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ASSET PURCHASE AGREEMENT
by and among
MARCHFIRST, INC.
and
MARCHFIRST CONSULTING, INC.
as Sellers
and
WH ACQUISITION CORP.
as Purchaser
Dated as of April 2, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE 1. PURCHASE AND SALE OF ASSETS...................................... 1
SECTION 1.01 Acquired Assets............................................... 1
SECTION 1.02 Excluded Assets............................................... 1
SECTION 1.03 Assumed Liabilities........................................... 1
SECTION 1.04 Excluded Liabilities.......................................... 1
SECTION 1.05 Purchase Price................................................ 2
ARTICLE 2. THE CLOSING...................................................... 4
SECTION 2.01 Closing....................................................... 4
SECTION 2.02 Deliveries at Closing......................................... 4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................... 5
SECTION 3.01 Organization.................................................. 5
SECTION 3.02 Authority Relative to this Agreement.......................... 5
SECTION 3.03 Consents and Approvals........................................ 5
SECTION 3.04 No Violations................................................. 5
SECTION 3.05 [Reserved].................................................... 6
SECTION 3.06 Certain Assets................................................ 6
SECTION 3.07 Brokers....................................................... 7
SECTION 3.08 Contracts..................................................... 7
SECTION 3.09 Intellectual Property......................................... 8
SECTION 3.10 Absence of Certain Changes.................................... 9
SECTION 3.11 Litigation and Proceedings.................................... 9
SECTION 3.12 Compliance with Laws and Court Orders......................... 9
SECTION 3.13 Receivables................................................... 10
SECTION 3.14 ERISA Representations......................................... 10
SECTION 3.15 WARN.......................................................... 11
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................. 11
SECTION 4.01 Organization.................................................. 11
SECTION 4.02 Authority Relative to this Agreement.......................... 11
SECTION 4.03 Consents and Approvals........................................ 11
SECTION 4.04 No Violations................................................. 12
SECTION 4.05 Brokers....................................................... 12
ARTICLE 5. COVENANTS........................................................ 12
SECTION 5.01 Access and Information........................................ 12
SECTION 5.02 Books and Records............................................. 12
SECTION 5.03 Additional Matters............................................ 13
SECTION 5.04 Employees and Benefit Programs................................ 13
SECTION 5.05 Public Announcements; Confidential Information................ 15
SECTION 5.06 Passed-Through Contracts...................................... 15
SECTION 5.07 Tax Matters................................................... 17
SECTION 5.08 Accounts Receivable........................................... 18
SECTION 5.09 Conduct of the Businesses..................................... 19
ARTICLE 6. CONDITIONS PRECEDENT............................................. 19
SECTION 6.01 Conditions Precedent to Obligation of the Sellers and the
Purchaser..................................................... 19
SECTION 6.02 Conditions Precedent to Obligation of the Sellers............. 20
SECTION 6.03 Conditions Precedent to Obligation of the Purchaser........... 20
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ARTICLE 7. TERMINATION...................................................... 21
SECTION 7.01 Termination................................................... 21
SECTION 7.02 Effect of Termination......................................... 21
ARTICLE 8. INDEMNIFICATION.................................................. 22
SECTION 8.01 Indemnification by Sellers.................................... 22
SECTION 8.02 Indemnification by Purchaser.................................. 22
SECTION 8.03 Definition of Losses.......................................... 23
SECTION 8.04 Indemnification Process....................................... 24
SECTION 8.05 Purchaser's Right of Set-Off.................................. 25
SECTION 8.06 Limitations and Liability..................................... 25
ARTICLE 9. GENERAL PROVISIONS............................................... 26
SECTION 9.01 Survival of Representations and Warranties.................... 26
SECTION 9.02 Transfer Taxes................................................ 26
SECTION 9.03 Notices....................................................... 27
SECTION 9.04 Descriptive Headings; Certain Terms........................... 28
SECTION 9.05 Entire Agreement, Assignment; Competing Agreements............ 28
SECTION 9.06 Governing Laws................................................ 28
SECTION 9.07 Expenses...................................................... 29
SECTION 9.08 Amendment..................................................... 29
SECTION 9.09 Waiver........................................................ 29
SECTION 9.10 Counterparts; Effectiveness................................... 29
SECTION 9.11 Integration; Parties of Interest.............................. 29
SECTION 9.12 Bulk Sales.................................................... 29
SECTION 9.13 Cumulative Remedies........................................... 29
SECTION 9.14 Further Assurances............................................ 30
ARTICLE 10. DEFINITIONS..................................................... 30
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT, dated as of April 2, 2001 (the "Agreement"),
is made by and among marchFIRST, Inc., a Delaware corporation ("Target" or a
"Seller"), marchFIRST Consulting, Inc., a Delaware corporation (a "Seller," and,
collectively with Target, the "Sellers"), and WH Acquisition Corp., an Illinois
corporation (the "Purchaser").
WHEREAS, the Purchaser desires to purchase the assets of the Sellers set
forth herein and assume certain liabilities from the Sellers, and the Sellers
desire to sell, convey, assign and transfer to the Purchaser, the assets and
properties set forth herein together with certain obligations and liabilities
relating thereto, all in the manner and subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
SECTION 1.01 Acquired Assets. On the terms and subject to the conditions
precedent set forth in this Agreement, at the Closing the Sellers shall sell,
assign, transfer, convey, and deliver to the Purchaser, and the Purchaser shall
purchase and accept from the Sellers, all of the Sellers'(and any subsidiary's
of either Seller) rights, title, and interests in, to and under all of the
assets, property, rights and claims of the Sellers and any subsidiary of either
Seller set forth in Schedule 1.01 (collectively, the "Acquired Assets") free and
clear of all liens, claims, encumbrances, interests and security interests of
any nature or kind whatsoever (other than Permitted Exceptions); provided, that
the Acquired Assets shall not include the Excluded Assets as set forth in
Section 1.02.
SECTION 1.02 Excluded Assets. Notwithstanding the foregoing, the
Purchaser expressly understands and agrees that (a) the assets and properties of
the Sellers listed or described on Schedule 1.02 and (b) all Contracts (other
than the Acquired Contracts and the Employee Covenants) (collectively, the
"Excluded Assets") shall be excluded from the Acquired Assets.
SECTION 1.03 Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement (including the limitations of Section
1.04), at the Closing, the Purchaser shall assume from the Sellers and
thereafter pay, perform or discharge in accordance with their terms all of the
liabilities and obligations arising set forth on Schedule 1.03 (collectively,
the "Assumed Liabilities").
SECTION 1.04 Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing or commitment (written or oral) to the contrary,
the Purchaser is assuming only the Assumed Liabilities and neither the Purchaser
nor any of its Affiliates is assuming any other liability or obligation of the
Sellers (or any predecessors or Affiliates of the
Sellers or any prior owners of all or part of their businesses and assets) of
whatever nature, whether presently in existence or arising hereafter. All such
other liabilities and obligations shall be retained by and remain obligations
and liabilities of the Sellers (all such liabilities and obligations not being
assumed being herein referred to as the "Excluded Liabilities"). Without
limiting the foregoing and notwithstanding anything to the contrary in this
Agreement, none of the following shall be Assumed Liabilities for the purposes
of this Agreement and shall be deemed Excluded Liabilities:
(a) any liability or obligation under any Environmental Laws;
(b) any liability or obligation related to employees of Sellers,
except as listed on Schedule 1.03;
(c) any liability or obligation under any Contract, other than the
Acquired Contracts;
(d) any liability or obligation arising out of any breach of or
default under any Acquired Contract relating to any period prior to Closing
other than any product or services warranty claim or work relating to
products or services sold or provided prior to Closing under a Customer
Contract;
(e) any liability or obligation for indebtedness for borrowed
money or evidenced by bonds or notes (including accrued interest and fees
with respect thereto);
(f) any Taxes other than those for which Purchaser is expressly
liable pursuant to Section 5.07;
(g) any liability or obligation relating to an Excluded Asset; and
(h) any liability or obligation under any International Plan,
Employee Plan or Benefit Arrangement, except as provided in Section
5.04(a).
SECTION 1.05 Purchase Price. In consideration for the Acquired Assets,
the Purchaser shall pay to the Sellers (collectively, the "Purchase Price"):
(a) at the Closing, (i) $6,250,000.00 less the True-Up Amount and
less all amounts (including interest) outstanding as of the Closing Date
under the Seller Note by wire transfer of immediately available funds (the
"Cash Proceeds") and (ii) $29,750,000.00 less the amount by which the
result of the calculation in clause (i) is less than zero, which sum shall
be combined with all amounts outstanding as of the Closing Date under the
Central Division Note, in the form of a secured promissory note in the form
attached hereto as Exhibit A (the "Note"); and
(b) after Purchaser has paid in full the Note, then (i) on or before
the forty-fifth (45th) day after the end of each calendar quarter, an
aggregate amount equal to fifty percent (50%) of the Free Cash Flow (as
defined in the Note) (calculated together with amounts to be paid under
Section 1.05(b) of the Central Division Asset Purchase
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Agreement) (including any partial quarter), (ii) promptly after receipt
thereof, fifty percent (50%) of any Blue Vector Proceeds (to the extent not
applied toward payment of the Note), and (iii) promptly after receipt
thereof, fifty percent (50%) of any Equity Sale Proceeds (to the extent not
applied toward payment of the Note, and calculated together with amounts to
be paid under Section 1.05(b) of the Central Division Asset Purchase
Agreement); provided, however, that (i) no amounts shall be payable for any
period after the calendar quarter ended March 31, 2006, and (ii) the
maximum aggregate amount payable to the Sellers pursuant to this clause (b)
and Section 1.05(b) of the Central Division Asset Purchase Agreement is
$55,000,000.00 (an amount equal to $39,050,000.00 plus $15,950,000.00) (the
amount payable under this clause (b) is referred to as the "Bonus"). The
Purchaser may, in its sole discretion, elect to pay or cause to be paid all
or part of the Bonus in the form of shares of common stock of divine, Inc.
(or its successor registrant) if, as of the date of the Bonus, such common
stock is listed for trading on any national securities exchange or
designated as a national market system security by the NASD, and either (x)
such shares would be freely tradeable by the Sellers without registration
under the Securities Act of 1933, as amended (the "Securities Act"), or (y)
a shelf registration statement pursuant to Rule 415 under the Securities
Act, covering the resale of all such shares issuable to the Sellers, is
effective, subject to the following provisions:
(i) the value of the common stock for determining the number of
shares to be delivered in payment of the Bonus shall be its Current
Market Value as of such date. "Current Market Value" shall mean the
average daily Market Value (as defined below) during the period of the
most recent 20 days, ending on such date, on which the national
securities exchanges were open for trading. "Market Value" shall mean,
on any date of determination, the amount per share of common stock
equal to (A) the last trading price of such common stock on such date,
or (B) if there shall have been no trading on such date, the average
of the closing bid and asked prices of the common stock on such date
as shown by the NASD automated quotation system;
(ii) the number of shares of common stock delivered in payment
of the Bonus shall not exceed the aggregate trading volume of divine,
Inc. common stock during the quarter ended immediately prior to the
date of the Bonus;
(iii) in the event a shelf registration statement covers resales
of common stock by the Sellers, such registration statement's
effectiveness shall be maintained until the earlier to occur of (A)
the date on which the Sellers can sell all of the shares of common
stock covered by such registration statement without restriction
pursuant to Rule 144(k) under the Securities Act or any successor
provision, or (B) the date on which the Sellers have sold all of the
shares of common stock covered by such registration statement; and
(iv) Purchaser shall not be permitted to deliver shares of
divine, Inc. common stock at any date if on such date Sellers hold
2,000,000 (adjusted for
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stock splits, reorganization and similar matters after the date
hereof) shares that have been delivered pursuant to this Section 1.05.
(c) if any amount payable under clause (b) is not paid when due, then
such amount shall accrue interest at fifteen percent (15%) per annum until
paid.
