Execution Copy
--------------
NOTE PURCHASE AGREEMENT
dated as of October 29, 2001
among
NAVISITE, INC.,
COMPAQ FINANCIAL SERVICES CORPORATION
AND
CMGI, INC.
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TABLE OF CONTENTS
ARTICLE 1
Definitions
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Section 1.01. Certain Defined Terms....................................... 1
Section 1.02. Index Of Defined Terms...................................... 7
Section 1.03. Accounting Terms And Determinations......................... 8
Section 1.04. Other Definitional Provisions............................... 8
ARTICLE 2
Purchase And Sale Of Notes
Section 2.01. Purchase And Sale Of Notes.................................. 9
ARTICLE 3
Closing
Section 3.01. The Closing................................................. 9
ARTICLE 4
Representations And Warranties Of The Company
Section 4.01. Corporate Existence and Power............................... 9
Section 4.02. Due Authorization........................................... 9
Section 4.03. Binding Effect; Liens of Security Documents................. 10
Section 4.04. Governmental Consents....................................... 10
Section 4.05. Non-contravention........................................... 10
Section 4.06. SEC Reports; Financial Statements........................... 11
Section 4.07. Capitalization.............................................. 11
Section 4.08. Valid Issuance of Stock..................................... 13
Section 4.09. Litigation.................................................. 14
Section 4.10. Ownership of Property....................................... 14
Section 4.11. No Default.................................................. 14
Section 4.12. Absence of Certain Changes.................................. 14
Section 4.13. No Burdensome Restrictions.................................. 14
Section 4.14. Subsidiaries; Other Equity Investments...................... 14
Section 4.15. Investment Company Act...................................... 15
Section 4.16. Taxes....................................................... 15
Section 4.17. Employment Matters.......................................... 15
Section 4.18. Compliance with ERISA....................................... 15
Section 4.19. Brokers..................................................... 16
Section 4.20. Related Transactions........................................ 16
Section 4.21. Employment, Shareholders and Subscription Agreements........ 16
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Section 4.22. Representations and Warranties Incorporated from the
Security Documents.......................................... 16
Section 4.23. Environmental and Safety Laws............................... 16
Section 4.24. Invention Assignment and Confidentiality Agreement.......... 16
Section 4.25. Intellectual Property....................................... 17
Section 4.26. Registration Rights......................................... 17
Section 4.27. Real Property Interests..................................... 17
ARTICLE 5
Affirmative Covenants
Section 5.01. Financial Statements And Other Reports...................... 18
Section 5.02. Payment Of Obligations...................................... 20
Section 5.03. Conduct Of Business And Maintenance Of Existence............ 20
Section 5.04. Maintenance Of Property Insurance........................... 20
Section 5.05. Compliance With Laws; Filings Of Reports.................... 21
Section 5.06. Inspection Of Property, Books And Records................... 22
Section 5.07. Reservation Of Shares....................................... 22
Section 5.08. Purchasers' Meetings........................................ 22
Section 5.09. Board Of Directors Meetings................................. 23
Section 5.10. Meeting Of Stockholders; Stockholder Approval............... 23
ARTICLE 6
Negative Covenants
Section 6.01. Debt........................................................ 23
Section 6.02. Negative Pledge............................................. 24
Section 6.03. Consolidations, Mergers And Sales Of Assets................. 24
Section 6.04. Restricted Payments......................................... 25
Section 6.05. Purchase Of Assets; Investments............................. 25
Section 6.06. Transactions With Affiliates................................ 25
Section 6.07. Notice Of Issuance Of Securities............................ 25
Section 6.08. Amendments And Waivers...................................... 26
ARTICLE 7
Events Of Default
Section 7.01. Events Of Default........................................... 26
ARTICLE 8
Conditions
Section 8.01. Conditions To Closing....................................... 28
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ARTICLE 9
Expenses, Indemnity, Taxes And Right To Perform
Section 9.01. Expenses.................................................... 29
Section 9.02. Indemnity................................................... 30
ARTICLE 10
Miscellaneous
Section 10.01. Survival................................................... 30
Section 10.02. No Waivers................................................. 30
Section 10.03. Security Agreement......................................... 31
Section 10.04. Notices.................................................... 31
Section 10.05. Payments................................................... 32
Section 10.06. Severability............................................... 32
Section 10.07. Amendments And Waivers..................................... 33
Section 10.08. Successors And Assigns; Registration....................... 33
Section 10.09. Lost Or Destroyed Notes.................................... 34
Section 10.10. Headings................................................... 35
Section 10.11. Confidentiality............................................ 35
Section 10.12. Governing Law; Submission To Jurisdiction.................. 35
Section 10.13. Waiver Of Jury Trial....................................... 36
Section 10.14. Counterparts; Integration.................................. 36
EXHIBIT A - Form of Initial Note........................................... A-1
EXHIBIT B - Form of Guarantee and Security Agreement....................... B-1
EXHIBIT C - Form of Amendment to and Restatement of the Investor
Rights Agreement............................................... C-1
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NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this "AGREEMENT") is made and entered into as
of October 29, 2001 among NaviSite, Inc., a Delaware corporation (the
"COMPANY"), Compaq Financial Services Corporation, a Delaware corporation
("CFS"), and CMGI, Inc., a Delaware corporation ("CMGI," together with CFS, the
"PURCHASERS").
WHEREAS, as more fully described in the Transaction Agreement, the Company
will issue to CFS a senior, secured, convertible note in an aggregate principal
amount equal to the sum of $55,000,000 plus an amount equal to the interest that
would have accrued on $35,000,000 of such note from November 1, 2001 up to and
including the Closing Date had such note been issued on November 1, 2001 (the
"CFS NOTE"), and the Company will issue to CMGI a senior, secured, convertible
note in the principal amount of $10,000,000 (the "CMGI NOTE," together with the
CFS Note, the "NOTES"), in each case, substantially in the form attached hereto
as Exhibit A;
WHEREAS, on or prior to the Closing Date, (i) the Company and the
Collateral Representative will enter into a Guarantee and Security Agreement
substantially in the form attached hereto as Exhibit B (the "SECURITY
AGREEMENT") and (ii) the Company and the Purchasers will enter into the
Amendment to and Restatement of the Investor Rights Agreement substantially in
the form attached hereto as Exhibit C (the "INVESTOR RIGHTS AGREEMENT
AMENDMENT");
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties, covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Certain Defined Terms. The following terms have the
following meanings:
"AFFILIATE" means (i) any Person that directly or indirectly controls the
Company, (ii) any Person (other than the Company or any of its Subsidiaries)
which is controlled by or is under common control with such controlling Person
and (iii) in the case of an individual, the parents, descendants, siblings and
spouse of such individual. As used herein, the term "control" of a Person means
the possession, directly or indirectly, of the power to vote 10% or more of any
class of voting securities of such Person or to direct or cause the direction of
the
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management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"AFFILIATE OBLIGATIONS" means obligations of the Company to CMGI arising
from (i) services and benefits provided by CMGI to the Company including but not
limited to, employee benefits, insurance, consulting, professional and legal
services, security services, recruiting fees, telecommunication charges,
software licenses, office supplies, human resources, facilities, finance,
information technology, public relations and (ii) invoices for goods or services
billed to and paid for by CMGI on behalf of the Company including but not
limited to, legal fees, office equipment leasing, office space rent, bank fees,
consulting agency fees, payroll services, telephony, relocation services,
shipping and handling services, tax consulting fees and real estate fees, in
each case solely to the extent consistent with the past business practices of
CMGI and the Company with respect to such services, benefits and invoices.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"CAPITAL LEASE" of any Person means any lease of any property by such
Person as lessee which would, in accordance with GAAP, be required to be
accounted for as a capital lease on the balance sheet of such Person.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participations or other equivalents however designated of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person.
"CHANGE OF CONTROL" means, with respect to the Company, the occurrence of
either of the following:
(a) if
(x) any "person" or "group" (as such terms are used in Section 13(d)
and Section 14(d) of the Exchange Act or any successor provisions to
either of the foregoing), including any group acting for the purpose
of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person will be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time,
and such person or group shall be deemed to beneficially own any
Voting Stock of a
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corporation held by another corporation so long as such person or
group beneficially owns, directly or indirectly, in the aggregate a
majority of the total voting power of the Voting Stock of such other
corporation), directly or indirectly, of a percentage of the total
voting power of the Voting Stock of the Company that is greater than
the percentage of the total voting power of the Voting Stock of the
Company held by CMGI and its Subsidiaries, or
(y) any Permitted Holder files a Schedule 13D or TO (or any successor
schedule, form or report under the Exchange Act) in connection with a
transaction or event as a result of which (a) such person becomes the
"beneficial owner" of additional shares of Common Stock and (b) the
Common Stock ceases, or immediately upon consummation of or
immediately following such transaction or event, will cease, to be
listed on a U.S. national securities exchange or approved for
quotation on the Nasdaq National Market or any similar U.S. system for
automated dissemination of quotations of securities prices; or
(b) if during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors (together
with new directors whose election or appointment by the board of
directors or whose nomination for election by the Company's
stockholders was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of
such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Company's board of directors then in office.
"COLLATERAL" means all property, now existing or hereafter acquired,
mortgaged or pledged to or purported to be subjected to a Lien in favor of, the
Collateral Representative for the benefit of the Purchasers pursuant to the
Security Documents.
"COLLATERAL REPRESENTATIVE" means CFS in its capacity as collateral
representative for the Purchasers under the Security Documents, and its
successors in such capacity.
