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ASSET PURCHASE AGREEMENT
by and among
MARCHFIRST, INC.
and
MARCHFIRST CONSULTING, INC.
as Sellers
and
WH ACQUISITION CORP.
as Purchaser
Dated as of April 2, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1. PURCHASE AND SALE OF ASSETS..................................... 1
SECTION 1.01 Acquired Assets............................................ 1
SECTION 1.02 Excluded Assets............................................ 1
SECTION 1.03 Assumed Liabilities........................................ 1
SECTION 1.04 Excluded Liabilities....................................... 1
SECTION 1.05 Purchase Price............................................. 2
ARTICLE 2. THE CLOSING..................................................... 3
SECTION 2.01 Closing.................................................... 3
SECTION 2.02 Deliveries at Closing...................................... 4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS................... 4
SECTION 3.01 Organization............................................... 4
SECTION 3.02 Authority Relative to this Agreement....................... 5
SECTION 3.03 Consents and Approvals..................................... 5
SECTION 3.04 No Violations.............................................. 5
SECTION 3.05 [Reserved]................................................. 5
SECTION 3.06 Certain Assets............................................. 6
SECTION 3.07 Brokers.................................................... 6
SECTION 3.08 Contracts.................................................. 6
SECTION 3.09 Intellectual Property...................................... 7
SECTION 3.10 Absence of Certain Changes................................. 9
SECTION 3.11 Litigation and Proceedings................................. 9
SECTION 3.12 Compliance with Laws and Court Orders...................... 9
SECTION 3.13 Receivables................................................ 9
SECTION 3.14 ERISA Representations...................................... 9
SECTION 3.15 WARN....................................................... 10
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................. 10
SECTION 4.01 Organization............................................... 11
SECTION 4.02 Authority Relative to this Agreement....................... 11
SECTION 4.03 Consents and Approvals..................................... 11
SECTION 4.04 No Violations.............................................. 11
SECTION 4.05 Brokers.................................................... 11
ARTICLE 5. COVENANTS....................................................... 12
SECTION 5.01 Access and Information..................................... 12
SECTION 5.02 Books and Records.......................................... 12
SECTION 5.03 Additional Matters......................................... 12
SECTION 5.04 Employees and Benefit Programs............................. 12
SECTION 5.05 Public Announcements; Confidential Information............. 14
SECTION 5.06 Passed-Through Contracts................................... 14
SECTION 5.07 Tax Matters................................................ 16
SECTION 5.08 Accounts Receivable........................................ 17
ARTICLE 6. PURCHASER COVENANTS............................................. 18
ARTICLE 7. [INTENTIONALLY OMITTED]......................................... 19
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ARTICLE 8. INDEMNIFICATION................................................. 19
SECTION 8.01 Indemnification by Sellers................................. 19
SECTION 8.02 Indemnification by Purchaser............................... 19
SECTION 8.03 Definition of Losses....................................... 19
SECTION 8.04 Indemnification Process.................................... 20
SECTION 8.05 Purchaser's Right of Set-Off............................... 22
SECTION 8.06 Limitations and Liability.................................. 22
ARTICLE 9. GENERAL PROVISIONS.............................................. 23
SECTION 9.01 Survival of Representations, Warranties, and Agreements.... 23
SECTION 9.02 Transfer Taxes............................................. 23
SECTION 9.03 Notices.................................................... 23
SECTION 9.04 Descriptive Headings; Certain Terms........................ 24
SECTION 9.05 Entire Agreement, Assignment; Competing Agreements......... 24
SECTION 9.06 Governing Laws............................................. 25
SECTION 9.07 Expenses................................................... 25
SECTION 9.08 Amendment.................................................. 26
SECTION 9.09 Waiver..................................................... 26
SECTION 9.10 Counterparts; Effectiveness................................ 26
SECTION 9.11 Integration; Parties of Interest........................... 26
SECTION 9.12 Bulk Sales................................................. 26
SECTION 9.13 Cumulative Remedies........................................ 26
SECTION 9.14 Further Assurances......................................... 26
ARTICLE 10. DEFINITIONS.................................................... 26
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT, dated as of April 2, 2001 (the "Agreement"),
is made by and among marchFIRST, Inc., a Delaware corporation ("Target" or a
"Seller"), marchFIRST Consulting, Inc., a Delaware corporation (a "Seller," and,
collectively with Target, the "Sellers"), and WH Acquisition Corp., an Illinois
corporation (the "Purchaser").
WHEREAS, the Purchaser desires to purchase the assets of the Sellers set
forth herein and assume certain liabilities from the Sellers, and the Sellers
desire to sell, convey, assign and transfer to the Purchaser, the assets and
properties set forth herein together with certain obligations and liabilities
relating thereto, all in the manner and subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
SECTION 1.01 Acquired Assets. On the terms and subject to the conditions
precedent set forth in this Agreement, the Sellers hereby sell, assign,
transfer, convey, and deliver to the Purchaser, and the Purchaser hereby
purchases and accepts from the Sellers, all of the Sellers' rights, title, and
interests in, to and under all of the assets, property, rights and claims of the
Sellers of every kind and description, wherever located, real, personal or
mixed, whether tangible or intangible, owned, held or used in the conduct of the
Businesses, free and clear of all liens, claims, encumbrances, interests and
security interests of any nature or kind whatsoever (other than Permitted
Exceptions), including, without limitation, as set forth in Schedule 1.01
(collectively, the "Acquired Assets"); provided, that the Acquired Assets shall
not include the Excluded Assets as set forth in Section 1.02.
SECTION 1.02 Excluded Assets. Notwithstanding the foregoing, the Purchaser
expressly understands and agrees that (a) the assets and properties of the
Sellers listed or described on Schedule 1.02 and (b) all Contracts (other than
the Acquired Contracts and the Employee Covenants) (collectively, the "Excluded
Assets") are excluded from the Acquired Assets.
SECTION 1.03 Assumed Liabilities. On the terms and subject to the conditions
set forth in this Agreement (including the limitations of Section 1.04), the
Purchaser hereby assumes from the Sellers and agrees to pay, perform or
discharge in accordance with their terms all of the liabilities and obligations
arising set forth on Schedule 1.03 (collectively, the "Assumed Liabilities").
SECTION 1.04 Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing or commitment (written or oral) to the contrary,
the Purchaser is assuming only the Assumed Liabilities and neither the Purchaser
nor any of its Affiliates is assuming any other liability or obligation of the
Sellers (or any predecessors or Affiliates of the Sellers or any prior
owners of all or part of their businesses and assets) of whatever nature,
whether presently in existence or arising hereafter. All such other liabilities
and obligations shall be retained by and remain obligations and liabilities of
the Sellers (all such liabilities and obligations not being assumed being herein
referred to as the "Excluded Liabilities"). Without limiting the foregoing and
notwithstanding anything to the contrary in this Agreement, none of the
following shall be Assumed Liabilities for the purposes of this Agreement and
shall be deemed Excluded Liabilities:
(a) any liability or obligation under any Environmental Laws;
(b) any liability or obligation related to employees of Sellers, except as
listed on Schedule 1.03;
(c) any liability or obligation under any Contract, other than the
Acquired Contracts;
(d) any liability or obligation arising out of any breach of or default
under any Acquired Contract relating to any period prior to Closing other than
any product or services warranty claim or work relating to products or services
sold or provided prior to Closing under a Customer Contract;
(e) any liability or obligation for indebtedness for borrowed money or
evidenced by bonds or notes (including accrued interest and fees with
respect thereto);
(f) any Taxes other than those for which Purchaser is expressly liable
pursuant to Section 5.07;
(g) any liability or obligation relating to an Excluded Asset; and
(h) any liability or obligation under any International Plan, Employee
Plan or Benefit Arrangement, except as provided in Section 5.04(a).