(d) The term "Blue Vector Proceeds" means net proceeds received by
the Purchaser from the sale of any interest in or distributions from
Bluevector LLC such "Equity Sale Proceeds" means the net proceeds received
by divine, Inc. from the sale of any equity interest (or any security
convertible into, or exchangeable for, such equity interest) of the
Purchaser.
ARTICLE 2.
THE CLOSING
SECTION 2.01 Closing. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxxx located at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
at 10:00 a.m. (a) within one business day after the conditions set forth in
Article 6 shall have been satisfied or waived or (b) at such other time, date
and place as shall be fixed by agreement among the parties (the date of the
Closing being herein referred to as the "Closing Date").
SECTION 2.02 Deliveries at Closing.
(a) At the Closing, the Sellers shall deliver to the Purchaser (i)
such bills of sale, assignments of leases and contracts, and any other
instruments of conveyance (collectively, the "Conveyance Documents") that,
in the reasonable judgment of Purchaser, are reasonable and necessary to
effectively vest in Purchaser good, valid and insurable title to the
Acquired Assets, free and clear of all liens, claims, encumbrances,
interests and security interests of any nature or kind whatsoever (other
than Permitted Exceptions) pursuant to the terms of this Agreement; (ii)
such other customary closing documents, instruments or certificates
required to be delivered as a condition precedent to the Purchaser's
obligations under this Agreement; (iii) an opinion of counsel of the
general counsel of Target as to the matters attached hereto as Exhibit B;
(iv) a certification for each Seller that satisfies the requirements of
Treasury Regulation Section 1.1445-2(b), duly executed, in a form
reasonably acceptable to the Purchaser; and (v) the Central Division Note
(which note, as of the Closing, shall be automatically cancelled).
(b) At the Closing, the Purchaser shall deliver to the Sellers (i)
such duly executed instruments as are deemed necessary or appropriate to
effectuate the assumption of the Assumed Liabilities by the Purchaser; (ii)
such other customary closing documents, instruments or certificates
required to be delivered as a condition precedent to the Sellers'
obligations under this Agreement; (iii) the Seller Note (which note, as of
the Closing, shall be automatically assigned to the Sellers, jointly,
without recourse, representation or warranty to the Purchaser); (iv) the
Cash Proceeds; (v) a duly executed Note; and (vi) an
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opinion of the general counsel of the sole stockholder of the Purchaser as
to the matters attached hereto as Exhibit C.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
A. Notwithstanding the representations and warranties contained in
this Article 3, the Sellers make no representations or warranties of
any type regarding the assets, liabilities, customers or business
relating to the offices listed on Schedule 10.
B. Each of the representations and warranties contained in this
Article 3 shall be deemed to exclude any reference to the offices
listed on Schedule 10.
The Sellers, jointly and severally, represent and warrant to the Purchaser
as follows:
SECTION 3.01 Organization. Each Seller is a corporation validly existing
and has the corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business.
Each Seller is in good standing under the laws of the State of Delaware.
SECTION 3.02 Authority Relative to this Agreement. Each Seller has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by the Sellers and the consummation by the Sellers of the transactions
contemplated hereby been duly authorized by all requisite corporate action. This
Agreement has been duly and validly executed and delivered by each Seller and
(assuming this Agreement constitutes a valid and binding obligation of the
Purchaser) constitutes a valid and binding obligation of each Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.03 Consents and Approvals. No consent, approval, order, or
authorization of, or declaration, filing or registration with, any Governmental
Authority is required to be made or obtained by the Sellers in connection with
the execution, delivery and performance by Sellers of this Agreement and the
consummation of the transactions contemplated hereby, except for consents,
approvals or authorizations which may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
SECTION 3.04 No Violations. None of the execution, delivery or
performance of this Agreement by either Seller, the consummation by either
Seller of the transactions contemplated hereby, or compliance by either Seller
with any of the provisions hereof, will (a) conflict with or result in any
breach of any provisions of the articles or certificate of incorporation, as the
case may be, or bylaws of either Seller, (b) except as may arise under the
Acquired Contracts or Passed-Through Contracts, result in a violation or breach
of, or constitute
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(with or without due notice or lapse of time) a default (or give rise to any
right of termination, cancellation, acceleration, vesting, payment, exercise,
suspension, or revocation) under any of the terms, conditions or provisions of
any note, bond, mortgage, deed of trust, security interest, indenture, license,
contract, agreement, plan or other instrument or obligation to which either
Seller is a party or by which either Seller or either Seller's properties or
assets may be bound or affected, (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to either Seller or either
Seller's properties or assets, (d) result in the creation or imposition of any
encumbrance on any Acquired Asset, or (e) cause the suspension or revocation of
any permit, license, governmental authorization, consent or approval necessary
for the conduct of the Businesses as currently conducted or as proposed to be
conducted, except in the case of clauses (b), (c), (d), and (e) for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations that would not individually or in the
aggregate have a material adverse effect on either Seller's ability to complete
the transactions contemplated by this Agreement.
SECTION 3.05 [Reserved].
SECTION 3.06 Certain Assets.
(a) Schedule 3.06(a) sets forth the street address of each parcel of
real property (the "Real Property") relating to the Businesses owned,
leased, operated or subleased by each Seller, specifying whether such Real
Property is owned or leased and in the case of leases or subleases, the
name of the lessor or sublessor.
(b) Except as set forth in Schedule 3.06(d), each Seller has a valid
leasehold interest in the Real Property designated on Schedule 3.06(a) as
being leased or subleased by such Seller.
(c) Except as set forth in Schedule 3.06(c) or except (in the case of
a Passed-Through Contract) due to a payment default, the Sellers have good
and valid title to, or a valid leasehold interest in, all tangible personal
property included in the Acquired Assets or Passed-Through Contracts.
Except as set forth on Schedule 3.06(c), regardless of any such default, no
tangible personal property which is an Acquired Asset or is subject to a
Passed-Through Contract has been repossessed or otherwise removed from a
Seller's use.
(d) Except as set forth in Schedule 3.06(d), there does not exist
under any material lease of Real Property, any material default or any
event which with notice or lapse of time or both would constitute a
default, other than defaults caused solely by the consummation of the
transactions contemplated hereby.
(e) The Acquired Assets and the Passed-Through Contracts include all
of the assets necessary to operate the Businesses after the Closing in the
hands of the Purchaser in the same manner and effect as the Businesses are
being operated by the Sellers as of the date hereof.
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(f) The Sellers own all rights, title, and interest in, to and under
the Acquired Assets, free and clear of any mortgage, lien, pledge or
security interest (other than Permitted Exceptions).
(g) The Sellers have provided to the Purchaser a true and complete
list of the names, titles, and annual salaries of all employees of the
Businesses whose annual base salary exceeds $100,000.
(h) All accounts receivable of the Sellers and their Affiliates are
owned by one of the Sellers, free and clear of all liens, pledges and
security interests of any nature or kind whatsoever (other than Permitted
Exceptions).
SECTION 3.07 Brokers. No person is entitled to any brokerage, financial
advisory or finder's fee or similar fee or commission in connection with the
transactions contemplated by this Agreement or the Note based upon arrangements
made by or on behalf of the Sellers for which the Purchaser will be liable.
SECTION 3.08 Contracts.
(a) Except as disclosed in Schedule 3.08(a) as of the date hereof,
none of the Passed-Through Contracts include:
(i) any lease for personal property requiring aggregate annual
payments by the Sellers of $100,000 or more;
(ii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets that has a term of at least
one year or that requires aggregate annual payments by the Sellers of
$100,000 or more;
(iii) any other agreement that requires aggregate annual
payments by the Sellers of $100,000 or more;
(iv) any partnership, joint venture or other similar agreement
or arrangement, exclusive of alliance agreements which do not involve
cash payments or covenants not to compete;
(v) any agency, dealer, sales representative, marketing or other
similar agreement; or
(vi) any agreement that limits the freedom of the Sellers to
compete in any line of business or with any Person or in any area or
to own, operate, sell, transfer, pledge or otherwise dispose of or
encumber any Acquired Asset or which would so limit the freedom of the
Purchaser after the Closing Date.
True and complete copies of each such Contract disclosed on Schedule
3.08(a) (and all amendments and modifications thereof and waivers
pertaining thereto) have been delivered or made available to the Purchaser.
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(b) The Contracts specifically identified on Schedule 1.01 constitute
all of the Customer Contracts. Except as disclosed on Schedules 3.08(b) or
3.11, to the knowledge of either Seller after reasonable inquiry, neither
of the Sellers nor any other party thereto is in default or breach in any
material respect under the terms of any Customer Contract which is
reasonably likely to materially and adversely affect the likelihood of the
subject customer continuing use of services under such Customer Contract
(except for defaults and breaches caused solely by the consummation of the
transactions contemplated hereby). True and complete copies of each
Customer Contract (and all amendments and modifications thereof and waivers
pertaining thereto) have been delivered or made available to the Purchaser.
SECTION 3.09 Intellectual Property.
(a) Except as set forth on Schedule 3.09(a), there shall be no fees,
payments to third parties (other than service providers) or assessments
(other than administrative filing and registration fees) required to assign
or sell the Intellectual Property included in the Acquired Assets to
Purchaser.
(b) Except as set forth on Schedule 3.09(b), the Sellers are not
aware of any defenses which a non-Seller party may have to the assignment
or sale of the Intellectual Property included in the Acquired Assets to
Purchaser.
(c) With respect to the Intellectual Property included in the
Acquired Assets or the subject of Passed-Through Contracts:
(i) the Sellers own, or have a valid leasehold or license
interest in, or rights to such Intellectual Property other than due to
a payment default under a Passed-Through Contract which has not
resulted in termination of such contract;
(ii) pursuant to this Agreement, the Sellers have validly sold,
assigned, transferred, conveyed and delivered to the Purchaser all of
the Sellers' rights, title and interest in the Intellectual Property
included in the Acquired Assets, subject to customary registrations
and filings;
(iii) except as set forth on Schedule 3.09(c)(iii), neither Seller
or any of their Affiliates is obligated to make any royalty or other
payment with respect to any Intellectual Property included in the
Acquired Assets;
(iv) except as set forth on Schedule 3.09(c)(iv), none of such
Intellectual Property has been sublicensed by the Sellers to any
Person nor has either Seller granted any other rights in such
Intellectual Property to any Person; and
(v) the Sellers have had all employees and independent
contractors sign written agreements transferring and assigning to
Seller, including without limitation the copyrights therein, prior to
the Closing Date, any and all rights in and to such Intellectual
Property.
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(d) Schedule 3.09(d) lists all Third Party Licenses requiring
aggregate annual payments by the Sellers after the Closing in excess of
$100,000 and whether either Seller is in default of any material payment
thereunder.
(e) Except in each case or in the aggregate as would not be
reasonably likely to have a Material Adverse Effect, (i) the Intellectual
Property is not now involved in any opposition, invalidation, challenge or
cancellation and, to the knowledge of either Seller, no such action is
threatened with respect to such Intellectual Property included in the
Acquired Assets, (ii) the Intellectual Property included in the Acquired
Assets is not infringing or potentially infringing any third party rights
and neither Seller has any knowledge of any claim to that effect, (iii) to
the knowledge of either Seller, no third party is infringing either
Seller's rights in and to the Intellectual Property included in the
Acquired Assets, (iv) each Seller has performed all action necessary to
maintain such Seller's rights, ownership and status, including without
limitation their validity and enforceability, in and with regard to the
Intellectual Property included in the Acquired Assets and has complied with
the legal requirements related thereto through the Closing Date, (v) to the
knowledge of either Seller, the Sellers' use of the Intellectual Property
which is the subject of the Passed-Through Contracts has not been and is
not now involved in any opposition, invalidation, challenge or cancellation
and, to the knowledge of either Seller, no such action is threatened with
respect to such Intellectual Property, and (vi) to the knowledge of either
Seller, the Sellers' use of the Intellectual Property which is the subject
of the Passed-Through Contracts is not infringing or potentially infringing
any third party rights and neither Seller has any knowledge of any claim to
that effect.