"DEBT" of a Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable or Affiliate Obligations in each case
arising and paid in the ordinary course of business, (iv) all Capital Leases of
such Person, (v) all obligations of such Person to purchase securities (or other
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property) which arise out of or in connection with the issuance or sale of the
same or substantially similar securities (or property), (vi) all non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vii) all equity
securities of such Person subject to repurchase or redemption otherwise than at
the sole option of such Person, (viii) all Debt secured by a Lien on any asset
of such Person, whether or not such Debt is otherwise an obligation of such
Person, and (ix) all Debt of others Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Investor Rights Agreement Amendment and any documents or
agreements contemplated therein.
"FISCAL YEAR" means a fiscal year of the Company.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"INVESTMENT" means any investment in any Person, whether by means of
acquiring or holding securities, capital contribution, loan, time deposit,
advance, Guarantee or otherwise.
"INVESTOR RIGHTS AGREEMENT" means the agreement dated October 27, 1999, as
amended on June 8, 2000 and December 12, 2000, between the Company and CMGI.
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"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement and the
other Financing Documents, the Company or its Subsidiaries shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the financial
condition, operations, business, properties or prospects of the Company and its
Subsidiaries, taken as a whole, (ii) the rights and remedies of the Collateral
Representative or the Purchasers under the Financing Documents, or the ability
of any of the Company or its Subsidiaries to perform its obligations under the
Financing Documents to which it is a party, (iii) the legality, validity or
enforceability of any Financing Document, or (iv) the existence, perfection or
priority of any security interest granted in the Financing Documents with
respect to, or the value of, any material Collateral.
"MATERIAL DEBT" means Debt of the Company or any of its Subsidiaries,
arising in one or more related or unrelated transactions, in an aggregate
principal or face amount exceeding $1,000,000.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of a Person
by its chairman of the board (if an officer), chief executive officer, president
or chief financial officer.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, articles of organization or partnership agreement)
or which relate to the internal governance of such Person (such as by-laws).
"PERMITTED CONTEST" means a contest maintained in good faith by appropriate
proceedings promptly instituted and diligently conducted and with respect to
which such reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; provided that compliance with the
obligation that is the subject of such contest is effectively stayed during such
challenge.
"PERMITTED HOLDER" means:
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o CMGI and any of its Subsidiaries,
o CFS and any of its Subsidiaries or Affiliates,
o any corporation, the outstanding voting power of the Capital Stock of
which is beneficially owned, directly or indirectly, by the Company's
stockholders in substantially the same proportions as their ownership of
the voting power of the Company's Capital Stock, or
o the Company or any Subsidiary of the Company.
"PERMITTED LIENS" means Liens permitted pursuant to Section 6.02.
"PERSON" means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any government or agency or political subdivision thereof.
"PROPERTY INSURANCE POLICY" means any insurance policy maintained by the
Company or any Subsidiary covering losses with respect to tangible real or
personal property or improvements or losses from business interruption.
"REQUIRED HOLDERS" means the holders of more than 50% of the aggregate
outstanding principal amount of the Notes.
"RESTRICTED PAYMENT" means as to any Person (i) any dividend or other
distribution on any equity interest in such Person (except those payable solely
in equity interests of the same class) or (ii) any payment on account of (a) the
purchase, redemption, retirement, defeasance, surrender or acquisition of any
equity interests in such Person or any claim respecting the purchase or sale of
any equity interest in such Person or (b) any option, warrant or other right to
acquire any equity interests in such Person.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY DOCUMENTS" means the Security Agreement and any other agreement
pursuant to which the Company or any of its Affiliates provides a Lien on its
assets in favor of the Collateral Representative for the benefit of the
Purchasers, and all supplementary assignments, security agreements, pledge
agreements, acknowledgments or other documents delivered or to be delivered
pursuant to the terms hereof or of any other Security Document.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
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power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
Unless otherwise specified, the term Subsidiary shall refer to a Subsidiary of
the Company.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct obligations
of the United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Service and P-1 by Moody's Investors Services, Inc.,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any State thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000 and
which issues (or the parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (ii) above, (iv) repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust company meeting the criteria specified in
clause (iii) above, provided in each case that such Investment matures within
one year from the date of acquisition thereof by the Company or any Subsidiary,
or (v) any money market or mutual fund which invests only in the foregoing and
the liquidity of which is satisfactory to the Required Holders.
"TRANSACTION AGREEMENT" means the agreement dated October 29, 2001 among
CMGI, the Company, CFS, AltaVista Company, a Delaware corporation, Compaq
Computer Corporation, a Delaware corporation, Compaq Financial Services Company,
an unlimited company having a share capital formed under the laws of Ireland,
and Compaq Financial Services Canada Corporation, a corporation incorporated
under the Nova Scotia Business Corporation Act.
"UCC" has the meaning set forth in the Security Agreement.
"VOTING STOCK" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors, or persons performing
similar functions, of such persons, whether at all times or only for so long as
no senior class of securities has such voting power by reason of any
contingency.
Section 1.02. Index Of Defined Terms. The following terms shall have the
respective meanings given to them in the sections indicated below:
DEFINED TERM SECTION
"Agreement".............................................. Preamble
"CFS".................................................... Preamble
"CFS Note"............................................... Recitals
"Closing"................................................ 3.01
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DEFINED TERM SECTION
"Closing Date"........................................... 3.01
"CMGI"................................................... Preamble
"CMGI Note".............................................. Recitals
"Common Stock"........................................... Recitals
"Company"................................................ Preamble
"Company Reports"........................................ 4.06
"Conversion Shares"...................................... 4.08
"Event of Default"....................................... 7.01
"GAAP"................................................... 1.03
"Indemnitees"............................................ 9.02
"Intellectual Property".................................. 4.25
"Investor Rights Agreement Amendment".................... Recitals
"Non-Assigning Purchaser"................................ 10.08(b)
"Note Register".......................................... 10.08(d)
"Notes".................................................. Recitals
"Proxy Statement"........................................ 5.10(a)
"Purchaser".............................................. Preamble
"Security Agreement"..................................... Recitals
"SEC".................................................... 4.06
"Stockholders' Meeting".................................. 5.10(b)
Section 1.03. Accounting Terms And Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time
("GAAP"), applied on a basis consistent (except for changes concurred in by the
Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its consolidated
Subsidiaries delivered to the Purchasers.
Section 1.04. Other Definitional Provisions. References in this Agreement
to "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any term defined herein may be used in the singular or
plural. "Include", "includes" and "including" shall be deemed to be followed by
"without limitation". "Writing", "written" and comparable terms refer to
printing, typing and other means of reproducing words in a visible form.
References to any agreement or contract are to such agreement or contract as
amended, modified or supplemented from time to time. References to any Person
include the successors and assigns of such Person. References to "from" or
"through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively. References to any statute or act shall
include all related current regulations and all amendments and any successor
statutes, acts and regulations.
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ARTICLE 2
Purchase And Sale Of Notes
Section 2.01. Purchase And Sale Of Notes. On the Closing Date (as defined
in Section 3.01 hereof), (i) CFS shall (x) consummate the other transactions
described in the Transaction Agreement and (y) deliver $20,000,000 to the
Company by wire transfer of immediately available funds, against delivery of the
CFS Note to CFS by the Company and (ii) CMGI shall deliver $10,000,000 to the
Company by wire transfer of immediately available funds against delivery of the
CMGI Note to CMGI. The Notes shall be convertible, in accordance with their
terms, into shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK").
ARTICLE 3
Closing
Section 3.01. The Closing. The closing of the purchase and sale of the
Notes (the "CLOSING") shall take place at the offices of Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York as soon as possible (and not less than
six Business Days after the date hereof), but in no event later than 10 Business
Days, after satisfaction of the conditions set forth in Section 8.01, or at such
other time or place as the Company, CMGI and CFS may agree (the "CLOSING DATE").
ARTICLE 4
Representations And Warranties Of The Company
The Company represents and warrants to the Purchasers, as of the date
hereof and the date of the Closing, that:
Section 4.01. Corporate Existence and Power. The Company is an entity duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and as
will be conducted after the transactions contemplated by the Transaction
Agreement, except where the failure to have such licenses, authorizations,
consents and approvals would not have a Material Adverse Effect. Each of the
Company and its Subsidiaries is qualified to do business as a foreign entity in
each jurisdiction in which it is required to be so qualified, except where the
failure to be so qualified would not have a Material Adverse Effect.
Section 4.02. Due Authorization. All corporate action on the part of each
of the Company and its Subsidiaries pursuant to its Organizational Documents,
which is necessary for the authorization, execution and delivery of, and the
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performance of all obligations of the Company and its Subsidiaries under the
Financing Documents has been taken, other than the approval of stockholders of
the Company of the conversion of the Notes to Common Stock.
Section 4.03. Binding Effect; Liens of Security Documents. Each of the
Financing Documents to which the Company is a party (other than the Notes) and
to which any of the Company's Subsidiaries is a party constitutes a valid and
binding agreement, and each of the Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Company, in each case enforceable against such Person in accordance with its
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors' rights generally and by general equitable principles, other than the
approval of stockholders of the Company of the conversion of the Notes to Common
Stock.
Section 4.04. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company or any of its Subsidiaries is required in connection with the
consummation of the transactions contemplated by the Financing Documents, except
(i) as may be required under the Securities Act and the rules and regulations
thereunder and all applicable state securities laws in connection with the
transactions contemplated by the Financing Documents and obtaining approval of
stockholders of the Company of the conversion of the Notes to Common Stock and
(ii) for such consents, approvals, orders, authorizations, qualifications,
designations, declarations or filings the failure of which to obtain or make,
individually or in the aggregate, would not have a Material Adverse Effect. All
such consents, approvals, orders, authorizations and qualifications will be
effective and all such designations, declarations and filings will be made
within the time prescribed by law.
