| Schedule
| 1.
| -
| List of Subsidiaries
|
|
|
|
| Schedule
| 2.03
| -
| Revenue Growth
|
|
|
|
| Schedule
| 3.02
| -
| Excluded Liabilities
|
|
|
|
| Schedule
| 4.01
| -
| List of Directors,
Officers, Managers and Members of the Company
|
|
|
|
| Schedule
| 4.08
| -
| Undisclosed Liabilities
|
|
|
|
| Schedule
| 4.09
| -
| Changes in Operations
|
|
|
|
| Schedule
| 4.10
| -
| Tax Disclosure
|
|
|
|
| Schedule
| 4.11
| -
| Restrictions on
Business Activities
|
|
|
|
| Schedule
| 4.12(a)
| -
| Real Property Leased by
the Company
|
|
|
|
| Schedule
| 4.12(b)
| -
| Liens on Equipment
|
|
|
|
| Schedule
| 4.12(c)
| -
| Equipment leased by the
Company
|
|
|
|
| Schedule
| 4.13(a)
| -
| Registered Rights,
Actions and Proceedings
|
|
|
|
| Schedule
| 4.13(b)
| -
| Transfer Restrictions
on Technology and Intellectual Property Rights
|
|
|
|
| Schedule
| 4.13(f)
| -
| Technology Ownership
Disclosure
|
|
|
|
| Schedule
| 4.13(g)
| -
| Technology Disclosure
Relating to Employees of the Company
|
|
|
|
| Schedule
| 4.13(h)
| -
| Form of Proprietary
Information, Confidentiality and Assignment Agreement
|
|
|
|
| Schedule
| 4.13(j)
| -
| List of Intellectual
Property Licenses
|
|
|
|
| Schedule
| 4.13(k)
| -
| Technology or
Intellectual Property Rights Licensed to the Company
|
|
|
|
| Schedule
| 4.13(l)
| -
| Indemnities of Third
Parties Against Infringement Claims
|
|
|
|
| Schedule
| 4.15
| -
| Agreements, contracts
and commitments of the Company
|
|
|
|
| Schedule
| 4.17
| -
| Governmental
Authorizations
|
|
|
|
| Schedule
| 4.18
| -
| Pending or Threatened
Litigation against the Company
|
|
|
|
| Schedule
| 4.22
| -
| Estimate of the
Company's Expenses
|
|
|
|
| Schedule
| 4.23(a)
| -
| Company Employee
Plans and Employee Agreements
|
|
|
|
| Schedule
| 4.23(c)
| -
| Employee Plan Compliance
|
|
|
|
| Schedule
| 4.23(f)
| -
| Schedule -
Post-Employment Obligations
|
|
|
|
| Schedule
| 4.23(h)(i)
| -
| Payment of Benefits to
Employees
|
|
|
|
| Schedule
| 4.23(h)(ii)
| -
| Schedule - Parachute
Payments
Schedule 4.23(j) - Collective
Bargaining Agreements
Schedule 4.24 - Insurance Policies and
Fidelity Bonds of the Company
Schedule 4.26 - Third Party Consents
Schedule 4.27 - Warranties and
Indemnities by the Company
Schedule 6.01 - Conduct of Business
Schedule 8.02 - List of individuals to
enter into an employment agreement with the Buyer.
Exhibit A
Membership Interests, Authorized Capital and
Capital Stock of each Holder, the Seller and/or each Subsidiary
Exhibit B
Organizational Chart
Exhibit C
Company Financial Statements
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE
AGREEMENT (together with all Schedules and Exhibits hereto, this
"Agreement"), dated July 30, 1999, is entered into by and
among ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group L.L.C., a Cayman Islands limited
liability company (the "Seller"), USWeb Corporation, a
Delaware corporation ("USWeb"), and USWeb Acquisition
Corporation 137, a Delaware corporation (the "Buyer").
RECITALS:
WHEREAS, the Seller
has a three level expansion strategy that
reflects its belief that its total value can be enhanced by
activities that would enable the Buyer to both capture the latent
value of its own franchise and realize the synergies of
the Seller's
consulting activities.
WHEREAS,
the Seller
believes this expansion will be achieved by a
combination of (i) expanding
the Seller's
traditional consulting services by growing its
own people as well as by recruiting talent from other firms, (ii)
using
the Seller's
knowledge of business-to-business transactions
to build and sell e-commerce ventures and solutions, including
electronic markets and web based auctions, and (iii) retaining
ownership of key functions and divisions of
the Seller's
clients, turn them around by applying
the Seller's
unique combination of people, skills and
knowledge, and then returning them to their previous owners or
IPO/sell them.
WHEREAS, the Seller desires to
sell and the Buyer desires to acquire substantially all of the
assets of the Seller on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in
consideration of the mutual covenants and undertakings contained
herein, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
As used in this
Agreement, the following terms shall have the following meanings:
"
Acquisition Proposal" - Defined in Section 6.03.
"Affiliate
" - Any other person or entity under common control with
the Seller within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations issued thereunder.
"Ancillary
Agreements" - Defined in Section 4.04.
"Assumed
Liabilities" - The Seller's liabilities reflected in the
Balance Sheet, as adjusted for the liabilities of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Group Limited transferred to the Seller upon the dissolution of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Limited, (with the exception of the Excluded
Liabilities) and no other liabilities of any kind, whether accrued,
absolute, contingent, matured, unmatured or other.
"Balance Sheet
" - Defined in Section 4.07.
"
Buyer" - USWeb Acquisition Corporation 137, a wholly
owned subsidiary of USWeb.
"
Buyer's Counsel" - ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇.
"
Closing" - Defined in Section 11.01.
"Closing
Date" - Defined in Section 11.01.
"
COBRA" - The Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"Code
" - The Internal Revenue Code of 1986, as amended.
"Company"
- Defined in Section 4.01.
"Company Agreement
" - Defined in Section 4.09(i).
"
Company Employee Plan" - Any plan, program, policy,
practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits
or other employee benefits or remuneration of any kind, whether
written or unwritten or otherwise, funded or unfunded, including
without limitation, each "employee benefit plan," within
the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by the
Seller or any Affiliate for the benefit of any Employee, or with
respect to which the Company or any Affiliate has or may have any
liability or obligation.
"
Company Authorizations" - Defined in Section 4.17.
"
Company Financials" - Defined in Section 4.07.
"Company
Intellectual Property" shall mean any Technology and
Intellectual Property Rights, including Registered Intellectual
Property Rights (as defined below), that are owned or licensed or
claimed to be owned or licensed by the Company.
"
Conflict" - Defined in Section 4.05.
"Contract
" - Defined in Section 4.15(b).
"
Customer Information" - All customer files and other
information relating to the Company's current and former customers.
"DOL
" - The Department of Labor.
"Effective Time
" - Defined in Section 11.01.
"Employee
" - Any current or former employee, consultant or director of
the Seller or any Affiliate.
"
Employee Agreement" - Each management, employment,
severance, consulting, relocation, repatriation, expatriation,
visas, work permit or other agreement, contract or understanding
between the Seller or any Affiliate and any Employee.
"
Equipment" - Defined in Section 4.12(c).
"ERISA"
- The Employee Retirement Income Security Act of 1974, as amended.
"
Exchange Act" - The Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated from time to time thereunder.
"
Excluded Assets" - All of the Seller's right, title and
interest in and to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Limited, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Group L.L.C., International Sourcing Services L.L.C. and the
Founders Fund, which assets are not being sold, transferred,
conveyed or assigned by the Seller to the Buyer.
"
Excluded Liabilities" - The Seller's liabilities described
in Schedule 3.02.
"
FMLA" - The Family Medical Leave Act of 1993, as amended.
"GAAP
" - Generally accepted accounting principles as in effect
in the United States from time to time.
"Governmental
Authority" - Any nation or government, any state or other
political subdivision thereof, and any entity or person exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"
Holder" - Each of the individuals whose names is set forth
on Exhibit A hereto.
"
Holder Certificate" - As described in Section 4.04.
"HSR Act
" - The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Indemnified Party
" - Defined in Section 13.03.
"
Indemnity Obligor" - Defined in Section 13.03.
"
Information Technology" - Defined in Section 4.14.
"
Intellectual Property" - All trademarks, service marks and
trade names listed in Schedule 4.13.
"Intellectual Property Rights
" shall mean any or all of the following and all rights in,
arising out of, or associated therewith:
(i) all United States and foreign patents and
utility models and applications therefor and all reissues,
divisions, re-examinations, renewals, extensions, provisionals,
continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries
including without limitation invention disclosures ("Patents
");
(ii) all rights in and to trade
secrets and know-how and confidential or proprietary information;
(iii) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the
world ("Copyrights"); (iv) all rights in
industrial designs and any registrations and applications therefor
throughout the world; (v) all rights in World Wide Web
addresses and domain names and applications and registrations
therefor, all rights in trade names, logos, common law trademarks
and service marks, trademark and service ▇▇▇▇ registrations and
applications therefor and all goodwill associated therewith
throughout the world ("Trademarks"); and (vi)
any similar, corresponding or equivalent rights to any of the
foregoing anywhere in the world.
"International
Employee Plan" - Each Company Employee Plan that has been
adopted or maintained by the Seller or any Affiliate, whether
informally or formally, or with respect to which the Seller or any
Affiliate will or may have any liability, for the benefit of
Employees who perform services outside the United States.
"IRS" - The Internal
Revenue Service.
"Lien" -
Defined in Section 4.10.
"Loss" -
Defined in Section 13.01.
"Material Adverse Effect
" - A material adverse effect on the business, operations,
property or financial condition of the Company, taken as a whole, or
of USWeb, taken as a whole, as the case may be, or on the
transactions contemplated hereby.
"Material Contracts"
- All contracts, commitments, agreements (including agreements for
the borrowing of money or the extension of credit), leases,
licenses, guarantees, understandings and obligations, whether
written or oral, to which the Seller or any of the Subsidiaries is
party or by which any of them are bound.
"Multiemployer
Plan" - Any "Pension Plan" (as defined below)
which is a "multiemployer plan," as defined in Section
3(37) of ERISA.
"Original Payment
" - Defined in Section 2.02(b)(i)
"PBGC" -
The Pension Benefit Guaranty Corporation
"Pension Plan" - Each
Company Employee Plan which is an "employee pension benefit
plan," within the meaning of Section 3(2) of ERISA
"Person"
- An individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plans" - (i)
Employee benefit plans as defined in Section 3(3) of ERISA, whether
or not funded and whether or not terminated; (ii) employment
agreements; and (iii) personnel policies or fringe benefit
plans, policies, programs and arrangements, whether or not subject
to ERISA, whether or not funded, and whether or not terminated,
including, without limitation, stock bonus, deferred compensation,
pension, severance, bonus, vacation, travel, incentive and health,
disability and welfare.
"Proceeding" -
Commencement of any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought,
conducted or heard before or otherwise involving any court,
governmental agency or entity or arbitration.
"Purchase Price" -
Defined in Section 2.02.
"Registered Intellectual
Property Rights" shall mean to the extent owned or claimed
to be owned or filed in the name of, or applied for by the Company
all United States, international and foreign: (i) Patents,
including applications therefor; (ii) registered Trademarks,
applications to register Trademarks, including intent-to-use
applications, or other registrations or applications related to
Trademarks; (iii) Copyrights registrations and applications to
register Copyrights; and (iv) any other Technology that is the
subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any state,
government or other public legal authority at any time.
"Representatives" -
Defined in Section 7.01.
"Requirements of Law"
- As to any Person, the Certificate of Incorporation, Memorandum and
Articles of Association or By-laws, Certificate of Limited
Partnership or Limited Partnership Agreement or other organizational
or governing documents of such Person, and any law (statutory or
otherwise), treaty, rule or regulation or determination of any
arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"SEC" - The
Securities and Exchange Commission.
"SEC Reports" - All
forms, reports and documents together with all exhibits required to
be filed with the SEC since December 5, 1997.
"Securities Act" -
The Securities Act of 1933, as amended.
"Seller" - ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Group, L.L.C., a Cayman Islands limited liability company.
"Seller's Counsel" -
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇.
"Shares" - Defined in
Section 2.02(a)(i).
"Subsidiaries" -
Listed in Schedule 1.
"Tax or Taxes" - (i)
Any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such
amounts; (ii) any liability for the payment of any amounts of
the type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for
any period; and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other
person or as a result of any obligations under any agreements or
arrangements with any other person with respect to such amounts and
including any liability for taxes of a predecessor entity.
"Tax Return or Tax Returns
" - Any report, return declaration or other information, or any
amendment thereof, required to be filed or supplied in connection
with any Tax.
"Technology" shall
mean any or all of the following: (i) works of authorship
describing or embodying technology including, without limitation,
computer programs, source code and executable code, whether embodied
in software or otherwise, and their documentation, designs, files,
records and data; (ii) inventions (whether or not patentable)
and improvements; (iii) proprietary and confidential
information describing or embodying technology, including technical
data and lists of technical customers and suppliers, and trade
secrets and know how describing or embodying technology; (iv)
databases, data compilations and collections describing or embodying
technology and technical data; (v) logos, trade names, trade
dress, trademarks, service marks, World Wide Web addresses and
domain names, tools, methods and processes describing or embodying
Technology; and all instantiations of the foregoing in any form and
embodied in any media.
"Third Party Claim" -
Defined in Section 13.03.
"Transferred Assets"
- All of the Company's assets except for the Excluded Assets.
"USWeb" - USWeb
Corporation, a Delaware corporation.
"USWeb Ancillary Agreements
" - Defined in Section 5.03.
"USWeb Financials" -
Defined in Section 5.06.
"Year One Deferred
Consideration" - Defined in Section 2.02(b)(ii).
"Year Two Deferred
Consideration" - Defined in Section 2.02(b)(iii).
ARTICLE II - PURCHASE
AND SALE OF TRANSFERRED ASSETS
2.01
Transferred Assets.
(a) At the Effective Time and subject
to the terms and conditions of this Agreement, the Buyer shall
purchase and acquire and accept from the Seller and the Seller shall
sell, transfer, convey and assign to the Buyer the Transferred
Assets and all rights thereto.
(b) None of the Excluded Assets are
being acquired by the Buyer pursuant to this Agreement.
2.02
Purchase Price for the Transferred Assets.
(a) The aggregate purchase price (the
"Purchase Price") to be paid by the Buyer to the Seller
for the Transferred Assets shall be:
(i) 14,420,320 shares of USWeb
common stock, par value $.001 per share (the "Shares")
subject to adjustment as provided in Section 2.03 hereof; plus
(ii) an amount in cash payable on or
before January 31 of each year, starting in January 2000 and
continuing until an aggregate amount of up to $10,000,000 has been
paid, the amount paid with respect to each year shall equal the
aggregate amount of interest payments on the " deferred tax
liability" as defined pursuant to Section 453A(c) of the Code
required for the year preceding the year of the payment by the
Holders as of the Closing Date with respect to the transactions
contemplated hereby, as such interest payment shall have been
computed by PricewaterhouseCoopers LLP with respect to such year. No
amount in excess of such aggregate interest obligations shall be
paid or payable thereafter pursuant to this Section 2.02(a)(ii).