SECTION 3.10 Absence of Certain Changes. Except as disclosed in Schedule
3.10, since September 30, 2000, there has not been any material damage,
destruction or other casualty loss (whether or not covered by insurance)
affecting any material tangible personal property included in the Acquired
Assets which, individually or in the aggregate, has had or could reasonably be
expected to have individually or in the aggregate a Material Adverse Effect.
SECTION 3.11 Litigation and Proceedings. Except as described in Schedule
3.11, there is no action, suit, investigation or proceeding pending against or,
to the knowledge of either Seller after reasonable inquiry, threatened in
writing against or affecting the Businesses or any Acquired Asset before any
court or arbitrator or any government body, agency or official which (a) could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Acquired Assets after the Closing or (b) in any manner
challenges or seeks to prevent, enjoin, after or materially delay the
transactions contemplated by this Agreement.
SECTION 3.12 Compliance with Laws and Court Orders. Except as set forth on
Schedule 3.12, since September 30, 2000, the Businesses have been conducted in
material compliance with all applicable laws, statutes, rules, regulations,
judgments, injunctions, orders or decrees and since September 30, 2000 neither
Seller has received any written communication from a government authority that
alleges that any of the Businesses have not been conducted in compliance with
any applicable laws, statutes, rules, regulations, judgments, injunctions,
orders or decrees, except in each case for violations that have not had and
could not reasonably be
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expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as disclosed on Schedule 3.11, neither the Sellers nor any of their
Affiliates have received notice of the intent of any federal or state agency
responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to the Businesses that could reasonably be expected
to have a Material Adverse Effect.
SECTION 3.13 Receivables. All accounts receivable comprising Acquired
Assets (other than receivables collected since the Balance Sheet Date) reflected
on the Balance Sheet on a consolidated basis are valid and arose from Sellers'
conduct of their business in the ordinary course.
SECTION 3.14 ERISA Representations.
(a) Schedule 3.14(a) lists (i) each material "employee benefit plan,"
as such term is defined in Section 3(3) of ERISA (an "Employee Plan"),
which is maintained, administered or contributed to by the Sellers which
covers employees of the Businesses or in which such employees participate
other than any plan exempt from ERISA pursuant to Section 4(b)(4) of ERISA
and (ii) each material employment, severance or other similar contract and
material policy, plan or arrangement providing for insurance coverage
(including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (1) is not an
Employee Plan, (2) is entered into, maintained or contributed to, as the
case may be, by the Sellers or any of its subsidiaries to cover employees
or former employees of the Sellers or any of its subsidiaries, (3) is not
entered into, maintained or contributed to primarily for the benefit of
persons substantially all of whom are nonresident aliens of the United
States and (4) is not an International Plan. Such contracts, policies,
plans and arrangements described in clause (B) above are hereinafter
referred to collectively as the "Benefit Arrangements."
(b) No Employee Plan maintained, administered or contributed to by
the Sellers or any ERISA Affiliate is a Multiemployer Plan or is subject to
Title IV of ERISA or Section 412 of the Code. Neither the Sellers nor any
of the Sellers' ERISA Affiliates has incurred any liability under Title IV
of ERISA arising in connection with the termination of any plan covered or
previously covered by Title IV of ERISA, or has maintained a plan subject
to Section 412 of ERISA, for which any liability remains outstanding.
(c) Each Employee Plan in which employees of the Businesses
participate and which is intended to be qualified under Section 401(a) of
the Code, is so qualified or, if such Employee Plan fails to be so
qualified, can become qualified on a retroactive basis, or the Sellers will
notify Purchaser of such failure prior to the rollover of any participant's
accounts from such plan to any plan of the Purchaser.
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(d) The Acquired Assets are not now nor will they after the passage
of time be subject to any Lien imposed under Section 412(n) of the Code by
reason of the failure of either Seller or their ERISA Affiliates to make
timely installments or other payments required by Section 412 of the Code
with respect to any plan maintained by either Seller or their ERISA
Affiliates prior to the Closing.
(e) With respect to the employees of the Sellers or any of the
Sellers' Subsidiaries the principal work location of which is located in
the United States who are residents or citizens of the United States, there
are no employee post-retirement medical or health plans in effect, except
as required by COBRA.
SECTION 3.15 WARN. Except to the extent set forth on Schedule 3.15, since
the enactment of the WARN Act, the Sellers have not effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
either Seller; or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of either Seller; nor has either Seller been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state or local law.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
SECTION 4.01 Organization. The Purchaser is a corporation validly existing
and in good standing under the laws of the State of Illinois and has the
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted.
SECTION 4.02 Authority Relative to this Agreement. The Purchaser has the
corporate power and authority to enter into this Agreement and the Note and to
carry out its obligations hereunder and thereunder. The execution, delivery, and
performance of this Agreement and the Note by the Purchaser and the consummation
by the Purchaser of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action. This Agreement and the Note
have been duly and validly executed and delivered by the Purchaser and (assuming
this Agreement constitute valid and binding obligation of the Sellers)
constitutes valid and binding agreements of the Purchaser, enforceable against
the Purchaser in accordance with its and their terms.
SECTION 4.03 Consents and Approvals. No consent, approval, or
authorization of, or declaration, filing or registration with, any Governmental
Authority is required to be made or obtained by the Purchaser in connection with
the execution, delivery, and performance of this Agreement or the Note and the
consummation of the transactions contemplated hereby and thereby, except for
consents, approvals or authorizations which may be required under the HSR Act.
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SECTION 4.04 No Violations. Neither the execution, delivery or performance
of this Agreement or the Note by the Purchaser, nor the consummation by the
Purchaser of the transactions contemplated hereby or thereby, nor compliance by
the Purchaser with any of the provisions hereof or thereof, will (a) conflict
with or result in any breach of any provisions of the articles or certificate of
incorporation, as the case may be, or bylaws of the Purchaser, (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time) a default (or give rise to any right of termination, cancellation,
acceleration, vesting, payment, exercise, suspension, or revocation) under any
of the terms, conditions or provisions of any note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which the Purchaser is a party or by which the
Purchaser or the Purchaser's properties or assets may be bound or affected, (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Purchaser or the Purchaser's properties or assets, (d) result
in the creation or imposition of any encumbrance on any asset of the Purchaser,
or (e) to the Purchaser's knowledge, cause the suspension or revocation of any
permit, license, governmental authorization, consent or approval necessary for
the Purchaser to conduct its business as currently conducted or as proposed to
be conducted, except in the case of clauses (b), (c), (d), and (e) for
violations, breaches, defaults, terminations, cancellations, accelerations,
creations, impositions, suspensions or revocations that would not individually
or in the aggregate have a material adverse effect on the Purchaser's ability to
complete the transactions contemplated by this Agreement or the Note.
SECTION 4.05 Brokers. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by the Purchaser in
connection with the transactions contemplated by this Agreement or the Note
based upon arrangements made by or on behalf of the Purchaser.
ARTICLE 5.
COVENANTS
SECTION 5.01 Access and Information. The Sellers shall afford to the
Purchaser and to the Purchaser's financial advisors, legal counsel, accountants,
consultants, financing sources and other authorized representatives reasonable
access during normal business hours throughout any period from and after the
date hereof to the books, records, properties and personnel of the Sellers
related to the Acquired Assets and, during such period, shall furnish as
promptly as practicable to the Purchaser any and all such information as the
Purchaser reasonably may request; provided, however, that any such access or
copying shall be had or done in such a manner so as not to unreasonably
interfere with the normal conduct of the Sellers' business or operations.
SECTION 5.02 Books and Records.
(a) If the Purchaser wishes to dispose of or destroy any of the
business records or files related to the Acquired Assets which are
transferred to the Purchaser pursuant to this Agreement, it shall first
give 10 days' prior written notice to the Sellers, and the Sellers shall
have the right, at their option and expense, upon prior written notice to
the Purchaser within such
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10-day period, to take possession of such records and files within 20 days
after the date of the notice from the Sellers.
(b) The Purchaser shall allow the Sellers and any of its then current
directors, officers, employees, counsel, representatives, accountants and
auditors (collectively, the "Sellers' Representatives"), at Sellers'
expense, access to all business records, files and personnel of the Sellers
or the Acquired Assets that are transferred to the Purchaser in connection
herewith, which are reasonably required by such Sellers' Representatives
for valid business purposes, during regular business hours and upon
reasonable notice at the Sellers' former offices and the Sellers'
Representatives shall have the right to make copies of any such records and
files; provided, however, that any such access or copying shall be had or
done in such a manner so as not to unreasonably interfere with the normal
conduct of the Purchaser's business or operations.
SECTION 5.03 Additional Matters. Subject to the terms and conditions
herein, each of the parties hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable, including under applicable laws
and regulations, to consummate and make effective the transactions contemplated
by this Agreement, including using all commercially reasonable efforts to obtain
all necessary waivers, consents and approvals required under this Agreement.
Without limiting the foregoing, the Purchaser and the Sellers shall (a) no later
than five (5) business days after the date hereof, make all filings required
under the HSR Act, (b) use their respective commercially reasonable efforts to
seek early termination of the waiting period under the HSR Act, (c) respond
promptly, but in no event in less than two (2) weeks, to any additional requests
for information under the HSR Act and (d) take all other action necessary to
expedite compliance with the HSR Act in order to consummate the transactions
contemplated hereby.
SECTION 5.04 Employees and Benefit Programs.
(a) Employees and Offers of Employment. On the Closing Date, the
Purchaser may make offers of post-Closing employment to any employee of
either Seller hired after the date hereof and will make offers of post-
Closing employment to the employees listed on Schedule 5.04(a) (the
"Employment Offerees"), provided, however, that the Purchaser shall be
under no obligation to make any such offer to any Employment Offeree who is
not employed by either Seller on the Closing Date. The Sellers shall
facilitate the Purchaser doing so, including, without limitation, by making
such persons and their personnel files available to the Purchaser and its
Representatives. The Sellers shall be solely responsible for any WARN Act
notification and any liability under the WARN Act, relating to any
termination of any of Sellers' employees occurring on or after the date of
this Agreement. Any severance or other obligations to officers and
employees of Sellers shall not be Assumed Liabilities. Any such offer of
employment shall be at such salary or wage and benefit levels made
available by the Purchaser to similarly situated employees and on such
other terms and conditions as the Purchaser shall in its sole discretion
deem appropriate. The employees engaged in the Businesses who accept and
commence employment with the Purchaser are hereinafter collectively
referred to as the "Transferred Employees." The Sellers will not take, and
will cause each of their
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subsidiaries not to take, any action which would impede, hinder, interfere
or otherwise compete with the Purchaser's effort to hire any Employment
Offeree.
(b) Sellers' Employee Liabilities and Benefit Plans. All (i) Sellers'
Employee Liabilities, (ii) obligations and liabilities under the Employee
Plans and Benefit Arrangements and (iii) obligations and liabilities with
respect to each Retained Employee, and any former employee of either Seller
who is not a Transferred Employee to the extent any such liability or
obligation relates to the period prior to the Closing Date shall not be
Assumed Liabilities. No assets of any Employee Plan or Benefit Arrangement
shall be transferred to the Purchaser or any of its Affiliates or to any
plan of the Purchaser or any of its Affiliates.
(c) Purchaser Benefit Plans. The Purchaser or one of its Affiliates
will recognize all years of service of the Transferred Employees with the
Sellers (or their predecessors) or any of their Affiliates, only for
purposes of eligibility to participate in and to vest under those employee
benefit plans, within the meaning of Section 3(3) of ERISA, in which the
Transferred Employees are enrolled by the Purchaser or one of its
Affiliates immediately after the Closing Date. The Purchaser shall cause
all pre-existing condition exclusions under any medical and dental plans
("Purchaser's Health Plans") made available by the Purchaser to Transferred
Employees to be waived in respect of such employees and dependents, but
only to the extent Sellers' medical and dental plans recognize such
Transferred Employees and their dependents as having satisfied any pre-
existing conditions exclusion under Sellers' medical and dental plans.