Section 4.05. Non-contravention. The execution, delivery and performance by
the Company and its Subsidiaries of the Financing Documents, and the
consummation by the Company and its Subsidiaries of the transactions
contemplated hereby and thereby, other than the approval of stockholders of the
Company of the conversion of the Notes to Common Stock, do not: (i) contravene
or conflict with the Company's or any of its Subsidiaries' Organizational
Documents; (ii) constitute a violation of any provision of any federal, state,
local or foreign law or rule, regulation or requirement binding upon or
applicable to the Company or any of its Subsidiaries; (iii) constitute a
violation of any rule, regulation or requirement of the National Association of
Securities Dealers, Inc.; or (iv) constitute a default or require any consent
under, give rise to any right of termination, cancellation or acceleration of,
or to a loss of any benefit to which the Company or any of its Subsidiaries is
entitled under, or result in the creation or imposition of any Lien under, any
contract to which the Company or any of its
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Subsidiaries is a party (other than as contemplated by the Financing Documents)
or any permit, license or similar right relating to the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries may be bound or
affected, except any such default, consent, right of termination, cancellation
or acceleration, loss or lien, claim or encumbrance which, individually or in
the aggregate, would not have a Material Adverse Effect.
Section 4.06. SEC Reports; Financial Statements. The Company has previously
furnished or made available to the Purchasers its (i) Annual Report on Form 10-K
for the fiscal year ended July 31, 2000, (ii) Definitive Proxy Statement filed
with the Securities and Exchange Commission (the "SEC") on November 16, 2000 and
(iii) all other periodic and current reports filed by the Company with the SEC
under the Exchange Act since July 31, 2000 in each case, as amended prior to the
date hereof (collectively, the "COMPANY REPORTS"). As of their respective dates
the Company Reports (or, if any of the Company Reports shall have been amended,
as of the date of such amendment), complied in all material respects with
applicable requirements of the Exchange Act and did 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 under which such statements were made, not misleading. The Company
has timely filed with the SEC, and the Company Reports constitute, all reports
required to be filed under Sections 13, 14 or 15(d) of the Exchange Act since
July 31, 2000. The audited financial statements and unaudited interim financial
statements of the Company included in the Company Reports (i) comply as to form
in all material respects with the published rules and regulations of the SEC
with respect thereto, (ii) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby (except as may be indicated therein or in the notes
thereto, and in the case of quarterly financial statements, as permitted by Form
10-Q under the Exchange Act), (iii) fairly present the consolidated financial
condition, results of operations and cash flows of the Company as of the
respective dates thereof and for the periods referred to therein and (iv) are
consistent with the books and records of the Company.
Section 4.07. Capitalization. (a) As of the date hereof the authorized
Capital Stock of the Company consists of: (i) 150,000,000 shares of Common
Stock, of which 62,336,563 shares are issued and outstanding and (ii) 5,000,000
shares of preferred stock, par value $0.01 per share, of which none are issued
and outstanding. All of such shares of Capital Stock have been duly authorized
for issuance, and all of such shares which are issued and outstanding have been
validly issued and are fully paid, nonassessable and free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof. The Company has reserved: (i) 15,000,000 shares of Common
Stock for issuance to officers, directors, employees, consultants or Affiliates
under the Company's 1998 Equity Incentive Plan, of which 5,769,680 are subject
to outstanding options granted thereunder; (ii) 250,000 shares of
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Common Stock for issuance to non-employee directors of the Company under the
Company's 1998 Director Stock Option Plan, of which 150,000 are subject to
outstanding options granted thereunder; (iii) 500,000 shares of Common Stock for
issuance to non-employee directors of the Company under the Company's 1999 Stock
Option Plan for Non-Employee Directors, of which 71,770 are subject to
outstanding options granted thereunder; (iv) 1,000,000 shares of Common Stock
for issuance under the Company's 2000 Stock Option Plan, of which 461,995 are
subject to outstanding options granted thereunder; and (v) 250,000 shares of
Common Stock for issuance under the Company's Employee Stock Purchase Plan, of
which 249,860 are issued and outstanding. All shares of Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, are duly authorized and
will be validly issued, fully paid and nonassessable. Other than (i) the
NaviSite Warrant No. 1 dated December 15, 2001 to purchase 2,601,626 shares of
the Company's Common Stock at an exercise price per share equal to $5.765625
("NAVISITE WARRANT 1"), (ii) the NaviSite Warrant No. 2 dated December 15, 2001
to purchase 2,601,626 shares of the Company's Common Stock at an exercise price
per share equal to $6.91875 ("NAVISITE WARRANT 2", together with the NaviSite
Warrant 1, the "NAVISITE WARRANTS"), (iii) the 7.5% Convertible Subordinated
Notes of NaviSite held by CMGI due December 12, 2003 in the principal amounts of
$50,000,000 and $30,000,000 and (iv) as set forth above in this paragraph (a),
there are no other equity securities, options, warrants, calls, rights,
commitments or agreements of any character to which the Company is a party or by
which it is bound obligating the Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the Capital Stock of the Company or obligating the Company to grant,
extend or enter into any such equity security, option, warrant, call, right,
commitment or agreement. Except as disclosed in the Company Reports, to the
Company's knowledge there are no stockholder agreements, voting agreements or
voting trusts relating to any shares of Capital Stock of the Company.
(b) On the Closing Date after giving effect to the transactions
contemplated by the Transaction Agreement, the authorized Capital Stock of the
Company will consist of: (i) 150,000,000 shares of Common Stock, of which
86,678,394 shares will be issued and outstanding (as such number may be
increased pursuant to the exercise of stock options described in the second
sentence of Section 4.08(a) above in accordance with their terms on or prior to
the Closing Date) and (ii) 5,000,000 shares of preferred stock, par value $0.01
per share, of which none will be issued and outstanding. All of such shares of
Capital Stock will have been duly authorized for issuance, and all of such
shares which shall at such time be issued and outstanding will have been validly
issued and will be fully paid, nonassessable and free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof. On the Closing Date after giving effect to the transactions
contemplated by the
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Transaction Agreement the Company will have reserved: (i) 15,000,000 shares of
Common Stock for issuance to officers, directors, employees, consultants or
Affiliates under the Company's 1998 Equity Incentive Plan, of which 5,769,680
will be subject to outstanding options granted thereunder; (ii) 250,000 shares
of Common Stock for issuance to non-employee directors of the Company under the
Company's 1998 Director Stock Option Plan, of which 150,000 will be subject to
outstanding options granted thereunder; (iii) 500,000 shares of Common Stock for
issuance to non-employee directors of the Company under the Company's 1999 Stock
Option Plan for Non-Employee Directors, of which 71,770 will subject to
outstanding options granted thereunder; (iv) 1,000,000 shares of Common Stock
for issuance under the Company's 2000 Stock Option Plan, of which 461,995 will
be subject to outstanding options granted thereunder; and (v) 250,000 shares of
Common Stock for issuance under the Company's Employee Stock Purchase Plan, of
which 249,860 will be issued and outstanding (as the number of shares specified
in clauses (i) through (v) above that are subject to options or issued and
outstanding may be increased by the exercise on or prior to the Closing Date of
stock options outstanding on the date hereof in accordance with their terms).
All shares of Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, will at the Closing Date be duly authorized and will be validly
issued, fully paid and nonassessable. At the Closing Date, after giving effect
to the transactions contemplated by the Transaction Agreement, other than (i)
the NaviSite Warrants, (ii) the Notes and (iii) as set forth above in this
paragraph (b), there will be no other equity securities, options, warrants,
calls, rights, commitments or agreements of any character to which the Company
is a party or by which it is bound obligating the Company to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the Capital Stock of the Company or obligating the
Company to grant, extend or enter into any such equity security, option,
warrant, call, right, commitment or agreement. Except as disclosed in the
Company Reports, at the Closing Date there will, to the Company's knowledge be
no stockholder agreements, voting agreements or voting trusts relating to any
shares of Capital Stock of the Company.
Section 4.08. Valid Issuance of Stock. (a) Subject to the vote of the
stockholders at the Stockholders Meeting to approve or ratify the authorization
and issuance of the shares of Common Stock to be issued upon conversion, if any,
by the Purchasers, (the "CONVERSION SHARES"), the Conversion Shares have been
duly and validly reserved for issuance and, upon issuance, sale and delivery in
accordance with the terms of the Notes will be duly and validly issued, fully
paid, nonassessable and free of preemptive rights binding on the Company.
(b) Assuming the correctness of the representations made by the Purchasers
in Section 10.08 hereof, no change in applicable law and no unlawful
distribution of the Notes or the Conversion Shares by the Purchasers or other
Persons, the Notes and the Conversion Shares will be issued to the Purchasers in
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compliance with applicable exemptions from (i) the registration and prospectus
delivery requirements of the Securities Act and (ii) the registration and
qualification requirements of all applicable securities laws of the states of
the United States.
Section 4.09. Litigation. Except as set forth in the Company Reports, there
is no action, suit or proceeding pending against, or to the knowledge of the
Company threatened against or affecting, any of the Company or its Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable likelihood of an adverse decision which could have a
Material Adverse Effect or which draws into question the validity of any of the
Financing Documents or the Transaction Agreement.
Section 4.10. Ownership of Property. Except as disclosed on Schedule 4.10,
on and as of the Closing Date, after giving effect to the transactions
contemplated by the Transaction Agreement, the Company is the lawful owner of,
has good and marketable title to and is in lawful possession of, or has valid
leasehold interests in, all properties and other assets (real or personal,
tangible, intangible or mixed) purported to be owned or leased (as the case may
be) by the Company on the balance sheet referred to in Section 5.01, except as
disposed of in the ordinary course of business.