(b) The Buyer shall pay the Purchase
Price to the Seller as follows:
(i) At the Closing Date, 7,210,160
shares of the USWeb common stock ("Original Payment"
), by delivery of the share certificates representing such Shares;
plus
(ii) Promptly after the first
anniversary of the Closing Date, the Buyer shall deliver to the
Seller 3,605,080 shares of USWeb common stock ("Year One
Deferred Consideration") by physical delivery of the share
certificates representing such Shares, subject (a) to any adjustment
in the number of such Shares required to reflect any stock dividend,
stock split or other change in the Buyer's capital stock in
connection with any combination of Shares, recapitalization, merger,
consolidation or other reorganization; (b) to any adjustment
required pursuant to the revenue growth provisions set forth in
Section 2.03 hereof; and (c) to any adjustments pursuant to the
indemnification provision of Section 13.01; and
(iii) Promptly after the second
anniversary of the Closing Date, the Buyer shall deliver to the
Seller 3,605,080 shares of USWeb common stock ("Year Two
Deferred Consideration") by physical delivery of the share
certificates representing such Shares, subject (a) to any adjustment
in the number of such Shares required to reflect any
stock dividend, stock split or other change in the Buyer's capital
stock in connection with any combination of Shares,
recapitalization, merger, consolidation or other reorganization, and
(b) to any adjustment required pursuant to the revenue growth
provisions set forth in Section 2.03 hereof; and (c) to any
adjustment pursuant to the indemnification provision of Section
13.01; and
(iv) On or before January 31, 2000 and
on or before each January 31 thereafter cash in an aggregate amount
up to $10,000,000 to satisfy the buyer's obligation to the Seller
pursuant to Section 2.02(a)(ii) but in no event shall the aggregate
of payments under this Section 2.02(b)(iv) exceed $10,000,000.
2.03
Deferred Consideration.
(a) Definitions.
(i) "Revenues" are
revenues as defined by GAAP (explicitly excluding pass-through)
recognized by the strategy consulting practice established as a
result of the actions provided for in this Agreement.
(ii) "Year 1" is
October 1, 1999 to September 30, 2000, and "Year 2"
is October 1, 2000 to September 30, 2001.
(iii) "Year 1 Base Revenues
" are $190,200,000, to be adjusted by agreement among the
parties for the addition of USWeb's existing strategy consulting
practice and, if mutually agreed, any subsequent acquisitions. "
Year 2 Base Revenues" are the greater of (i) the
revenues attained by the Seller in Year 1, or (ii) the Year 1
Base Revenues.
(iv) "Annual Growth Rate
" means the percentage increase in Revenues during Year 1 or
Year 2 over the Year 1 Base Revenues or Year 2 Base Revenues,
respectively; provided that for Year 2, the Annual Growth Rate shall
be deemed to be increased by a "credit factor" equal to
the product of (x) one-half the number of percentage points that the
Annual Growth Rate for Year 1 exceeds 25%, times (y) the "
Margin Factor" (defined below) for Year 1.
(v) "Revenue Factor"
is 100% minus 3% for each point the Annual Growth Rate is below 25%.
(vi) "Operating Margin
" means Revenues minus cost of revenues and operating expenses
as defined by GAAP and determined using the accounting principles
and practices of Buyer in accordance with GAAP.
(vii) "Margin Factor"
is 100% minus 4% for each of the first 10 points the Operating
Margin is below 15%, and minus 10% for each point the Operating
Margin is below 5% (that is, 4% for each point between 15% and 5%,
and 8% for each point below 5%).
(b) Adjustment of Deferred
Consideration. In each of Year 1 and Year 2, if Annual Growth
Rate is at least 25% and the Operating Margin is at least 15%, there
shall be no adjustment to the Year 1 Deferred Consideration or the
Year 2 Deferred Consideration, as the case may be. Otherwise, the
Year 1 Deferred Consideration or the Year 2 Deferred
Consideration shall be adjusted by multiplying such amount by the
Revenue Factor and the Margin Factor.
The following table shows examples of
the Revenue Factor and the Margin Factor for various values of
Annual Revenue Growth and Operating Margin (all numbers are
percentages):
| Annual
Growth
Rate
|
| Revenue
Factor
|
|
Operating Margin
|
| Margin
Factor
|
|
|
|
|
|
|
|
| 25
|
| 100
|
| 15
|
| 100
|
| 20
|
| 85
|
| 12
|
| 88
|
| 15
|
| 70
|
| 9
|
| 76
|
| 10
|
| 55
|
| 6
|
| 64
|
| 5
|
| 40
|
| 3
|
| 40
|
| 0
|
| 25
|
| 0
|
| 10
|
| -5
|
| 10
|
| -1
|
| 0
|
| -8
| 1/3
| 0
|
|
|
|
For example, if the Annual Growth Rate
is 12%, the percentage is 13 points below 25, so the Revenue Factor
is 100% minus (3% times 13), or 61%. Similarly, if the Operating
Margin is 10, the percentage is 5 points below 15, so the Margin
Factor is 100% minus (4% times 5), or 80%. The Deferred Compensation
for the year would then be adjusted by multiplying it by 61% times
80%, or 48.8%.
(c) Determinations. The
computations set forth above shall be completed by the Chief
Accounting Officer of USWeb within 40 days after the end of each of
Year 1 and Year 2. When completed, the computation shall be
delivered to ▇▇▇▇ ▇▇▇▇▇ (or his successor in office) for his review
and approval or rejection on behalf of the Seller. If ▇▇▇▇ ▇▇▇▇▇
approves the computation, the number of shares shall be fixed
accordingly. If ▇▇▇▇ ▇▇▇▇▇ does not approve the computation within
five business days, such computation will be referred to a committee
consisting of USWeb's CEO and CFO and ▇▇▇ ▇▇▇▇▇▇▇ (or their
respective successors in office) for their approval, which must be
unanimous. If this committee cannot approve the computation within
ten business days, the matter will be referred to USWeb's audit
committee for resolution by unanimous vote. If the audit committee
cannot so agree within 30 calendar days, the matter shall be
submitted for arbitration in the same manner as other disputes in
this Agreement.
(d) Issuance of Deferred
Consideration. Within five business days after final
determination of the computations set forth above, USWeb shall issue
to the Seller the Year 1 or Year 2 Deferred Consideration, as
applicable and as adjusted as set forth above. During the
resolution of any issues regarding the computations, USWeb shall issue
any amounts not in dispute.
2.04
Fractional Shares.
No fractional share of USWeb Common
Stock shall be issued in connection with the Agreement. In lieu
thereof, the number of shares otherwise issued or issuable shall be
rounded to the nearest whole share, with one-half share or more
being rounded up.
2.05
Lost, Stolen or Destroyed Certificates.
In the event any Certificates
shall have been lost, stolen or destroyed, USWeb's transfer agent
shall issue in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of USWeb common stock as may be required
pursuant to Section 2.02; provided, however, that USWeb or such
transfer agent may require posting of the bond prior to issuance of
any such replacement certificate.
2.06
Allocation of Purchase Price.
The Buyer and the Seller shall allocate
the Purchase Price (and all other capitalized costs, including any
Seller's liabilities other than Excluded Liabilities) among the
Transferred Assets, and the Non-Competition Agreement, as defined in
Section 12.07, which allocation to such Non-Competition Agreement
shall not exceed $100,000, in accordance with the allocation
schedule (the "Allocation Schedule"), which
Allocation Schedule shall be completed by the end of the 30 day
period following the Closing Date. By the end of such 30 day period
following the Closing Date, the Buyer and the Seller shall sign the
Allocation Schedule and exchange executed copies thereof. The Buyer
and the Seller agree to file IRS Form 8594, and all federal, state,
local and foreign Tax Returns in accordance with the Allocation
Schedule. The Buyer and the Seller agree to promptly provide the
other with any information required to complete IRS Form 8594. In
the event of any disagreement between the Buyer and the Seller with
respect to the Allocation Schedule, an independent evaluator
selected by the Buyer and the Seller shall make the final
determination of the proper allocation of the Purchase Price and
other proceeds to be reflected on such Allocation Schedule, which
determination shall be binding on the Buyer and the Seller.
2.07
Withholding Taxes.
Payment of the Purchase Price shall be
subject to all applicable withholding taxes, including but not
limited to taxes required to be withheld under Sections 1441, 1442,
1445 and 1446 of the Code. The Buyer shall allow the Seller to
provide documentation establishing the exemption of any portion of
the Purchase Price from withholding taxes. The Buyer shall, thirty
days prior to any payment of the Purchase Price, provide the Seller
with an estimate of the amount of (based on the current trading
price of USWeb common stock) and the basis for any reduction in the
payments provided for under Section 2.02 of this Agreement, and the
Seller shall have from that time until three days prior to such
Payment to provide documentation reducing or eliminating such
withholding taxes. Subject to the foregoing, in the event that any
withholding of taxes is required with respect to any payment made to
the Seller in shares of USWeb Common Stock, the Buyer shall compute
such required withholding taxes and shall reduce the number of
shares of USWeb common stock delivered by the number of shares of
USWeb common stock having a value equal to the amount of the taxes
required to be withheld. For this purpose, the value of USWeb common
stock shall be deemed to be the average trading price of USWeb
common stock during the 10 day period prior to the two days prior to
any such payment date.
ARTICLE III -
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
3.01
Assumption of the Liabilities.
(a) On the terms and subject to the
conditions set forth herein, on the Closing Date, the Seller will
assign to the Buyer and the Buyer will assume from the Seller, the
Assumed Liabilities. Except for the Assumed Liabilities, the Buyer
shall not assume any liabilities or obligations of the Seller.
(b) The Buyer expressly agrees,
effective at the Effective Time, to assume the Assumed Liabilities
and thereafter to pay, perform and discharge in full, in accordance
with their terms where applicable, the Assumed Liabilities. Nothing
contained in this Agreement shall require the Buyer to pay, perform
or discharge any of the Assumed Liabilities so long as the Buyer
shall in good faith contest or cause to be contested the amount or
validity thereof or shall in good faith assert any defense or offset
thereto, and the Seller shall provide reasonable assistance to the
Buyer in so contesting and defending such claims. Notwithstanding
anything contained in this Agreement to the contrary, the Buyer
shall not assume, pay, satisfy or discharge any of the Assumed
Liabilities to the extent that such Assumed Liabilities are insured
against (or but for the transfer of the Assets and assignment and
assumption of the Assumed Liabilities pursuant to this Agreement,
would have been insured against) by a third party under policies of
insurance which the Seller is unable to assign to the Buyer and
which are maintained by the Seller.
3.02
General.
(a) The Buyer is not assuming and
shall not be liable for or with respect to any of the Excluded
Liabilities as described in Schedule 3.02 hereto.
(b) Notwithstanding anything in this
Agreement to the contrary, in no event shall any liability of a
Holder be assumed by the Buyer.
ARTICLE IV -
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to
USWeb and the Buyer as follows:
4.01
Organization of the Seller.
The Seller is a limited liability
company duly organized, validly existing and in good standing under
the laws of the Cayman Islands. Each Subsidiary is a corporation,
limited liability company or partnership, as the case may be, duly
organized and validly existing under the laws of their respective
jurisdictions of formation. The Seller and each Subsidiary
(individually and collectively, the "Company") has
the power to own its properties and to carry on its business as now
being conducted. The Company is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on the Company. The
Company has delivered a true and correct copy of each of its charter
documents, each as amended to date, to Buyer. Schedule 4.01 lists
the directors, officers, managers, and members of the Company. The
operations now being conducted by the Company have not been conducted
under any other name.
4.02
Company Capital Structure.
(a) Other than the shares of
membership interests described in Exhibit A, there is no membership
interest in the Seller of any kind outstanding or otherwise issuable
pursuant to any agreement or understanding. Other than the shares of
membership interests described in Exhibit A, there is no membership
interest in each Subsidiary which is a limited liability company of
any kind outstanding or otherwise issuable pursuant to any agreement
or understanding. The authorized capital stock of each corporate
Subsidiary and the shares of membership interests of the Seller and
each Subsidiary which is a limited liability company are held by the
Persons with the domicile addresses and in the amounts set forth on
Exhibit A. There are no other classes or series of capital stock of
each corporate Subsidiary of any kind outstanding or issuable. All
outstanding shares of membership interests of the Seller and each
Subsidiary of the Seller which is a limited liability company and
all shares of common stock of each Subsidiary which is a
corporation, as the case may be, are duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive
rights created by statute, the Certificate of Formation, Limited
Liability Company Agreement, Articles of Incorporation, or By-laws,
as the case may be, or any other charter documents, of the Company,
or any agreement to which the Company is a party or by which it is
bound.
(b) There are no options, warrants,
calls, rights, commitments or agreements of any character, written
or oral, to which a Subsidiary is a party or by which it is bound
obligating any such Subsidiary to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of membership interests, shares of the capital
stock of, or other interests in, such Subsidiary or obligating such
Subsidiary to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement.
4.03
Subsidiaries; Predecessors.
Other than the Subsidiaries, the
subsidiaries listed in the organizational chart attached hereto as
Exhibit B and as otherwise disclosed in Exhibit B, the Seller (i)
does not have any subsidiary or affiliated company and does not
otherwise own any shares of or any interest in, or control, directly
or indirectly, any other corporation, partnership, association,
joint venture or other business entity, (ii) has never had any
material subsidiary or affiliated company and has never otherwise
owned shares of or any interest in or controlled, directly or
indirectly, any other corporation, partnership, association, joint
venture or other business entity, and (iii) has no other predecessor
in interest.
4.04
Authority.
The Seller has all requisite power
and authority to enter into this Agreement and all other agreements
required by the terms hereof to be entered into by the Seller (the
"Ancillary Agreements") and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of the
Seller. This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Seller and constitute the valid and
binding obligations of the Seller, enforceable in accordance with
their respective terms, except as
such enforceability may be limited by principles of public policy and
subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and to rules of law governing
specific performance, injunctive relief or other equitable remedies.
Each Holder has all requisite legal authority and power, without
approval from any other person, to execute and deliver a Holder
Certificate which shall be in form and substance satisfactory to
counsel for each of the Buyer and the Seller.
4.05
No Conflict.
The execution and delivery of this
Agreement and the Ancillary Agreements do not, and the consummation
of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation, modification or acceleration of
any obligation or loss of any benefit (any such event, a "
Conflict") under (i) any provision of the Certificate
of Formation, Limited Liability Company Agreement, Articles of
Incorporation, or Bylaws, as the case may be, or any other charter
documents, (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise or
license to which the Company or any of its properties or assets are
subject, or (iii) assuming compliance with the requirements of
the HSR Act and U.S. and foreign "blue sky" law, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of the Holders or any of their
properties or assets.
4.06
Consents.
No Governmental Authority or
consent, waiver, approval, order or authorization of any third
party, including a party to any agreement with the Company, is
required by or with respect to the Company (or by any Holder with
respect to his or her Holder Certificate, his or her voting
agreement, if any, and any other certificates or agreements executed
by the Holder in connection with the transaction contemplated by
this Agreement and the Ancillary Agreements) in connection with the
execution and delivery of this Agreement or the Ancillary Agreements
or the consummation of the transactions contemplated hereby and
thereby, except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be
required, hereby or thereby, under applicable securities laws or the
HSR Act and except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings which, if
not provided, would not in the aggregate result in a Material
Adverse Effect.
4.07
Company Financial Statements.
Exhibit C sets forth certain
financial statements of the Company (the "Company Financials
"). The Company Financials, which include information with
respect to International Sourcing Services L.L.C. (which is an
Excluded Asset) have been prepared in accordance with GAAP applied
on a basis consistent throughout the periods indicated and
consistent with each other. The Company Financials present fairly in
all material respects the financial condition, operating results and
cash flows of the Company, including information with respect to
International Sourcing Services L. L. C. (which is an Excluded
Asset) as of the dates and during the periods indicated therein,
subject in the case of the unaudited financial statements to normal
year-end adjustments, which will not be material in amount or
significance. The Company's most recent balance sheet included in
the Company Financials shall be referred to as the "Balance
Sheet."
4.08
No Undisclosed Liabilities.