SECTION 1.05 Purchase Price. In consideration for the Acquired Assets, the
Purchaser shall pay to the Sellers (collectively, the "Purchase Price"):
(a) at the Closing, $6,250,000.00 by wire transfer of immediately
available funds (the "Cash Proceeds") and $27,750,000.00 in the form of a
secured promissory note in the form attached hereto as Exhibit A (the "Note");
and
(b) after Purchaser has paid in full either the Note or the Subsequent
Note, then (i) on or before the forty-fifth (45th)day after the end of each
calendar quarter, an amount equal to fifty percent (50%) of the Free Cash Flow
(as defined in the applicable note) (including any partial quarter), and (ii)
promptly after receipt thereof, fifty percent of any Equity Sale Proceeds (to
the extent not applied toward payment of the Note or Subsequent Note); provided,
however, that (i) no amounts shall be payable for any period after the calendar
quarter ended March 31, 2006, and (ii) the maximum amount payable to Seller
pursuant to this clause (b) is $39,050,000.00 (the amount payable under this
clause (b) is referred to as the "Bonus"). The Purchaser may, in its sole
discretion, elect to pay or cause to be paid all or part of the Bonus in the
form of shares of
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common stock of divine, Inc. (or its successor registrant) if, as of the date of
the Bonus, such common stock is listed for trading on any national securities
exchange or designated as a national market system security by the NASD, and
either (x) such shares would be freely tradeable by the Sellers without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or (y) a shelf registration statement pursuant to Rule 415 under the
Securities Act, covering the resale of all such shares issuable to the Sellers,
is effective, subject to the following provisions:
(i) the value of the common stock for determining the number of
shares to be delivered in payment of the Bonus shall be its Current Market Value
as of such date. "Current Market Value" shall mean the average daily Market
Value (as defined below) during the period of the most recent 20 days, ending on
such date, on which the national securities exchanges were open for trading.
"Market Value" shall mean, on any date of determination, the amount per share of
common stock equal to (A) the last trading price of such common stock on such
date, or (B) if there shall have been no trading on such date, the average of
the closing bid and asked prices of the common stock on such date as shown by
the NASD automated quotation system;
(ii) the number of shares of common stock delivered in payment of
the Bonus shall not exceed the aggregate trading volume of divine, Inc. common
stock during the quarter ended immediately prior to the date of the Bonus;
(iii) in the event a shelf registration statement covers resales of
common stock by the Sellers, such registration statement's effectiveness shall
be maintained until the earlier to occur of (A) the date on which the Sellers
can sell all of the shares of common stock covered by such registration
statement without restriction pursuant to Rule 144(k) under the Securities Act
or any successor provision, or (B) the date on which the Sellers have sold all
of the shares of common stock covered by such registration statement; and
(iv) Purchaser shall not be permitted to deliver shares of divine,
Inc. common stock at any date if on such date Sellers hold 2,000,000 (adjusted
for stock splits, reorganization and similar matters after the date hereof)
shares that have been delivered pursuant to this Section 1.05.
(c) if any amount payable under clause (b) is not paid when due, then such
amount shall accrue interest at fifteen percent (15%) per annum until paid.
(d) The term "Equity Sale Proceeds" means net proceeds received by divine,
Inc. from the sale of any equity interest (or any security convertible into, or
exchangeable for, such equity interest) of the Purchaser.
ARTICLE 2.
THE CLOSING
SECTION 2.01 Closing. On the date hereof (the "Closing Date") in order to
effectuate the transactions contemplated by this Agreement (the "Closing") the
parties are taking the following actions.
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SECTION 2.02 Deliveries at Closing.
(a) The Sellers shall deliver to the Purchaser (i) such bills of sale,
assignments of leases and contracts, and any other instruments of conveyance
(collectively, the "Conveyance Documents") that, in the reasonable judgment of
Purchaser, are reasonable and necessary to effectively vest in Purchaser good,
valid and insurable title to the Acquired Assets, free and clear of all liens,
claims, encumbrances, interests and security interests of any nature or kind
whatsoever (other than Permitted Exceptions) pursuant to the terms of this
Agreement; (ii) such other customary closing documents, instruments or
certificates required to be delivered as a condition precedent to the
Purchaser's obligations under this Agreement; (iii) opinions of counsel of
Morris, Nichols, Arsht & ▇▇▇▇▇▇▇ and the general counsel of Target in the forms
as to the matters attached hereto as Exhibits B and C; (iv) a technology license
agreement in the form attached hereto as Exhibit D (the "Technology License
Agreement"); (v) transition services agreements in the forms attached hereto as
Exhibits E and F (the "Transition Services Agreements"); (vi) a written
agreement from American National Bank and Trust Company of Chicago (X)
consenting to the transactions contemplated hereby, the transactions
contemplated by the Subsequent Asset Purchase Agreement or the Credit Agreement,
(Y) waiving any covenant breach or default under the Loan Agreement, dated as of
April 30, 2000 by and between American National Bank and Trust Company of
Chicago and the Sellers, as amended and extended, resulting from the
transactions contemplated hereby, the transactions contemplated by the
Subsequent Asset Purchase Agreement or the Credit Agreement and (Z) releasing
any Liens held on the Acquired Assets and the assets to be acquired pursuant to
the Subsequent Asset Purchase Agreement; (vii) a trademark assignment agreement
in the form attached hereto as Exhibit G (the "Trademark Assignment Agreement");
and (viii) a certification for each Seller that satisfies the requirements of
Treasury Regulation Section 1.1445-2(b), duly executed, in a form reasonably
acceptable to the Purchaser.
(b) The Purchaser shall deliver to the Sellers (i) such duly executed
instruments as are deemed necessary or appropriate to effectuate the assumption
of the Assumed Liabilities by the Purchaser; (ii) such other customary closing
documents, instruments or certificates required to be delivered as a condition
precedent to the Sellers' obligations under this Agreement; (iii) the Cash
Proceeds; (iv) a duly executed Note; (v) an opinion of the general counsel of
the sole stockholder of the Purchaser as to the matters set forth on Exhibit H;
(vi) the Technology License Agreement; (vii) the Transition Services Agreements;
and (viii) the Trademark Assignment Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the Purchaser
as follows:
SECTION 3.01 Organization. Each Seller is a corporation validly existing and
has the corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business. Each
Seller is in good standing under the laws of the State of Delaware.
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SECTION 3.02 Authority Relative to this Agreement. Each Seller has the
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Sellers and the consummation by the Sellers of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action. This Agreement and the Ancillary Agreements have
been duly and validly executed and delivered by each Seller and (assuming this
Agreement and the Ancillary Agreements constitute valid and binding obligations
of the Purchaser) constitute valid and binding obligations of each Seller,
enforceable against it in accordance with its and their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.03 Consents and Approvals. Assuming that the representation and
warranty of Purchaser contained in Section 4.03 is true and correct, no consent,
approval, order, or authorization of, or declaration, filing or registration
with, any Governmental Authority is required to be made or obtained by the
Sellers in connection with the execution, delivery and performance by Sellers of
this Agreement or the Ancillary Agreements and the consummation of the
transactions contemplated hereby or thereby.
SECTION 3.04 No Violations. Neither the execution, delivery or performance of
this Agreement nor any Ancillary Agreement by either Seller, nor the
consummation by either Seller of the transactions contemplated hereby or
thereby, nor compliance by either Seller with any of the provisions hereof or
thereof, will (a) conflict with or result in any breach of any provisions of the
articles or certificate of incorporation, as the case may be, or bylaws of
either Seller, (b) except as may arise under the Acquired Contracts or Passed-
Through Contracts, result in a violation or breach of, or constitute (with or
without due notice or lapse of time) a default (or give rise to any right of
termination, cancellation, acceleration, vesting, payment, exercise, suspension,
or revocation) under any of the terms, conditions or provisions of any note,
bond, mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which either Seller is a
party or by which either Seller or either Seller's properties or assets may be
bound or affected, (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to either Seller or either Seller's properties or
assets, (d) result in the creation or imposition of any encumbrance on any
Acquired Asset, or (e) cause the suspension or revocation of any permit,
license, governmental authorization, consent or approval necessary for the
conduct of the Businesses as currently conducted or as proposed to be conducted,
except in the case of clauses (b), (c), (d), and (e) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations that would not individually or in the aggregate have
a material adverse effect on either Seller's ability to complete the
transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 3.05 [Reserved].