Section 4.11. No Default. Except as disclosed on Schedule 4.11, no Default
or Event of Default has occurred and is continuing and neither the Company nor
any of its Subsidiaries is in default under or with respect to any material
contract, agreement, lease or other instrument to which it is a party or by
which its property is bound or affected.
Section 4.12. Absence of Certain Changes. Except as set forth in the
Company Reports, since March 31, 2001, the businesses and operations of the
Company and each of its Subsidiaries have been conducted in the ordinary course
consistent with past practice and there has not been or occurred any event or
condition which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
Section 4.13. No Burdensome Restrictions. Except as set forth in the
Company Reports, no contract, lease, agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which any of its property is
bound or affected, no charge, corporate restriction, judgment, decree or order
and no provision of applicable law or governmental regulation is reasonably
likely to have a Material Adverse Effect.
Section 4.14. Subsidiaries; Other Equity Investments. Each Subsidiary is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business
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as now conducted, except where the failure to have such licenses,
authorizations, consents and approvals would not have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is engaged in any joint venture
or partnership with any other Person.
Section 4.15. Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "Investment Company" as defined in the Investment Company Act
of 1940. The consummation of the transactions contemplated by the Financing
Documents or the Transaction Agreement do not and will not violate any provision
of such act or any rule, regulation or order issued by the SEC thereunder.
Section 4.16. Taxes. All material Federal, state and local tax returns,
reports and statements required to be filed by or on behalf of each of the
Company and its Subsidiaries have been filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements are
required to be filed, and all taxes (including real property taxes) and other
charges shown to be due and payable have been timely paid prior to the date on
which any fine, penalty, interest, late charge or loss may be added thereto for
nonpayment thereof. All state and local sales and use taxes required to be paid
by each of the Company and its Subsidiaries have been paid. All material
Federal and state returns have been filed by each of the Company and its
Subsidiaries for all periods for which returns were due with respect to employee
income tax withholding, social security and unemployment taxes, and the amounts
shown thereon to be due and payable have been paid in full or adequate
provisions therefor have been made.
Section 4.17. Employment Matters. The Company (i) has withheld all amounts
required by law or agreement to be withheld from wages, salaries and other
payments to its employees and former employees or has remedied any failure to do
so, (ii) is not liable for any arrearages of wages and (iii) is not liable for
taxes or penalties for failure to withhold or pay wages when due. There are no
complaints pending or, to the Company's knowledge, threatened before any
governmental authority alleging unfair labor practices or unlawful
discrimination nor, to the Company's knowledge, is there any basis for any such
claim. There are no existing or, to the Company's knowledge, threatened labor
strikes, disputes, grievances, controversies or other labor troubles affecting
the Company which would individually or in the aggregate, have a Material
Adverse Effect. The Company is not a party to any collective bargaining
agreement with any labor union.
Section 4.18. Compliance with ERISA. Except as disclosed on Schedule 4.18,
neither the Company nor any of its Subsidiaries sponsors or participates in any
employee benefit plan subject to ERISA. Neither the Company nor any of its
Subsidiaries is required to contribute to any "multiemployer plan" as defined in
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ERISA Section 3(37), nor has the Company or any of its Subsidiaries ever
contributed to or withdrawn from such a multiemployer plan.
Section 4.19. Brokers. Except as disclosed on Schedule 4.19, no broker,
finder or other intermediary has brought about the obtaining, making or closing
of the transactions contemplated by the Financing Documents or the Transaction
Agreement, and neither the Company nor any of its Subsidiaries has or will have
any obligation to any Person in respect of any finder's or brokerage fees in
connection herewith or therewith.
Section 4.20. Related Transactions. No Person has waived any condition
precedent to its obligations to close as set forth in the Financing Documents or
the Transaction Agreement.
Section 4.21. Employment, Shareholders and Subscription Agreements. Except
for the Financing Documents or the Transaction Agreement and the other
agreements described in Schedule 4.21, and except as set forth in the Company
Reports there are no (i) employment agreements covering the management of the
Company or any of its Subsidiaries, (ii) collective bargaining agreements or
other labor agreements covering any employees of the Company or any its
Subsidiaries, (iii) material agreements for managerial, consulting or similar
services to which the Company or any of its Subsidiaries is a party or by which
it is bound, or (iv) material agreements regarding the Company or any of its
Subsidiaries, its assets or operations or any investment therein to which any of
its equityholders is a party or by which it is bound.
Section 4.22. Representations and Warranties Incorporated from the Security
Documents. As of the Closing Date, each of the representations and warranties
made in the Security Documents by the Company and its Subsidiaries is true and
correct in all material respects, and such representations and warranties are
hereby incorporated herein by reference with the same effect as though set forth
in their entirety herein, as qualified therein, except to the extent that such
representation or warranty relates to a specific date, in which case such
representation and warranty shall be true as of such earlier date.
Section 4.23. Environmental and Safety Laws. To the Company's knowledge,
the Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety which would
reasonably be expected to have a Material Adverse Effect, except as set forth in
the Company Reports.
Section 4.24. Invention Assignment and Confidentiality Agreement. Each
employee and consultant or independent contractor of the Company or any of its
Subsidiaries whose material duties include the development of products or
Intellectual Property (as defined in Section 4.25), and each former employee and
consultant or independent contractor whose material duties included the
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development of products or Intellectual Property, has entered into and executed
an invention assignment and confidentiality agreement or an employment or
consulting agreement containing terms with respect to invention assignments and
confidentiality, in each case, except where failure to do the same would not
have a Material Adverse Effect.
Section 4.25. Intellectual Property. (a) The Company or one of its
Subsidiaries has sole title to and owns, or is licensed or otherwise possesses
legally enforceable rights to use, or reasonably expects that it will be able to
obtain licenses or legally enforceable rights to use, all patents or patent
applications, software, know-how, registered or unregistered trademarks and
service marks and any applications therefor, registered or unregistered
copyrights and trade names and any applications therefor, trade secrets or other
confidential or proprietary information ( the "INTELLECTUAL PROPERTY") necessary
to enable the Company and its Subsidiaries to carry on their respective
businesses as currently conducted or as proposed to be conducted except where
the failure to own or have rights to use such Intellectual Property would not
have a Material Adverse Effect or except as disclosed in the Company Reports.
(b) Neither the Company nor any of its Subsidiaries is currently subject
(whether as licensor or licensee) to any exclusive licenses (whether such
exclusivity is temporary or permanent) to any material portion of the
Intellectual Property utilized by the Company or any of its Subsidiaries. There
are not outstanding any licenses or agreements of any kind relating to any
Intellectual Property owned by the Company or any of its Subsidiaries, except
for agreements with customers of the Company or any such Subsidiary entered into
in the ordinary course of business. Neither the Company nor any of its
Subsidiaries is obligated to pay any royalties or other payments to third
parties with respect to any Intellectual Property (other than off-the-shelf
commercial applications), except as it may be so obligated in the ordinary
course of its business.
(c) To the Company's knowledge, neither the Company nor any of its
Subsidiaries is violating or infringing, and neither the Company nor any of its
Subsidiaries has received any communication alleging that either the Company,
any of its Subsidiaries or any of their respective employees or consultants has
violated or infringed any Intellectual Property of any other Person which would
reasonably be expected to have a Material Adverse Effect.
Section 4.26. Registration Rights. Except as provided in the Investor
Rights Agreement, as amended, the Company has not granted or agreed to grant to
any Person any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or registered or qualified
with any other governmental authority.
Section 4.27. Real Property Interests. Except for the ownership, leasehold
or other interests set forth in Schedule 4.27, and except as set forth in
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the Company Reports, the Company and its Subsidiaries have, as of the Closing
Date, no ownership, leasehold or other interest in real property.