(d) Employee Covenants. On the Closing Date, each Seller hereby
assigns to the Purchaser all rights and claims of such Seller of every kind
and description under all non-disclosure, confidentiality, non-competition,
non-solicitation, assignment of inventions and other agreements of a
comparable nature with (i) all present and former employees other than
Employment Offerees to the extent such agreements relate to the Acquired
Assets and (ii) all Employment Offerees whether or not such agreements
relate to the Acquired Assets (collectively, the "Employee Covenants").
Furthermore, on the Closing Date, the Purchaser hereby assigns to the
Sellers all rights and claims of every kind and description under any non-
solicitation agreements with Employment Offerees assigned by the Sellers to
the Purchaser pursuant to the first sentence of this subsection to the
extent not related to the Acquired Assets. The Sellers shall not make or
propose any modifications or amendments to any Employee Covenants without
the Purchaser's prior written consent. On or before June 30, 2001, neither
the Purchaser nor any of its Affiliates shall solicit for employment any
active employee of either Seller or any of their Affiliates (or any
employee of either Seller on the date hereof that becomes a former employee
by virtue of a sale of a business by such Seller to a third party after the
date hereof), other than the Employment Offerees hereunder and under the
Central Division Asset Purchase Agreement with respect to the transaction
contemplated hereunder and thereunder. On or before June 30, 2001, neither
the Sellers nor any of their Affiliates shall solicit for employment any
active employee of the Purchaser or any of its Affiliates, and none of the
Sellers or their Affiliates shall sell, transfer or otherwise convey or
agree to sell, transfer or otherwise convey any assets of or equity
interest in the Sellers or any of
14
their Affiliates unless the purchaser of such assets or equity interest
shall have agreed to be bound to the aforementioned non-solicitation
covenant.
(e) No Third Party Beneficiaries. No provision of this Article shall
create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of either
Seller or of any of their subsidiaries in respect of continued employment
(or resumed employment) with either any Business, the Purchaser any of its
Affiliates and no provision of this Section 5.04 shall create any such
rights in any such Persons in respect of any benefits that may be provided,
directly or indirectly, under any Employee Plan or Benefit Arrangement or
any plan or arrangement which may be established by the Purchaser or any of
its Affiliates. No provision of this Agreement shall constitute a
limitation on rights to amend, modify or terminate after the Closing Date
any such plans or arrangements of the Purchaser or any of its Affiliates.
SECTION 5.05 Public Announcements; Confidential Information. The Purchaser
and the Sellers shall consult with each other before issuing any press release
or making any public statement or other public communication with respect to the
Agreement or the transactions contemplated hereby. The Purchaser and the Sellers
shall not issue any such press release or make any such public statement or
public communication without the prior consent of the other party, which shall
not be unreasonably withheld or delayed; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may, upon the advice of counsel, be required by law or
any listing agreement with any national securities exchange. After the Closing,
the Sellers shall (a) not disclose to others any confidential information about
the Businesses without the prior consent of the Purchaser except to the extent
such disclosure is required by law or order of any Governmental Authority (in
which case the Sellers shall, to the extent practicable, inform the Purchaser in
advance of any such disclosure, shall cooperate with the Purchaser in obtaining
a protective order or other protection in respect of such required disclosure,
and shall limit such disclosure to the extent possible while still complying
with such requirements) and (b) use reasonable care to safeguard confidential
information about the Businesses and to protect such information against
disclosure, misuse, espionage, loss and theft.
SECTION 5.06 Passed-Through Contracts. The Sellers and the Purchaser shall
use their respective best efforts to obtain any consent, approval or amendment
required to novate and/or assign to the Purchaser the Acquired Contracts, the
Employee Covenants and all other Contracts, licenses and other related rights of
any nature whatsoever which relate to the Acquired Assets or are necessary in
the ordinary course to operate the Businesses (the "Passed-Through Contracts"
which term, for purposes of this Section 5.06 only, shall include the Acquired
Contracts and the Employee Covenants, but elsewhere in this Agreement shall not
include the Acquired Contracts or the Employee Covenants); provided, however,
that except for filing and other administrative charges, the Purchaser shall not
be obligated to pay any consideration, and neither Seller shall be obligated to
(i) pay any material consideration or (ii) make payments in satisfaction of
amounts due under such contracts relating to any period prior to Closing,
therefor to the third party from whom such consents, approvals or amendments are
requested. Until such time as such consents, approvals or amendments are
obtained, or in the event and to the extent that the Sellers and the Purchaser
are unable to obtain any such required consent, approval or
15
amendment, or if any attempted assignment would be ineffective or would
adversely affect the rights of the Sellers with respect to any Passed-Through
Contract so that the Purchaser would not in fact receive all the rights with
respect to such Passed-Through Contract, the Sellers and the Purchaser will
cooperate in a mutually agreeable arrangement under which the Purchaser shall
obtain the benefits and satisfy the obligations arising after the Closing Date
with respect to such Passed-Through Contract in accordance with this Agreement,
including sub-contracting, sub-licensing, or sub-leasing to the Purchaser, or
under which the Sellers would enforce for the benefit of the Purchaser, with the
Purchaser satisfying such Sellers' obligations, any and all rights of the
Sellers against a third party thereto. The Sellers shall, without further
consideration therefor, pay and remit to the Purchaser promptly all monies,
rights, and other considerations received in respect of the Purchaser's
performance of such obligations, and, at the Purchaser's request, shall direct
that such payments be made directly to the Purchaser. Without limiting the
foregoing, the Sellers shall not terminate any Passed-Through Contract (unless
the Purchaser has terminated its arrangement with respect thereto, sooner than
thirty (30) days after the date hereof). Without limiting the foregoing, this
Agreement shall be deemed to effect the following arrangements as of the
Closing:
(a) The Sellers hereby sublease to Purchaser, their rights under all
leases between either Seller and a third party granting a lease to Real
Property listed on Schedule 5.06(a) to either Seller which is listed on
Schedule 5.06(a), with Purchaser making payments in respect thereof as
provided on Schedule 5.06(a) (or directly to the payee, if Purchaser so
elects); provided, that any such sublease shall automatically terminate on
the thirty-first (31st) day after the Closing Date unless (i) the Purchaser
shall have obtained the consent, approval or amendment required to novate
and/or assign to the Purchaser such Passed-Through Contract and (ii) the
Sellers shall have received any security deposit related to such Passed-
Through Contract.
(b) As to master equipment leases or other similar multi-asset
contracts (including Third Party rights) which include assets which are in
part not used in the Businesses, obligations under such contracts shall be
allocated to Purchaser based on the relative charges under the contract for
the rights or assets used in the Businesses (based on utilization or
similar indicator) (and paid directly to payee, if Purchaser so elects);
provided, that the charges allocated to Purchaser for any Xxxxxx Financial
equipment leases of Sellers shall be limited to the amount provided on
Schedule 5.06(a) in the aggregate for any amounts allocated under this
Agreement or the Central Division Asset Purchase Agreement.
(c) The Sellers hereby sublicense their rights under the Third Party
Licenses, subject to allocation per Section 5.06(b) (and paid directly to
payee, if Purchaser so elects).
Purchaser may, from time to time, upon five (5) business days' notice to the
Sellers, terminate any arrangements which are the subject of this Section 5.06
(excluding the Acquired Contracts) with respect to periods after such notice,
without liability or further obligation to either Seller or any third party.
Notwithstanding the foregoing or any other term of this Agreement, (X) the
Sellers shall have no liability to Purchaser if, for any reason, they are unable
to provide the
16
services called for by the Passed-Through Contracts other than due to an
affirmative action after the Closing Date by either Seller and (Y) the Sellers
shall not be obligated to provide services under any Passed-Through Contract if
as a result of providing such services the other party to such Passed-Through
Contract ceases or threatens in writing to cease providing services to Seller's
other businesses. Notwithstanding any of the subleasing, sublicensing or
subcontracting arrangements set forth above, the Purchaser shall not assume any
liability or obligations arising under any Passed-Through Contract which relates
to any period prior to the Closing.
SECTION 5.07 Tax Matters.
(a) Liability for Taxes.
(i) Sellers shall be liable for and pay, and pursuant to Section
8.01 shall indemnify Purchaser against, (A) all Taxes (other than
Property Taxes relating to the Acquired Assets) imposed on the Sellers
or for which the Sellers may otherwise be liable (including any Taxes
resulting from the transactions hereunder and any liability for Taxes,
including those described in Section 9.02, imposed on the Sellers
pursuant to any provision in this Agreement) and (B) all Property
Taxes relating to the Acquired Assets that relate to, or are otherwise
allocable pursuant to Section 5.07(b) to, a Pre-Closing Tax Period.
(ii) Purchaser shall be liable for and pay, and pursuant to
Section 8.02 shall indemnify Sellers against, (A) all Taxes imposed on
the Acquired Assets (other than Property Taxes) for any taxable year
or period that begins after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning after
the Closing Date and (B) all Property Taxes relating to the Acquired
Assets that do not relate to, or are otherwise not allocable pursuant
to Section 5.07(b) to, a Pre-Closing Tax Period; provided, however,
that Purchaser shall not be liable for or pay, and shall not indemnify
Sellers against, any Taxes for which Sellers are liable under this
Agreement (including, without limitation, Section 5.07(a)(i)).
(b) In the case of any Straddle Period:
(i) real, personal and other similar intangible property Taxes
("Property Taxes") relating to the Acquired Assets for the Pre-Closing
Tax Period shall be equal to the amount of such Property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in the
Pre-Closing Tax Period and the denominator of which is the total
number of days in the Straddle Period; and
(ii) the Taxes relating to the Acquired Assets (other than
Property Taxes) for any Pre-Closing Tax Period shall be computed,
using the closing of the books method, as if such taxable period ended
as of the close of business on the Closing Date.
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(c) The Purchaser and the Sellers agree to (i) furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Businesses and the Acquired
Assets (including access to books and records) as is reasonably necessary
for the filing of all Tax Returns, the making of any election relating to
Taxes, the preparation for any audit by any Taxing Authority, and the
prosecution or defense of any claim, suit or proceeding relating to any Tax
and (ii) cooperate fully in preparing for any audits of, or disputes with
Taxing Authorities regarding, any Tax relating to the Businesses or the
Acquired Assets; (iii) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to the Businesses
or the Acquired Assets for taxable periods for which the other may have a
liability; and (iv) furnish the other with copies of all correspondence
received from any Taxing Authority in connection with any Tax audit or
information request with respect to any such taxable period. The Purchaser
shall retain all books and records with respect to Taxes pertaining to the
Acquired Assets for a period of at least six years following the Closing
Date. Each party shall provide the other with at least ten days prior
written notice before destroying or transferring custody of any such books
and records, during which period the party receiving such notice can elect
to take possession, at its own expense, of such books and records.
SECTION 5.08 Accounts Receivable.
(a) If and to the extent that the proceeds of the accounts receivable
included in the Acquired Assets or other funds pertaining to or arising out
of the Acquired Assets which are received by the Sellers or their
Affiliates at any time, such proceeds shall be received and held by such
person in trust for the Purchaser and shall be paid over to the Purchaser
promptly. Accordingly, the Sellers irrevocably authorize and direct the
Purchaser to retain any such proceeds (including any such proceeds received
in either Seller's collection accounts, lockboxes, blocked or restricted
accounts or similar accounts used by the Sellers to collect accounts
receivable).
(b) As soon as reasonably practicable after the Closing Date, the
Purchaser shall notify in writing each debtor whose account receivable is
set forth on the spreadsheet attached to Schedule 1.01 that (i) such
debtor's account receivable has been sold to the Purchaser and (ii) such
debtor shall make payment of all amounts due or payable or to become due
directly to the Purchaser or its designee or designated account.