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SECTION 3.06 Certain Assets.
(a) Schedule 3.06(a) sets forth the street address of each parcel of real
property (the "Real Property") relating to the Businesses owned, leased,
operated or subleased by each Seller, specifying whether such Real Property is
owned or leased and in the case of leases or subleases, the name of the lessor
or sublessor.
(b) Except as set forth in Schedule 3.06(d), each Seller has a valid
leasehold interest in the Real Property designated on Schedule 3.06(a) as being
leased or subleased by such Seller.
(c) Except as set forth in Schedule 3.06(c) or except (in the case of a
Passed-Through Contract) due to a payment default, the Sellers have good and
valid title to, or a valid leasehold interest in, all tangible personal property
included in the Acquired Assets or Passed-Through Contracts. Except as set forth
on Schedule 3.06(c), regardless of any such default, no tangible personal
property which is an Acquired Asset or is subject to a Passed-Through Contract
has been repossessed or otherwise removed from a Seller's use.
(d) Except as set forth in Schedule 3.06(d), there does not exist under
any material lease of Real Property, any material default or any event which
with notice or lapse of time or both would constitute a default, other than
defaults caused solely by the consummation of the transactions contemplated
hereby.
(e) The Acquired Assets and the Passed-Through Contracts include all of
the assets necessary to operate the Businesses after the Closing in the hands of
the Purchaser in the same manner and effect as the Businesses are being operated
by the Sellers as of the date hereof.
(f) The Sellers own all rights, title, and interest in, to and under the
Acquired Assets, free and clear of any mortgage, lien, pledge or security
interest (other than Permitted Exceptions).
(g) The Sellers have provided to the Purchaser a true and complete list of
the names, titles, and annual salaries of all employees of the Businesses whose
annual base salary exceeds $100,000.
(h) All accounts receivable of the Sellers and their Affiliates are owned
by one of the Sellers, free and clear of all liens, pledges and security
interests of any nature or kind whatsoever (other than Permitted Exceptions).
SECTION 3.07 Brokers. No person is entitled to any brokerage, financial
advisory or finder's fee or similar fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Sellers for which the Purchaser
will be liable.
SECTION 3.08 Contracts.
(a) Except as disclosed in Schedule 3.08(a) as of the date hereof, none of
the Passed-Through Contracts include:
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(i) any lease for personal property requiring aggregate annual
payments by the Sellers of $100,000 or more;
(ii) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets that has a term of at least one year or that
requires aggregate annual payments by the Sellers of $100,000 or more;
(iii) any other agreement that requires aggregate annual payments by
the Sellers of $100,000 or more;
(iv) any partnership, joint venture or other similar agreement or
arrangement, exclusive of alliance agreements which do not involve cash
payments or covenants not to compete;
(v) any agency, dealer, sales representative, marketing or other
similar agreement; or
(vi) any agreement that limits the freedom of the Sellers to compete
in any line of business or with any Person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any Acquired Asset or
which would so limit the freedom of the Purchaser after the Closing Date.
True and complete copies of each such Contract disclosed on Schedule
3.08(a) (and all amendments and modifications thereof and waivers pertaining
thereto) have been delivered or made available to the Purchaser.
(b) The Contracts specifically identified on Schedule 1.01 constitute all
of the Customer Contracts. Except as disclosed on Schedules 3.08(b) or 3.11, to
the knowledge of either Seller after reasonable inquiry, neither of the Sellers
nor any other party thereto is in default or breach in any material respect
under the terms of any Customer Contract which is reasonably likely to
materially and adversely affect the likelihood of the subject customer
continuing use of services under such Customer Contract (except for defaults and
breaches caused solely by the consummation of the transactions contemplated
hereby). True and complete copies of each Customer Contract (and all amendments
and modifications thereof and waivers pertaining thereto) have been delivered or
made available to the Purchaser.
SECTION 3.09 Intellectual Property.
(a) Except as set forth on Schedule 3.09(a), there shall be no fees,
payments to third parties (other than service providers) or assessments (other
than administrative filing and registration fees) required to assign or sell the
Intellectual Property included in the Acquired Assets to Purchaser.
(b) Except as set forth on Schedule 3.09(b), the Sellers are not aware of
any defenses which a non-Seller party may have to the assignment or sale of the
Intellectual Property included in the Acquired Assets to Purchaser.
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(c) With respect to the Intellectual Property included in the Acquired
Assets or the subject of Passed-Through Contracts:
(i) the Sellers own, or have a valid leasehold or license interest
in, or rights to such Intellectual Property other than due to a payment default
under a Passed-Through Contract which has not resulted in termination of such
contract;
(ii) pursuant to this Agreement, the Sellers have validly sold,
assigned, transferred, conveyed and delivered to the Purchaser all of the
Sellers' rights, title and interest in the Intellectual Property included in the
Acquired Assets, subject to customary registrations and filings;
(iii) except as set forth on Schedule 3.09(c)(iii), neither Seller or
any of their Affiliates is obligated to make any royalty or other payment with
respect to any Intellectual Property included in the Acquired Assets;
(iv) except as set forth on Schedule 3.09(c)(iv), none of such
Intellectual Property has been sublicensed by the Sellers to any Person nor has
either Seller granted any other rights in such Intellectual Property to any
Person; and
(v) the Sellers have had all employees and independent contractors
sign written agreements transferring and assigning to Seller, including without
limitation the copyrights therein, prior to the Closing Date, any and all rights
in and to such Intellectual Property.
(d) Schedule 3.09(d) lists all Third Party Licenses requiring
aggregate annual payments by the Sellers after the Closing in excess of $100,000
and whether either Seller is in default of any material payment thereunder.
(e) Except in each case or in the aggregate as would not be reasonably
likely to have a Material Adverse Effect, (i) the Intellectual Property is not
now involved in any opposition, invalidation, challenge or cancellation and, to
the knowledge of either Seller, no such action is threatened with respect to
such Intellectual Property included in the Acquired Assets, (ii) the
Intellectual Property included in the Acquired Assets is not infringing or
potentially infringing any third party rights and neither Seller has any
knowledge of any claim to that effect, (iii) to the knowledge of either Seller,
no third party is infringing either Seller's rights in and to the Intellectual
Property included in the Acquired Assets, (iv) each Seller has performed all
action necessary to maintain such Seller's rights, ownership and status,
including without limitation their validity and enforceability, in and with
regard to the Intellectual Property included in the Acquired Assets and has
complied with the legal requirements related thereto through the Closing Date,
(v) to the knowledge of either Seller, the Sellers' use of the Intellectual
Property which is the subject of the Passed-Through Contracts has not been and
is not now involved in any opposition, invalidation, challenge or cancellation
and, to the knowledge of either Seller, no such action is threatened with
respect to such Intellectual Property, and (vi) to the knowledge of either
Seller, the Sellers' use of the Intellectual Property which is the subject of
the Passed-
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Through Contracts is not infringing or potentially infringing any third party
rights and neither Seller has any knowledge of any claim to that effect.
SECTION 3.10 Absence of Certain Changes. Except as disclosed in Schedule 3.10,
since September 30, 2000, there has not been any material damage, destruction or
other casualty loss (whether or not covered by insurance) affecting any material
tangible personal property included in the Acquired Assets which, individually
or in the aggregate, has had or could reasonably be expected to have
individually or in the aggregate a Material Adverse Effect.
SECTION 3.11 Litigation and Proceedings. Except as described in Schedule 3.11,
there is no action, suit, investigation or proceeding pending against or, to the
knowledge of either Seller after reasonable inquiry, threatened in writing
against or affecting the Businesses or any Acquired Asset before any court or
arbitrator or any government body, agency or official which (a) could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Acquired Assets after the Closing or (b) in any manner challenges or
seeks to prevent, enjoin, after or materially delay the transactions
contemplated by this Agreement.