ARTICLE 5
Affirmative Covenants
The Company agrees that from the date hereof until the Closing Date and
thereafter so long as any of the Notes remain outstanding:
Section 5.01. Financial Statements And Other Reports. The Company will
maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
accordance with GAAP and to provide the information required to be delivered to
the Purchasers hereunder, and will deliver to the Purchasers:
(a) as soon as practicable and in any event within 30 days after the end of
each month, a consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such month and the related consolidated statements
of operations and cash flows for such month, and for the portion of the Fiscal
Year ended at the end of such month setting forth in each case in comparative
form the figures for the corresponding periods of the previous Fiscal Year and
the figures for such month and for such portion of the Fiscal Year ended at the
end of such month set forth in the annual operating and capital expenditure
budgets and cash flow forecast delivered pursuant to Section 5.01(h), all in
reasonable detail and certified by the chief financial officer of the Company as
fairly presenting the financial condition and results of operations of the
Company and its consolidated Subsidiaries and as having been prepared in
accordance with GAAP applied on a basis consistent with the audited financial
statements of the Company, subject to changes resulting from audit and normal
year-end adjustments;
(b) as soon as available and in any event within 90 days after the end of
each Fiscal Year, a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, stockholders' equity and cash flows for
such Fiscal Year, setting forth in each case in comparative form the figures for
the previous Fiscal Year and the figures for such Fiscal Year set forth in the
annual operating and capital expenditure budgets and cash flow forecast
delivered pursuant to Section 5.01(h), certified (solely with respect to such
consolidated statements) without qualification by KPMG LLP or other independent
public accountants acceptable to the Required Holders of nationally recognized
standing;
(c) together with each delivery of financial statements pursuant to Section
5.01(a) and 5.01(b) above, an Officer's Certificate of the Company (i) stating
that the officer executing such certificate has reviewed the terms of this
Agreement and has made, or caused to be made under supervision, a review in
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reasonable detail of the transactions and condition of the Company during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that such officer does not have knowledge of the existence as at the date of
such Officer's Certificate of any Default, or, if any such Default existed or
exists, specifying the nature and period of existence thereof and what action
the Company has taken or is taking or proposes to take with respect thereto,
(ii) providing details of all transactions between the Company and any Person
referred to in Section 6.06 and (iii) if not specified in the financial
statements delivered pursuant to Section 5.01(a) and 5.01(b) above, as the case
may be, specifying the aggregate amount of interest paid or accrued and the
aggregate amount of depreciation and amortization charged, during such
accounting period;
(d) promptly upon receipt thereof, copies of all reports submitted to the
Company by independent public accountants in connection with each annual,
interim or special audit of the financial statements of the Company made by such
accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit;
(e) promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses filed by the Company
with any securities exchange or with the SEC or any successor and (iii) all
press releases and other statements made available generally by the Company
concerning material developments in the business of the Company;
(f) promptly upon any executive officer of the Company obtaining knowledge
(i) of the existence of any Default, or becoming aware that the holder of any
Debt of the Company has given any notice or taken any other action with respect
to a claimed default thereunder, (ii) of any change in the Company's independent
public accountant or any resignation, or decision not to stand for re-election,
by any member of the Company's board of directors (or comparable body), (iii)
that any Person has given any notice (other than a notice received by the
Company within 30 days of the Closing Date with respect to a default under a
material lease that has been cured or waived on or prior to 60 days after the
Closing Date) to the Company with respect to a claimed default under any
material agreement or instrument (other than the Financing Documents) to which
the Company is a party or by which any of its assets is bound, or (iv) of the
institution of any litigation or arbitration involving an alleged liability of
the Company equal to or greater than $1,000,000 or any adverse determination in
any litigation or arbitration involving a potential liability of the Company
equal to or greater than $1,000,000, an Officer's Certificate of the Company
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such
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claimed default (including any Default), event or condition, and what action the
Company has taken, is taking or proposes to take with respect thereto;
(g) simultaneously with the financial statements referred to in Section
5.01(a) above, operating plans and financial forecasts, including cash flow
projections covering proposed fundings, repayments, additional advances,
investments and other cash receipts and disbursements, in each case to the
extent prepared from time to time by the management of the Company for internal
use;
(h) at the conclusion of each Fiscal Year, the Company's annual operating
and capital expenditure budgets and cash flow forecast for the following Fiscal
Year presented on a monthly basis, which shall be in a format reasonably
consistent with projections, budgets and forecasts theretofore provided to the
Purchasers;
(i) with reasonable promptness, such other information and data with
respect to the Company as from time to time may be reasonably requested by
either of the Purchasers.
Section 5.02. Payment Of Obligations. The Company (i) shall pay and
discharge, and cause its Subsidiaries to pay and discharge, at or before
maturity, all of their respective material obligations and liabilities,
including tax liabilities, except where the same may be the subject of a
Permitted Contest, in each case to the extent that the failure to do the same
would not have a Material Adverse Effect, (ii) shall maintain, and cause its
Subsidiaries to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same and (iii) shall not breach or permit its Subsidiaries
to breach, in any material respect, or permit to exist any material default
under, the terms of any lease, commitment, contract, instrument or obligation to
which it is a party, or by which its properties or assets are bound, in each
case to the extent that such breach or default would not have a Material Adverse
Effect.
Section 5.03. Conduct Of Business And Maintenance Of Existence. The Company
will continue, and will cause its Subsidiaries to continue, to engage in
business of the same general type as they now conduct and will preserve, renew
and keep in full force and effect, and will cause its Subsidiaries to preserve,
renew and keep in full force and effect their respective existence and their
respective material rights, privileges and franchises necessary or desirable in
the normal conduct of business.
Section 5.04. Maintenance Of Property Insurance. (a) The Company will keep,
and will cause its Subsidiaries to keep, all property useful and necessary in
its business in good working order and condition, ordinary wear and tear
excepted.
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(b) The Company will maintain, and will cause its Subsidiaries to maintain,
(i) physical damage insurance on all real and personal property on an all risks
basis (including the perils of flood and quake), covering the repair and
replacement cost of all such property and consequential loss coverage for
business interruption and extra expense, (ii) public liability insurance
(including products/completed operations liability coverage) and (iii) such
other insurance coverage in such amounts and with respect to such risks as the
Purchasers may reasonably request. All such insurance shall be provided by
insurers having an A.M. Best policyholders rating of not less than B+ or such
other insurers as the Required Holders may approve in writing.
(c) On or prior to the Closing Date, the Company shall cause the Collateral
Representative to be named as an additional insured and loss payee on each
insurance policy required to be maintained pursuant to this Section 5.04. The
Company will deliver to the Purchasers (i) on the Closing Date, a certificate
from the Company's insurance broker dated such date showing the amount of
coverage as of such date, and certifying that such policies will include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all loss payees and
additional insureds and all rights of subrogation against all loss payees and
additional insureds, and that if all or any part of such policy is canceled, is
terminated or expires, the insurer will forthwith give notice thereof to each
additional insured and loss payee and that no cancellation, reduction in amount
or material change in coverage thereof shall be effective until at least 30 days
after receipt by each additional insured and loss payee of written notice
thereof, (ii) upon the request of either of the Purchasers from time to time
full information as to the insurance carried, (iii) within five days of receipt
of notice from any insurer, a copy of any notice of cancellation, nonrenewal or
material change in coverage from that existing on the date of this Agreement,
and (iv) forthwith, notice of any cancellation or nonrenewal of coverage by the
Company.
(d) Any proceeds to the Company or its Subsidiaries in excess of $2,000,000
from any Property Insurance Policy in respect of any claim, or from any
condemnation award or other compensation in respect of a condemnation (or any
transfer or disposition of property in lieu of condemnation), shall be paid to
the Collateral Representative to be held, applied, deposited or released for
application in accordance with Section 7 of the Security Agreement and with this
Agreement. The Company hereby appoints the Collateral Representative as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to execute or endorse all documents, checks or drafts in
connection with payments under Property Insurance Policies.
Section 5.05. Compliance With Laws; Filings Of Reports. The Company will
comply, and cause its Subsidiaries to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including ERISA and the rules and regulations
thereunder). The
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Company will, for so long as it has securities registered under the Exchange Act
or has an effective registration statement under the Securities Act, make timely
filing of such reports as are required to be filed by it with the SEC.
Section 5.06. Inspection Of Property, Books And Records. The Company will
keep, and will cause its Subsidiaries to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause its Subsidiaries to permit, representatives of either of the
Purchasers, at such Purchaser's expense, to visit and inspect any of their
respective properties, to examine and make abstracts or copies from any of their
respective books and records, to conduct a collateral audit and analysis of
their respective inventories and accounts receivable and to discuss their
respective affairs, finances and accounts with their respective officers and
employees, all at such reasonable times during normal business hours and as
often as may reasonably be desired; provided that prior to the occurrence of a
Default or Event of Default, such visits shall be limited to one visit during
each fiscal quarter of the Company.
Section 5.07. Reservation Of Shares. The Company will at all times after
the Stockholders of the Company approve or ratify the authorization and issuance
of the Conversion Shares, reserve and keep available, solely for issuance and
delivery upon the conversion of the Notes, all such shares of Common Stock, or
such other stock, securities and property as from time to time are issuable upon
the conversion of the Notes. The Company will not avoid or seek to avoid the
observance or performance of any of the terms of the Notes, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Purchasers thereunder. In addition, the Company will promptly
take all commercially reasonable action as may from time to time be required in
order to permit the Purchasers to convert the Notes and to duly and effectively
issue shares of Common Stock pursuant thereto, including, without limitation,
complying with any applicable premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and all regulations
promulgated thereunder, with costs associated with compliance with such
requirements to be borne by the Company.
Section 5.08. Purchasers' Meetings. Within 30 days after the end of each
fiscal quarter, at the request of the Purchasers the Company will conduct a
meeting with the Purchasers to discuss such fiscal quarter's results and the
financial condition of the Company at which shall be present the chief executive
officer and the chief financial officer of the Company and such other officers
of the Company as the Company's chief executive officer shall designate. Such
meetings shall be held at a time and place convenient to the Purchasers and to
the Company.
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Section 5.09. Board Of Directors Meetings. The Company will notify the
Purchasers of all meetings and actions by written consent of the board of
directors and each committee thereof at the same time and in the same manner as
notice of any meetings is required to be given to such Persons who do not waive
such notice (or, if such action requires no notice, then two Business Days'
written notice thereof describing the matters upon which action is to be taken).
Each Purchaser shall have the right to send a representative selected by it to
each such meeting, who shall be permitted to attend such meeting and any
adjournments thereof; provided that representatives of the Purchasers shall not
have the right to attend the portion of any such meeting during which the
Company intends to discuss information, the disclosure of which is reasonably
likely to result in the waiver of the Company's attorney client privilege
applicable to such information, but solely to the extent that the Company
provides to the Purchasers all non privileged information discussed during such
portion of such meeting.
Section 5.10. Meeting Of Stockholders; Stockholder Approval. The Company
shall:
(a) promptly prepare and file with the SEC a proxy statement covering the
solicitation of proxies for use at the Stockholders' Meeting (defined in Section
5.10(b) hereof) (the "PROXY STATEMENT") and respond to any comments of the SEC
with respect to the Proxy Statement and cause the Proxy Statement to be mailed
to its stockholders;
(b) call and give notice of, as soon as practicable following the clearance
of the Proxy Statement by the SEC, the annual meeting of its stockholders (the
"STOCKHOLDERS' MEETING") to be duly called and held as soon as reasonably
practicable (and shall use its best efforts to cause such meeting to be held no
later than December 31, 2001), for the purpose of voting to approve or ratify
the authorization and issuance of the Conversion Shares and shall use its best
efforts to obtain such stockholder approval or ratification; and
(c) recommend approval or ratification, of the issuance of the Conversion
Shares, and include such recommendation in the Proxy Statement, and take all
lawful action to solicit such stockholder approval or ratification.