Except as described in Schedule
4.08, the Company has no liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent,
matured, unmatured or other (whether or not required to be reflected
in financial statements in accordance with GAAP), except as
reflected in the Balance Sheet, or in the ordinary course of
business consistent with past practices since the date of the
Balance Sheet.
4.09
No Changes.
Except as described in Schedule
4.09, since the date of the Balance Sheet, there has not been,
occurred or arisen any:
(a) transaction by the Company except
in the ordinary course of business as conducted on that date and
consistent with past practices;
(b) amendments or changes to the
Certificate of Formation, Limited Liability Company Agreement,
Articles of Incorporation, or Bylaws, as the case may be, or any
other charter documents, of the Company;
(c) capital expenditure or commitment
by the Company, either individually or in the aggregate, exceeding
$350,000;
(d) destruction of, damage to or loss
of any material assets, business or customer of the Company (whether
or not covered by insurance);
(e) labor trouble or claim of wrongful
discharge or other unlawful labor practice or action;
(f) change in accounting methods or
practices (including any change in depreciation or amortization
policies or rates) by the Company;
(g) declaration, setting aside or
payment of a dividend or other distribution (except distributions by
the Company to its members in the ordinary course of business) with
respect to the Company's shares of membership interests or capital
stock, as the case may be, or any direct or indirect redemption,
purchase or other acquisition by the Company of any of its shares of
membership interests or capital stock, as the case may be;
(h) material increase in the salary or
other compensation payable or to become payable by the Company to
any of its officers, directors, employees or advisors, other than in
the ordinary course of business, or the material declaration,
payment or commitment or obligation of any kind for the payment, by
the Company, of a bonus or other additional salary or compensation
to any such person, other than in the ordinary course of business;
(i) any agreement, contract, lease or
commitment (each a "Company Agreement") or any
extension or modification the terms of any Company Agreement which
(i) involves the payment of greater than $350,000 per annum or
which extends for more than one year, (ii) involves any payment
or obligation to any affiliate of the Company other than in the
ordinary course of business as conducted on that date and consistent
with past practices, or (iii) involves the sale of any material
assets;
(j) sale, lease, license or other
disposition of any of the assets or properties of the Company, or
any creation of any security interest in such assets or properties
except in the ordinary course of business as conducted on that date
and consistent with past practices;
(k) amendment or termination of any
material contract, agreement or license to which the Company is a
party or by which it is bound;
(l) loan by the Company to any person
or entity, incurring by the Company of any indebtedness,
guaranteeing by the Company of any indebtedness, issuance or sale of
any debt securities of the Company or guaranteeing of any debt
securities of others, except for advances to employees for travel
and business expenses in the ordinary course of business, consistent
with past practices;
(m) waiver or release of any material
right or claim of the Company, including any write-off or other
compromise of any material account receivable of the Company outside
of the ordinary course of the Company's business, consistent with
past practice;
(n) the commencement or notice or
threat of commencement of any lawsuit or proceeding against, or
investigation of, the Company or its affairs;
(o) notice of any claim of ownership
by a third party of the Company's Intellectual Property (as defined
in Section 4.13 below) or notice of infringement by the Company
of any third party's Intellectual Property rights;
(p) issuance or sale by the Company of
any of its shares of membership interests or capital stock, as the
case may be, or securities exchangeable, convertible or exercisable
therefor, or of any other of its securities;
(q) any event or condition of any
character that has or may have a Material Adverse Effect on the
Company; or
(r) negotiation or agreement by the
Company or any officer or employee thereof to do any of the things
described in the preceding clauses (a) through (q) (other than
the transactions contemplated by this Agreement).
4.10
Tax Matters.
(a) Tax Returns and Audits.
No representation or warranty is made
hereby with respect to the Tax liabilities of the Seller except with
respect to Tax liabilities arising as a consequence of or resulting
from the transactions contemplated hereby. Except as set forth on
Schedule 4.10 hereto:
(i) The Company as of the Closing
Date will have prepared and timely filed or made a timely request
for extension for all Tax Returns relating to any and all Taxes,
requiring the filing of Tax Returns, concerning or attributable to
the Company or its operations, and such Tax Returns are true and
correct and have been completed in accordance with applicable law in
all respects.
(ii) The Company as of the
Closing Date (A) will have paid or accrued all Taxes it is
required to pay or accrue and (B) will have withheld and timely
remitted with respect to its employees all income taxes and other
Taxes required to be withheld and remitted.
(iii) The Company has not been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, assessed or, to the Company's knowledge, proposed
against the Company, nor has the Company executed any waiver of any
statute of limitations on or extending the period for the assessment
or collection of any Tax.
(iv) No audit or other examination of
any Tax Return of the Company, is presently in progress, nor has the
Company been notified of any request for such an audit or other
examination.
(v) The Company has made or will make
available to the Buyer or its legal counsel, copies of all foreign,
federal and state income and all state sales and use Tax Returns
filed for all years as to which any applicable statute of
limitations has not expired.
(vi) There is no mortgage, pledge,
security interest or lien or other encumbrance (each a "Lien
") of any sort on the assets of the Company relating to or
attributable to Taxes other than Liens for taxes not yet due and
payable.
(vii) As of the Closing, there will
not be any contract, agreement, plan or arrangement, including but
not limited to the provisions of this Agreement, covering any
employee or former employee of the Company that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible by the Company as an expense under Sections
162(m), or 404 of the Code.
(viii) The Company is not a party to a
tax sharing, indemnification or allocation agreement nor does the
Company owe any amount under any such agreement.
(ix) The Seller and the Subsidiaries
which are entities formed in the United States use the cash method
of accounting for U.S. Federal income tax purposes. The Subsidiaries
which are entities formed outside the United States use the accrual
method of accounting for U.S. income tax purposes. The Company's tax
basis in its assets for purposes of determining its future
amortization, depreciation and other federal income tax deductions
is accurately reflected on the Company's tax books and records.
(x) The Seller and each of the
Subsidiaries (other than ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Limited) qualify
(and all entities formed under U.S. state law have qualified since
their formation) as a partnership or a disregarded entity for all
U.S. Federal income tax purposes and state income tax purposes,
where an income tax return has been filed.
(xi) To the extent required by
applicable law, the Company has filed an Income Tax Return in each
jurisdiction (and for each period) for which it has (or had) a
permanent establishment Schedule 4.10 lists each jurisdiction in
which the Company files Tax Returns.
(xii) Neither the Company nor any
Subsidiary is currently (or has been) a controlled foreign
corporation under Section 957 of the Code, a foreign personal
holding company under Section 552 of the Code or a passive foreign
investment company under Section 1297 of the Code.
(xiii) The Company has complied with
all information reporting and withholding requirements under
Sections 1441, 1442 and 1446 of the Code.
(xiv) There is no withholding required
under Section 1445 of the Code (or any other provision) on the
payments contemplated by this Agreement.
4.11
Restrictions on Business Activities.
Except as set forth in Schedule
4.11, there is no agreement (noncompete or otherwise), commitment,
judgment, injunction, order or decree to which the Company or any
Holder is a party or otherwise binding upon the Company which has or
may have the effect of prohibiting or impairing any business
practice of the Company, any acquisition of property (tangible or
intangible) by the Company or the conduct of business by the
Company. Except as set forth in Schedule 4.11, the Company has not
entered into any agreement under which the Company is restricted
from providing services to customers or potential customers or any
class of customers, in any geographic area, during any period of
time or in any segment of the market.
4.12
Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment.
(a) The Company does not own any real
property, nor has it ever owned any real property. Schedule 4.12(a)
sets forth a list of all real property currently leased by the
Company, the name of the lessor, the date of the lease and each
amendment thereto and, with respect to any current lease, the
aggregate annual rental or other fees payable under any such lease.
All such current leases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both, would
constitute a default).
(b) The Company has good and valid
title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its tangible properties and assets,
real, personal and mixed, used or held for use in its business, free
and clear of any Liens, except as reflected in the Company
Financials or in Schedule 4.12(b) and except for liens for taxes not
yet due and payable and such imperfections of title and
encumbrances, if any, which are not material in character, amount or
extent, and which do not detract from the value, or interfere with
the present use, of the property subject thereto or affected thereby.
(c) Schedule 4.12(c) lists all
material items of equipment owned or leased by the Company (the
"Equipment") and such Equipment is, taken as a
whole, (i) adequate for the conduct of the business of the
Company as currently conducted and (ii) in good operating
condition, regularly and properly maintained, subject to normal wear
and tear.
(d) The Company has sole and exclusive
ownership, free and clear of any Liens, of all customer files and
other customer information relating to Company's current and former
customers (the "Customer Information"). Other than
normal rights of Company's
customers to their own information, no third party possesses any
claims or rights with respect to use of the Customer Information.
4.13
Intellectual Property.
(a) Schedule 4.13(a) lists all
Registered Intellectual Property Rights and lists any proceedings or
actions before any court or tribunal (including the United States
Patent and Trademark Office (the "PTO") or
equivalent authority anywhere in the world) related to any
Registered Intellectual Property Rights or Intellectual Property of
the Company.
(b) Each item of Registered
Intellectual Property Rights is valid and subsisting, and all
necessary registration, maintenance and renewal fees in connection
with such Registered Intellectual Property Rights have been paid and
all necessary documents and certificates in connection with such
Registered Intellectual Property Rights have been filed with the
relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Registered Intellectual Property
Rights. There are no actions that must be taken by the Company
within 120 days of the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any
responses to PTO office actions for the purposes of obtaining,
maintaining, perfecting or preserving or renewing any Registered
Intellectual Property Rights. Except as disclosed on Schedule
4.13(b), in each case in which the Company has acquired any
Technology or Intellectual Property Right from any person, the
Company has either obtained a valid and enforceable assignment
sufficient to transfer irrevocably all rights in such Technology and
Intellectual Property Rights (including the right to seek past and
future damages with respect thereto) to the Company or the Company
has rights to use and to license others to use such Technology and
Intellectual Property Rights adequate to conduct the business of the
Company as heretofore conducted.
(c) The Company has no knowledge of
any facts or circumstances that would render any Company
Intellectual Property invalid or unenforceable.
(d) Each item of the Company
Intellectual Property is free and clear of any Liens except for
non-exclusive licenses granted to end-user customers in the ordinary
course of business. The Company is the exclusive owner of all the
Company Intellectual Property.
(e) All Company Intellectual Property
will be fully transferable, alienable or licensable by the Buyer
and/or USWeb without restriction and without payment of any kind to
any third party.
(f) Except as disclosed on Schedule
4.13(f), all Technology used in or necessary to the conduct of the
Company's business as presently conducted or currently contemplated
to be conducted by the Company was written and created solely by
either (i) employees of the Company acting within the scope of
their employment or (ii) by third parties who have either
granted the Company rights adequate for the uses made by the Company
or have validly and irrevocably assigned all of their rights,
including Intellectual Property Rights therein, to the Company.
(g) Except as disclosed on Schedule
4.13(g), all employees of the Company have entered into a valid and
binding written agreement with the Company sufficient to vest title
in the Company of all Technology, including all accompanying
Intellectual Property Rights, created by such employee in the scope
of his or her employment with the Company.
(h) Except as disclosed on Schedule
4.13(h), the Company has taken all steps that are reasonably
required to protect the Company's rights in confidential information
and trade secrets of the Company or provided by any other person to
the Company. Without limiting the foregoing, the Company has and
enforces a policy requiring each employee, consultant and contractor
to execute a proprietary information, confidentiality and assignment
agreement, substantially in the form attached hereto in Schedule
4.13(h), and all current and former employees, consultants and
contractors of the Company have executed such an agreement.
(i) Company Intellectual Property
constitutes all the Technology and Intellectual Property Rights used
in and/or necessary to the conduct of the business of the Company as
it currently is conducted, and, to the knowledge of the Company, as
it is currently planned or contemplated to be conducted by the
Company, including, without limitation, the design, development,
manufacture, use, import and sale of products, technology and
performances of services (including products, technology or services
currently under development).
(j) Other than inbound "
shrink-wrap" and similar publicly available commercial binary
code end-user licenses and outbound "shrink-wrap" licenses
in the form set forth in Schedule 4.13(j), the contracts, licenses
and agreements listed in Schedule 4.13(j) list all contracts,
licenses and agreements to which the Company is a party with respect
to any material Technology or Intellectual Property Rights. The
Company is not in breach of nor has the Company failed to perform
under, any of the foregoing contracts, licenses or agreements and,
to the Company's knowledge, no other party to any such contract,
license or agreement is in breach thereof or has failed to perform
thereunder.
(k) Except as disclosed on Schedule
4.13(k), no Person who has licensed Technology or Intellectual
Property Rights to the Company has ownership rights or license
rights to improvements made by the Company in such Technology or
Intellectual Property Rights.
(l) Schedule 4.13(l) lists all
material contracts, licenses and agreements between the Company and
any other Person wherein or whereby the Company has agreed to, or
assumed, any obligation or duty to warrant, indemnify, reimburse,
hold harmless, guaranty or otherwise assume or incur any obligation
or liability or provide a right of rescission with respect to the
infringement or misappropriation by the Company or such other person
of the Intellectual Property Rights of any Person other than the
Company.
(m) The operation of the business of
the Company as it is currently conducted or is contemplated to be
conducted including the design, development, use, import, marketing,
manufacture and sale of the products, Technology or services
(including products, Technology or services currently under
development) of the Company, does not and will not, and will not
when conducted by USWeb and/or the Buyer in substantially the same
manner following the Closing, infringe or misappropriate any
Intellectual Property Right of any Person, violate any right of any
Person (including any right to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any
jurisdiction, and the Company has not received notice from any
Person claiming that such operation or any act, product, Technology
or service (including products, technology or services currently
under development) of the Company infringes or misappropriates any
Intellectual Property Right of any Person or constitutes unfair
competition or trade practices under the laws of any jurisdiction
(nor does the Company have knowledge of any basis therefor).
(n) To the knowledge of the Company,
there are no contracts, licenses or agreements between the Company
and any other Person with respect to the Company Intellectual
Property under which there is any dispute regarding the scope of
such agreement, or performance under such agreement, including with
respect to any payments to be made or received by the Company
thereunder.
(o) To the Company's knowledge, no
Person is infringing or misappropriating any Company Intellectual
Property Right.
(p) No Company Intellectual Property
or service of the Company is subject to any proceeding or
outstanding decree, order, judgment or settlement agreement or
stipulation that restricts in any manner the use, transfer or
licensing thereof by the Company or may affect the validity, use or
enforceability of such Company Intellectual Property.
(q) Neither this Agreement nor the
transactions contemplated by this Agreement, will (i) grant to
any third party any right to or with respect to any Technology or
Intellectual Property Right owned by, or licensed to, USWeb or the
Buyer, (ii) bind or subject USWeb or the Buyer to any
non-compete, non-solicitation or other restriction on the operation
or scope of its business, or (iii) obligate USWeb or the Buyer
to pay any royalties or other amounts to any third party in excess
of those payable by the Company prior to the Closing.
4.14
Year 2000 Compliance.
To the knowledge of the Company,
all of the Company's Information Technology (as defined below) is
Year 2000 Compliant, and will not cause an interruption in the
ongoing operations of the Company's business on or after January 1,
2000. For purposes of the foregoing, the term "Information
Technology" shall mean and include all software, hardware,
firmware, telecommunications systems, network systems, embedded
systems and other systems, components and/or services (other than
general utility services including gas, electric, telephone and
postal) that are owned or used by the Company in the conduct of its
business, or purchased by the Company from third party suppliers.
4.15
Agreements, Contracts and Commitments.