SECTION 3.12 Compliance with Laws and Court Orders. Except as set forth on
Schedule 3.12, since September 30, 2000, the Businesses have been conducted in
material compliance with all applicable laws, statutes, rules, regulations,
judgments, injunctions, orders or decrees and since September 30, 2000 neither
Seller has received any written communication from a government authority that
alleges that any of the Businesses have not been conducted in compliance with
any applicable laws, statutes, rules, regulations, judgments, injunctions,
orders or decrees, except in each case for violations that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Except as disclosed on Schedule 3.11, neither the
Sellers nor any of their Affiliates have received notice of the intent of any
federal or state agency responsible for the enforcement of labor or employment
laws to conduct an investigation with respect to the Businesses that could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.13 Receivables. All accounts receivable comprising Acquired Assets
(other than receivables collected since the Balance Sheet Date) reflected on the
Balance Sheet on a consolidated basis are valid and arose from Sellers' conduct
of their business in the ordinary course.
SECTION 3.14 ERISA Representations.
(a) Schedule 3.14(a) lists (i) each material "employee benefit plan," as
such term is defined in Section 3(3) of ERISA (an "Employee Plan"), which is
maintained, administered or contributed to by the Sellers which covers employees
of the Businesses or in which such employees participate other than any plan
exempt from ERISA pursuant to Section 4(b)(4) of ERISA and (ii) each material
employment, severance or other similar contract and material policy, plan or
arrangement providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement
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insurance, compensation or benefits which (1) is not an Employee Plan, (2) is
entered into, maintained or contributed to, as the case may be, by the Sellers
or any of its subsidiaries to cover employees or former employees of the Sellers
or any of its subsidiaries, (3) is not entered into, maintained or contributed
to primarily for the benefit of persons substantially all of whom are
nonresident aliens of the United States and (4) is not an International Plan.
Such contracts, policies, plans and arrangements described in clause (B) above
are hereinafter referred to collectively as the "Benefit Arrangements."
(b) No Employee Plan maintained, administered or contributed to by the
Sellers or any ERISA Affiliate is a Multiemployer Plan or is subject to Title IV
of ERISA or Section 412 of the Code. Neither the Sellers nor any of the Sellers'
ERISA Affiliates has incurred any liability under Title IV of ERISA arising in
connection with the termination of any plan covered or previously covered by
Title IV of ERISA, or has maintained a plan subject to Section 412 of ERISA, for
which any liability remains outstanding.
(c) Each Employee Plan in which employees of the Businesses participate
and which is intended to be qualified under Section 401(a) of the Code, is so
qualified or, if such Employee Plan fails to be so qualified, can become
qualified on a retroactive basis, or the Sellers will notify Purchaser of such
failure prior to the rollover of any participant's accounts from such plan to
any plan of the Purchaser.
(d) The Acquired Assets are not now nor will they after the passage of
time be subject to any Lien imposed under Section 412(n) of the Code by reason
of the failure of either Seller or their ERISA Affiliates to make timely
installments or other payments required by Section 412 of the Code with respect
to any plan maintained by either Seller or their ERISA Affiliates prior to the
Closing.
(e) With respect to the employees of the Sellers or any of the Sellers'
Subsidiaries the principal work location of which is located in the United
States who are residents or citizens of the United States, there are no employee
post-retirement medical or health plans in effect, except as required by COBRA.
SECTION 3.15 WARN. Except to the extent set forth on Schedule 3.15, since the
enactment of the WARN Act, the Sellers have not effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
either Seller; or (ii) a "mass layoff" (as defined in the WARN Act) affecting
any site of employment or facility of either Seller; nor has either Seller been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state or local law.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
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SECTION 4.01 Organization. The Purchaser is a corporation validly existing and
in good standing under the laws of the State of Illinois and has the corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted.
SECTION 4.02 Authority Relative to this Agreement. The Purchaser has the
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to carry out its obligations hereunder and thereunder. The
execution, delivery, and performance of this Agreement and the Ancillary
Agreements by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action. This Agreement and the Ancillary Agreements have
been duly and validly executed and delivered by the Purchaser and (assuming this
Agreement and the Ancillary Agreements constitute valid and binding obligations
of the Sellers) constitute valid and binding agreements of the Purchaser,
enforceable against the Purchaser in accordance with its and their terms.
SECTION 4.03 Consents and Approvals. No consent, approval, or authorization of,
or declaration, filing or registration with, any Governmental Authority is
required to be made or obtained by the Purchaser in connection with the
execution, delivery, and performance of this Agreement or the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby.
SECTION 4.04 No Violations. Neither the execution, delivery or performance of
this Agreement or the Ancillary Agreements by the Purchaser, nor the
consummation by the Purchaser of the transactions contemplated hereby or
thereby, nor compliance by the Purchaser with any of the provisions hereof or
thereof, will (a) conflict with or result in any breach of any provisions of the
articles or certificate of incorporation, as the case may be, or bylaws of the
Purchaser, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time) a default (or give rise to any right of
termination, cancellation, acceleration, vesting, payment, exercise, suspension,
or revocation) under any of the terms, conditions or provisions of any note,
bond, mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which the Purchaser is a
party or by which the Purchaser or the Purchaser's properties or assets may be
bound or affected, (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Purchaser or the Purchaser's properties or
assets, (d) result in the creation or imposition of any encumbrance on any asset
of the Purchaser, or (e) to the Purchaser's knowledge, cause the suspension or
revocation of any permit, license, governmental authorization, consent or
approval necessary for the Purchaser to conduct its business as currently
conducted or as proposed to be conducted, except in the case of clauses (b),
(c), (d), and (e) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or revocations
that would not individually or in the aggregate have a material adverse effect
on the Purchaser's ability to complete the transactions contemplated by this
Agreement or the Ancillary Agreements.
SECTION 4.05 Brokers. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by the Purchaser in
connection with the
11
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Purchaser.
ARTICLE 5.
COVENANTS
SECTION 5.01 Access and Information. The Sellers shall afford to the Purchaser
and to the Purchaser's financial advisors, legal counsel, accountants,
consultants, financing sources and other authorized representatives reasonable
access during normal business hours throughout the period from and after the
Closing Date to the books, records, properties and personnel of the Sellers
related to the Acquired Assets and, during such period, shall furnish as
promptly as practicable to the Purchaser any and all such information as the
Purchaser reasonably may request; provided, however, that any such access or
copying shall be had or done in such a manner so as not to unreasonably
interfere with the normal conduct of the Sellers' business or operations.
SECTION 5.02 Books and Records.
(a) If the Purchaser wishes to dispose of or destroy any of the business
records or files related to the Acquired Assets which are transferred to the
Purchaser pursuant to this Agreement, it shall first give 10 days' prior written
notice to the Sellers, and the Sellers shall have the right, at their option and
expense, upon prior written notice to the Purchaser within such 10-day period,
to take possession of such records and files within 20 days after the date of
the notice from the Sellers.
(b) The Purchaser shall allow the Sellers and any of its then current
directors, officers, employees, counsel, representatives, accountants and
auditors (collectively, the "Sellers' Representatives"), at Sellers' expense,
access to all business records, files and personnel of the Sellers or the
Acquired Assets that are transferred to the Purchaser in connection herewith,
which are reasonably required by such Sellers' Representatives for valid
business purposes, during regular business hours and upon reasonable notice at
the Sellers' former offices and the Sellers' Representatives shall have the
right to make copies of any such records and files; provided, however, that any
such access or copying shall be had or done in such a manner so as not to
unreasonably interfere with the normal conduct of the Purchaser's business or
operations.
SECTION 5.03 Additional Matters. Subject to the terms and conditions herein,
each of the parties hereto agrees to use all commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, including under applicable laws and
regulations, to consummate and make effective the transactions contemplated by
this Agreement, including using all commercially reasonable efforts to obtain
all necessary waivers, consents and approvals required under this Agreement.
SECTION 5.04 Employees and Benefit Programs.