(c) It is the intention of the parties hereto that the conveyance of
the Acquired Assets hereunder shall constitute a sale, which sale is
absolute and irrevocable and provides Purchaser with the full benefits of
ownership of the Acquired Assets. Upon the request of Purchaser, each
Seller will execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate to perfect and maintain the
perfection of Purchaser's ownership interest in the Acquired Receivables
(as defined on Schedule 1.01) originated by such Seller and included in the
Acquired Assets.
18
(d) If, notwithstanding the intention of the parties expressed in
clause (a) above, the conveyance of any of the Acquired Assets hereunder
shall be characterized as a secured loan and not a sale or such sale shall
for any reason be ineffective or unenforceable, then this Agreement shall
be deemed to constitute a security agreement under the UCC and other
applicable law. For this purpose and without being in derogation of the
parties' intention that the sale of the Acquired Receivables by each Seller
hereunder shall constitute a true sale thereof, such Seller hereby grants
to Purchaser a duly perfected security interest in all of such Seller's
right, title and interest in, to and under the Acquired Assets which are
now existing or hereafter arising, and all proceeds thereof to secure the
prompt and complete payment of a loan deemed to have been made in an amount
equal to the Purchase Price of the Acquired Assets purchased from such
Seller together with all other obligations of such Sellers hereunder, which
security interest shall be prior to all other Liens thereto. Purchaser and
its assigns shall have, in addition to the rights and remedies which they
may have under this Agreement, all other rights and remedies provided to a
secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative.
SECTION 5.09 Conduct of the Businesses. Except as otherwise provided
herein, from the date hereof until the Closing Date, the Sellers, subject to
Purchaser's reasonable consent rights:
(a) shall conduct the Businesses and the use and maintenance of the
Acquired Assets in the ordinary course and shall use commercially
reasonable efforts to preserve intact the business or organizations and
relationships with third parties and to keep available the services of the
present employees of the Businesses; and
(b) shall collect the SAP Accounts Receivable in the ordinary course
consistent with past practices, subject to Section 5.01.
ARTICLE 6.
CONDITIONS PRECEDENT
SECTION 6.01 Conditions Precedent to Obligation of the Sellers and the
Purchaser. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) the waiting period, if any, under the HSR Act shall have expired
or been terminated;
(b) there shall be no injunction, order or decree of any nature of
any court or government authority of competent jurisdiction that is in
effect that prohibits or materially restrains the consummation of the
transactions contemplated under this Agreement; and
19
(c) no statute, rule or regulation shall have been promulgated by any
Governmental Authority which prohibits the consummation of the transactions
contemplated by this Agreement.
SECTION 6.02 Conditions Precedent to Obligation of the Sellers. The
obligation of the Sellers to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Purchaser shall have performed in all material respects its
obligations under this Agreement required to be performed by the Purchaser
at or prior to the Closing Date; and
(b) the Purchaser shall have made all the deliveries required to be
delivered by the Purchaser pursuant to Section 2.02(b) at or prior to the
Closing Date.
SECTION 6.03 Conditions Precedent to Obligation of the Purchaser. The
obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the representations and warranties of the Sellers contained in
Sections 3.01 through 3.04, 3.06(b) and (c) and 3.09(c)(i) and (ii) shall
be true in all material respects as of the date hereof and on and as of the
Closing Date, except as would not have a material adverse effect on the
Purchaser's ability to operate the assets;
(b) the Sellers shall have made all the deliveries required to be
delivered by the Sellers pursuant to Section 2.02(a) at or prior to the
Closing Date;
(c) the Purchaser shall have approved the results of any and all due
diligence inspections, investigations and inquiries with respect to the
Sellers' interest in and the assets of Bluevector LLC, a Delaware limited
liability company, as Purchaser may elect to make or obtain; and
(d) with respect to (x) the Alliance Agreement dated as of April 1,
2000 by and between Microsoft Corporation, a Washington corporation, and
marchFIRST Consulting, Inc. and (y) the related Loan Agreement and
Unsecured Promissory Note dated July 5, 2000 made by marchFIRST Consulting,
Inc. in favor of MS Channel Initiatives Corp., a Nevada corporation,
Microsoft Corporation and MS Channel Initiatives Corp. shall have agreed in
writing to (i) waive or settle any claim for breach or amounts due under
such agreements in amounts, on terms and subject to conditions acceptable
to the Purchaser; and (ii) terminate such agreements and cancel such note
at the Closing; and
(e) with respect to the joint venture relationships with Dentsu and
Samsung (which for purposes of this Agreement are not severable), Dentsu
shall have agreed in writing to modify its joint venture relationship on
terms and subject to conditions acceptable to the Purchaser;
20
provided, however, that in the event any of the conditions set forth in
subsections (c), (d) or (e) above are not satisfied such condition will be
deemed satisfied in such cases, respectively, by the Purchaser electing to
exclude from the Acquired Assets Bluevector, the HostOne business or the
joint venture relationships (non-severable for purposes of this Agreement)
with Dentsu and Samsung (and, in each case, the related assets, Contracts,
employees and Assumed Liabilities), respectively, from the transactions
contemplated hereby, and this Agreement shall be deemed, upon a Closing
based upon such election(s), to have been amended to give effect to such
changes with no change in the consideration to be received by Sellers
except that the Purchaser shall not assume any of the Assumed Liabilities
related to such excluded Acquired Assets.
ARTICLE 7.
TERMINATION
SECTION 7.01 Termination. This Agreement may be terminated:
(a) by mutual written agreement of the Sellers and the Purchaser
prior to the Closing Date;
(b) at any time before the Closing, by the Purchaser if any of the
conditions set forth in Section 6.01 or Section 6.03 shall have become
incapable of fulfillment or cure and shall not have been waived by the
Purchaser; provided, that the Purchaser is not then in breach of this
Agreement;
(c) at any time before the Closing, by either Seller if any of the
conditions set forth in Section 6.01 or Section 6.02 shall have become
incapable of fulfillment or cure and shall not have been waived by the
Sellers; provided, that neither Seller is not then in breach of this
Agreement;
(d) at any time after June 30, 2001, by either Seller if the Closing
fails to occur on or before such date, unless such failure is due to the
action or inaction of the Sellers; or
(e) at any time after June 30, 2001, by the Purchaser if the Closing
fails to occur on or before such date, unless such failure is due to the
action or inaction of the Purchaser.
SECTION 7.02 Effect of Termination. If this Agreement is terminated under
Section 7.01, written notice thereof will forthwith be given to the other party
and this Agreement will thereafter become void and have no further force and
effect and, except for those provisions that expressly survive the termination
of this Agreement, all further obligations of the Sellers and the Purchaser to
each other under this Agreement will terminate without further obligation or
liability of the Sellers or the Purchaser to the other, except that each party
will return all documents, workpapers and other material of any other party
relating to the transactions contemplated by this Agreement, whether so obtained
before or after the execution of this Agreement, to the party furnishing the
same, and all confidential information received by any
21
party to this Agreement with respect to the business of any other party will be
treated in accordance with the confidentiality agreement between the parties.
ARTICLE 8.
INDEMNIFICATION
SECTION 8.01 Indemnification by Sellers. From and after the Closing Date
and subject to the provisions of this Article 8, the Sellers, jointly and
severally, agree to indemnify, hold harmless and defend each Purchaser
Indemnified Party from and against any and all Losses arising out of, resulting
from or relating to:
(a) any inaccuracy or breach of any representation or warranty of
Sellers contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by the Sellers pursuant
hereto (without regard to any qualification thereof as to materiality or
Material Adverse Effect);
(b) any inaccuracy or breach of any representation or warranty of
Sellers contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by the Sellers pursuant
hereto as if such representation or warranty were made on and as of the
Closing Date;
(c) any Excluded Liability (without regard to any qualification
thereof as to materiality or Material Adverse Effect); or
(d) any non-compliance with or breach of any covenant or agreement of
Sellers contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by the Sellers pursuant
hereto (without regard to any qualification thereof as to materiality or
Material Adverse Effect).
SECTION 8.02 Indemnification by Purchaser. From and after the Closing Date
and subject to the provisions of this Article 8, Purchaser agrees to indemnify,
hold harmless and defend each Seller Indemnified Party from and against any and
all Losses arising out of, resulting from or relating to:
(a) any inaccuracy or breach of any representation or warranty of
Purchaser contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by Purchaser pursuant
hereto (without regard to any qualification thereof as to materiality or
Material Adverse Effect);
(b) any inaccuracy or breach of any representation or warranty of the
Purchaser contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by the Purchaser
pursuant hereto as if such representation or warranty were made on and as
of the Closing Date;
(c) any Assumed Liability; or
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(d) any non-compliance with or breach of any covenant or agreement of
Purchaser contained in this Agreement or any other agreement, certificate,
instrument or other document executed and delivered by Purchaser pursuant
hereto (without regard to any qualification thereof as to materiality or
Material Adverse Effect).
SECTION 8.03 Definition of Losses. The term "Losses" shall have the
following meanings: (i) with reference to the obligation of the Sellers to
indemnify the Purchaser, its Affiliates and each of their respective
Representatives (each a "Purchaser Indemnified Party"), "Losses" shall mean any
and all costs or losses resulting from any Taxes, liabilities, obligations,
damages, lawsuits, deficiencies, claims, demands, and expenses (whether or not
arising out of Third Party Claims), including, without limitation, interest,
penalties, costs of mitigation, lost profits and other losses resulting from any
shutdown or curtailment of operations of the Purchaser, reasonable attorneys'
fees, all amounts which would constitute Losses, and all amounts paid in
investigation, defense or settlement of any of the foregoing; and (ii) with
reference to the obligation of Purchaser to indemnify the Sellers, their
Affiliates and each of their respective Representatives (each a "Seller
Indemnified Party"), "Losses" shall mean any and all costs or losses resulting
from any Taxes, liabilities, obligations, damages, lawsuits, deficiencies,
claims, demands, and expenses (whether or not arising out of Third Party
Claims), including, without limitation, interest, penalties, costs of
mitigation, lost profits and other losses resulting from any shutdown or
curtailment of operations of the Sellers, reasonable attorneys' fees and all
amounts paid in investigation, defense or settlement of any of the foregoing.
The term "Losses" as used in this Article 8 is not limited to matters asserted
by third parties against the Sellers or the Purchaser, but includes Losses
incurred or sustained by the Sellers or Purchaser in the absence of Third Party
Claims. Losses in respect of an Excluded Liability or Assumed Liability which
result from payment to a third party other than a Governmental Authority shall
be indemnifiable only to the extent such payment was (x) required by Contract or
law to be made, (y) legally compelled to be made or (z) paid on a commercially
reasonable basis to avoid or mitigate the types of claims described in clauses
(x) and (y) or legal or other costs associated therewith, in each case, by the
Purchaser Indemnified Party. Notwithstanding anything to the contrary in this
Agreement, Losses shall expressly include punitive damages, exemplary damages,
multiple damages, and other penalty damages arising out of a Third Party Claim.
SECTION 8.04 Indemnification Process. The party or parties hereto and
their Representatives and Affiliates making a claim for indemnification under
this Article 8 shall be, for the purposes of this Agreement, referred to as the
"Indemnified Party" and the party or parties against whom such claims are
asserted under this Article 8 shall be, for the purposes of this Agreement,
referred to as the "Indemnifying Party." All claims by any Indemnified Party
under this Article 8 shall be asserted and resolved as follows:
(a) Notice of Claims. In the event that (i) any claim, demand or
Proceeding is asserted or instituted by any Person other than the parties
to this Agreement or their Affiliates which could give rise to Losses for
which an Indemnifying Party could be liable to an Indemnified Party under
this Agreement (such claim, demand or Proceeding, a "Third Party Claim") or
(ii) any Indemnified Party under this Agreement shall have a claim to be
indemnified by any Indemnifying Party under this Agreement which does not
involve a Third Party Claim (such claim, a "Direct Claim" and, together
with Third Party
23
Claims, "Claims"), the Indemnified Party shall with reasonable promptness
send to the Indemnifying Party a written notice specifying the nature of
such claim, demand or Proceeding and the amount or estimated amount thereof
(which amount or estimated amount shall not be conclusive of the final
amount, if any, of such claim, demand or Proceeding) (a "Claim Notice");
provided, that a delay in notifying the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under this Agreement
except to the extent that (and only to the extent that) such failure shall
have caused the Losses for which the Indemnifying Party is obligated to be
greater than such Losses would have been had the Indemnified Party given
the Indemnifying Party proper notice.