ARTICLE 6
Negative Covenants
The Company agrees that from the date hereof until the Closing Date and
thereafter so long as any of the Notes remain outstanding:
Section 6.01. Debt. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or
otherwise become or remain directly or indirectly liable with respect to, any
Debt,
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or any contingent obligations which would be Debt hereunder if they were
non-contingent, except for
(a) Debt or such contingent obligations outstanding on the date of this
Agreement as set forth in Schedule 6.01 plus any renewals, extensions,
replacements or other refinancing thereof, provided that after giving effect to
such renewal, extension, replacement or other refinancing, Debt permitted
pursuant to this Section 6.01(a) does not exceed the amount listed on Schedule
6.01 as of the Closing Date;
(b) Debt under the Financing Documents;
(c) Debt incurred or assumed for the purpose of financing all or any part
of the cost of acquiring any asset (including through Capital Leases), in an
aggregate principal amount at any time outstanding not greater than $5,000,000;
and
(d) Debt to a wholly-owned Subsidiary.
Section 6.02. Negative Pledge. The Company will not, and will not permit
any of its Subsidiaries to, create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) any Lien on any asset securing Debt permitted under Section 6.01(c)
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such asset, provided that such Lien attaches solely to such asset and
concurrently with or within 90 days after the acquisition thereof;
(b) Liens existing on the date of this Agreement securing Debt permitted by
Section 6.01(a) in an aggregate principal amount not exceeding $1,000,000;
(c) inchoate Liens for taxes, assessments or governmental charges or levies
not yet due or payable;
(d) other Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$500,000 and (iii) do not in the aggregate materially detract from the value of
its assets or materially impair the use thereof in the operation of its
business; and
(e) Liens created by the Security Documents.
Section 6.03. Consolidations, Mergers And Sales Of Assets. The Company will
not, and will not permit any of its Subsidiaries to, (i) consolidate or merge
with or into any other Person or (ii) sell, lease or otherwise transfer,
directly or indirectly, any of its or their assets, other than (x) dispositions
of Temporary Cash Investments, (y) dispositions for cash and fair value of
assets
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that the board of directors (or comparable body) of the Company determines in
good faith are no longer used or useful to or necessary for the business of the
Company and its Subsidiaries and (z) the disposition of the Company's "streaming
media" business.
Section 6.04. Restricted Payments. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment.
Section 6.05. Purchase Of Assets; Investments. The Company will not, and
will not permit any of its Subsidiaries to, acquire any assets other than in the
ordinary course of business. The Company will not, and will not permit any of
its Subsidiaries to, make, acquire or own any Investment in any Person other
than (a) Temporary Cash Investments and (b) Investments in Subsidiaries;
provided that the aggregate amount of Investments in Subsidiaries (whether now
existing or hereafter created or acquired) made after the date hereof shall not
exceed $500,000. Without limiting the generality of the foregoing, the Company
will not, and will not permit any of its Subsidiaries to, (i) acquire or create
any Subsidiary unless such Subsidiary becomes a Lien Grantor (as defined in the
Security Agreement) pursuant to Section 15 of the Security Agreement or (ii)
engage in any joint venture or partnership with any other Person, in each case
without the prior written consent of the Required Holders; provided that the
foregoing clause (ii) shall not prohibit the Company or any Subsidiary from
entering into a strategic alliance which does not involve the transfer of cash
or other assets, or equity of the Company or any such Subsidiary.
Section 6.06. Transactions With Affiliates. Except as disclosed in the
Company Reports or on Schedule 6.06 and except for transactions on fair and
reasonable terms and conditions no less favorable to the Company as the terms
and conditions which would apply in a comparable transaction with a Person other
than an Affiliate, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company without the
prior written consent of the Required Holders.
Section 6.07. Notice Of Issuance Of Securities. The Company shall not issue
any securities from the date of this Agreement until the conversion of the
Notes, in their entirety, without the prior written consent of the Required
Holders, such consent not to be unreasonably withheld; provided that, the
Company shall not be required to obtain such consent in connection with (i) any
issuance of securities pursuant to the exercise or conversion of any securities
outstanding as of the date of this Agreement, (ii) the issuance of any shares of
Common Stock, or options or other rights to purchase or acquire shares of Common
Stock, or the issuance of any other securities, to directors, employees,
consultants or advisors to the Company, pursuant to a formal plan duly adopted
by the board of directors,
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(iii) the issuance by the Company of Common Stock to any Person that is not an
Affiliate of the Company or (iv) the issuance by the Company of Common Stock to
any Purchaser as payment of interest on any Note or in satisfaction of Affiliate
Obligations.
Section 6.08. Amendments And Waivers. Without the prior written consent of
the Required Holders, the Company will not, nor will the Company permit any of
its Subsidiaries to, agree to (i) any amendment to or waiver of or in respect of
the Organizational Documents of the Company or such Subsidiary or any Financing
Document or (ii) any other material amendment to or waiver of any material
contract constituting a part of the Collateral, if in each case, such amendments
or waiver would adversely affect the rights or remedies of any Purchaser under
the Financing Documents.
ARTICLE 7
Events Of Default
Section 7.01 . Events Of Default. If any one or more of the following
events (each an "EVENT OF DEFAULT") shall occur and be continuing for any reason
whatsoever (whether voluntary or involuntary, by operation of law or otherwise):
(a) the Company shall fail to pay any principal, when due, or shall fail to
pay within 5 days of the due date any interest or premium on any Note, any fees
or any other amount payable hereunder;
(b) the Company shall fail to observe or perform any covenant contained in
Article 6 hereof, or Section 5(b), 5(e) or 7 of the Security Agreement;
(c) the Company or any of its Subsidiaries shall fail to observe or perform
any covenant or agreement contained in the Financing Documents (other than those
covered by Section 7.01(a) or 7.01(b) above) for 10 days after written notice
thereof has been given to the Company by either Purchaser;
(d) any representation, warranty, certification or statement made by the
Company or any of its Subsidiaries in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to any
Financing Document shall prove to have been incorrect in any respect (or in any
material respect if such representation, warranty, certification or statement is
not by its terms already qualified as to materiality) when made (or deemed
made);
(e) the Company or any of its Subsidiaries shall fail to make any payment
in respect of any Material Debt (other than the Notes);
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(f) any event or condition shall occur which (i) results in the
acceleration of the maturity of any Material Debt (other than the Notes) of the
Company or any of its Subsidiaries, or (ii) enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such Material Debt
or any Person acting on such holder's behalf to accelerate the maturity thereof,
or (iii) results in a violation of, or a default under, any provision of the
certificate of incorporation of the Company or any of its Subsidiaries;
(g) the Company or any of its Subsidiaries shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced against the
Company or any of its Subsidiaries seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company or any of its Subsidiaries under the
federal bankruptcy laws as now or hereafter in effect;
(i) one or more judgments or orders for the payment of money aggregating in
excess of $1,000,000 shall be rendered against the Company or any of its
Subsidiaries and such judgments or orders shall continue unsatisfied and
unstayed for a period of 10 days;
(j) there shall occur a Change of Control;
(k) through no fault of the Purchasers, the Lien created by any of the
Security Documents shall at any time fail to constitute a valid and perfected
Lien on any material portion of the Collateral purported to be secured thereby,
subject to no prior or equal Lien except Permitted Liens, or the Company or any
of its Subsidiaries shall so assert in writing;
(l) the Company or any of its Subsidiaries shall be prohibited or otherwise
materially restrained from conducting the business theretofore conducted by it
by virtue of any determination, ruling, decision, decree or order of any court
or regulatory authority of competent jurisdiction and such
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determination, ruling, decision, decree or order remains unstayed and in effect
for any period of 10 days; or
(m) any of the Financing Documents shall for any reason fail to constitute
the valid and binding agreement of any party thereto, or any such party shall so
assert in writing;
then, and in every such event and at any time thereafter during the
continuance of such event, the Required Holders may by notice to the Company
declare the Notes (together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company and the Company will pay the same; provided that in the case of any of
the Events of Default specified in Section 7.01(g) or 7.01(h) above, without any
notice to the Company or any other act by the Purchasers, the Notes (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company and the Company will pay the same.
ARTICLE 8
Conditions
Section 8.01. Conditions To Closing. The obligation of each Purchaser to
purchase the Notes on the Closing Date shall be subject to the satisfaction of
the following conditions precedent:
(a) receipt by CFS of a duly executed CFS Note;
(b) receipt by CMGI of a duly executed CMGI Note;
(c) receipt by each Purchaser of evidence satisfactory to it in its
reasonable and good faith discretion of the satisfaction (without waiver) of all
conditions to the closing of the transactions contemplated by the Transaction
Agreement on the Closing Date;
(d) receipt by each Purchaser of evidence satisfactory to it of the
effectiveness of and a copy of all Financing Documents required to be effective
on the Closing Date, all in form and substance reasonably satisfactory to such
Purchaser, in each case in its reasonable and good faith discretion;
(e) receipt by each Purchaser of an opinion of counsel for the Company
(which shall be a nationally recognized law firm reasonably acceptable to the
Purchasers), satisfactory in form and substance to such Purchaser and covering
such matters relating to the transactions contemplated hereby as either
Purchaser may reasonably request (by its execution and delivery of this
Agreement, the
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Company authorizes and directs such counsel to deliver such opinions to the
Purchasers);
(f) receipt by each Purchaser of all amounts due and payable to it on or
prior to the Closing Date under each Financing Document;
(g) receipt by each Purchaser of a certificate signed by the chief
financial officer or treasurer of the Company to the effect that, both before
and immediately after the purchase and sale of the Notes and the other
transactions contemplated to take place on the Closing Date, including those
contemplated by the Transaction Agreement (i) no Default shall have occurred and
be continuing and (ii) the representations and warranties of the Company and its
Subsidiaries made in or pursuant to the Financing Documents are true;
(h) receipt by each Purchaser of the certificate referred to in Section
5.04(c); and
(i) receipt by each Purchaser of all documents either Purchaser may
reasonably request relating to the existence of the Company and its
Subsidiaries, the authority for and the validity of the Financing Documents, and
any other matters relevant hereto, all in form and substance satisfactory to
each Purchaser, in its sole good faith discretion.