(a) Employees and Offers of Employment. The Purchaser shall be entitled to
and will make offers of employment to the employees listed on Schedule 5.04(a)
(the "Employment
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Offerees"). The Sellers shall facilitate the Purchaser doing so, including,
without limitation, by making such persons and their personnel files available
to the Purchaser and its Representatives. The Sellers shall be solely
responsible for any WARN Act notification and any liability under the WARN Act,
relating to any termination of any of Sellers' employees occurring on or after
the date of this Agreement. Any severance or other obligations to officers and
employees of Sellers shall not be Assumed Liabilities. Any such offer of
employment shall be at such salary or wage and benefit levels made available by
the Purchaser to similarly situated employees and on such other terms and
conditions as the Purchaser shall in its sole discretion deem appropriate. The
employees engaged in the Businesses who accept and commence employment with the
Purchaser are hereinafter collectively referred to as the "Transferred
Employees." The Sellers will not take, and will cause each of their subsidiaries
not to take, any action which would impede, hinder, interfere or otherwise
compete with the Purchaser's effort to hire any Employment Offeree.
(b) Sellers' Employee Liabilities and Benefit Plans. All (i) Sellers'
Employee Liabilities, (ii) obligations and liabilities under the Employee Plans
and Benefit Arrangements and (iii) obligations and liabilities with respect to
each Retained Employee, and any former employee of either Seller who is not a
Transferred Employee to the extent any such liability or obligation relates to
the period prior to the Closing Date shall not be Assumed Liabilities. No assets
of any Employee Plan or Benefit Arrangement shall be transferred to the
Purchaser or any of its Affiliates or to any plan of the Purchaser or any of its
Affiliates.
(c) Purchaser Benefit Plans. The Purchaser or one of its Affiliates will
recognize all years of service of the Transferred Employees with the Sellers (or
their predecessors) or any of their Affiliates, only for purposes of eligibility
to participate in and to vest under those employee benefit plans, within the
meaning of Section 3(3) of ERISA, in which the Transferred Employees are
enrolled by the Purchaser or one of its Affiliates immediately after the Closing
Date. The Purchaser shall cause all pre-existing condition exclusions under any
medical and dental plans ("Purchaser's Health Plans") made available by the
Purchaser to Transferred Employees to be waived in respect of such employees and
dependents, but only to the extent Sellers' medical and dental plans recognize
such Transferred Employees and their dependents as having satisfied any pre-
existing conditions exclusion under Sellers' medical and dental plans.
(d) Employee Covenants. Each Seller hereby assigns to the Purchaser all
rights and claims of such Seller of every kind and description under all non-
disclosure, confidentiality, non-competition, non-solicitation, assignment of
inventions and other agreements of a comparable nature with (i) all present and
former employees other than Employment Offerees to the extent such agreements
relate to the Businesses and (ii) all Employment Offerees whether or not such
agreements relate to the Businesses (collectively, the "Employee Covenants").
Furthermore, the Purchaser hereby assigns to the Sellers all rights and claims
of every kind and description under any employee non-solicitation agreements
with Employment Offerees assigned by the Sellers to the Purchaser pursuant to
the first sentence of this subsection to the extent not related to the
Businesses; provided, that no action taken by any Employment Offeree to
effectuate the transactions contemplated under the Subsequent Asset Purchase
Agreement shall be a violation of any non-solicitation rights assigned by the
Purchaser to the Sellers pursuant to this sentence or retained by Seller
pursuant to the preceding sentence. The Sellers shall not make or propose any
modifications or amendments to any Employee Covenants without the Purchaser's
prior written
13
consent. On or before June 30, 2001, neither the Purchaser nor any of its
Affiliates shall solicit for employment any active employee of either Seller or
any of their Affiliates (or any employee of either Seller on the date hereof
that any such employee becomes a former employee by virtue of a sale of a
business by such Seller to a third party after the date hereof), other than the
Employment Offerees hereunder and under the Subsequent Asset Purchase Agreement
with respect to the transaction contemplated hereunder and thereunder. On or
before June 30, 2001, neither the Sellers nor any of their Affiliates shall
solicit for employment any active employee of the Purchaser or any of its
Affiliates, and none of the Sellers or their Affiliates shall sell, transfer or
otherwise convey or agree to sell, transfer or otherwise convey any assets of or
equity interest in the Sellers or any of their Affiliates unless the purchaser
of such assets or equity interest shall have agreed to be bound to the
aforementioned non-solicitation covenant.
(e) No Third Party Beneficiaries. No provision of this Article shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of either Seller or of
any of their subsidiaries in respect of continued employment (or resumed
employment) with either any Business, the Purchaser any of its Affiliates and no
provision of this Section 5.04 shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement which may be
established by the Purchaser or any of its Affiliates. No provision of this
Agreement shall constitute a limitation on rights to amend, modify or terminate
after the Closing Date any such plans or arrangements of the Purchaser or any of
its Affiliates.
SECTION 5.05 Public Announcements; Confidential Information. The Purchaser and
the Sellers shall consult with each other before issuing any press release or
making any public statement or other public communication with respect to the
Agreement or the transactions contemplated hereby. The Purchaser and the Sellers
shall not issue any such press release or make any such public statement or
public communication without the prior consent of the other party, which shall
not be unreasonably withheld or delayed; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may, upon the advice of counsel, be required by law or
any listing agreement with any national securities exchange. After the Closing,
the Sellers shall (a) not disclose to others any confidential information about
the Businesses without the prior consent of the Purchaser except to the extent
such disclosure is required by law or order of any Governmental Authority (in
which case the Sellers shall, to the extent practicable, inform the Purchaser in
advance of any such disclosure, shall cooperate with the Purchaser in obtaining
a protective order or other protection in respect of such required disclosure,
and shall limit such disclosure to the extent possible while still complying
with such requirements) and (b) use reasonable care to safeguard confidential
information about the Businesses and to protect such information against
disclosure, misuse, espionage, loss and theft.
SECTION 5.06 Passed-Through Contracts. The Sellers and the Purchaser shall use
their respective best efforts to obtain any consent, approval or amendment
required to novate and/or assign to the Purchaser the Acquired Contracts, the
Employee Covenants and all other Contracts, licenses and other related rights of
any nature whatsoever which relate to the Acquired Assets or are necessary in
the ordinary course to operate the Businesses (the "Passed-Through Contracts"
14
which term, for purposes of this Section 5.06 only, shall include the Acquired
Contracts and the Employee Covenants, but elsewhere in this Agreement shall not
include the Acquired Contracts or the Employee Covenants); provided, however,
that except for filing and other administrative charges, the Purchaser shall not
be obligated to pay any consideration, and neither Seller shall be obligated to
(i) pay any material consideration or (ii) make payments in satisfaction of
amounts due under such contracts relating to any period prior to Closing,
therefor to the third party from whom such consents, approvals or amendments are
requested. Until such time as such consents, approvals or amendments are
obtained, or in the event and to the extent that the Sellers and the Purchaser
are unable to obtain any such required consent, approval or amendment, or if any
attempted assignment would be ineffective or would adversely affect the rights
of the Sellers with respect to any Passed-Through Contract so that the Purchaser
would not in fact receive all the rights with respect to such Passed-Through
Contract, the Sellers and the Purchaser will cooperate in a mutually agreeable
arrangement under which the Purchaser shall obtain the benefits and satisfy the
obligations arising after the Closing Date with respect to such Passed-Through
Contract in accordance with this Agreement, including sub-contracting, sub-
licensing, or sub-leasing to the Purchaser, or under which the Sellers would
enforce for the benefit of the Purchaser, with the Purchaser satisfying such
Sellers' obligations, any and all rights of the Sellers against a third party
thereto. The Sellers shall, without further consideration therefor, pay and
remit to the Purchaser promptly all monies, rights, and other considerations
received in respect of the Purchaser's performance of such obligations, and, at
the Purchaser's request, shall direct that such payments be made directly to the
Purchaser. Without limiting the foregoing, the Sellers shall not terminate any
Passed-Through Contract (unless the Purchaser has terminated its arrangement
with respect thereto, sooner than thirty (30) days after the date hereof).