(b) Third Party Claims. In the event of a Third Party Claim, the
Indemnifying Party shall be entitled to appoint counsel of the Indemnifying
Party's choice at the expense of the Indemnifying Party to represent the
Indemnified Party and any others the Indemnifying Party may reasonably
designate in connection with such claim, demand or Proceeding (in which
case the Indemnifying Party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by any Indemnified Party
except as set forth below); provided, that such counsel is reasonably
acceptable to the Indemnified Party. Notwithstanding an Indemnifying
Party's election to appoint counsel to represent an Indemnified Party in
connection with a Third Party Claim, an Indemnified Party shall have the
right to employ separate counsel, and the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel selected by the Indemnifying Party to represent the Indemnified
Party would present such counsel with a conflict of interest or (ii) the
Indemnifying Party shall not have employed counsel to represent the
Indemnified Party within a reasonable time after notice of the institution
of such Third Party Claim. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim, demand or Proceeding which the
Indemnifying Party defends, or, if appropriate and related to the claim,
demand or Proceeding in question, in making any counterclaim against the
person asserting the Third Party Claim, or any cross-complaint against any
person.
(c) Settlement of Claims. The Indemnifying Party shall not, without
the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), (i) settle or compromise any Claims or consent to
the entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to the Indemnified Party
of a written release from all liability in respect of such Claim of all
Indemnified Parties affected by such Claim or (ii) settle or compromise any
Claim if the settlement imposes equitable remedies or material obligations
on the Indemnified Party other than financial obligations for which such
Indemnified Party will be indemnified hereunder. No Claim which is being
defended in good faith by the Indemnifying Party in accordance with the
terms of this Agreement shall be settled or compromised by the Indemnified
Party without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld).
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(d) Direct Claims. In the event of a Direct Claim, the Indemnifying
Party shall notify the Indemnified Party within thirty (30) days of receipt
of a Claim Notice whether or not the Indemnifying Party disputes such
claim.
(e) Access. From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party, each
Indemnified Party shall grant the Indemnifying Party and its
Representatives all reasonable access to the books, records and properties
of such Indemnified Party to the extent reasonably related to the matters
to which the Claim Notice relates. All such access shall be granted during
normal business hours and shall be granted under conditions which will not
unreasonably interfere with the business and operations of such Indemnified
Party. The Indemnifying Party will not, and shall require that its
representatives do not, use (except in connection with such Claim Notice)
or disclose to any third person other than the Indemnifying Party's
Representatives (except as may be required by applicable Law) any
information obtained pursuant to this Section 8.04(e) which is designated
as confidential by an Indemnified Party.
SECTION 8.05 Purchaser's Right of Set-Off.
(a) Notwithstanding anything to the contrary in this Agreement, and
regardless of other means of obtaining payment, at any time and from time
to time any Purchaser Indemnified Party delivers a Claim Notice to the
Sellers regarding any Claim for which the Purchaser Indemnified Party is or
may be entitled to indemnification from the Sellers under this Article 8,
the Purchaser is hereby authorized to withhold and set-off and apply
against any amounts owing or that may be owed to any of the Sellers by the
Purchaser under (i) this Agreement and (ii) the Note (to the extent
provided in the Note), up to such amounts as set forth in each such Claim
Notice. The Purchaser shall have the right to withhold and set-off in
connection with this Section 8.05(a) upon the earlier of (x) when a Claim
has been made or filed against a Purchaser Indemnified Party, (y) when a
Purchaser Indemnified Party has paid or been required to pay a third party
in connection with a Claim or (z) when a Purchaser Indemnified Party has
realized a quantifiable loss due to any Claim. The rights of the Purchaser
under this Section 8.05 shall include, without limitation, the right to
withhold and retain any payment due under the Note in accordance with the
terms of the Note.
(b) Notwithstanding anything in this Agreement to the contrary (and
without limiting the generality of Section 9.13 (Cumulative Remedies)), (i)
the rights to set-off provided in the Note or otherwise pursuant to this
Section 8.05 and (ii) any other rights and remedies under this Agreement or
in equity or at law that any Purchaser Indemnified Party may have with
respect to the satisfaction of the joint and several indemnification
obligations of the Sellers under this Agreement shall be cumulative, and
the exercise of any such right by any Person shall not be exclusive of any
other right or remedy and shall not limit, modify, adversely affect,
prejudice or impair the exercise (or ability to exercise) any such rights
or remedies.
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SECTION 8.06 Limitations and Liability.
(a) No amount shall be payable by any Indemnifying Party pursuant to
Sections 8.01(a) or 8.02(a), unless the aggregate amount of Losses subject
to indemnification thereunder, as the case may be, exceed $250,000 (at
which point the Indemnified Party shall be entitled to all indemnification
amounts accrued up to such threshold). Notwithstanding anything to the
contrary in this Agreement, the maximum amount of indemnifiable Losses
which may be recovered by Purchaser from the Sellers arising out of or
resulting from the causes enumerated in this Section 8.06(a) and Section
8.06(a) of the Central Division Asset Purchase Agreement shall be an amount
equal the aggregate face amount of the Subsequent Note.
(b) Notwithstanding anything to the contrary in this Agreement, the
limitations set forth in Section 8.06(a) and the limitations on survival
set forth in Section 9.01 shall not apply to (i) any indemnification
obligations of the Sellers under Section 8.01(b); or (ii) any
indemnification obligations of the Sellers to the Purchaser arising from
the Sellers' covenants set forth in Section 5.07 (Tax Matters).
Furthermore, the limitations set forth in Section 8.06(a) and the
limitations on survival set forth in Section 9.01 shall not apply in the
event any such Losses arise out of an intentional misrepresentation or
fraud by any party hereto or any Affiliate of such party.
ARTICLE 9.
GENERAL PROVISIONS
SECTION 9.01 Survival of Representations and Warranties. The
representation and warranties of the Sellers and the Purchaser contained in this
Agreement shall survive the Closing of the applicable period set forth in this
Section 9.01, and any and all claims and causes of action for indemnification
under Article 8 arising out of the inaccuracy or breach of any representation or
warranty of either Seller or the Purchaser must be made prior to the termination
of the applicable survival period. All of the representations and warranties of
the Sellers and the Purchaser contained in this Agreement and any and all claims
and causes of action for indemnification under Article 8 with respect thereto
shall terminate one (1) year after the Closing Date; provided that (a) the
representations and warranties of the Sellers contained in Sections 3.01, 3.02,
3.03, 3.04, 3.06(c) and 3.09(c)(i) and (ii) and of the Purchaser in Sections
4.01, 4.02, 4.03 and 4.04 and the representations and warranties shall survive
indefinitely, it being understood that in the event notice of any Claim for
indemnification under Section 8.01(a) or Section 8.02(a) shall have been given
within the applicable survival period, the representations and warranties that
are the subject of such indemnification Claim shall survive until such time as
such Claim is finally resolved.
SECTION 9.02 Transfer Taxes. In the event transfer Taxes are required to
be paid in order to consummate the transactions hereunder, or in the event any
such Taxes are assessed at any time thereafter, such transfer Taxes (including
any interest, penalties or other additions thereon) incurred as a result of the
transactions contemplated hereby shall be paid by the Sellers. In the event
sales, use or other similar Taxes are assessed at Closing or at any time
thereafter on the transfer of any of the Acquired Assets, such Taxes (including
any interest, penalties or other additions thereon) incurred as a result of the
transactions contemplated hereby shall be paid by the Sellers. The Purchaser and
the Sellers shall cooperate in providing each other with any
26
appropriate resale exemption certifications and other similar documentation, and
shall prepare and timely file all Tax Returns and other documentation relating
to such Taxes as required by applicable law.
SECTION 9.03 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (c) the expiration of
three (3) business days after the day when mailed by registered or certified
mail (postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
(a) If to the Purchaser, to
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxx Xxxxxxxx, General Counsel
with the copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Sears Tower - Suite 5800
Xxxxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxx X. Xxxxxxxx
(b) If to either Seller, to:
marchFIRST, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxx Xxxxxx, General Counsel
with the copy (which shall not constitute notice) to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxx X. Xxxxx
27
SECTION 9.04 Descriptive Headings; Certain Terms. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references to "$" or
dollars shall be to United States dollars and all references to "days" shall be
to calendar days unless otherwise specified.
SECTION 9.05 Entire Agreement, Assignment; Competing Agreements. This
Agreement (including the Exhibits, schedules and the other documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof,
including any transaction between or among the parties hereto and (ii) shall not
be assigned by operation of law or otherwise; provided, however, that Purchaser
may assign all or part of its rights or obligations under this Agreement to one
of its wholly owned subsidiaries so long as Purchaser remains liable for its
obligations hereunder. THE SELLERS MAKE NO REPRESENTATION OR WARRANTY WITH
RESPECT TO THE ACQUIRED ASSETS, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY MADE
IN THIS AGREEMENT, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE
CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, THE ACQUIRED ASSETS ARE BEING SOLD "AS IS" AND "WHERE IS."
SECTION 9.06 Governing Laws. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO ANY CONFLICTS OF LAWS. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY FEDERAL COURT SITTING IN
THE CITY OF CHICAGO, UNLESS THERE IS NO FEDERAL COURT JURISDICTION, IN WHICH
CASE THE ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY STATE COURT
SITTING IN THE CITY OF CHICAGO AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING
AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM WITH RESPECT THERETO.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY
ACTION OR OTHER PROCEEDING BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
OR PARTIES HERETO WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY WAY
CONNECTED WITH OR RELATED TO, THIS AGREEMENT OR ANY PORTION THEREOF, WHETHER
BASED UPON CONTRACTUAL, STATUTORY, TORTIOUS OR OTHER THEORIES OF LIABILITY. EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT
ITS ADDRESS FOR NOTICE UNDER SECTION 9.03 OF THIS AGREEMENT. NOTHING IN THIS
SECTION 9.06 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW. THE CONSENTS TO JURISDICTION SET FORTH IN
THIS SECTION 9.06 SHALL NOT CONSTITUTE GENERAL CONSENTS TO
28
SERVICE OF PROCESS IN THE VENUES SPECIFIED ABOVE AND SHALL HAVE NO EFFECT FOR
ANY PURPOSE EXCEPT AS PROVIDED IN THIS SECTION 9.06 AND SHALL NOT BE DEEMED TO
CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES HERETO.
SECTION 9.07 Expenses. Except as set forth in this Agreement, whether or
not the transactions contemplated by this Agreement are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. The
foregoing shall not affect the legal right, if any, that any party hereto may
have to recover expenses from any other party that breaches its obligations
hereunder.
SECTION 9.08 Amendment. This Agreement and the Exhibits and Schedules
hereto may not be amended except by an instrument in writing signed on behalf of
all the parties hereto.
SECTION 9.09 Waiver. At any time prior to the Closing Date, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.10 Counterparts; Effectiveness. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective when each party hereto shall have received counterparts thereof
signed by all the other parties hereto.
SECTION 9.11 Integration; Parties of Interest. The rights and obligations
of the parties hereto pursuant to this Agreement and the Note are integrated and
are not severable. Nothing in this Agreement, express or implied, is intended to
confer upon any person not a party to this Agreement any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.12 Bulk Sales. The Purchaser hereby waives compliance by the
Sellers with any bulk sales or other similar laws in any applicable jurisdiction
in respect of the transactions contemplated by this Agreement.