(a) Except as described on Schedule
4.15, the Company does not have, or is not bound by:
(i) any collective bargaining
agreement,
(ii) any agreements or arrangements
that contain any severance pay or post-employment liabilities or
obligations,
(iii) any employment or
consulting agreement, contract or commitment with an employee or
individual consultant or salesperson or consulting or sales
agreement, contract or commitment with a firm or other organization,
(iv) any agreement or plan, including,
without limitation, any stock option plan, stock appreciation rights
plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement,
(v) any fidelity or surety bond or
completion bond,
(vi) any lease of personal property
having a value individually in excess of $350,000,
(vii) any agreement of indemnification
or guaranty,
(viii) any agreement, contract or
commitment containing any covenant limiting the freedom of the
Company or any of the Company's consultants or partners to engage in
any line of business or to compete with any Person,
(ix) any agreement, contract or
commitment relating to capital expenditures and involving future
payments in excess of $350,000,
(x) any agreement, contract or
commitment relating to the disposition or acquisition of assets or
any interest in any business enterprise outside the ordinary course
of the Company's business,
(xi) any mortgages, indentures, loans
or credit agreements, security agreements or other agreements or
instruments relating to the borrowing of money or extension of
credit, including guaranties referred to in clause (vii) hereof,
(xii) any purchase order or contract
for the purchase of materials involving $350,000 or more,
(xiii) any construction contracts,
(xiv) any distribution, joint
marketing or development agreement, or
(xv) any other agreement, contract or
commitment that (A) involves $350,000 or more or (B) is not
cancelable without penalty within 30 days.
(b) The Company has not breached,
violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or
conditions of any agreement, contract, license or commitment to
which it is a party, by which it benefits or by which it is bound
(any such agreement, contract, license or commitment, a "
Contract"), nor is the Company or any Holder aware of any
event that would constitute such a breach, violation or
default with the lapse of time, giving of notice or both. Each
Contract is in full force and effect and is not subject to any
default thereunder by any party obligated to the Company pursuant
thereto. The Company has obtained, or will obtain prior to the
Closing Date, all necessary consents, waivers and approvals of
parties to any Contract as are required thereunder in connection
with the transactions contemplated herein so that all such Contracts
will remain in effect without modification after the Closing.
4.16
Interested Party Transactions.
No officer, director, manager or
Holder of the Company who is currently employed by the Company and,
to the knowledge of the Company, no Holder who is not employed by
the Company (nor any ancestor, sibling, descendant or spouse of any
of such persons, or any trust, partnership or corporation in which
any of such persons has or has had an interest), has or has had,
directly or indirectly, (i) an interest in any entity which
furnished or sold, or furnishes or sells, services or products that
the Company furnishes or sells, or proposes to furnish or sell, or
(ii) any interest in any entity that purchases from or sells or
furnishes to, the Company, any goods or services or (iii) a
beneficial interest in any Contract; provided, that ownership of no
more than 1% of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "interest in any entity
" for purposes of this Section 4.16.
4.17
Governmental Authorization.
Schedule 4.17 accurately lists
each consent, license, permit, grant or other authorization issued
to the Company by a Governmental Authority (i) pursuant to
which the Company currently operates or holds any interest in any of
its properties or (ii) which is required for the operation
of its business or the holding of any such interest (herein
collectively called "Company Authorizations"). The
Company Authorizations are in full force and effect and constitute
all Company Authorizations required to permit the Company to operate
or conduct its business or hold any interest in its properties or
assets.
4.18
Litigation.
Except as shown on Schedule 4.18,
there is no action, suit or proceeding of any nature pending, or to
the knowledge of the Company or the Holders threatened, against the
Company, its properties or any of its officers, directors,
governors, managers, or members, nor is there any reasonable basis
therefor. There is no investigation pending or, to the knowledge of
the Company or the Holders who are currently employed by the Company
threatened, against the Company, its properties or any of its
officers or directors (nor, to the knowledge of the Company, is
there any reasonable basis therefor) by or before any governmental
entity. No governmental entity (in its capacity other than as a
client of the Company) has at any time challenged or questioned the
legal right of the Company to offer or sell any of its products or
services in the present manner or style thereof.
4.19
Accounts Receivable.
(a) The Company has made available to
the Buyer a list of all accounts receivable of the Company as of the
date of the Balance Sheet ("Accounts Receivable"),
together with the number of days that have elapsed since each
invoice.
(b) All Accounts Receivable of the
Company arose in the ordinary course of business, are carried at
values determined in accordance with GAAP consistently applied and
are collectible except to the extent of reserves therefor set forth
in the Balance Sheet. No Person
other than PNC Bank, National Association has any Lien on any of such
Accounts Receivable and no demand or agreement for deduction or
discount has been made with respect to any of such Accounts
Receivable.
4.20
Minute Books.
The written consents, resolutions
and minutes of the Company made available to counsel for the Buyer
are the only written consents, resolutions and minutes of the
Company and contain an accurate summary in all material respects of
all meetings and written actions of the Managers and/or Board of
Directors (or committees thereof) of the Company and its members or
shareholders, as the case may be, since the time of formation or
incorporation, as the case may be, of the Company.
4.21
Environmental Liabilities.
No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Company's knowledge, threatened concerning any
environmental permit, hazardous material or any hazardous materials
activity of the Company. The Company is not aware of any fact or
circumstance which could involve the Company in any environmental
litigation or impose upon the Company any environmental liability.
4.22
Brokers' and Finders' Fees; Third Party Expenses.
Except as set forth in Schedule
4.22, the Company has not incurred nor will it incur, directly or
indirectly, any liability for brokers or finders fees or agents
commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby. Schedule 4.22 sets forth the
Company's current reasonable estimate of all third party expenses
expected to be incurred by the Company in connection with the
negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby.
4.23
Employee Matters and Benefit Plans.
(a) Schedule. Schedule 4.23(a)
contains an accurate and complete list of each Company Employee Plan
and each Employee Agreement. The Company does not have any plan or
commitment to establish any new Company Employee Plan or Employee
Agreement, to modify any Company Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Company
Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to USWeb in
writing, or as required by this Agreement), or to enter into any
Company Employee Plan or Employee Agreement.
(b) Documents. The Company has
provided (or will provide prior to Closing) to the Buyer: (i)
correct and complete copies of all documents embodying each Company
Employee Plan and each Employee Agreement including (without
limitation) all amendments thereto and all related trust documents;
(ii) the most recent annual actuarial valuations, if any,
prepared for each Company Employee Plan; (iii) the three (3)
most recent annual reports (Form Series 5500 and all schedules
and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Company Employee Plan; (iv)
if the Company Employee Plan is funded, the most recent annual
and periodic accounting of Company Employee Plan assets; (v)
the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required
under ERISA with respect to each Company
Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and all applications and correspondence between
the Company and the IRS or the DOL with respect to any such
application or letter; (vii) all material written agreements and
contracts relating to each Company Employee Plan, including, but not
limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (viii) all
communications material to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plans, in
each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material
liability to the Company; (ix) all correspondence to or from any
governmental agency relating to any Company Employee Plan; (x) all
COBRA forms and related notices; (xi) all policies pertaining to
fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan; (xii) all discrimination tests for each
Company Employee Plan for the most recent plan year; and (xiii) all
registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with
each Company Employee Plan.
(c) Employee Plan Compliance.
Except as set forth on Schedule 4.23(c), (i) the Company has
performed in all material respects all obligations required to be
performed by it under, is not in default or violation of, and has no
knowledge of any default or violation by any other party to each
Company Employee Plan, and each Company Employee Plan has been
established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or
the Code; (ii) each Company Employee Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable
determination, opinion, notification or advisory letter from the IRS
with respect to each such Plan as to its qualified status under the
Code, including all amendments to the Code effected by the Tax
Reform Act of 1986 and subsequent legislation, or has remaining a
period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any
amendments necessary to obtain a favorable determination as to the
qualified status of each such Company Employee Plan; (iii) no
"prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and
not otherwise exempt under Section 408 of ERISA or Section 4975 of
the Code, has occurred with respect to any Company Employee Plan;
(iv) there are no actions, suits or claims pending, or, to the
knowledge of the Company, threatened or reasonably anticipated
(other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan
(other than those set forth in Schedule 4.18); (v) each Company
Employee Plan can be amended, terminated or otherwise discontinued
after the Effective Time in accordance with its terms, without
liability to the Parent, the Company or any of its Affiliates (other
than ordinary administration expenses); (vi) there are no audits,
inquiries or proceedings pending or, to the knowledge of the Company
or any Affiliates, threatened by the IRS or DOL with respect to any
Company Employee Plan; and (vii) neither the Company nor any
Affiliate is subject to any penalty or tax with respect to any
Company Employee Plan under Section 502(i) of ERISA or Sections
4975 through 4980 of the Code.
(d) Pension Plan. Except as set
forth on Schedule 4.23(a), neither the Company nor any Affiliate has
previously or currently maintains, sponsors, participates in or
contributes to a Pension Plan which is subject to Title IV of ERISA
or Section 412 of the Code.
As of the Effective Time each such Pension Plan has been maintained in
compliance with the minimum funding standards of ERISA and the Code
where applicable and has not incurred any "accumulated funding
deficiency," as defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived.
(e) Multiemployer Plans. At no
time has the Company or any Affiliate contributed to or been
obligated to contribute to any Multiemployer Plan.
(f) No Post-Employment Obligations
. Except as set forth in Schedule 4.23(f), no Company Employee
Plan provides, or reflects or represents any liability to provide,
retiree life insurance, retiree health or other retiree employee
welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and the Company has
never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees
as a group) or any other person that such Employee(s) or other
person would be provided with retiree life insurance, retiree health
or other retiree employee welfare benefit, except to the extent
required by statute.
(g) COBRA etc. Neither the
Company nor any Affiliate has, prior to the Effective Time and in
any material respect, violated any of the health care continuation
requirements of COBRA, the requirements of FMLA, the requirements of
the Women's Heath and Cancer Rights Act, the requirements of the
Newborns' and Mothers' Health Protection Act of 1996, or any similar
provisions of state law applicable to its Employees.
(h) Effect of Transaction.
(i) Except as set forth on
Schedule 4.23(h)(i) the execution of this Agreement and the
consummation of the transactions contemplated hereby will not
(either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Employee Plan,
Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Employee.
(ii) Except as set forth on Schedule
4.23(h)(ii), no payment or benefit which will or may be made by the
Company with respect to any Employee as a result of the transactions
contemplated by this Agreement or otherwise will be characterized as
a "parachute payment," within the meaning of Section
280G(b)(2) of the Code (but without regard to clause (ii)
thereof).
(i) Employment Matters. Each of
the Subsidiaries (i) is in compliance in all respects with all
applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with
respect to Employees; (ii) has withheld and reported all
amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to Employees;
(iii) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (iv)
is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental
authority, with
respect to unemployment compensation benefits, social security or
other benefits or obligations for Employees (other than routine
payments to be made in the normal course of business and consistent
with past practice). There are no pending, threatened or reasonably
anticipated claims or actions against any of the Subsidiaries under
any worker's compensation policy or long-term disability policy.
(j) Labor. No work stoppage or
labor strike against the Company is pending, threatened or
reasonably anticipated. The Company does not know of any activities
or proceedings of any labor union to organize any Employees. Except
as set forth in Schedule 4.18 or Schedule 4.23(j), there are no
actions, suits, claims, labor disputes or grievances pending, or, to
the knowledge of the Company, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving
any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely
determined, would, individually or in the aggregate, result in any
material liability to the Company. Neither the Company nor any of
its subsidiaries has engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. Except as set forth
in Schedule 4.23(j), the Company is not presently, nor has it been
in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by the Company.
(k) International Employee Plan
. Each International Employee Plan has been established, maintained
and administered in compliance with its terms and conditions and
with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by
insurance or fully accrued. Except as required by law, no condition
exists that would prevent the Company or Parent from terminating or
amending any International Employee Plan at any time for any reason.
4.24
Insurance.
Schedule 4.24 lists all insurance
policies and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors
of the Company. There is no claim by the Company pending under any
of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have
been paid and the Company is otherwise in compliance with the terms
of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). The Company and the
Holders have no knowledge of any threatened termination of, or
premium increase with respect to, any of such policies.
4.25
Compliance with Laws.
Except as otherwise provided in
any of the Schedules to this Agreement, the Company has complied
with, is not in violation of, and has not received any notices of
violation with respect to, any foreign, federal, state or local
statute, law or regulation.
4.26
Third Party Consents.
Except as provided in Schedule
4.26, no consent or approval is needed from any third party in order
to effect the transactions contemplated herein.
4.27
Warranties; Indemnities.
Schedule 4.27 sets forth a summary
of all warranties and indemnities relating to products sold or
services rendered by the Company, and no warranty or indemnity has
been given by the Company which differs therefrom in any material
respect. Schedule 4.27 also indicates all warranty and indemnity
claims in excess of $200,000 made against the Company.
4.28
Complete Copies of Materials.
The Seller has delivered or made
available true and complete copies of each document, or summaries of
same) (or the Seller indicated that such document was either not
available or not applicable) that has been requested by USWeb or the
Buyer.
4.29
Business Plan.
The Seller has provided to Buyer a
current, accurate and detailed business plan for the Company's
planned operations during the twelve months following the Closing
Date which includes, without limitation, a description of the
Company's capital requirements, staffing needs, and a pro forma
income statement.
4.30
Holder Investment Representations.
Seller understands that, and Seller
will inform its stockholders that, (i) the Shares to be acquired
pursuant to this Agreement are characterized as "restricted
securities" under the federal securities laws as they are being
acquired from USWeb in a transaction not involving a public offering;
(ii) the Shares to be acquired pursuant to this Agreement have
not been registered under the Securities Act or any state securities
laws, by reason of their issuance by USWeb in a transaction exempt
from the registration requirements thereof, and (iii) the
Shares to be acquired pursuant to this Agreement may not be sold
unless such disposition is registered under the Securities Act and
applicable state securities laws or is exempt from registration
thereunder.
4.31
Representations Complete.
None of the representations or
warranties made by the Company, nor any certificate furnished by the
Company or the Holders pursuant to this Agreement, or furnished in
or in connection with documents mailed or delivered to the Holders
in connection with soliciting their consent to this Agreement and
the transactions contemplated herein, contains or will contain at
the Closing, any untrue statement of a material fact, or omits or
will omit at the Closing to state any material fact necessary in
order to make the statements contained herein or therein, in the
light of the circumstances under which they were made, not
misleading.
4.32
Fairness Opinion.
The Board of Directors of the
Seller has received an oral statement from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation (to be confirmed in a written
opinion) to the effect that as of the date hereof, the transactions
contemplated herein are fair to the Seller and its Holders from a
financial point of view.
4.33
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group L.L.C.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group L.L.C. has no
assets other than a 1% ownership interest in International Sourcing
Services, L.L.C., a Delaware limited liability company.
4.34
Holders.
Each Holder is the beneficial and
legal owner of the securities set forth opposite such Holder's name
in Exhibit A, attached hereto, free and clear of all liens
and encumbrances and subject to the restrictions contained in the
Seller's Shareholders
Agreement and subject to the restrictions on transfer imposed under
applicable securities laws. Further, the Company represents on
behalf of the Holders that the securities identified opposite each
such Holder's name in Exhibit A, attached hereto, are all of
the shares of common interests of the Company owned of record or
beneficially by such Holders.
ARTICLE V -
REPRESENTATIONS AND WARRANTIES OF USWEB AND THE BUYER
USWeb and the Buyer represent and
warrant to the Seller as follows:
5.01
Organization, Standing and Power.
Each of USWeb and the Buyer (i) is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; (ii) has the corporate
power to own its properties and to carry on its business as now
being conducted; and (iii) is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on USWeb.
5.02
Capital Structure.