The certificates and opinions referred to in this Section shall be dated
the Closing Date.
ARTICLE 9
Expenses, Indemnity, Taxes And Right To Perform
Section 9.01. Expenses. Whether or not the transactions contemplated hereby
shall be consummated, each party hereto shall bear its own (i) costs and
expenses of preparation of this Agreement and the other Financing Documents and
(ii) the fees, expenses and disbursements of each of its counsel to, and each of
its independent appraisers and consultants retained in connection with the
negotiation, preparation, execution and administration of this Agreement and the
other Financing Documents. The Company agrees to pay (i) the reasonable fees,
expenses and disbursements of counsel to, and independent appraisers and
consultants retained by, the Purchasers in connection with the negotiation,
preparation, and execution of any amendments to or any waivers of this Agreement
or any other Financing Document, (ii) all reasonable costs and expenses of
creating, perfecting and maintaining Liens pursuant to the Financing Documents,
including title investigations and fees and expenses of such local counsel as
either Purchaser shall request; provided that any such costs in excess of $5,000
per Lien Grantor shall be payable by the Purchasers, pro-rata to the outstanding
principal amount of each Purchaser's Note, (iii) the reasonable fees,
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expenses and disbursements of independent accountants or other experts retained
by the Purchasers in connection with not more than two accounting and collateral
audits or reviews of the Company and its affairs during any calendar year and
(iv) if an Event of Default occurs, all out-of-pocket expenses incurred by each
Purchaser, including fees and disbursements of counsel and all expenses of
protecting, storing, insuring, handling, maintaining or selling any Collateral,
in connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom.
Section 9.02. Indemnity. Whether or not the transactions contemplated
hereby shall be consummated, the Company agrees to indemnify, pay and hold
harmless the Purchasers and any subsequent holder of any of the Notes and the
officers, directors, and employees of the Purchasers and such holders
(collectively called the "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitee) in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitee shall be designated a party thereto and including
any such proceeding initiated by or on behalf of the Company, and the reasonable
expenses of investigation by engineers, environmental consultants and similar
technical personnel and any commission, fee or compensation claimed by any
broker (other than any broker retained by the Purchasers) asserting any right to
payment for the transactions contemplated hereby, which may be imposed on,
incurred by or asserted against such Indemnitee as a result of or in connection
with the transactions contemplated hereby or by the other Financing Documents
and the use or intended use of the proceeds of the Notes, except that the
Company shall have no obligation hereunder to an Indemnitee with respect to any
liability resulting from the gross negligence or willful misconduct of such
Indemnitee. To the extent that the undertaking set forth in the immediately
preceding sentence may be unenforceable, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them.
ARTICLE 10
Miscellaneous
Section 10.01. Survival. The indemnities and agreements set forth in
Article 9 shall survive the payment of the Notes and any termination of this
Agreement.
Section 10.02. No Waivers. No failure or delay by any Purchaser in
exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof
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or the exercise of any other right, power or privilege. The rights and remedies
herein and therein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 10.03. Security Agreement. The Purchasers hereby approve the
provisions of the Security Agreement and agree to be bound by the provisions
thereof, including, without limitation, Section 13 thereof.
Section 10.04. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including prepaid overnight courier,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth below (other than notices, requests or
other communications provided to CFS under Section 5.01, which shall be given to
CFS at the address or facsimile number set forth below) or at such other address
or facsimile number as such party may hereafter specify for the purpose by
notice to the Company.
If to the Company to: NaviSite, Inc.
400 Minuteman Road
Andover, MA 01810
Attention: General Counsel
Facsimile: (978) 682-8100
If to CFS generally, to: Compaq Financial Services Corporation
420 Mountain Avenue
Murray Hill, NJ 07974
Attention : General Counsel
Facsimile: (908) 898-4137
With a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Chris Mayer
Facsimile: (212) 450-4800
If to CFS pursuant to Section 5.01: Compaq Financial Services Corporation
420 Mountain Avenue
Murray Hill, NJ 07974
Attention: Vice President and
Managing Director Global
Structured Finance
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Facsimile: (908) 898-4138
With a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Chris Mayer
Facsimile: (212) 450-4800
If to CMGI to: CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
Attention: General Counsel
Facsimile: (978) 684-3601
With a copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Mark G. Borden, Esq.
Facsimile: (617) 526-5000
Each such notice, request or other communication shall be effective (i) when
delivered to such party at its address specified above, (ii) when sent to such
party by facsimile, addressed to it at its facsimile number specified above, and
such party sends back an electronic confirmation of receipt, or (iii) ten days
after being sent to such party by certified or registered United States mail,
addressed to it at its address specified below, with first class or airmail
postage.
Section 10.05. Payments. Each payment of principal on the Notes and each
payment of interest on the Notes shall be allocated pro rata among the
Purchasers in accordance with the respective principal amounts of their
outstanding Notes. Any amounts paid by the Company under the Notes shall be
applied in the following order: first, to the payment of any interest accrued up
to the date of such payment on any overdue amount under the Notes; second, to
the payment of any interest on the principal of the Notes, provided that such
interest is due and payable at such date; and third, to the payment of any
outstanding principal amount of the Notes, provided that such principal amount
is due and payable at such date.
Section 10.06. Severability. In case any provision of or obligation under
this Agreement or the Notes or any other Financing Document shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
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Section 10.07. Amendments And Waivers. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Company and the Required Holders; provided that
no such amendment or waiver shall, unless signed by all of the Purchasers (i)
reduce the principal of or rate of interest on any Note or (ii) postpone the
date fixed for any payment of principal on any Note or of interest on any Note.
Section 10.08. Successors And Assigns; Registration. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns (including any transferee of
any Note), except that the Company may not assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of the
Required Holders.
(b) Either of the Purchasers may at any time assign or transfer all, or a
proportionate part of all of its rights and obligations under this Agreement and
the Notes only with the prior written consent of the Company and each other
Purchaser (each, a "NON-ASSIGNING PURCHASER"), which consent shall not be
unreasonably withheld or delayed; provided that the consent of the Company and
the Non-Assigning Purchasers shall not be required for such assignments or
transfers (i) to an Affiliate of a Purchaser or (ii) to another Purchaser.
Subject to the restriction contained in the foregoing sentence, the terms and
provisions of this Agreement shall inure to the benefit of any transferee or
assignee of any Note and, in the event of such transfer or assignment, the
rights and privileges herein conferred upon the assigning Purchaser shall
automatically extend to and be vested in such transferee or assignee, all such
to the terms and conditions hereof.
(c) Upon any assignment of any Note, the assigning Purchaser shall
surrender its Note to the Company for exchange or registration of transfer, and
the Company will promptly execute and deliver in exchange therefor a new Note or
Note of the same tenor, and registered in the name of the assignor Purchaser (if
less than all of such Purchaser's Notes are assigned) and the name of the
assignee Purchaser.
(d) The Company shall maintain a register (the "NOTE REGISTER") of the
Purchasers and all assignee Purchasers that are the holders of all the Notes
issued pursuant to this Agreement. The Company will allow any Purchaser to
inspect and copy such list at the Company's principal place of business during
normal business hours. Prior to the due presentment for registration of transfer
of any Note, the Company may deem and treat the Person in whose name a Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and premium and interest on such Note and for all other
purposes whatsoever, and the Company shall not be affected by notice to the
contrary.
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(e) Each Purchaser (including any assignee Purchaser at the time of such
assignment) represents that it (i) is acquiring its Note solely for investment
purposes and not with a view toward, or for sale in connection with, any
distribution thereof, (ii) has received and reviewed such information as it
deems necessary to evaluate the merits and risks of its investment in the Notes,
(iii) is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act, and (iv) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Notes, including a complete loss of its investment.
(f) Each Purchaser understands that the Notes are being offered only in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future such Purchaser decides to resell,
pledge or otherwise transfer any of the Notes, such Notes may be resold, pledged
or transferred only (i) to the Company, (ii) to a person who such Purchaser
reasonably believes is a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that such resale, pledge or transfer is being made in reliance on Rule
144A under the Securities Act, or (iii) pursuant to an exemption from
registration under the Securities Act.
(g) Each Purchaser understands that the Notes will, unless otherwise agreed
by the Company and the holder thereof, bear a legend to the following effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
Section 10.09. Lost Or Destroyed Notes. If any Note becomes mutilated and
is surrendered by the Purchaser with respect thereto to the Company, or if any
Purchaser claims that its Note has been lost, destroyed or wrongfully taken, the
Company shall execute and deliver to such Purchaser a replacement Note, upon
the affidavit of such Purchaser attesting to such loss, destruction or wrongful
taking with respect to such Note and such lost, destroyed, mutilated,
surrendered or wrongfully taken Note shall be deemed to be canceled for all
purposes hereof.
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Such affidavit shall be accepted as satisfactory evidence of the loss, wrongful
taking or destruction thereof and no indemnity shall be required as a condition
of the execution and delivery of a replacement Note. Any costs and expenses of
the Company in replacing any such Note shall be for the account of such
Purchaser.