SECTION 9.13 Cumulative Remedies. Except as otherwise expressly set forth
in this Agreement, all rights and remedies of each party hereto are cumulative
of each other and of every other right or remedy such party may otherwise have
in equity or at law, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of any other
rights or remedies.
29
SECTION 9.14 Further Assurances. In addition to the provisions of this
Agreement, from time to time after the Closing Date, the Sellers and the
Purchaser will use all commercially reasonable efforts to execute and deliver
such other instruments of conveyance, transfer, or assumption, as the case may
be, and take such other action as may be reasonably requested to implement more
effectively the conveyance and transfer of the Acquired Assets to the Purchaser
and the assumption of the Assumed Liabilities by the Purchaser.
ARTICLE 10.
DEFINITIONS
As used herein, the terms below shall have the following meanings.
"Acquired Assets" has the meaning set forth in Section 1.01.
"Acquired Contracts" means the Customer Contracts, Contracts
specifically referenced on Schedule 1.01, and all Contracts to which either
Seller is a party for the use of any domain name used or related to the
Businesses.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such other Person.
"Agreement" has the meaning set forth in Preamble.
"A/R Servicing Agreement" means the accounts receivable servicing
agreement dated as of the date hereof by and among the parties hereto.
"Assumed Liabilities" has the meaning set forth in Section 1.03.
"Balance Sheet" means the unaudited balance sheet of Target as of the
Balance Sheet Date.
"Balance Sheet Date" means December 31, 2000.
"Benefit Arrangements" has the meaning set forth in Section 3.14(a).
"Blue Vector Proceeds" has the meaning set forth in Section 1.05(d).
"Bluevector" means the Sellers' interest in Bluevector LLC, a Delaware
limited liability company.
"Bonus" has the meaning set forth in Section 1.05(b)
"Businesses" means the (a) SAP business based in Denver, Colorado, (b)
HostOne business and (c) joint venture relationships with Dentsu and
Samsung.
"Cash Proceeds" has the meaning set forth in Section 1.05(a).
30
"Central Division Asset Purchase Agreement" means the other Asset
Purchase Agreement dated as of the date hereof between the parties hereto.
"Central Division Businesses" means the businesses, assets and
liabilities of the Sellers acquired by the Purchaser pursuant to the
Central Division Asset Purchase Agreement.
"Central Division Note" means the note issued pursuant to the Central
Division Asset Purchase Agreement.
"Central Division Transferred Employees" means those former employees
of the Sellers formerly engaged in the businesses acquired by the Purchaser
pursuant to the Central Division Asset Purchase Agreement who accepted and
commenced employment with the Purchaser pursuant to the Central Division
Asset Purchase Agreement.
"Claim Notice" has the meaning set forth in Section 8.04(a).
"Claims" has the meaning set forth in Section 8.04(a).
"Closing" has the meaning set forth in Section 2.01.
"Closing Date" has the meaning set forth in Section 2.01.
"COBRA" means Part 6 of Title I of ERISA or any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means any agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase orders, letters
of credit, settlement agreements, franchise agreements, undertakings,
covenants not to compete, employment agreements, licenses, instruments,
obligations, commitments, understandings, policies, purchase and sales
orders, quotations and other executory commitments to which any Person is a
party or to which any of the assets of the any Person is subject, whether
oral or written, express or implied.
"Conveyance Documents" has the meaning set forth in Section 2.02(a).
"Current Market Value" has the meaning set forth in Section
1.05(b)(i).
"Customer Contracts" means the Contracts described or listed on
Schedule 1.01.
"Direct Claim" has the meaning set forth in Section 8.04(a).
"Employee Covenants" has the meaning set forth in Section 5.04(d).
"Employee Plans" has the meaning set forth in Section 3.14(a).
"Employment Offerees" has the meaning set forth in Section 5.04(a).
31
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or any agreement with any Governmental Authority
or other third party, relating to the environment, human health and safety
or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.
"Equity Value Proceeds" has the meaning set forth in Section 1.05(d).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414
of the Code.
"Excluded Assets" has the meaning set forth in Section 1.02.
"Excluded Liabilities" has the meaning set forth in Section 1.04.
"Governmental Authority" means any nation or government, any state or
provincial or other political subdivision thereof, any province, city or
municipality, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States, or any political subdivision thereof, any
government authority, agency, department, board, commission or
instrumentality of the United States or any political subdivision thereof
and any tribunal or arbitrator(s) of competent jurisdiction, and any self-
regulatory organization.
"HSR Act" has the meaning set forth in Section 3.03.
"including" shall always be read as "including without limitation."
"Indemnified Party" has the meaning set forth in Section 8.04.
"Indemnifying Party" has the meaning set forth in Section 8.04.
"Intellectual Property" means all statutory and common law rights to
trademarks, service marks, trade names, logos, web sites, computer
software, mask work, invention, patent, trade secret, copyright,
technology, processes, inventions, proprietary data, formulae, research and
development data and concepts, computer software programs, customer and
prospect lists, field manuals and methodologies, know-how and trade secrets
or any other similar type of proprietary intellectual property right
(including without limitation any registrations or applications for
registration of any of the foregoing and renewals, extensions, re-issues
and the like related thereto) and all modifications, improvements, and
derivative works thereto, which is used or held for use in the operation of
the Businesses.
32
"International Plan" means an employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within 30 days without liability of the Sellers or any of its
ERISA Affiliates), or a plan or arrangement providing for severance,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits that (a) is exempt from ERISA pursuant
to Section 4(b)(4) of ERISA, (b) is maintained or contributed to by the
Sellers or any of its subsidiaries and (c) covers any employee or former
employee of the Sellers or any of its subsidiaries.
"knowledge" means, with respect to Sellers, the actual knowledge of
Xxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxx or Xxxxxx Xxxxxx.
"Lien" means any interest in the Acquired Assets by a Person other
than the Sellers, including any mortgage, lien, pledge, charge, security
interest encumbrance or other adverse claim of any kind in respect of any
Acquired Asset.
"Losses" has the meaning set forth in Section 8.03.
"Market Value" has the meaning set forth in Section 1.05(b)(i).
"Material Adverse Effect" means any event, condition or matter in
respect of the operation of the Businesses, the Acquired Assets and the
Assumed Liabilities that in the aggregate will result in or have a material
adverse effect on the Acquired Assets, the Assumed Liabilities, or the
ability of Purchaser to operate the Businesses or use the Acquired Assets
after the Closing in the manner in which such Businesses are being operated
or the Acquired Assets are being used as of the date hereof.
"Multiemployer Plan" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Note" has the meaning set forth in Section 1.05(a).
"Passed-Through Contracts" has the meaning set forth in Section 5.06.
"Permitted Exceptions" means imperfections of title, restrictions or
encumbrances, if any, that (a) would not involve material costs to correct
or remove, (b) do not materially impair the use and operation of such asset
in the Businesses as currently conducted or (c) are caused solely by
Purchaser.
"Permitted True-Up Costs" means, to the extent relating to Acquired
Assets (and costs relating to Samsung whether or not the Samsung joint
venture is acquired by Purchaser), (i) payroll and employee benefit costs
paid in the ordinary course of business, (ii) real property lease expenses
and personal property lease expenses paid in the ordinary course (but
limited to the amounts (pro rated for a partial period) set forth on
Schedule
33
5.06(a)) and associated utility and similar costs, (iii)
reimbursement of current travel and entertainment expenses for employees
and (iv) such other expenses as the Purchaser may approve in writing.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Pre-Closing Tax Period" means any tax period ending on or before the
Closing Date and the portion of any Straddle Period ending on the Closing
Date.
"Proceeding" means charge, complaint, action, order, writ, injunction,
judgment or decree outstanding or claim, application, demand, suit,
litigation, proceeding, labor dispute, arbitration or other alternative
dispute resolution proceeding, hearing or investigation.
"Property Taxes" has the meaning set forth in Section 5.07(b)(i).
"Purchase Price" has the meaning set forth in Section 1.05.
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Indemnified Party" has the meaning set forth in Section
8.03.
"Purchaser's Health Plans" has the meaning set forth in Section
5.04(c)(i).
"Real Property" has the meaning set forth in Section 3.06(a).
"Representatives" means any officer, director, member, shareholder,
principal, attorney, agent, employee, accountant, consultant or other
representative.
"SAP Accounts Receivable" means the accounts receivable related to the
SAP business (indicated as such accounts on the accounts receivable
spreadsheet attached to Schedule 1.01).
"Securities Act" has the meaning set forth in Section 1.05(b).
"Seller" has the meaning set forth in the Preamble.
"Seller Indemnified Party" has the meaning set forth in Section 8.03.
"Seller Note" means the Note dated as of the date hereof made by the
Sellers in favor of the Purchaser.
"Sellers' Employee Liabilities" means all liabilities, obligations and
commitments arising out of or related to the employment (or termination of
employment) by the Sellers of its employees and former employees,
including, but not limited to, any obligation or liability for (a) accrued
but unpaid wages, salary, incentive or bonus compensation,
34
vacation benefits and pay, unpaid contributions to any Employee Plans or
other compensation, (b) all claims for severance or other termination
benefits, (c) all workers compensation claims, (d) employee tort claims or
claims under federal and state employee discrimination or sexual harassment
laws including claims under Title VII of the Civil Rights Act of 1964, and
(e) any actions, suits or proceedings brought by employees or former
employees which are set forth on Schedule 3.15(a).
"Sellers' Representatives" has the meaning set forth in Section
5.02(b).
"Straddle Period" means any taxable period beginning before and ending
after the Closing Date.
"Target" has the meaning set forth in the Preamble.
"Tax" and, with correlative meaning, "Taxes" means with respect to any
Person (1) all federal, state, local, county, foreign and other taxes,
assessments or other government charges, including, without limitation, any
income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
registration, recording, documentary, conveyancing, gains, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Governmental Authority (a "Taxing Authority") responsible
for the imposition of any such tax (domestic or foreign), or (2) liability
for the payment of any amounts of the type described in (1) relating to any
other Person as a result of being party to any agreement to indemnify such
other Person, being a successor or transferee of such other Person, or
being a member of the same affiliated consolidated, combined, unitary or
other group with such other Person (including any liability for Taxes under
Treasury Regulation Section 1.1502-6).
"Tax Returns" means any return (including information return), report,
notice, form, declaration, claim for refund, estimate, election, or
information statement or other document relating to any Tax, including any
schedule or attachment thereto, and any amendment thereof filed or to be
filed with any Taxing Authority in connection with the determination,
assessment or collection of Taxes.
"Third Party Claim" has the meaning set forth in Section 8.04(a).
"Third Party Licenses" means those agreements, between a Seller and a
third party granting a license to Intellectual Property to either Seller.
"Transferred Employees" has the meaning set forth in Section 5.04(a).
"True-Up Amount" means all cash and cash equivalents collected by the
Seller after the date of this Agreement with respect to the Businesses and
the first, second and fifth facilities listed on Schedule 10 (Toronto, Los
Angeles and Hong Kong) to the extent actually acquired on the Closing Date
hereunder, less Permitted True-Up Costs plus the
35
actual costs incurred by the parties hereto to satisfy in full any lien,
claim, encumbrance, interests or security interests of any nature or kind
whatsoever (other than Permitted Exceptions) upon the Acquired Assets.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988.
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36
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
MARCHFIRST, INC.
By: /s/
------------------------------
Name:
Title:
MARCHFIRST CONSULTING, INC.
By: /s/
-------------------------------
Name:
Title:
WH ACQUISITION CORP.