(a) The authorized
capital stock of USWeb consists of 200,000,000 shares of Common
Stock, $0.001 par value, of which 76,854,544 shares were outstanding
as of June 30, 1999, and 1,000,000 shares of preferred stock,
$0.001 par value, none of which is outstanding. Except (i) with
respect to USWeb's stock option and stock purchase plans and certain
employment agreements, each as further described in USWeb's SEC
Reports, and (ii) as set forth in the prospectus contained in
USWeb's "shelf" Registration Statement on Form S-4,
as amended, describing USWeb's ongoing acquisition strategy, there
are no other options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which USWeb is a
party or by which it is bound obligating USWeb to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of USWeb or
obligating USWeb to grant, extend, or enter into any such option,
warrant, call, right, commitment or agreement (it being understood
that the number of shares of USWeb Common Stock issued in the future
pursuant to such commitments may exceed the number of shares
currently registered on such Form S-4 and on the Company's currently
effective Forms S-8).
(b) The shares of USWeb Common Stock
to be issued pursuant to this Agreement, when issued as contemplated
hereby, will be duly authorized, validly issued, fully paid and
non-assessable.
(c) The authorized capital stock of
the Buyer consists of 1,000 shares of common stock, $0.001 par
value, all of which are outstanding. There are no other options,
warrants, calls, rights, commitments or agreements of any character,
written or oral, to which the Buyer is a party or by which the Buyer
is bound obligating the Buyer to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Buyer or obligating
the Buyer to grant, extend, or enter into any such option, warrant,
call, right, commitment or agreement.
(d) The shares of the
Buyer common stock are validly issued, fully paid and
non-assessable.
5.03
Authority.
USWeb and the Buyer have all
requisite corporate power and authority to enter into this Agreement
and all other agreements required by the terms hereof to be entered
into by USWeb or the Buyer (the "USWeb Ancillary Agreements
") and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the
USWeb Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of USWeb and the Buyer. This
Agreement and the USWeb Ancillary Agreements have been duly executed
and delivered by USWeb and the Buyer and, assuming the due
authorization, execution and delivery by the Company and the
Holders, constitute the valid and binding obligations of USWeb and
the Buyer, enforceable in accordance with their terms, except as
such enforceability may be limited by principles of public policy
and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable
remedies.
5.04
No Conflict.
The execution and delivery of this
Agreement and the USWeb Ancillary Agreements by USWeb and the Buyer
do not, and the consummation of the transactions contemplated hereby
and thereby will not, result in a Conflict with (i) assuming
compliance with the requirements of all USWeb investor rights
agreements, any provision of the respective Certificate of
Incorporation or Bylaws of USWeb or the Buyer, (ii) assuming
compliance with the requirements of all USWeb investor rights
agreements, any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, or
license to which USWeb or the Buyer or any of their assets are
subject, or (iii) assuming compliance with the requirements of
the HSR Act, U.S. and foreign "blue sky" law and all USWeb
investor rights agreements, judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to USWeb or the Buyer or
their respective properties or assets. No consent, waiver, approval,
or registration, declaration or filing with, any Governmental Entity
or any third party is required by or with respect to any of the
USWeb or the Buyer in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
5.05
Consents.
No Governmental Authority or
consent, waiver, approval, order or authorization of a third party,
including a party to any agreement with USWeb or the Buyer (so as
not to trigger any Conflict), is required by or with respect to
USWeb or the Buyer in connection with the execution and delivery of
this Agreement or USWeb Ancillary Agreements or the consummation of
the transactions contemplated hereby and thereby, except for such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required, hereby or thereby,
under applicable securities laws or the HSR Act.
5.06
USWeb Financial Statements.
The financial statements of USWeb
included in USWeb's Forms 10-K and 10-Q, as amended (the "
USWeb Financials"), are correct in all material respects
and have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each
other. USWeb Financials present fairly in all material respects the
financial condition, operation results and cash flows of USWeb on a
consolidated basis as of the dates and during the periods indicated
therein, subject
in the case of the unaudited financial statements to normal year-end
adjustments, which will not be material in amount or significance.
5.07
Information Statement.
The information supplied by USWeb
for inclusion in the Company's proxy or information statement shall
not, on the date such information statement is first mailed to the
Holders or at the time of the meeting of the Holders held to approve
the transactions contemplated by this Agreement contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication
with respect to the meeting of the Holders held to approve the
transactions contemplated by this Agreement which has become false
or misleading. Notwithstanding the foregoing, USWeb makes no
representation or warranty with respect to any information supplied
by the Company which is contained in any of the foregoing documents.
5.08
SEC Filings.
USWeb has filed the SEC Reports
and has made available to the Company the SEC Reports. The SEC
Reports (i) as of their respective dates were prepared in
accordance with the requirements of the Exchange Act as the case may
be, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) or, in the case of
the SEC Reports filed under the Securities Act, when such filing
became effective, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
5.09
Complete Copies of Materials.
USWeb has delivered or made
available true and complete copies of each document (or summaries of
same) that has been requested by the Company or its counsel.
5.10
Fairness Opinion.
The Board of Directors of USWeb
has received an oral opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated (to be confirmed in writing) to the effect that as of
the date hereof, the transaction contemplated herein is fair to
USWeb from a financial point of view.
5.11
S-3 Registration Statement.
The S-3 Registration Statement will
contain, and the Prospectus and any amendments or supplements
thereto will contain, all statements which are required to be stated
therein by, and will conform in all material respects to the
requirements of, the Securities Act and the rules and regulations
thereunder. The S-3 Registration Statement and any amendment thereto
will not contain any untrue statement of a material fact and will
not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The final
Prospectus and any amendments and supplements thereto will not
contain any untrue statement of material fact and will not omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
USWeb makes no representations or warranties as to information
contained in or omitted from the final S-3 Registration Statement or
the final Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with,
written information furnished to USWeb by or on behalf of the
Seller, any stockholder of the Seller or any underwriter mutually
selected by the Seller and USWeb.
ARTICLE VI - COVENANTS
OF THE SELLER
The Seller covenants and agrees with
the Buyer as follows:
6.01
Conduct of Business.
Except as otherwise specified
herein or in Schedule 6.01 hereof, from the date hereof to the
Closing Date, except as provided by this Agreement or as the Buyer
shall otherwise consent in writing, the Seller and each Subsidiary
shall:
(a) not enter into any
commitment or transaction not in the ordinary course of business or
any commitment or transaction of the type described in Section
4.09;
(b) continue to carry on its business,
maintain its facilities and equipment and keep its books of account,
records and files in substantially the same manner as heretofore
carried on and maintained;
(c) continue to conduct its business
in accordance and in compliance with all applicable laws and rules
and regulations in all material respects as heretofore operated;
(d) maintain in full force and effect
through the Closing Date property damage, liability and other
insurance with respect to its assets at levels of coverage
reasonable and customary in the consulting industry;
(e) refrain from selling, leasing,
licensing or otherwise transferring or disposing of any of its
assets or properties, except for (i) the Seller's Excluded Assets,
or (ii) assets disposed of in the ordinary course of business;
(f) not make any material distribution
of assets of the Seller or any Subsidiary or declare, pay or set
aside for payment any dividend (of any kind or nature) or
distribution with respect to the Shares, except for allocations or
payment of corporate expense and interest expense consistent with
past practice;
(g) not alter the term of any existing
Material Contract except where such alteration would not have a
Material Adverse Effect;
(h) refrain from issuing, selling,
delivering, or agreeing to issue, sell or deliver, any capital
stock, warrants, options or similar rights or other corporate
securities of the Seller or any Subsidiary;
(i) refrain from repurchasing,
redeeming and making a distribution with respect to, any shares of
capital stock of the Seller or any Subsidiary, except as otherwise
provided in this Agreement;
(j) refrain from effecting any
recapitalization of capital stock of the Seller or any Subsidiary
and making any amendment, whether by merger, consolidation or
otherwise, to
the Certificate of Incorporation, By-laws or other charter documents
of the Seller or any Subsidiary;
(k) refrain from (i) merging or
consolidating with or into any other corporation or entity (except
for any merger, liquidation or dissolution of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
Limited), (ii) conveying, selling, leasing or otherwise disposing of
in any transaction or related series of transactions all or
substantially all of the property, business or assets of the Seller
(except the transfer of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group UK Holding Limited to
any affiliate of the Seller to which USWeb consents), and (iii)
acquiring by purchase the business, assets or stock of any business;
(l) use reasonable efforts to preserve
intact the business organization of the Seller and each Subsidiary
and to keep available the services of their present key employees,
and use reasonable efforts to preserve the goodwill of those having
business relationships with the Seller or the Subsidiaries;
(m) comply with all other laws, rules
and regulations to which the Seller and each of the Subsidiaries and
their respective businesses, are subject, except where the failure
to comply would not have a Material Adverse Effect;
(n) refrain from (i) granting any
increase in the compensation of employees (including any such
increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment), except for reasonable increases in the ordinary
course of business and consistent with past practice; (ii) assuming
or incurring any lien in respect to the property of the Seller or
any Subsidiary, other than liens made in the ordinary course of
business; (iii) entering into any agreement that is material to the
Seller and the Subsidiaries, taken as a whole, except in the
ordinary course of business;
(o) incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell
any debt securities or guarantee any debt securities of others;
(p) grant any loans to others or
purchase debt securities of others or amend the terms of any
outstanding loan agreement, except in the ordinary course of
business and consistent with past practices;
(q) grant any severance or termination
pay (i) to any director or (ii) to any other employee except
payments made pursuant to standard written agreements outstanding on
the date hereof;
(r) revalue any of its assets,
including without limitation writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary
course of business;
(s) pay, discharge or satisfy, in an
amount in excess of $100,000 (in any one case) or $350,000 (in the
aggregate), any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in the
Financial Statements (or the notes thereto);
(t) not make or change
any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(u) not enter into any strategic
alliance or joint marketing arrangement or agreement; and
(v) refrain from agreeing, whether in
writing or otherwise, to do any of the foregoing;
in each case, except where failure to
do any of the foregoing would not have a Material Adverse Effect and
provided that nothing contained in this Section shall
require the Seller or any Subsidiary to incur any extraordinary cost
or make any extraordinary payment.
6.02
Access and Information.
During the period commencing on
the date hereof and ending on the Closing Date, the Seller shall
permit the Buyer and its counsel, accountants and other
representatives reasonable access during normal business hours to
all the properties, assets, employees, books, records, agreements
and other documents of the Seller and each of the Subsidiaries;
provided that the Buyer will obtain the approval of ▇▇▇▇
▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇ (or their successors in office) prior to each
visit to any of the Seller's or any Subsidiary's premises, whose
approval shall not be unreasonably withheld. The Seller shall
furnish to the Buyer and its representatives all information
concerning the Seller and the Subsidiaries as the Buyer may
reasonably request; provided that such information is
prepared by the management in the ordinary course of business. The
Seller will cause its employees, accountants and other agents to
furnish to the Buyer such additional financial and operating data
and information (including information relating to tax matters) as
the Buyer may from time to time reasonably request, provided
that such information is prepared in the ordinary course of
business. Any investigation by the Buyer pursuant to this Section
shall be conducted in such manner as not to interfere unreasonably
with the normal operation of the Seller and the Subsidiaries. The
Buyer and its representatives shall be accompanied on any visits to
the premises of the Seller or any of the Subsidiaries by
representatives of the Seller. No information or knowledge obtained
in any investigation pursuant to this Section 6.02 shall affect
or be deemed to modify any representation or warranty contained
herein or the conditions to the obligation of the parties to
consummate this transaction.
6.03
No Solicitation.
Neither the Seller, the
Subsidiaries nor any representatives of the Seller, will directly or
indirectly, through any partner, officer, director, agent or
otherwise (a) solicit, initiate or encourage the submission of
inquiries, proposals or offers from any Person relating to any
acquisition or purchase of assets or capital stock of the Seller or
any Subsidiary or any other transaction that would result in the
transfer of control of the Seller or any Subsidiary or an investment
by any Person in the Seller or any Subsidiary (each an "
Acquisition Proposal") or (b) participate in any
discussions or negotiations regarding an Acquisition Proposal or any
of the foregoing or furnish to any Person any information concerning
the Seller or any Subsidiary or any of the foregoing, except to the
extent required by law or fiduciary duty, or (c) otherwise cooperate
in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek
any of the
foregoing, except as may be required for the Board of Directors to
comply with its fiduciary duties under applicable law.
6.04
Confidentiality.
In consideration of the
confidential nature of certain of the information which will be
provided to the Seller by the Buyer, USWeb and any of their agents
prior to the Closing, the Seller agrees to retain in confidence, and
to require its directors, officers, employees, consultants,
professional representatives and agents (collectively, its "
Representatives") to retain in confidence all information
(including all reports analyses, notes or other information that are
based on, contain or reflect any confidential information, the "
Notes") transmitted or disclosed to it by the Buyer, USWeb or
any of their agents, and further agrees that, it will not use or
disclose to any third party, or permit the use or disclosure to any
third party of, any information so obtained or revealed, except that
the Seller may disclose the information to those of its
Representatives who need the information for the proper performance
of their assigned duties with respect to the consummation of the
transactions contemplated hereby. Confidential information shall be
held in confidence by the Seller and its representatives until such
information becomes public knowledge without breach of this
Agreement. In making such information available to its
Representatives, the Seller shall take any and all precautions
necessary to ensure that its Representatives use the information
only as permitted hereby. Notwithstanding anything to the contrary
in the foregoing provisions, such information may be disclosed if it
is required by court order or decree or applicable law. If the
Seller shall be required to make disclosure of any such information
by operation of law, the Seller shall give the Buyer prompt prior
notice of the making of such disclosure and shall use all reasonable
efforts to afford the Buyer an opportunity to contest the making of
such disclosure. In the event that the Closing does not occur, the
Seller shall immediately deliver, or cause to be delivered, to the
Buyer (without retaining any copies thereof) any and all documents,
statements or any other information, regardless of the form stored
or transmitted, obtained from the Buyer, USWeb or any of their
agents that contain confidential information of the Buyer, USWeb or
any of their agents, and destroy all Notes and promptly deliver to
the Buyer a certificate executed by a duly authorized officer of the
Seller indicating that the requirements of this sentence have been
satisfied in full.
6.05
Conduct of Business by the Company prior to the Effective Time.
(a) The Company agrees to terminate
its 401(k) plan immediately prior to the Closing, unless the Buyer,
in its sole and absolute discretion, agrees to sponsor and maintain
such plan by providing the Seller with written notice of such
election at least three (3) days before the Effective Time. Unless
the Buyer provides such notice to the Seller, the Buyer shall
receive from the Seller evidence that the Company's 401(k) plan has
been terminated pursuant to resolution of such entity's Board of
Directors or equivalent (the form and substance of which resolutions
shall be subject to review and approval of the Buyer), effective as
of the day immediately preceding the Closing Date.
(b) The Company agrees to terminate
any and all group severance, separation or salary continuation
plans, programs or arrangements that are covered under ERISA
immediately prior to Closing. The Buyer shall receive from the
Seller evidence that the Company plan(s) has been terminated
pursuant to resolution of such entity's Board of Directors
or equivalent (the form and substance of which resolutions shall be
subject to review and approval of the Buyer), effective as of the
day immediately preceding the Closing Date.
(c) The Seller agrees to liquidate its
wholly-owned Irish Subsidiary, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Limited, prior
to the Closing Date. The Buyer shall receive from the Seller
evidence that ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Limited has been liquidated
pursuant to resolution of such entity's Board of Directors or
equivalent on or before the Closing Date.
ARTICLE VII -
COVENANTS OF USWEB AND THE BUYER
USWeb and the Buyer
covenant and agree with the Seller as follows:
7.01
Confidentiality.