Section 10.10. Headings. Headings and captions used in the Financing
Documents (including the Exhibits and Schedules hereto and thereto) are included
for convenience of reference only and shall not be given any substantive effect.
Section 10.11. Confidentiality. In handling any confidential information of
the Company or any of its Subsidiaries, the Purchasers shall exercise the same
degree of care that it exercises with respect to its own proprietary information
of the same types to maintain the confidentiality of any non-public information
thereby received or received pursuant to this Agreement except that disclosure
of such information may be made (i) to the agents, employees, Subsidiaries or
Affiliates of such Person in connection with its present or prospective business
relations with the Company and its Subsidiaries arising out of the Financing
Documents, but only to the extent that each such agent, employee, Subsidiary or
Affiliate has been directed to maintain the confidentiality of such information
in accordance with the provisions of this Section 10.11, (ii) to prospective
transferees or purchasers of any interest in the Notes, provided that they have
agreed to be bound by the provision of this Section 10.11, (iii) as required by
law, regulations, rule, request or order, subpoena, judicial order or similar
order and in connection with any litigation, and (iv) as may be required in
connection with the examination, audit or similar investigation of such Person.
The Purchasers will not use or allow the use of confidential information for any
purpose except in connection with the transactions and agreements contemplated
by the Financing Documents. Confidential information shall include only such
information identified as such in writing at the time provided to the Purchasers
or upon written notice to the Purchasers at any time thereafter and shall not
include information that either: (i) is in the public domain, or becomes part of
the public domain after disclosure to such Person through no fault of such
Person or (ii) is disclosed to such Person by a third party, provided the
Purchasers do not have actual knowledge that such third party is prohibited from
disclosing such information.
Section 10.12 . Governing Law; Submission To Jurisdiction. THIS AGREEMENT
AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
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RELATING TO THIS AGREEMENT, ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.03. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
Section 10.13. Waiver Of Jury Trial. EACH OF THE COMPANY AND THE PURCHASERS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 10.14. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement, the other Financing Documents and the Transaction Agreement
constitute the entire agreement and understanding among the parties hereto and
supersede any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
NAVISITE, INC.
By: /s/ Patricia Gilligan
----------------------------
Name: Patricia Gilligan
Title: President and Chief
Executive Officer
COMPAQ FINANCIAL SERVICES
CORPORATION
By: /s/ Edward W. Andrews, Jr.
----------------------------
Name: Edward W. Andrews, Jr.
Title: Vice President and
Managing Director
CMGI, INC.
By: /s/ George A. McMillan
----------------------------
Name: George A. McMillan
Title: CFO
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EXHIBIT A
FORM OF NOTE
THIS SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS NOTE IS ENTITLED TO THE BENEFITS OF THE GUARANTEE AND
SECURITY AGREEMENT DATED OCTOBER __, 2001 AMONG THE COMPANY, CERTAIN SUBSIDIARY
GUARANTORS THERETO AND COMPAQ FINANCIAL SERVICES CORPORATION, AS AMENDED,
MODIFIED AND SUPPLEMENTED FROM TIME TO TIME. ADDITIONALLY, THE HOLDER OF THIS
NOTE IS ENTITLED TO THE BENEFITS OF THE AMENDMENT TO AND RESTATEMENT OF TO THE
INVESTOR RIGHTS AGREEMENT DATED OCTOBER __, 2001 AMONG THE COMPANY, COMPAQ
FINANCIAL SERVICES CORPORATION AND CMGI, INC., AS AMENDED, MODIFIED AND
SUPPLEMENTED FROM TIME TO TIME.
NAVISITE, INC.
12% Convertible, Senior, Secured Note
Due December 31, 2007
U.S. $_______ October __, 2001
FOR VALUE RECEIVED, the undersigned, NaviSite, Inc., a Delaware corporation
(the "COMPANY"), hereby promises to pay to __, a Delaware corporation (the
"PURCHASER"), the principal sum of US$____ in twelve equal quarterly
installments (each a "PRINCIPAL PAYMENT"), together with accrued but unpaid
interest thereon, commencing on the first Interest Payment Date (as defined
below) in 2005 and continuing on each Interest Payment Date thereafter (each
date on which a Principal Payment is made, a "PRINCIPAL PAYMENT DATE")
<PAGE>
until December 31, 2007 (the "MATURITY DATE"). The Company may not prepay this
Note. Interest on the outstanding principal shall be at a rate of 12% per annum
("INTEREST"), calculated on the basis of a 360 day year consisting of twelve 30
day months, and will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each an "INTEREST PAYMENT DATE")
beginning December 31, 2001 until the Maturity Date. Interest for first Interest
Payment Date shall be calculated from the date of issuance hereof to the first
Interest Payment Date. If all or a portion of a Principal Payment or Interest
shall not be paid when due (whether at its stated maturity, by acceleration or
otherwise), the Company hereby promises to pay, on demand, interest on such
overdue amount from and including the due date to, but excluding, the date such
amount is paid in full at 14% per annum (and until the date such overdue amount
is paid in full, "Interest" on such overdue amount shall mean interest at such
rate).
This Note is being delivered pursuant to a Note Purchase Agreement, dated
as of October 29, 2001, among the Company, the Purchaser and [CFS/CMGI] (the
"NOTE PURCHASE AGREEMENT"). This Note is one of the Notes referred to in the
Note Purchase Agreement, which among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events and for
the amendment or waiver of certain provisions of the Note Purchase Agreement,
all upon the terms and conditions therein specified.
1. Certain Definitions. As used herein, the following terms have the
following meanings:
"CLOSING PRICE" shall mean, on any day, (i) the closing price of the Common
Stock (or any other security for which a closing price must be determined) on a
national securities exchange or as quoted on the Nasdaq National Market on such
day, as reported by the Wall Street Journal or (ii) if the Common Stock (or any
such other security) is quoted on the Nasdaq National Market but no sale occurs
on such day, the average of the closing bid and asked prices of the Common Stock
(or any such other security) on the Nasdaq National Market on such day, as
reported by the Wall Street Journal or (iii) if the Common Stock (or any such
other security) is not so listed or quoted, the average of the closing bid and
asked prices of the Common Stock (or any such other security) in the U.S. over-
the-counter market or (iv) if no such trading market is readily available, the
fair market value of the Common Stock (or any such other security) as determined
in accordance with Section 5(b) hereof.
"CURRENT MARKET PRICE" of the Common Stock means the average of the daily
Closing Prices of the Common Stock for the five consecutive trading days
selected by the board of directors commencing not more than 20 trading days
before, and ending not later than the date immediately preceding the record date
fixed in connection with such event or, if there is no record date, the date of
such event; provided, that the Current Market Price of the Common Stock in
connection with a Spin-Off shall mean the average of the daily Closing Prices of
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the Common Stock for the same five consecutive trading days used to determine
the Fair Market Value of the securities being distributed in such Spin-Off.
"FAIR MARKET VALUE" of the securities to be distributed to the holders of
the Common Stock in connection with a Spin-Off shall mean the average of the
daily Closing Prices of such securities for a five consecutive trading day
period selected by the board of directors during the period beginning on the
first day of trading of such securities after the effectiveness of such Spin-Off
and ending not later than 20 days after the effectiveness of the Spin-Off.
All capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to such terms in the Note Purchase Agreement.
2. Security.
The Purchaser's right to payment pursuant to the terms of this Note shall
be secured to the extent and on the terms and conditions set forth in the
Security Agreement, and the terms and provisions of the Security Agreement are
incorporated herein by reference.
3. Payment.
Principal Payments on each Principal Payment Date and Interest on each
Interest Payment Date shall be made by bank cashier's check payable to the
Purchaser at the Purchaser's principal address set forth in Section 10.04 of the
Note Purchase Agreement (or at such other place as the Purchaser hereof shall
notify the Company in writing) or, if the Purchaser so specifies, by written
notice to the Company given not less than two Business Days prior to the
Principal Payment Date or the Interest Payment Date, as the case may be, by bank
wire transfer, in immediately available funds, to the account so specified, in
lawful money of the United States of America; provided that, at the election of
the Company, so long as the Company is listed on the Nasdaq National Market, up
to [one-sixth - CFS Note]/[100% - CMGI Note] of the amount of Interest due on
any Interest Payment Date through and including the Interest Payment Date in
December [2003 -CFS Note]/[2007-CMGI Note] may be paid in shares of Common
Stock. The number of shares of Common Stock to be issued in payment of the
Interest due on such Interest Payment Date shall equal the amount of such
Interest to be paid in Common Stock divided by the average of the Closing Prices
per share of the Common Stock on the five consecutive trading days ending on the
trading day immediately preceding such Interest Payment Date. If any Principal
Payment Date or any Interest Payment Date occurs on a date that is not a
Business Day, then the Principal Sum or Interest then due shall be paid on the
next succeeding Business Day.
4. Conversion.
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(a) Conversion Rights. Subject to and in accordance with the provisions of
this Section 4, at any time on or prior to the Maturity Date, the Purchaser may
elect, in its sole discretion, to effect the conversion (the "CONVERSION") of
all or any portion of the outstanding principal and interest due on this Note
into shares of Common Stock. The number of shares of Common Stock into which the
outstanding principal and accrued but unpaid interest (or portion thereof) shall
be converted pursuant to this Section 4(a) shall be determined by dividing the
amount of outstanding principal and interest the Purchaser has elected to
convert by $0.26. The Conversion Price is subject to adjustment as provided in
Section 5 hereof.
(b) Manner of Effecting the Conversion. If the Purchaser elects to effect
the Conversion pursuant to Section 4(a) hereof, the Purchaser shall deliver a
duly executed written notice to the Company of such election (the "CONVERSION
NOTICE"), and in such event the Conversion shall be deemed to have