this Section 6 is prohibited or limited by
law, the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such Liabilities, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section(d) were determined solely by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the
12
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
e. SURVIVAL. The indemnification and contribution provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities.
7. COMPLIANCE WITH RULE 144. At the request of an Investor proposing to
sell securities in compliance with Rule 144, the Company will (i) forthwith
furnish to such Investor, upon request, a written statement of compliance with
the filing requirements of the SEC as set forth in Rule 144, as such rule may be
amended from time to time, and (ii) use its reasonable best efforts to make
available to the public and such Investor such information as will enable such
Investor to make sales pursuant to Rule 144.
8. MISCELLANEOUS.
a. OTHER REGISTRATION RIGHTS. The Company may hereafter grant to any
Person or Persons the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of the Registrable Securities; provided, however, the securities held by
such Person or Persons may not have priority over Registrable Securities under
Section 2(h).
b. ASSIGNMENT OF REGISTRATION RIGHTS. The registration rights of the
Holder under this Agreement with respect to any Registrable Securities may be
assigned to any Person who acquires such Registrable Securities; PROVIDED that
(a) the Investor shall give the Company written notice at or prior to the time
of such assignment stating the name and address of the assignee and identifying
the shares with respect to which the rights under this Agreement are being
assigned; (b) such assignee shall agree in writing, in form and substance
reasonably satisfactory to the Company, to be bound to the same extent and in
the same capacity as the Investor by the provisions of this Agreement; and (c)
such assignee acknowledges, immediately following such assignment, the further
disposition of such securities by such assignee is restricted under the 1933
Act.
c. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective permitted successors and assigns of the parties hereto, whether so
expressed or not.
d. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
13
e. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of,
and shall not be utilized in interpreting, this Agreement.
f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service or (iv) five (5) days
after deposit in the U.S. mail, return receipt requested, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
With a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Legal Counsel:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Day
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt or deposit in the
U.S. mail, as the case may be, (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal
14
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service or (D) by a signed return receipt in accordance with clause
(i), (ii), (iii), or (iv) above, respectively.
g. GOVERNING LAW. The corporate laws of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the State of Delaware, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
h. AMENDMENTS AND WAIVERS. The provisions of this Agreement may be
amended upon the written agreement of the Company and the Investors holding a
majority of the Registrable Securities, determined as if all of the Preferred
Shares and the Warrants then outstanding have been converted into or exercised
for Registrable Securities without regard to any limitations on conversion of
the Preferred Shares or the exercise of the Warrants. Any waiver, permit,
consent or approval of any kind or character on the part of any holders of any
provision or condition of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in writing.
i. FINAL AGREEMENT. This Agreement, constitutes the complete and
final agreement of the parties concerning the matters referred to herein and
supersedes all prior agreements and understandings.
j. EXECUTION. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party
15
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
k. CONSENTS. All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investors holding a majority of the Registrable
Securities, determined as if all of the Preferred Shares and the Warrants then
outstanding have been converted into or exercised for Registrable Securities
without regard to any limitations on conversion of the Preferred Shares or the
exercise of the Warrants.
l. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.
m. SUCCESSORS AND ASSIGNS. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
* * * * * *
16
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
COMPANY:
divine, inc.
By: Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and
General Counsel
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
OAK INVESTMENT PARTNERS IX, LIMITED
PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Managing Member of Oak Associates IX, LLC
The General Partner of Oak Investment
Partners IX, Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
OAK IX AFFILIATES FUND, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Managing Member of Oak IX Affiliates, LLC
The General Partner of Oak IX Affiliates
Fund, Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
OAK IX AFFILIATES FUND-A, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Managing Member of Oak IX Affiliates, LLC
The General Partner of Oak IX Affiliates Fund-A,
Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
OAK INVESTMENT PARTNERS X, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Managing Member of Oak Associates X, LLC
The General Partner of Oak Investment Partners X,
Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
OAK X AFFILIATES FUND, LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Managing Member of Oak X Affiliates, LLC
The General Partner of Oak X Affiliates Fund,
Limited Partnership
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
-----------------------------------
Xxxxx Xxxxx
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
/s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxxx
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
BUYERS:
-----------------------------------
By:
------------------------------------
Name:
-------------------------------
Its:
--------------------------------
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
ATTN: _________________
RE: divine, inc.
Ladies and Gentlemen:
We are counsel to divine, inc., a Delaware corporation (the "COMPANY"), and
have represented the Company in connection with that certain Securities Purchase
Agreement (the "PURCHASE AGREEMENT") entered into by and among the Company and
the buyers named therein (collectively, the "HOLDERS") pursuant to which the
Company issued to the Holders shares of its Series B Convertible Preferred
Stock, par value $0.001 per share, (the "PREFERRED SHARES") convertible into
shares of the Company's Class A Common Stock, par value $0.001 per share (the
"COMMON STOCK"), and warrants to purchase shares of the Series B Convertible
Preferred Stock of the Company (the "WARRANT PREFERRED SHARES"), subject to
adjustment (the "WARRANTS"). Pursuant to the Purchase Agreement, the Company
also has entered into a Registration Rights Agreement with the Holders (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed, subject
to the terms and conditions thereof, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the shares of Common Stock issuable upon conversion of the Preferred
Shares and conversion of the Warrant Preferred Shares issued upon the exercise
of the Warrants, under the Securities Act of 1933, as amended (the "1933 ACT").
In connection with the Company's obligations under the Registration Rights
Agreement, on _____________, 200_, the Company filed a Registration Statement on
Form S-3 (File No. 333-_____________) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities subject to the Conversion Notice attached hereto which names each of
the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities subject to the Conversion Notice attached hereto are available for
resale under the 1933 Act pursuant to the Registration Statement.
Very truly yours,
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
By:
-----------------------------------
cc: [LIST NAMES OF HOLDERS]