In consideration of the
confidential nature of certain of the information which will be
provided to the Buyer by the Seller, the Subsidiaries and any of
their agents prior to the Closing, the Buyer agrees to retain in
confidence, and to require its directors, officers, employees,
consultants, professional representatives and agents (collectively,
its "Representatives") to retain in confidence all
information (including all reports analyses, notes or other
information that are based on, contain or reflect any confidential
information, the "Notes") transmitted or disclosed to it
by the Seller, the Subsidiaries or any of their agents, and further
agrees that, it will not use or disclose to any third party, or
permit the use or disclosure to any third party of, any information
so obtained or revealed, except that the Buyer may disclose the
information to those of its Representatives who need the information
for the proper performance of their assigned duties with respect to
the consummation of the transactions contemplated hereby and the
parties from which the Buyer seeks financing and their
representatives. Confidential information shall be held in
confidence by the Seller and its representatives until such
information becomes public knowledge without breach of this
Agreement. In making such information available to its
Representatives, the Buyer shall take any and all precautions
necessary to ensure that its Representatives use the information
only as permitted hereby. Notwithstanding anything to the contrary
in the foregoing provisions, such information may be disclosed if it
is required by court order or decree or applicable law. If the Buyer
shall be required to make disclosure of any such information by
operation of law, the Buyer shall give the Seller prompt prior
notice of the making of such disclosure and shall use all reasonable
efforts to afford the Seller an opportunity to contest the making of
such disclosure. In the event that the Closing does not occur, the
Buyer shall immediately deliver, or cause to be delivered, to the
Seller (without retaining any copies thereof) any and all documents,
statements or any other information, regardless of the form stored
or transmitted, obtained from the Seller, the Subsidiaries or any of
their agents that contain confidential information of the Seller,
the Subsidiaries or any of their agents, and destroy all Notes and
promptly deliver to the Seller a certificate executed by a duly
authorized officer of the Buyer indicating that the requirements of
this sentence have been satisfied in full.
7.02
S-3 Registration Statement.
(a) As soon as practicable, USWeb
shall file with the SEC a registration statement on Form S-3 (the
"S-3 Registration Statement") covering the number of
Shares payable to the Seller on the Closing Date pursuant to Section
2.02(b)(i) having an aggregate market value of at least $125 million
on the Closing Date (determined by reference to the closing
price of USWeb common stock as reported by Nasdaq on the date two days
preceding the Closing Date), and USWeb shall use commercially
reasonable efforts to cause such S-3 Registration Statement to
become effective as soon as practicable thereafter. USWeb
acknowledges and agrees that the offering of shares of USWeb common
stock covered by the S-3 Registration Statement will be an
underwritten offering and that the underwriter or underwriters for
such offering shall be mutually selected by the Seller and USWeb.
With respect to the
registration to be effected pursuant to this Section 7.02(a), USWeb
further agrees as follows:
(i) USWeb shall prepare
and file with the SEC such amendments and supplements to the S-3
Registration Statement and the prospectus used in connection with
such S-3 Registration Statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition
of all shares of USWeb common stock covered by such S-3 Registration
Statement;
(ii) USWeb shall furnish to the
Seller, the stockholders of Seller and the underwriter such numbers
of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to
facilitate the disposition of the shares of USWeb common stock
covered by the S-3 Registration Statement;
(iii) USWeb shall use commercially
reasonable efforts to register and qualify the Shares covered by the
S-3 Registration Statement under such other securities or "blue
sky" laws of such jurisdictions as shall be reasonably
requested by Seller, the stockholders of Seller or any underwriter;
(iv) USWeb shall enter into and
perform its obligations under a customary underwriting agreement;
(v) USWeb shall promptly notify Seller
and the stockholders of Seller: (i) when the S-3 Registration
Statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the S-3 Registration Statement has been filed and, with respect to
the S-3 Registration Statement or any post-effective amendment, when
the same has become effective; (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of the S-3
Registration Statement or the initiation of any proceedings for that
purpose; (iii) of the receipt by USWeb of any notification with
respect to the suspension of the qualification of any Shares for
sale under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose; and (iv) of
the existence of any fact of which USWeb becomes aware which results
in the S-3 Registration Statement, the prospectus related thereto or
any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact
required to be stated therein or necessary to make any statement
therein not misleading.
(vi) Notwithstanding the foregoing,
USWeb shall not be obligated to take any action pursuant to this
Section 7.02 either (i) in any particular jurisdiction in which
USWeb would be required to execute a
general consent to service of process in effecting such
registration, qualification or compliance unless USWeb is already
subject to service in such jurisdiction and except as may be
required by the Securities Act; or (ii) if USWeb shall furnish
to such Holders a certificate signed by the President of USWeb
stating that, in the good faith judgment of the Board of Directors,
it would be seriously detrimental to USWeb or its shareholders for
registration statements to be filed in the near future, then USWeb's
obligation to use its best efforts to file a registration statement
shall be deferred for a period not to exceed one hundred 120 days
from the receipt of the request to file such registration by such
Holder or Holders.
(vii) USWeb shall use commercially
reasonable efforts to have the Shares covered by the S-3
Registration Statement to be listed on the principal securities
exchange on which similar securities issued by USWeb are then listed
(if any), or, if similar securities are reported on the Nasdaq, to
be reported on Nasdaq;
(viii) USWeb shall use commercially
reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of the S-3 Registration Statement;
(ix) USWeb shall make reasonably
available its employees and personnel and otherwise provide
reasonable assistance to the underwriter (taking into account the
needs of USWeb's business); and
(x) USWeb shall bear all customary
expenses incurred in connection with such registration, filing or
qualification; provided, however, the Seller will pay all
underwriting commissions and discounts and USWeb will reimburse the
Seller as consideration for this Agreement for one-half (1/2) of
such their underwriting discounts and commissions pursuant to the
S-3.
(b) USWeb shall enter into such
customary agreements (including, as discussed under subsection
(a)(iv) above, underwriting agreements in customary form) and, from
and after the date hereof, shall take all such other actions as the
Seller reasonably requests in order to expedite or facilitate the
disposition of the shares being sold pursuant to the S-3
Registration Statement on the Closing Date (including, without
limitation (i) using commercially reasonable efforts to cause senior
members of management to participate in customary "road show
" activities, (ii) causing to be delivered to the underwriters
and the Seller opinions of counsel to USWeb and comfort letters from
the independent public accountants of USWeb in customary form, which
cover such matters as are customarily covered by opinions and
comfort letters for an underwritten offering and (iii) taking any
such other actions as are usual and customary in connection with an
underwriting offering of equity securities.
(c) Seller acknowledges that other
stockholders of Buyer have existing rights that permit those
stockholders to include shares in the S-3 Registration Statement.
7.03
Piggyback Registration Rights.
USWeb agrees that during the period
commencing on the Closing Date and ending on the date which is 18
months following the Closing Date, Seller and the stockholders of
Seller shall have "piggyback registration" rights for the
Shares acquired hereunder which are not covered by the S-3
Registration Statement. At the
Closing, USWeb shall enter into an agreement providing for such
piggyback registration rights substantially comparable to those
contained in the piggyback registration rights agreement to which
USWeb is currently a party providing the selling stockholders with
the most favorable rights.
ARTICLE VIII - MUTUAL
COVENANTS
USWeb and the Buyer covenant and agree
with the Seller as follows:
8.01
HSR Filings.
The Buyer and the Seller shall, as
promptly as practicable following the execution of this Agreement,
and in cooperation with each other, file with the Department of
Justice and the Federal Trade Commission the premerger notification
forms and any other documents required under the HSR Act, and each
shall use commercially reasonable efforts to obtain earliest
termination of all waiting periods under the HSR Act. The Buyer
shall be responsible for and shall pay all fees assessed in
connection with the filing of such forms and documents.
8.02
Employment Agreements.
The Buyer and the Seller mutually
agree that on or before the Closing the holders of common interests
of the Seller whose names are set forth in Schedule 8.02 each shall
have entered into an employment agreement with the Buyer.
8.03
Securityholder Approval.
The Buyer and the Seller mutually
agree that on or before the Closing the Seller shall have obtained
the required approval of the transactions contemplated by this
Agreement by the Holders in accordance with all applicable law.
8.04
Transfer of ▇▇▇▇ ▇▇▇▇▇'▇ Interest.
As promptly as practicable following the
execution of this Agreement and on or before the Closing, for no
additional consideration the Seller and the Buyer shall enter into
an agreement with ▇▇▇▇ ▇▇▇▇▇ to effect the transfer to the Seller of
all of ▇▇▇▇ ▇▇▇▇▇'▇ right, title and interest in ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Consulting Group, Inc. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group (Del.) LLC. Such
agreement shall be in the form and substance mutually satisfactory
to the Seller and the Buyer.
8.05
Shareholders Agreement.
The Seller shall use commercially
reasonable efforts to have the Seller's Shareholders Agreement
amended and restated and approved by the requisite number of
Holders. The Seller shall (A) use commercially reasonable efforts to
have such Amended and Restated Shareholders Agreement be in a form
and substance satisfactory to USWeb, (B) grant USWeb a veto right
over the voting rights of such Holders (subject to limited
exceptions) and (C) provide USWeb a seat on the Board of Directors
of the Seller.
8.06
Further Actions.
(a) The Seller and the Buyer each will
immediately notify the other of any litigation, arbitration or
administrative proceeding pending, or to its knowledge, threatened
against any party hereto which challenges the transactions
contemplated in this Agreement.
(b) Each party hereto agrees to use
commercially reasonable efforts to satisfy the conditions to the
Closing set forth in this Agreement and otherwise to consummate the
transactions contemplated by this Agreement. Specifically, but without
limiting the generality of the foregoing, the Buyer and the Seller
shall use commercially reasonable efforts to make or obtain all
consents, approvals, authorizations, registrations and filings with
all Federal, State or local judicial or governmental authorities or
administrative agencies as are required in connection with the
consummation of the transactions contemplated by this Agreement.
ARTICLE IX -
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
The obligations of the Buyer to
consummate the transactions contemplated by this Agreement are
subject to the satisfaction of each of the following conditions on
or before the Closing Date, unless specifically waived in writing by
the Buyer prior to the Closing Date:
9.01
Representations and Warranties.
The representations and warranties
of the Seller contained in this Agreement shall have been true and
correct in all material respects (without giving duplicative effect
to any materiality standard contained in the terms of such
representation or warranty) on the date of this Agreement and
(unless expressly made as of a date other than the Closing Date)
shall be true and correct in all material respects (without giving
duplicative effect to any materiality standard contained in the
terms of such representation or warranty) on the Closing Date as
though made on and as of the Closing Date. The Buyer shall have
received a certificate executed by the Seller dated as of the
Closing Date, certifying the satisfaction of the conditions in this
Section.
9.02
Compliance with Covenants.
The Seller shall have duly
performed and complied with in all material respects all covenants,
agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
The Buyer shall have received a certificate executed by an officer
of the Seller dated as of the Closing Date, certifying the
satisfaction of the conditions in this Section.
9.03
Absence of Litigation.
No action, suit or claim or
proceeding shall be overtly threatened or pending by or before any
court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this
Agreement.
9.04
HSR Act.
All applicable waiting periods
under the HSR Act shall have expired or been terminated.
9.05
Effective S-3 Registration.
USWeb shall have an effective
Registration Statement on Form S-3.
9.06
Claims.
There shall not have occurred any
claims (whether or not asserted in litigation) which may have a
Material Adverse Effect on the Seller.
9.07
Third Party Consents.
Any and all consents, waivers and
approvals listed in Schedule 4.26 and all waivers of any
restrictions to the business activity of the Seller enumerated in
Schedule 4.26 shall have been obtained.
9.08
No Material Adverse Changes.
There shall not have occurred any
material adverse change in the business, assets (including tangible
assets), results of operations,
liabilities (contingent or accrued) or financial condition of the
Seller since the date of the Balance Sheet.
9.09
Seller's Holders Approval.
The requisite percentage of the
Seller's Holders shall have approved this Agreement and the
transactions contemplated thereby, all Holders that will become
USWeb employees shall have entered into a written agreement
regarding noncompetition, nonsolicitation, the offering and related
matters, and no Seller's Holders shall have exercised, or have any
continuing right to exercise, appraisal, dissenters' or similar
rights by virtue of the Asset Purchase.
9.10
The Sellers Agreements.
The Company shall have provided
evidence satisfactory to USWeb of (A) the amendment of the Seller's
Shareholders Agreement pursuant to Section 8.05, (B) the termination
of all severance agreements and material employment agreements,
other than standard nondisclosure, nonsolicitation and similar
proprietary information agreements, and (C) the amendment of the
Seller's Founders Fund.
9.11
Termination of Plans.
The Seller shall have terminated
any Plans required to be terminated pursuant to Section 6.05.
9.12
Audit.
Seller's independent auditors
shall have completed at Seller's sole expense an audit of the
Seller's financial records for the period ended December 31, 1998
and delivered to Seller an unqualified opinion with respect thereto.
9.13
Fairness Opinion.
The Board of Directors of Seller
shall have received a fairness opinion from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation to the effect that the transactions
contemplated herein are fair to the Seller and its Holders from a
financial point of view.
ARTICLE X - CONDITIONS
PRECEDENT TO THE SELLER'S OBLIGATIONS
The obligations of the Seller to
consummate the transaction contemplated by this Agreement are
subject to the satisfaction of each of the following conditions on
or before the Closing Date, unless specifically waived in writing by
the Seller prior to the Closing Date:
10.01
Representations and Warranties.
The representations and warranties
of the Buyer and USWeb contained in this Agreement shall have been
true and correct in all material respects (without giving
duplicative effect to any materiality standard contained in the
terms of such representation or warranty) on the date of this
Agreement and (unless expressly made as of a date other than the
Closing Date) shall be true and correct in all material respects
(without giving duplicative effect to any materiality standard
contained in the terms of such representation or warranty) on the
Closing Date as though made on and as of the Closing Date. The
Seller shall have received a certificate executed by an officer of
the Buyer dated as of the Closing Date, certifying the satisfaction
of the conditions in this Section.
10.02
Compliance with Covenants.
The Buyer and USWeb shall have
duly performed and complied with in all material respects all
covenants, agreements and obligations required by this Agreement to
be performed or complied with by it on or prior the Closing Date.
The Seller shall have received a certificate executed by an officer of
the Buyer dated as of the Closing Date, certifying the satisfaction
of the conditions in this Section.
10.03
Absence of Litigation.
No action, suit, claim or
proceeding against the Buyer or USWeb shall be overtly threatened or
pending by or before any court or other governmental body or agency
seeking to restrain, prohibit or invalidate the transactions
contemplated by this Agreement.
10.04
HSR Act.
All applicable waiting periods
under the HSR Act shall have expired or been terminated.
10.05
Effective S-3 Registration.
USWeb shall have an effective
Registration Statement on Form S-3.
10.06
No Injunction, etc.
No injunction, restraining order,
or order of any nature by a Federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Shares.
10.07
Listing of Shares.
The Shares covered by the S-3
Registration Statement shall have been approved for listing on
Nasdaq.
10.08
Blue Sky Qualifications.
The Shares covered by the S-3
Registration Statement shall have been, to the extent required by
law, registered and qualified under the securities or "blue sky
" laws of such jurisdictions as shall have been reasonably
requested by the Seller or any underwriter selected by the Seller.
10.09
Piggyback Registration Rights Agreement.
The Registration Rights Agreement
described in Section 7.03 shall have been executed by the
Seller, the stockholders of the Seller and USWeb.
10.10
Regulation D.
The issuance of USWeb common stock
contemplated by this Agreement shall constitute a legally
permissible private transaction under Regulation D of the
Securities Act in the reasonable judgment of Buyer's Counsel.