By: /s/
-------------------------------
Name:
Title:
S-1
SECURED PROMISSORY NOTE
$57,559,387.59 April 12, 2001
FOR VALUE RECEIVED, the undersigned, divine/Xxxxxxxx-Xxxx, inc. (f/k/a WH
Acquisition Corp.), an Illinois corporation (the "Buyer"), hereby promises to
pay to the order of MARCHFIRST, INC. as agent (the "Agent") for itself and
MARCHFIRST CONSULTING, INC., MARCHFIRST RESELLER CORPORATION, MARCHFIRST, INC. -
CANADA, and MARCHFIRST CONSULTING COMPANY (collectively, the "Sellers") the
principal sum of Fifty-Seven Million Five Hundred Fifty-Nine Thousand Three
Hundred Eighty-Seven Dollars and Fifty-Nine Cents ($57,559,387.59) together with
interest on the unpaid principal balance hereof in accordance with the payment
provisions set forth below.
The unpaid principal amount of the indebtedness evidenced hereby shall bear
interest at the Prime Rate. Interest shall be computed on the basis of a year
of twelve (12) months of thirty (30) days each. All payments of principal and
interest hereunder shall be made in lawful money of the United States of America
in immediately available funds, at such place as the holder hereof may designate
in writing, except for Buyer's option to pay the Final Payment (as defined
below) in shares of common stock, as set forth below. For purposes hereof, the
"Prime Rate" shall mean the annual percentage rate of interest published by the
Wall Street Journal from time to time as the prime rate.
This Note evidences indebtedness relating to payment of a portion of the
purchase price under, and is subject to certain provisions of, (i) that certain
Asset Purchase Agreement (the "Central Division Asset Purchase Agreement") by
and among Buyer and Sellers, dated as of April 2, 2001 and, if amended, all
amendments thereto, and (ii) that certain subsequent Asset Purchase Agreement
(the "Subsequent Asset Purchase Agreement') by and among Buyer and Sellers,
dated as of April 2, 2001 and, if amended, all amendments thereto, and replaces
the Central Division Note in its entirety in all respects. The holder of this
Note is entitled to any and all rights and benefits of the Central Division
Asset Purchase Agreement and the Subsequent Asset Purchase Agreement. Payments
under this Note are subject to Buyer's rights of offset set forth in the Central
Division Asset Purchase Agreement and the Subsequent Asset Purchase Agreement.
In addition, the Buyer may offset payments under the Note by any amounts that
are owed or may be owed by the Sellers to the Buyer under the Credit Agreement
by and among the Sellers (as borrowers) and the Buyer (as lender), dated as of
April 2, 2001. Unless the context clearly indicates otherwise, any reference to
the "Note" in this Note, the Central Division Asset Purchase Agreement, the
Subsequent Asset Purchase Agreement or any document related to the transactions
contemplated herein or therein shall be deemed to refer to this Note.
Buyer shall make payments of accrued interest on the last day of each
calendar quarter, to the extent Buyer has available cash. To the extent cash is
not available for such interest payment, interest shall continue to accrue.
Buyer shall also make payments of principal on or before the 45th day after the
end of each calendar quarter after the Closing Date (as defined in the
Subsequent Asset Purchase Agreement), commencing with the quarter ended June 30,
2001, in an amount equal to the lesser of (i) the outstanding principal balance
hereof; or (ii) fifty percent (50%) of the Free Cash Flow (as defined below) for
the prior calendar quarter. Furthermore, Buyer shall make a prepayment equal to
(i) 50% of Blue Vector Proceeds, and (ii) 50% of Equity Sale Proceeds, promptly
after receiving such proceeds; provided, that in no event shall any such
prepayment exceed the then outstanding principal and accrued and unpaid interest
hereon. All payments hereunder shall be applied first to accrued interest and
then to the unpaid principal balance hereof. Notwithstanding the foregoing, the
entire principal amount of this Note plus all accrued and unpaid interest
thereon (the "Final Payment") shall be due and payable in full on April 12,
2006.
The Buyer may, in its sole discretion, elect to pay or cause to be paid all
or part of the Final Payment in the form of shares of common stock of divine,
Inc. if, as of the date of the Final Payment, such common stock is listed for
trading on any national securities exchange or designated as a national market
system security by the NASD, and either (i) such shares would be freely tradable
by Agent without registration under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) a shelf registration statement pursuant to Rule 415
under the Securities Act, covering the resale of all such shares issuable to
Agent, is effective, subject to the following provisions:
(i) the value of the common stock for determining the number of
shares to be delivered in payment of the Final Payment shall be its Current
Market Value as of such date. "Current Market Value" shall mean the average
daily Market Value (as defined below) during the period of the most recent 20
days, ending on such date, on which the national securities exchanges were open
for trading. "Market Value" shall mean, on any date of determination, the
amount per share of common stock equal to (A) the last trading price of such
common stock on such date, or (B) if there shall have been no trading on such
date, the average of the closing bid and asked prices of the common stock on
such date as shown by the NASD automated quotation system;
(ii) in the event a shelf registration statement covers resales of
common stock by the Agent, such registration statement's effectiveness shall be
maintained until the earlier to occur of (A) the date on which the Agent can
sell all of the shares of common stock voered by such registration statement
without restriction pursuant to Rule 144(k) under the Securities Act or any
successor provision, or (B) the date on which the Agent has sold all of the
shares of common stock covered by such registration statement; and
(iii) if upon the sale of all divine common stock delivered to the
Agent in payment of the Final Payment, the aggregate proceeds received by Agent
(after deducting costs and expenses, including commissions, directly related to
the sale of such stock) result in an average selling price per share that is
less than the Current Market Value used to determine the number of shares to
deliver to Agent pursuant to clause (i) above, then Buyer shall promptly make an
additional payment of cash to Agent equal to such shortfall; provided, that
Agent shall have sold such shares in good faith through one of two brokers
chosen by Buyer.
-2-
"Free Cash Flow" means, with respect to Buyer for any quarter, net income
of Buyer for such quarter determined in accordance with GAAP, plus
(i) depreciation, amortization and non-cash charges; plus
(ii) state, federal and foreign income taxes to the extent included in
net income; plus
(iii) the positive difference between the amount of accounts payable of
Buyer at the end of such quarter minus the amount of accounts payable of Buyer
at end of the immediately preceding quarter; minus
(iv) the positive difference between the amount of accounts receivable of
Buyer at the end of such quarter minus the amount of accounts receivable of
Buyer at end of the immediately preceding quarter; minus
(v) the lesser of capital expenditures during such quarter and the
following percentage of revenues during such quarter: 5% in year 1, 4% in year
2, 3% in year 3, 2.5% in year 4 and 2.5% in year 5; plus
(vi) the book value from dispositions of fixed assets during such
quarter.
When calculating Free Cash Flow, the net income, results of operations and
all related financial and non financial items of Bluevector shall be excluded
for all purposes. For purposes of this Note, "Blue Vector Proceeds" means the
proceeds received by Buyer from the sale of any interest (net of taxes actually
paid by Buyer or its Affiliates in respect of such sale) in Bluevector LLC or
distributions from Bluevector LLC other than for taxes allocated in respect of
such interest, and "Equity Sale Proceeds" means the net proceeds received by
divine, Inc. from the sale of any equity interest (including any security
convertible into or exchangeable for such equity interest) of the Buyer.
Payment of this Note is secured by a Pledge and Security Agreement by and
between Buyer and Sellers (the "Security Agreement"), dated as of April 2, 2001.
Agent, for the benefit of the Sellers, is entitled to any and all rights and
benefits of the Security Agreement and may enforce the covenants and agreements
contained therein and exercise the remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the terms thereof.
After ten (10) days notice to Buyer of the occurrence and during the
continuation of an Event of Default (as hereinafter defined) and at the option
of the Agent, the entire unpaid principal balance of this Note, irrespective of
the maturity date hereof, and all accrued and unpaid interest thereon, and any
other sums required to be paid hereunder or the Security Agreement shall become
immediately due and payable. If an Event of Default shall occur, the rate of
interest on the unpaid principal amount hereof shall be increased by an
additional two percent (2%) per annum (the "Default Interest Rate") for the
quarter after the occurrence of the Event of Default until the Event of Default
is cured or waived or the unpaid principal amount hereof is paid, whether or not
the Agent accelerates payment. All costs and expenses incurred by, or on behalf
-3-
of, the Sellers (including without limitation reasonable attorneys' fees and
expenses) which are occasioned by any Event of Default by Buyer hereunder shall
become immediately due and payable, shall bear interest at the Default Interest
Rate from the date incurred until paid, and shall become additional indebtedness
evidenced by this Note and secured by the Security Agreement. After the
occurrence of an Event of Default, the Agent may institute, or cause to be
instituted, proceedings for the realization of its rights under this Note and
the Security Agreement.
The remedies of the Sellers, as provided herein or in the Security
Agreement shall be cumulative, and may be pursued singularly, successively or
together, at the sole discretion of the Sellers, and may be exercised as often
as occasion therefore shall arise. No act of omission or commission of Sellers,
including specifically any failure to exercise any right, remedy or recourse,
shall be deemed to be a waiver or release of the same, such waiver or release to
be effected only through a written document executed by Sellers and then only to
the extent specifically recited therein. A waiver or release with reference to
any one event shall not be construed as continuing, as a bar to, or as a waiver
or release of', any subsequent right, remedy or recourse as to a subsequent
event.
Buyer shall have the right of first refusal with respect to any sale of
this Note. Buyer shall have the right to prepay this Note either in whole at
any time or in part from time to time, without premium or penalty, upon not less
than 10 days prior written notice to the holder of this Note by payment of the
principal amount of the Note or the portion thereof to be prepaid and accrued
interest thereon to the date of prepayment, provided that any such prepayment
shall be in cash. All partial prepayments shall be applied first to accrued
interest and thereafter to the unpaid principal balance hereof.
Buyer agrees to pay all reasonable costs of collection, including
reasonable attorneys' fees if the unpaid principal sum of this Note and interest
thereon is not paid when due.
Whenever used herein, the words "Buyer" and "Sellers" shall be deemed to
include their respective successors, assigns, heirs, legal representatives
endorsees and successors in interest. In this Note, whenever and wherever the
context so requires, the neuter shall include the feminine and the masculine and
the singular shall include the plural, where appropriate.
The occurrence of any one or more of the following events shall constitute
an "Event of Default" under this Note:
(a) Nonpayment of Amounts. Failure to pay any principal, interest or any
other amount due under this Note for a period of five (5) days after the date
such payment was due;
(b) Bankruptcy or Insolvency. Buyer or any of its affiliates: (i) shall
have filed petition in bankruptcy or for the approval of a plan of
reorganization or arrangement under the Bankruptcy Reform Act of 1978, or an
involuntary petition in bankruptcy or plan of reorganization is filed against
Buyer or an affiliate thereof, or an admission seeking the relief therein
provided; (ii) is unable, or admits in writing its inability, to pay its debts
as they become due; (iii) makes an assignment for the benefit of creditors; (iv)
-4-
shall have filed a petition or applied to any tribunal for the appointment of a
custodian, receiver or any trustee for all or a substantial part of its assets;
(v) by any act or omission indicates its consent, approval of, or acquiescence
in the appointment of a receiver, custodian or trustee for all or a substantial
part of its property; (vi) become insolvent however otherwise evidenced; or
(vii) ceases doing business as a going concern; or
(c) Breach of Covenants. A breach by Buyer of (i) Section 6(e) of the
Central Division Asset Purchase Agreement or (ii) any covenant, term or
agreement contained in the Security Agreement, if any such default is not cured
or waived within ten (10) days after written notice thereof is given to Buyer.
-5-
This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois. Buyer waives, presentment, protest and
demand. Every provision hereof is intended to be severable. If any clause,
phrase, provision or portion of this Note or the application thereof is
determined by a court of competent jurisdiction to be invalid or unenforceable
under applicable law, the remaining clauses, phrases, provision and portions of
this Note shall not be affected or impaired thereby, but each such remaining
clause, phrase, provision and portion shall be valid and be enforced to the
fullest extent permitted by law.
divine/Xxxxxxxx-Xxxx, Inc.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