Without limiting the foregoing, this Agreement shall be deemed to effect the
following arrangements as of the Closing:
(a) The Sellers hereby sublease to Purchaser, their rights under all
leases between either Seller and a third party granting a lease to Real Property
listed on Schedule 5.06(a) to either Seller which is listed on Schedule 5.06(a),
with Purchaser making payments in respect thereof as provided on Schedule
5.06(a) (or directly to the payee, if Purchaser so elects); provided, that any
such sublease shall automatically terminate on the thirty-first (31st) day after
the Closing Date unless (i) the Purchaser shall have obtained the consent,
approval or amendment required to novate and/or assign to the Purchaser such
Passed-Through Contract and (ii) the Sellers shall have received any security
deposit related to such Passed-Through Contract.
(b) As to master equipment leases or other similar multi-asset contracts
(including Third Party rights) which include assets which are in part not used
in the Businesses, obligations under such contracts shall be allocated to
Purchaser based on the relative charges under the contract for the rights or
assets used in the Businesses (based on utilization or similar indicator) (and
paid directly to payee, if Purchaser so elects); provided, that the charges
allocated to Purchaser for any ▇▇▇▇▇▇ Financial equipment leases of Sellers
shall be limited to the amount provided on Schedule 5.06(a) in the aggregate for
any amounts allocated under this Agreement or the Subsequent Asset Purchase
Agreement.
(c) The Sellers hereby sublicense their rights under the Third Party
Licenses, subject to allocation per Section 5.06(b) (and paid directly to payee,
if Purchaser so elects).
15
Purchaser may, from time to time, upon five (5) business days' notice to the
Sellers, terminate any arrangements which are the subject of this Section 5.06
(excluding the Acquired Contracts) with respect to periods after such notice,
without liability or further obligation to either Seller or any third party.
Notwithstanding the foregoing or any other term of this Agreement, (X) the
Sellers shall have no liability to Purchaser if, for any reason, they are unable
to provide the services called for by the Passed-Through Contracts other than
due to an affirmative action by either Seller and (Y) the Sellers shall not be
obligated to provide services under any Passed-Through Contract if as a result
of providing such services the other party to such Passed-Through Contract
ceases or threatens in writing to cease providing services to Seller's other
businesses. Notwithstanding any of the subleasing, sublicensing or
subcontracting arrangements set forth above, the Purchaser shall not assume any
liability or obligations arising under any Passed-Through Contract which relates
to any period prior to the Closing.
SECTION 5.07 Tax Matters.
(a) Liability for Taxes.
(i) Sellers shall be liable for and pay, and pursuant to Section 8.01
shall indemnify Purchaser against, (A) all Taxes (other than Property Taxes
relating to the Acquired Assets) imposed on the Sellers or for which the Sellers
may otherwise be liable (including any Taxes resulting from the transactions
hereunder and any liability for Taxes, including those described in Section
9.02, imposed on the Sellers pursuant to any provision in this Agreement) and
(B) all Property Taxes relating to the Acquired Assets that relate to, or are
otherwise allocable pursuant to Section 5.07(b) to, a Pre-Closing Tax Period.
(ii) Purchaser shall be liable for and pay, and pursuant to Section
8.02 shall indemnify Sellers against, (A) all Taxes imposed on the Acquired
Assets (other than Property Taxes) for any taxable year or period that begins
after the Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period beginning after the Closing Date and (B) all Property Taxes
relating to the Acquired Assets that do not relate to, or are otherwise not
allocable pursuant to Section 5.07(b) to, a Pre-Closing Tax Period; provided,
however, that Purchaser shall not be liable for or pay, and shall not indemnify
Sellers against, any Taxes for which Sellers are liable under this Agreement
(including, without limitation, Section 5.07(a)(i)).
(b) In the case of any Straddle Period:
(i) real, personal and other similar intangible property Taxes
("Property Taxes") relating to the Acquired Assets for the Pre-Closing Tax
Period shall be equal to the amount of such Property Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of days during the Straddle Period that are in the Pre-Closing Tax Period and
the denominator of which is the total number of days in the Straddle Period; and
(ii) the Taxes relating to the Acquired Assets (other than Property
Taxes) for any Pre-Closing Tax Period shall be computed, using the closing of
the books method, as if such taxable period ended as of the close of business on
the Closing Date.
16
(c) The Purchaser and the Sellers agree to (i) furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Businesses and the Acquired Assets
(including access to books and records) as is reasonably necessary for the
filing of all Tax Returns, the making of any election relating to Taxes, the
preparation for any audit by any Taxing Authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax and (ii) cooperate
fully in preparing for any audits of, or disputes with Taxing Authorities
regarding, any Tax relating to the Businesses or the Acquired Assets; (iii)
provide timely notice to the other in writing of any pending or threatened Tax
audits or assessments relating to the Businesses or the Acquired Assets for
taxable periods for which the other may have a liability; and (iv) furnish the
other with copies of all correspondence received from any Taxing Authority in
connection with any Tax audit or information request with respect to any such
taxable period. The Purchaser shall retain all books and records with respect to
Taxes pertaining to the Acquired Assets for a period of at least six years
following the Closing Date. Each party shall provide the other with at least ten
days prior written notice before destroying or transferring custody of any such
books and records, during which period the party receiving such notice can elect
to take possession, at its own expense, of such books and records.
SECTION 5.08 Accounts Receivable.
(a) If and to the extent that the proceeds of the accounts receivable
included in the Acquired Assets or other funds pertaining to or arising out of
the Acquired Assets which are received by the Sellers or their Affiliates at any
time, such proceeds shall be received and held by such person in trust for the
Purchaser and shall be paid over to the Purchaser promptly. Accordingly, the
Sellers irrevocably authorize and direct the Purchaser to retain any such
proceeds (including any such proceeds received in either Seller's collection
accounts, lockboxes, blocked or restricted accounts or similar accounts used by
the Sellers to collect accounts receivable).
(b) As soon as reasonably practicable after the date hereof, the Purchaser
shall notify in writing each debtor whose account receivable is set forth on the
spreadsheet attached to Schedule 1.01 that (i) such debtor's account receivable
has been sold to the Purchaser and (ii) such debtor shall make payment of all
amounts due or payable or to become due directly to the Purchaser or its
designee or designated account.
(c) It is the intention of the parties hereto that the conveyance of the
Businesses hereunder shall constitute a sale, which sale is absolute and
irrevocable and provides Purchaser with the full benefits of ownership of the
Businesses. Upon the request of Purchaser, each Seller will execute and file
such financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate to perfect and maintain the perfection of Purchaser's ownership
interest in the accounts receivable set forth on Schedule 1.01 originated by
such Seller and included in the Businesses.
(d) If, notwithstanding the intention of the parties expressed in clause
(a) above, the conveyance of any of the Businesses hereunder shall be
characterized as a secured loan and not a sale or such sale shall for any reason
be ineffective or unenforceable, then this Agreement shall be deemed to
constitute a security agreement under the UCC and other applicable law. For this
17
purpose and without being in derogation of the parties' intention that the sale
of the accounts receivable set forth on Schedule 1.01 by each Seller hereunder
shall constitute a true sale thereof, such Seller hereby grants to Purchaser a
duly perfected security interest in all of such Seller's right, title and
interest in, to and under the Businesses which are now existing or hereafter
arising, and all proceeds thereof to secure the prompt and complete payment of a
loan deemed to have been made in an amount equal to the Purchase Price of the
Businesses purchased from such Seller together with all other obligations of
such Sellers hereunder, which security interest shall be prior to all other
Liens thereto. Purchaser and its assigns shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided to a secured creditor under the UCC and other applicable law,
which rights and remedies shall be cumulative.
ARTICLE 6.
PURCHASER COVENANTS
Until the latest of satisfaction in full of the Note, the Subsequent Note
or any obligation under Sections 1.05(b) of this Agreement and the Subsequent
Asset Purchase Agreement:
(a) Within 15 days of the end of each calendar month Purchaser will
deliver to Seller a certificate, signed by an officer of Purchaser, and
certifying the amount of Free Operating Cash Flow (as defined in the applicable
note) generated by the Purchaser in such calendar month and calculating the
payment therefor due in respect of the Note, the Subsequent Note or Section 1.05
of this Agreement or the Subsequent Asset Purchase Agreement.