ARTICLE XI - CLOSING
11.01
Closing.
The closing of the transactions
contemplated by this Agreement (the "Closing") shall take
place at the offices of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ in New
York, New York or such other place as agreed to between the Seller
and the Buyer at 10:00 a.m. local time on September 9, 1999;
provided, however, as follows: (a) if one or
more conditions to this Agreement is/are not satisfied by such date,
the party benefiting from such condition may elect, in its sole
discretion, one or more postponements of the Closing for the purpose
of enabling such condition to be satisfied; and (b) upon agreement
of the parties hereto, the Closing may be changed to a different
date; provided that, notwithstanding the provisions of
the preceding subparagraphs (a) and (b), in no event may the Closing
be postponed beyond October 23, 1999. The date of the Closing is
referred to as the "Closing Date." The Closing when
completed shall
be deemed to have occurred at 12:01 a.m., local time, on the Closing
Date (the "Effective Time").
11.02
Deliveries by the Seller.
At the Closing, the Seller shall
deliver or cause to be delivered to the Buyer the following:
(a) A certificate of the
Seller confirming the satisfaction of the conditions set forth in
Sections 9.01 and 9.02 hereof as to representations, warranties and
covenants.
(b) A copy of all corporate
resolutions authorizing the execution, delivery and performance of
this Agreement, and the consummation of the transactions
contemplated herein, accompanied by the certification of the
Secretary of the Seller to the effect that such resolutions are in
full force and effect and have not been amended, modified or
rescinded.
(c) The stock certificates
representing all of the issued and outstanding shares of each
Subsidiary, duly endorsed in blank.
(d) The minute books, corporate seals
and stock transfer records of the Subsidiaries.
(e) Such other documents, certificates
and information as the Buyer may reasonably request.
11.03
Deliveries by the Buyer.
At the Closing, USWeb and the
Buyer shall deliver or cause to be delivered to the Seller the
following:
(a) A Registration Rights
Agreement, executed by USWeb and in form reasonably satisfactory to
the Seller.
(b) A certificate of an officer of the
Buyer confirming the satisfaction of the conditions set forth in
Sections 10.01 and 10.02 as to representations, warranties and
covenants.
(c) A copy of all corporate
resolutions authorizing the execution, delivery and performance of
this Agreement, and the consummation of the transactions
contemplated herein, accompanied by the certification of the
Secretary of USWeb and of the Buyer to the effect that such
resolutions are in full force and effect and have not been amended,
modified or rescinded.
(d) Such other documents, certificates
and information as the Seller may reasonably request.
ARTICLE XII - ACTIONS
BY THE SELLER AND THE BUYER AFTER THE CLOSING
12.01
Annual Growth Rate.
The Buyer shall support the Seller's
efforts to increase the Annual Growth Rate (as defined in Section
2.03(a)(iv)) to the extent such efforts are not expected by the
Buyer, in its reasonable good faith expectations, to reduce the
Margin Factor (as defined in Section 2.03(a)(vii)) by an amount
greater than the anticipated corresponding increase in the Revenue
Factor (as defined in Section 2.03(a)(v)).
12.02
Stock Options.
Promptly after the Closing, the
Buyer shall grant options to purchase 9.0 million shares of the
Buyer's common stock at the fair market value thereof on the Closing
Date, such options to be allocated among the Company's employees as
agreed to at or before the Closing by the Buyer and the Seller.
12.03
Transfer Restrictions.
The Seller covenants not to distribute
the Purchase Price or any of the Shares to any Holder until such
Holder has signed and delivered to the Seller a Holder Certificate.
12.04
Books and Records; Access to Information.
(a) On and after the
Closing Date, the Seller shall permit the Buyer and its
Representatives, during normal business hours, to have access to and
to examine and take copies of all books and records of the Seller
which are not delivered to the Buyer pursuant to this Agreement and
which relate to the Transferred Assets, whether with respect to
events occurring prior to the Closing Date or to transactions or
events occurring subsequent to the Closing Date which arise out of
transactions or events occurring prior to the Closing Date. All
books and records of the Seller relating to the Transferred Assets
and not delivered to the Buyer pursuant hereto will be preserved by
the Seller for a period of not less than five years following the
Closing Date.
(b) The Buyer shall preserve and keep
all books and records with respect to the Transferred Assets and
Liabilities for a period of at least five years following the
Closing Date. After such five year period, before the Buyer shall
dispose of any such books and records, at least 90 days' prior
written notice to such effect shall be given by the Buyer to the
Seller, and the Seller shall be given an opportunity, at its cost
and expense, to remove and retain all or any part of such books or
records as it may select. During such five year period, duly
authorized Representatives of the Seller shall, upon reasonable
notice, have access thereto during normal business hours to examine,
inspect and copy such books and records.
(c) For a period of five years
following the Closing Date, the Buyer shall maintain and make
available to the Seller for inspection and photocopying during
normal business hours all books and records of each of the
Subsidiaries and the Buyer.
(d) The Seller and the Buyer will
provide each other with such cooperation and information as either
of them reasonably may request, in order to facilitate the
resolution of any claims made by or against the Seller or the Buyer,
whether prior to or after the Closing Date, or the discharge by the
Seller or the Buyer of any of its responsibilities or obligations
after the Closing Date, including, without limitation, in connection
with any legal, governmental or administrative proceeding, filing
any Tax Return, amended Tax Return or claim for refund, determining
a past, present or future liability for Taxes or a right to refund
of Taxes, preparation for litigation or investigation of claims in
conducting any audit or other proceeding in respect of Taxes. For
this purpose, upon reasonable notice, the Buyer shall (i)
afford the Seller or its representatives, during normal business
hours access, to the offices, properties, books and records of the
Subsidiaries or the Buyer with respect to the Subsidiaries, (ii)
furnish to the representatives of the Seller such additional
financial and other information regarding the Subsidiaries as the
Seller may from time to time reasonably request and (iii) make
available to
the Seller, the employees of the Buyer and the Subsidiaries whose
assistance, testimony or presence is reasonably necessary to assist
the Seller in evaluating or defending any such claims or in
discharging such responsibilities or obligations, including the
presence of such persons as witnesses in hearings or trials for such
purposes. The Seller shall reimburse the Buyer for all reasonable
expenses incurred by the Buyer pursuant to this Section 12.04(d),
including salary expenses of employees who are required to be away
from their normal place of employment.
12.05
Mail Received After Closing.
(a) In the event that the Buyer
receives after the Closing any mail or other communications
addressed to the Seller, the Buyer agrees to deliver promptly or
cause to be delivered to the Seller such mail or other
communications.
(b) In the event that the Seller
receives after the Closing mail or other communications addressed to
the Seller which relates to any of the Transferred Assets or the
Liabilities, the Seller shall promptly deliver or cause to be
delivered all such mail and the contents thereof to the Buyer. The
Seller agrees to cooperate with the Buyer and to make arrangements
(including banking arrangements) reasonably necessary in order to
properly deal with checks addressed to the Seller but which belong
to the Buyer pursuant to this Agreement, and to properly direct the
proceeds thereof to the Buyer.
12.06
No Solicitation.
For a period of three years
following the Closing, the Seller shall not, directly or indirectly,
actively solicit or induce any employee of the Buyer or any
Subsidiary to leave such employment, without the prior written
consent of the Buyer.
12.07
Non-Competition.
For a period of three years
following the Closing, the Seller shall not, directly or indirectly,
engage or attempt to engage, directly or indirectly, in any business
competitive with the business of the Buyer (such covenant, the "
Non-Competition Agreement").
12.08
Allocation of Tax Items.
Whenever it is necessary to determine
the liability for Taxes attributable to periods prior to the Closing
(such periods, "Pre-Closing Tax Periods"), on one
hand, and periods following the Closing (such periods, "
Post-Closing Tax Periods"), on the other hand, including
but not limited to (i) determinations for purposes of Section
4.10(a)(ii) of this Agreement, (ii) for all Tax Return preparation
purposes, or (iii) indemnification of the Seller by the Buyer as
provided in this Section 12.08, such determination shall be made on
a "closing of the books basis" by assuming that the
relevant books of the Company were closed at 11:59 p.m. on the day
on which the Closing occurs; provided, however, that
(i) transactions occurring on the date on which the Closing actually
occurs, excluding any transactions between the Buyer and the Seller
which are the subject of this Agreement, that are properly allocable
(based on, among other relevant factors, the factors set forth in
Treasury Regulation § 1.1502-76(b)(1)(ii)(B)) to the portion of
the date on which the Closing actually occurs, but after the time of
the Closing, shall be allocated to the Buyer, and (ii) exemptions,
allowances or deductions that are calculated on an annual basis, if
any, shall be apportioned between Pre-Closing Tax Periods and
Post-Closing Tax Periods on a daily basis and Taxes that are
computed on a periodic basis, such as property Taxes, shall also be
so apportioned on a daily basis. The Buyer and the Seller agree to
report all Tax items in a manner consistent with this
Section 12.08, including the reporting of income, deduction, gain,
loss, and any other Tax items derived with respect to the operation
of the Transferred Assets. The Buyer and the Seller agree to
promptly provide the other with any information required to report
any Tax item in accordance with the requirements of this Section
12.08. The Buyer shall be liable for and pay, and pursuant to
Section 13.02 of this Agreement, (subject to the limitations
thereof, and which Section shall control the operation of any
indemnification payment pursuant to this provision) shall indemnify
and hold harmless the Company and the Holders against all Taxes
(whether assessed or unassessed) applicable to the Post-Closing Tax
Periods, and as provided for in Section 15.03, and any Taxes as a
result of transactions engaged in by the Buyer but not by the
Seller, other than transactions which are the subject of this
Agreement, occurring on the date on which the Closing actually
occurs that are properly allocable (based on, among other relevant
factors, the factors set forth in Treasury Regulation §
1.1502-76(b)(1)(ii)(B)) to the portion of the date on which the
Closing actually occurs, but after the time of the Closing. The
Sellers shall be entitled to any refund of (or credit for) Taxes
attributable to Pre-Closing Tax Periods and the Buyer shall be
entitled to any refund of (or credit for) Taxes attributable to
Post-Closing Tax Periods. In the event of any disagreement between
the Buyer and the Seller with respect to the proper allocation of
Tax items pursuant to this Section 12.08, PricewaterhouseCoopers LLP
shall make the final determination of the proper allocation of all
Tax items, which determination shall be binding on the parties, with
the parties reporting in accordance with such determination.
ARTICLE XIII
INDEMNIFICATION
13.01
Indemnification by the Seller.
The Seller shall indemnify, defend
and hold harmless USWeb and the Buyer and each of their respective
subsidiaries, officers, directors, employees, agents and each Person
who controls USWeb or the Buyer within the meaning of the Exchange
Act, from, against, and with respect to any and all loss, damage,
claim, obligation, liability, reasonable cost and expense (including
without limitation reasonable attorneys' fees and costs and expenses
incurred in investigating, preparing, defending against or
prosecuting any litigation, claim, proceeding or demand), of any
kind or character (a "Loss") arising out of or in
connection with any of the following:
(a) any inaccuracy or
breach of any of the representations or warranties of the Seller
contained in this Agreement, the Ancillary Agreements or any
instrument delivered by the Seller at the Closing;
(b) any failure by the Seller to
perform or observe, or to have performed or observed any covenant,
agreement or condition to be performed or observed by it pursuant to
this Agreement or the Ancillary Agreements;
(c) any debt or liability, recognized
as such under GAAP, of the Seller to the extent not disclosed on the
balance sheet included in the Financial Statements, on any Schedule
hereto, or not otherwise expressly assumed by the Buyer hereunder to
the extent such debt or liability would be required to be disclosed
pursuant to GAAP;
(d) any of the matters described in
Section 4.18 and 4.23(c).
13.02
Indemnification by the Buyer.
The Buyer shall indemnify, defend
and hold harmless the Seller and the Seller's respective
shareholders, employees, directors, officers and agents from,
against and with respect to any Loss arising out of or in connection
with any of the following:
(a) any inaccuracy or
breach of any of the representations and warranties of the Buyer
contained in this Agreement, the Ancillary Agreements or any
instrument delivered by the Buyer at the Closing;
(b) any failure by the Buyer to
perform or observe, or to have performed or observed any covenant,
agreement or condition to be performed or observed by it pursuant to
this Agreement or the Ancillary Agreements.
13.03
Notice of Claim.
If any third party shall notify
any party (the "Indemnified Party") with respect to any
matter (a "Third Party Claim") which may give rise to a
claim for indemnification against any other party (the "
Indemnity Obligor") under this Article XIII, then the
Indemnified Party shall, within 15 days following receipt of such
Third Party Claim, promptly notify the Indemnity Obligor in writing
of any claim for recovery, specifying in reasonable detail the
nature of the Loss and the amount of the liability estimated to
arise therefrom. If the Indemnified Party does not so notify the
Indemnity Obligor within 15 days of its discovery of a claim for
recovery, such claim shall be barred only to the extent that the
Indemnity Obligor is prejudiced by such failure to notify. The
Indemnified Party shall provide to the Indemnity Obligor as promptly
as practicable thereafter all information and documentation
reasonably requested by the Indemnity Obligor to verify the claim
asserted.
13.04
Defense.
(a) If the facts relating
to a Loss arise out of the claim of any third party, or if there is
any claim against a third party available by virtue of the
circumstances of the Loss, the Indemnity Obligor may, by giving
written notice to the Indemnified Party within 15 days following its
receipt of the notice of such claim, elect to assume the defense or
the prosecution thereof, including the employment of counsel or
accountants at its cost and expense; provided,
however, that during the interim the Indemnified Party shall
use its best efforts to take all action (not including settlement)
reasonably necessary to protect against further damage or loss with
respect to the Loss. If notice is given to the Indemnity Obligor of
the commencement of any Proceeding and the indemnifying party does
not, within 15 days after the Indemnified Party's notice is given,
give notice to the Indemnified Party of its election to assume the
defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or
settlement effected by the Indemnified Party. The Indemnified Party
shall have the right to employ counsel separate from counsel
employed by the Indemnity Obligor in any such action and to
participate therein, but the fees and expenses of such counsel shall
be at the Indemnified Party's own expense, unless (a) the employment
thereof has been specifically authorized by the Indemnity Obligor,
(b) such Indemnified Party will have been advised by counsel
reasonably satisfactory to the Indemnity Obligor that there may be
one or more legal defenses available to it which are different from
or additional to those available to the Indemnity Obligor and in the
reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (c) the Indemnity
Obligor has failed to assume the defense
of such action or employ counsel reasonably satisfactory to the
Indemnified Party. Whether or not the Indemnity Obligor chooses so
to defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony and shall attend such
conferences, discovery proceedings and trials as may be reasonably
requested in connection therewith. Except as previously set forth in
this Section 13.04, the Indemnity Obligor shall not be liable for
any settlement of any such claim effected without its prior written
consent. In the event of payment by the Indemnity Obligor to the
Indemnified Party in connection with any Loss arising out of a third
party claim, the Indemnity Obligor shall be subrogated to and shall
stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any
right or claim against such third party relating to such Indemnified
Matter. The Indemnified Party shall cooperate with the Indemnity
Obligor in prosecuting any subrogated claim. The Indemnity Obligor
will take no action in connection with any claim that would
adversely affect the Indemnified Party including any compromise or
settlement of such claims without the consent of the Indemnified
Party.
(b) Notwithstanding the
foregoing, if an Indemnified Party determines in good faith that
there is a reasonable probability that a Proceeding may adversely
affect it or its affiliates other than as a result of monetary
damages for which such Indemnified Party would be entitled to
indemnification under this Agreement, the Indemnified Party may, by
notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
13.05
Time for Claims.