(b) Seller shall have the right, not more than once each calendar quarter,
to inspect (or have inspected) the books and records of the Purchaser pertaining
to Free Operating Cash Flow (as defined in the applicable note) for the purpose
of verifying the accuracy of the calculations of Free Operating Cash Flow.
(c) Neither Purchaser, its sole stockholder, nor any of their Affiliates
will (i) transfer any employee of Purchaser to any such Affiliate engaged in a
same or similar business, or (ii) transfer Purchaser's customers or the
customers' business to any such Affiliate without providing appropriate
consideration to Purchaser.
(d) The Purchaser shall not enter into or allow or permit to exist any
arrangement or agreement with any Affiliate, or make any payment to any
Affiliate, unless written notice is given to the Sellers describing the
arrangement or such payment and such arrangement or payment (i) is fair and
equitable to the Purchaser, (ii) is of a sort which would be entered into by a
prudent person in the position of Purchaser and (iii) is on terms which are not
less favorable to the Purchaser than are obtainable from a person which is not
one of its Affiliates.
(e) The Purchaser shall not (i) declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding, (ii) purchase, redeem or retire any
shares of any class of capital stock (or other equity interest) of the Purchaser
or any option, warrant or other right to directly or indirectly
18
acquire shares of the Purchaser's capital stock or (c) make any loans or
advances to the Purchaser's sole stockholder or any of its Affiliates.
ARTICLE 7.
[INTENTIONALLY OMITTED]
ARTICLE 8.
INDEMNIFICATION
SECTION 8.01 Indemnification by Sellers. From and after the Closing Date and
subject to the provisions of this Article 8, the Sellers, jointly and severally,
agree to indemnify, hold harmless and defend each Purchaser Indemnified Party
from and against any and all Losses arising out of, resulting from or relating
to:
(a) any inaccuracy or breach of any representation or warranty of Sellers
contained in this Agreement or in any Ancillary Agreement or any other
agreement, certificate, instrument or other document executed and delivered by
the Sellers pursuant hereto (without regard to any qualification thereof as to
materiality or Material Adverse Effect);
(b) any Excluded Liability (without regard to any qualification thereof as
to materiality or Material Adverse Effect); or
(c) any non-compliance with or breach of any covenant or agreement of
Sellers contained in this Agreement or in any Ancillary Agreement or any other
agreement, certificate, instrument or other document executed and delivered by
the Sellers pursuant hereto (without regard to any qualification thereof as to
materiality or Material Adverse Effect).
SECTION 8.02 Indemnification by Purchaser. From and after the Closing Date and
subject to the provisions of this Article 8, Purchaser agrees to indemnify, hold
harmless and defend each Seller Indemnified Party from and against any and all
Losses arising out of, resulting from or relating to:
(a) any inaccuracy or breach of any representation or warranty of
Purchaser contained in this Agreement or in any Ancillary Agreement or any other
agreement, certificate, instrument or other document executed and delivered by
Purchaser pursuant hereto (without regard to any qualification thereof as to
materiality or Material Adverse Effect);
(b) any Assumed Liability; or
(c) any non-compliance with or breach of any covenant or agreement of
Purchaser contained in this Agreement or in any Ancillary Agreement or any other
agreement, certificate, instrument or other document executed and delivered by
Purchaser pursuant hereto (without regard to any qualification thereof as to
materiality or Material Adverse Effect).
SECTION 8.03 Definition of Losses. The term "Losses" shall have the following
meanings: (i) with reference to the obligation of the Sellers to indemnify the
Purchaser, its Affiliates and each of their respective Representatives (each a
"Purchaser Indemnified Party"),
19
"Losses" shall mean any and all costs or losses resulting from any Taxes,
liabilities, obligations, damages, lawsuits, deficiencies, claims, demands, and
expenses (whether or not arising out of Third Party Claims), including, without
limitation, interest, penalties, costs of mitigation, lost profits and other
losses resulting from any shutdown or curtailment of operations of the
Purchaser, reasonable attorneys' fees, all amounts which would constitute
Losses, and all amounts paid in investigation, defense or settlement of any of
the foregoing; and (ii) with reference to the obligation of Purchaser to
indemnify the Sellers, their Affiliates and each of their respective
Representatives (each a "Seller Indemnified Party"), "Losses" shall mean any and
all costs or losses resulting from any Taxes, liabilities, obligations, damages,
lawsuits, deficiencies, claims, demands, and expenses (whether or not arising
out of Third Party Claims), including, without limitation, interest, penalties,
costs of mitigation, lost profits and other losses resulting from any shutdown
or curtailment of operations of the Sellers, reasonable attorneys' fees and all
amounts paid in investigation, defense or settlement of any of the foregoing.
The term "Losses" as used in this Article 8 is not limited to matters asserted
by third parties against the Sellers or the Purchaser, but includes Losses
incurred or sustained by the Sellers or Purchaser in the absence of Third Party
Claims. Losses in respect of an Excluded Liability or Assumed Liability which
result from payment to a third party other than a Governmental Authority shall
be indemnifiable only to the extent such payment was (x) required by Contract or
law to be made, (y) legally compelled to be made or (z) paid on a commercially
reasonable basis to avoid or mitigate the types of claims described in clauses
(x) and (y) or legal or other costs associated therewith, in each case, by the
Purchaser Indemnified Party. Notwithstanding anything to the contrary in this
Agreement, Losses shall expressly include punitive damages, exemplary damages,
multiple damages, and other penalty damages arising out of a Third Party Claim.
SECTION 8.04 Indemnification Process. The party or parties hereto and their
Representatives and Affiliates making a claim for indemnification under this
Article 8 shall be, for the purposes of this Agreement, referred to as the
"Indemnified Party" and the party or parties against whom such claims are
asserted under this Article 8 shall be, for the purposes of this Agreement,
referred to as the "Indemnifying Party." All claims by any Indemnified Party
under this Article 8 shall be asserted and resolved as follows:
(a) Notice of Claims. In the event that (i) any claim, demand or
Proceeding is asserted or instituted by any Person other than the parties to
this Agreement or their Affiliates which could give rise to Losses for which an
Indemnifying Party could be liable to an Indemnified Party under this Agreement
(such claim, demand or Proceeding, a "Third Party Claim") or (ii) any
Indemnified Party under this Agreement shall have a claim to be indemnified by
any Indemnifying Party under this Agreement which does not involve a Third Party
Claim (such claim, a "Direct Claim" and, together with Third Party Claims,
"Claims"), the Indemnified Party shall with reasonable promptness send to the
Indemnifying Party a written notice specifying the nature of such claim, demand
or Proceeding and the amount or estimated amount thereof (which amount or
estimated amount shall not be conclusive of the final amount, if any, of such
claim, demand or Proceeding) (a "Claim Notice"); provided, that a delay in
notifying the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that (and only to the
extent that) such failure shall have caused the Losses for which the
Indemnifying Party is obligated to be greater than such Losses would have been
had the Indemnified Party given the Indemnifying Party proper notice.
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(b) Third Party Claims. In the event of a Third Party Claim, the
Indemnifying Party shall be entitled to appoint counsel of the Indemnifying
Party's choice at the expense of the Indemnifying Party to represent the
Indemnified Party and any others the Indemnifying Party may reasonably designate
in connection with such claim, demand or Proceeding (in which case the
Indemnifying Party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by any Indemnified Party except as set forth
below); provided, that such counsel is reasonably acceptable to the Indemnified
Party. Notwithstanding an Indemnifying Party's election to appoint counsel to
represent an Indemnified Party in connection with a Third Party Claim, an
Indemnified Party shall have the right to employ separate counsel, and the
Indemnifying Party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel selected by the Indemnifying Party to
represent the Indemnified Party would present such counsel with a conflict of
interest or (ii) the Indemnifying Party shall not have employed counsel to
represent the Indemnified Party within a reasonable time after notice of the
institution of such Third Party Claim. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim, demand or Proceeding which the Indemnifying
Party defends, or, if appropriate and related to the claim, demand or Proceeding
in question, in making any counterclaim against the person asserting the Third
Party Claim, or any cross-complaint against any person.