Any claim asserted with respect to
the items enumerated in Sections 13.01 or 13.02 must be submitted to
the Indemnity Obligor in writing, or invoked in official
proceedings, within twenty-four months after the Closing Date.
13.06
Limitation.
(a) Notwithstanding the
provisions of Section 13.01, the Seller shall not have any
indemnification obligation under this Agreement unless and until and
to the extent that the aggregate amount of the Losses of the Buyer
exceeds $1,000,000 in the aggregate plus the amount of any reserves
on the books of the Seller which are properly applied to any expense
which shall constitute a loss, and the indemnification obligation of
the Seller shall not exceed $60,000,000, except that after the first
anniversary of the Closing, the indemnification obligation of the
Seller shall not exceed $30,000,000. However, the limitation on
liability for indemnification set forth in the previous sentence
will not apply (a) to claims for adjustments pursuant to Section
2.03 (nor should any such adjustment be included in
determining whether Losses exceed $1,000,000), (b) to any breach of
any representations and warranties of the Seller of which the Seller
had knowledge at any time prior to the date on which such
representation and warranty is made or any intentional breach by the
Seller of any covenant or obligation hereunder and (c) to claims
arising from any matters described in Schedule 4.18 or in Schedule
4.23(c).
(b) The parties hereto agree that a
party should not be entitled to indemnification for a Loss if such
indemnification, in combination with the adjustment set within
Section 2.03, would result in a windfall to such party. On the other
hand, the parties hereto further agree that if a party is entitled
to indemnification for a Loss, such party is not precluded from
recovering from the Indemnity Obligor for such Loss even though the
circumstances giving rise to the Loss and the resulting
indemnification claim also give rise to such adjustment, if without
indemnification and such adjustment, such party would not be made
whole. Therefore, the parties agree to the extent a Loss results in
such adjustment, no indemnification claim asserted hereunder with
respect to such Loss shall result in a recovery which exceeds the
amount of the Loss less such adjustment set forth in Section
2.03 resulting from such Loss.
13.07
Characterization.
Any payments pursuant to this
Article XIII shall be treated by the parties as adjustments to the
Purchase Price for tax purposes, unless otherwise required by law.
13.08 Adjustments to Indemnity
Payments. The amount payable by an Indemnity Obligor to an
Indemnified Party with respect to a Loss shall be reduced by the
amount of any insurance proceeds received by the Indemnified Party
to the extent such proceeds are paid by any insurance policies that
prior to the Closing Date were fully paid by Indemnity Obligor with
respect to the Loss, and each of the parties hereby agrees to use
its commercially reasonable best efforts to collect all such
insurance proceeds to which it may be entitled in respect of any
Loss. Additionally, the amount payable by an Indemnity Obligor to an
Indemnified Party with respect to a Loss shall be further reduced by
the amount of any Tax Benefit (as defined below), reduced by any Tax
Cost (as defined below), realized by any Indemnified Party with
respect to the Losses or items giving rise to such claim for
indemnification, or with respect to any payments made pursuant to
Section 13.01 or 13.02. Tax Benefit shall mean any decrease in
liability for Taxes resulting from any deduction, expense, loss,
credit or refund realized by the Indemnified Party or any Affiliate
thereof, as a result of the Loss, or items giving rise to such claim
for indemnification, during the tax periods which include the
Closing Date and each subsequent tax period through and including
the tax period in which the payment is made pursuant to Section
2.02(b)(ii) of this Agreement (the "Applicable Tax Periods"
), and Tax Cost shall mean any increase in liability for Taxes
resulting from any income, gain, or loss of deduction realized by
the Indemnified Party or any Affiliate thereof, as a result of any
Indemnity Payment in respect of a Loss, during the Applicable Tax
Periods; however, any adjustment pursuant to this Section for Tax
Costs and Tax Benefits shall be limited to the extent that such
Indemnified Party actually (i) in the case of a Tax Cost, suffers an
increase in its (or its Affiliates') liabilities for Taxes, and (ii)
in the case of a Tax Benefit, experiences a reduction in its (or its
Affiliates') liabilities for Taxes in the Applicable Tax Periods, as
a result of any Losses or items giving rise to such claim for
indemnification and any payment of a Loss. PricewaterhouseCoopers
LLP shall make the final determination of any Tax Benefit or Tax
Cost, which determination shall be binding on the Parties.
ARTICLE XIV -
TERMINATION
14.01
Termination.
This Agreement may be terminated
at any time prior to the Closing:
(a) by the mutual written
consent of each of the Seller and the Buyer;
(b) by the Seller (if the
Seller is not then in material breach of any term of this
Agreement), if the Buyer shall (i) fail to perform in any material
respect its agreements contained herein required to be performed on
or prior to the Closing Date, or (ii) materially breach any of its
representations or warranties contained herein, which failure or
breach is not cured within thirty days after the Seller has notified
the Buyer of its intent to terminate this Agreement pursuant to this
subparagraph;
(c) by the Buyer (if the Buyer is not
then in material breach of any term of this Agreement), if the
Company or the Holders shall (i) fail to perform in any material
respect its agreements contained herein required to be performed on
or prior to the Closing Date, or (ii) materially breach any of its
representations or warranties contained herein, which failure or
breach is not cured within thirty days after the Buyer has notified
the Seller of its intent to terminate this Agreement pursuant to
this subparagraph;
(d) by the Seller, on the one hand, or
the Buyer, on the other hand, if there shall be any final and
binding order, writ, injunction or decree of any court or
governmental or regulatory agency binding on any of the Seller or
the Buyer which prohibits or restrains the Seller or the Buyer from
consummating the transactions contemplated hereby (other than
temporary injunctions);
(e) by the Seller, on the one hand, or
the Buyer, on the other hand, if the Closing has not occurred by
October 23, 1999, for any reason other than delay or nonperformance
of the party seeking such termination; or
(f) by the Buyer, if an event having a
Material Adverse Effect on the Seller or Buyer shall have occurred
after the date of this Agreement.
14.02
Effect on Obligations.
Termination of this Agreement
pursuant to this Article shall terminate all obligations of the
parties hereunder, except for the obligations under Sections 15.03
(with respect to expenses) and 15.04 (with respect to publicity) and
7.01 (with respect to confidentiality); provided,
however, that termination pursuant to subparagraph (b) or
(c) of Section 14.01 shall not relieve the defaulting or breaching
party from any liability to the other parties hereto.
14.03
Topping Fee.
(a) If, within three
months from the date hereof, and if USWeb has not willfully breached
any material provision of this Agreement, an Acquisition Event (as
hereinafter defined) has (i) been consummated by an entity
other than USWeb or its wholly-owned subsidiaries or (ii) been
offered to the Seller or the Seller's Holders at a price in excess
of the price set forth herein and Seller's Holders subsequently do
not approve the transactions contemplated by this Agreement, then
Seller shall pay to USWeb (by wire transfer of immediately available
federal funds to an account designated by USWeb for such purpose)
the sum of $20,000,000 (the "Topping Fee") on the
second business day following the occurrence of the Acquisition
Event. As used herein, an "Acquisition Event" shall
mean acquisition of all or substantially all the business of Seller,
whether by merger, sale of assets, consolidation, business
combination, or otherwise.
(b) For a period of three
months following the date hereof, the Seller agrees that it will not
enter into any agreement with a USWeb Competitor (as defined below),
or any person or entity with respect to Section 14.03(b)(ii) hereof,
pursuant to which (i) the Seller grants to such USWeb
Competitor rights to any Seller Intellectual Property Rights, (ii)
the Seller grants to such person or entity any right to
acquire an equity interest in Seller, (iii) Seller establishes
a joint marketing, product development or other similar relationship
with a USWeb Competitor or (iv) the Seller establishes any
other material relationship with a USWeb Competitor, in each case
other than sales of products or services in the ordinary course,
unless Seller shall have first complied with the provisions of this
Section 14.03. Before entering into any such agreement or
relationship with a USWeb Competitor, the Seller shall first
negotiate in good faith with USWeb for a period of up to 30 days to
enter into such an agreement or establish such a relationship. In
the event Seller and USWeb are unable to negotiate a mutually
acceptable agreement or relationship within such 30 day period, the
Seller shall thereafter be free to enter into a relationship or
agreement with a USWeb Competitor on terms which, when considered as
a whole, are no more favorable to such USWeb Competitor than the
most favorable terms offered to USWeb by Seller during the 30 day
negotiation period referenced above. As used herein, "USWeb
Competitor" shall mean any entity with annual revenues in
excess of $20 million for its last fiscal year which provides
Internet professional services.
ARTICLE XV -
MISCELLANEOUS
15.01
Survival of Representations.
All of the representations and
warranties of the parties hereto contained in this Agreement, the
Ancillary Agreements and any instrument delivered to the other party
hereto shall terminate on the second anniversary of the Closing.
15.02
Access after the Closing Date.
After the Closing Date, the Buyer
shall provide the Seller with reasonable access during normal
business hours to copies of all of the books and records of the
Seller and the Subsidiaries regarding matters prior to the Closing
Date whenever requested by the Seller, and the Buyer shall retain
such books and records for the later of the end of the normal
document retention period of the Buyer; provided that
the Buyer shall retain all required Tax books and records until 60
days following the expiration of the applicable statute of
limitations. At the request and expense of the Seller, the Buyer
shall deliver copies of any such books and records to the Seller.
The Buyer shall use reasonable efforts to cause any of the employees
of the Seller or any Subsidiary or the Buyer who were previously
employed by the Seller or any Subsidiary to meet with the Seller and
its representatives and agents (including counsel and accountants)
at such times and places as the Seller may reasonably request in
order to provide the Seller with information concerning the
operations of the Seller or the Subsidiaries and the conduct of its
business by the Seller or such Subsidiary to the Closing Date.
15.03
Payment of Expenses.
(a) All costs, including
recordation, stamp, transfer and documentary taxes and fees, and any
Federal, State or local excise, sales or use taxes, and any filings
or grant fees imposed by any governmental authority caused by, or
arising from, any liquidation, merger, sale or transfer by or of the
Seller or any Subsidiary or assets of the Seller or any Subsidiary
with respect to transactions provided for herein and such notes,
taxes and fees incurred after the Closing shall be paid one-half by
the Buyer and one-half by the Seller.
(b) Except as otherwise expressly
provided in this Agreement, each of the parties hereto shall bear
its own expenses, including the fees of any brokers, finders,
investment bankers, attorneys, accountants and other advisers
engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
15.04
Publicity.
The Seller and the Buyer agree
that they will not make any press releases or other announcements
prior to the Closing with respect to the transactions contemplated
hereby, except as required by applicable law, without the prior
approval of all other parties.
15.05
Notices.
All notices, demands and other
communications made hereunder shall be in writing and shall be given
either by personal delivery, by nationally recognized overnight
courier (with charges prepaid) or by telecopy (with telephone
confirmation), and shall be deemed to have been given or made when
personally delivered, the day following the date deposited with such
overnight courier service or when transmitted to telecopy machine
and confirmed by telephone, addressed to the respective parties at
the following addresses (or such other address for a party as shall
be specified by like notice):
If to the Seller:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
L.L.C.
c/o MeesPierson Fund Services (Bahamas) Limited
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
Nassau, Bahamas
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies (which shall
not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ (15th
Fl.)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer:
USWeb
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall
not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
15.06
Governing Law.
This Agreement shall be governed
with respect to corporate matters by the laws of the State of
Delaware.
15.07
Resolution of Conflicts; Arbitration.
(a) In the event of any
dispute among the parties in connection with this Agreement,
including without limitation, disputes over a claim pursuant to
Section 13.01 or Section 13.02, any disputes under the state or
Federal securities laws in connection with this Agreement, and
disputes over the amount of any amount payable pursuant to Section
2.01 hereof, the Seller and USWeb shall attempt in good faith to
agree upon the rights of the respective parties with respect to each
of such claims. If the Seller and USWeb should so agree, a
memorandum setting forth such agreement shall be prepared and signed
by both parties.
(b) If no such agreement can be
reached after good faith negotiation (or in any event after 60 days
from the date of a Notice setting forth such dispute), either USWeb
or the Seller may demand arbitration of the matter unless the amount
of the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration
conducted by three arbitrators. USWeb and the Seller shall each
select one arbitrator, and the two arbitrators so selected shall
select a third arbitrator. The arbitrators shall set a limited time
period and establish procedures designed to reduce the cost and time
for discovery while allowing the parties an opportunity, adequate in
the sole judgment of the arbitrators, to discover relevant
information from the opposing parties about the subject matter of
the dispute. The arbitrators shall rule upon motions to compel or
limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the same extent as a court
of law or equity, should the arbitrators determine that discovery
was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The
decision of a majority of the three arbitrators as to the validity
and amount of any claim in such Officer's Certificate or Notice
shall be binding and conclusive upon the parties to this Agreement.
Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrators. The
arbitrators shall not be empowered to award punitive damages.
(c) Judgment upon any award rendered
by the arbitrators may be entered in any court having jurisdiction.
Any such arbitration shall be held in New York under the rules then
in effect of the American Arbitration Association. The arbitrators
shall determine how all expenses relating to the arbitration shall
be paid, including without limitation, the respective expenses of
each party, the fees of each arbitrator and the administrative fee
of the American Arbitration Association.
15.08
Counterparts.
This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
15.09
Assignment.
This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as expressly
provided herein, neither this Agreement nor any of the rights,
interest or obligations
hereunder shall be assigned by any of the parties hereto without the
prior written consent of all other parties hereto, and any purported
assignment without such consent shall be void.
15.10
Headings.
The article and section headings
contained in this Agreement are solely for the purpose of reference,
are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
15.11
Amendments.
Any waiver, amendment,
modification or supplement of or to any term or condition of this
Agreement shall be effective only if in writing and signed by all
parties hereto, and the parties hereto waive the right to amend the
provisions of this Section orally.
15.12
Interpretation.
The words "includes
" and "including" when used herein shall be
deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever used in this Agreement with respect to a party, "
Knowledge" as used in this Agreement means that such party
(including the owners, officers, directors and employees of such
entity) knows or has good or valid reason to know of the matters in
question.
15.13
Severability.
In the event that any provision in
this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect, the remaining provisions of this
Agreement shall not be in any way impaired and the application of
such provision to other persons or circumstances will be interpreted
so as reasonably to effect the intent of the parties thereto. The
illegal, invalid or unenforceable provision shall be fully severed
from this Agreement and there shall be automatically added in lieu
thereof a provision as similar in terms and intent to such severed
provision as may be legal, valid and enforceable.
15.14
Other Remedies.
Except as otherwise provided
herein, any and all remedies herein expressly conferred hereby, or
by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
15.15
Entire Agreement.
This Agreement and the Schedules
and Exhibits hereto constitute the entire contract between the
parties hereto pertaining to the subject matter hereof, and
supersede all prior agreements and understandings between the
parties with respect to such subject matter (except with respect to
that certain Confidentiality Agreement by and between the Buyer and
the Seller which shall not be superseded hereby in the event of a
termination of this Agreement for any reason before Closing).
IN WITNESS WHEREOF, each of the
parties hereto has caused this Agreement to be signed by its duly
authorized officer as of the date first above written.
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ GROUP
L.L.C.
|
|
|
|
| By:
|
| _____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Partner
|
|
|
| USWEB CORPORATION
|
|
|
| By:
|
| _____________________________
▇▇▇▇▇▇ ▇▇▇▇
Chief Executive Officer
|
|
|
| USWEB ACQUISITION
CORPORATION 137
|
|
|
| By:
|
| _____________________________
▇▇▇▇▇▇▇ ▇▇▇▇
Chief Financial Officer
| | |