(c) Settlement of Claims. The Indemnifying Party shall not, without the
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld), (i) settle or compromise any Claims or consent to the
entry of any judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnified Party of a written
release from all liability in respect of such Claim of all Indemnified Parties
affected by such Claim or (ii) settle or compromise any Claim if the settlement
imposes equitable remedies or material obligations on the Indemnified Party
other than financial obligations for which such Indemnified Party will be
indemnified hereunder. No Claim which is being defended in good faith by the
Indemnifying Party in accordance with the terms of this Agreement shall be
settled or compromised by the Indemnified Party without the written consent of
the Indemnifying Party (which consent shall not be unreasonably withheld).
(d) Direct Claims. In the event of a Direct Claim, the Indemnifying Party
shall notify the Indemnified Party within thirty (30) days of receipt of a Claim
Notice whether or not the Indemnifying Party disputes such claim.
(e) Access. From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party, each Indemnified
Party shall grant the Indemnifying Party and its Representatives all reasonable
access to the books, records and properties of such Indemnified Party to the
extent reasonably related to the matters to which the Claim Notice relates. All
such access shall be granted during normal business hours and shall be granted
under conditions which will not unreasonably interfere with the business and
operations of such Indemnified Party. The Indemnifying Party will not, and shall
require that its representatives do not, use (except in connection with such
Claim Notice) or disclose to any third person other than the Indemnifying
Party's Representatives (except as may be required by applicable Law) any
information obtained pursuant to this Section 8.04(e) which is designated as
confidential by an Indemnified Party.
21
SECTION 8.05 Purchaser's Right of Set-Off.
(a) Notwithstanding anything to the contrary in this Agreement, and
regardless of other means of obtaining payment, at any time and from time to
time any Purchaser Indemnified Party delivers a Claim Notice to the Sellers
regarding any Claim for which the Purchaser Indemnified Party is or may be
entitled to indemnification from the Sellers under this Article 8, the Purchaser
is hereby authorized to withhold and set-off and apply against any amounts owing
or that may be owed to any of the Sellers by the Purchaser under (i) this
Agreement, (ii) the Note (to the extent provided in the Note) and (iii) the A/R
Servicing Agreement, up to such amounts as set forth in each such Claim Notice.
The Purchaser shall have the right to withhold and set-off in connection with
this Section 8.05(a) upon the earlier of (x) when a Claim has been made or filed
against a Purchaser Indemnified Party, (y) when a Purchaser Indemnified Party
has paid or been required to pay a third party in connection with a Claim or (z)
when a Purchaser Indemnified Party has realized a quantifiable loss due to any
Claim. The rights of the Purchaser under this Section 8.05 shall include,
without limitation, the right to withhold and retain any payment due under the
Note or the A/R Servicing Agreement in accordance with the terms of the Note or
the A/R Servicing Agreement, respectively.
(b) Notwithstanding anything in this Agreement to the contrary (and
without limiting the generality of Section 9.13 (Cumulative Remedies)), (i) the
rights to set-off provided in the Note, the A/R Servicing Agreement or otherwise
pursuant to this Section 8.05 and (ii) any other rights and remedies under this
Agreement or in equity or at law that any Purchaser Indemnified Party may have
with respect to the satisfaction of the joint and several indemnification
obligations of the Sellers under this Agreement shall be cumulative, and the
exercise of any such right by any Person shall not be exclusive of any other
right or remedy and shall not limit, modify, adversely affect, prejudice or
impair the exercise (or ability to exercise) any such rights or remedies.
SECTION 8.06 Limitations and Liability.
(a) No amount shall be payable by any Indemnifying Party pursuant to
Sections 8.01(a) or 8.02(a), unless the aggregate amount of Losses subject to
indemnification thereunder, as the case may be, exceed $250,000 (at which point
the Indemnified Party shall be entitled to all indemnification amounts accrued
up to such threshold). Notwithstanding anything to the contrary in this
Agreement, the maximum amount of indemnifiable Losses which may be recovered by
Purchaser from the Sellers arising out of or resulting from the causes
enumerated in this Section 8.06(a) and Section 8.06(a) of the Subsequent Asset
Purchase Agreement shall be an amount equal to the aggregate face amount of the
Note and, if issued, the Subsequent Note.
(b) Notwithstanding anything to the contrary in this Agreement, the
limitations set forth in Section 8.06(a) and the limitations on survival set
forth in Section 9.01 shall not apply to (i) any indemnification obligations of
the Sellers under Section 8.01(b); or (ii) any indemnification obligations of
the Sellers to the Purchaser arising from the Sellers' covenants set forth in
Section 5.07 (Tax Matters). Furthermore, the limitations set forth in Section
8.06(a) and the limitations on survival set forth in Section 9.01 shall not
apply in the event any such Losses
22
arise out of an intentional misrepresentation or fraud by any party hereto or
any Affiliate of such party.
ARTICLE 9.
GENERAL PROVISIONS
SECTION 9.01 Survival of Representations and Warranties. The representation and
warranties of the Sellers and the Purchaser contained in this Agreement shall
survive the Closing of the applicable period set forth in this Section 9.01, and
any and all claims and causes of action for indemnification under Article 8
arising out of the inaccuracy or breach of any representation or warranty of
either Seller or the Purchaser must be made prior to the termination of the
applicable survival period. All of the representations and warranties of the
Sellers and the Purchaser contained in this Agreement and any and all claims and
causes of action for indemnification under Article 8 with respect thereto shall
terminate one (1) year after the Closing Date; provided that (a) the
representations and warranties of the Sellers contained in Sections 3.01, 3.02,
3.03, 3.04, 3.06(c) and 3.09(c)(i) and (ii) and of the Purchaser in Sections
4.01, 4.02, 4.03 and 4.04 and the representations and warranties shall survive
indefinitely, it being understood that in the event notice of any Claim for
indemnification under Section 8.01(a) or Section 8.02(a) shall have been given
within the applicable survival period, the representations and warranties that
are the subject of such indemnification Claim shall survive until such time as
such Claim is finally resolved.
SECTION 9.02 Transfer Taxes. In the event transfer Taxes are required to be
paid in order to consummate the transactions hereunder, or in the event any such
Taxes are assessed at any time thereafter, such transfer Taxes (including any
interest, penalties or other additions thereon) incurred as a result of the
transactions contemplated hereby shall be paid by the Sellers. In the event
sales, use or other similar Taxes are assessed at Closing or at any time
thereafter on the transfer of any of the Acquired Assets, such Taxes (including
any interest, penalties or other additions thereon) incurred as a result of the
transactions contemplated hereby shall be paid by the Sellers. The Purchaser and
the Sellers shall cooperate in providing each other with any appropriate resale
exemption certifications and other similar documentation, and shall prepare and
timely file all Tax Returns and other documentation relating to such Taxes as
required by applicable law.
SECTION 9.03 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (c) the expiration of three (3)
business days after the day when mailed by registered or certified mail (postage
prepaid, return receipt requested), addressed to the respective parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
23
(a) If to the Purchaser, to
divine, inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Sears Tower - Suite 5800
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(b) If to either Seller, to:
marchFIRST, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
SECTION 9.04 Descriptive Headings; Certain Terms. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All references to "$" or
dollars shall be to United States dollars and all references to "days" shall be
to calendar days unless otherwise specified.
SECTION 9.05 Entire Agreement, Assignment; Competing Agreements. This Agreement
(including the Exhibits, schedules and the other documents and instruments
referred to herein) (i) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof, including any
transaction between or among the parties hereto and (ii) shall not be assigned
by operation of law or otherwise; provided, however, that Purchaser may assign
all or part of its rights or obligations under this Agreement to one of its
wholly owned subsidiaries so long as
24
Purchaser remains liable for its obligations hereunder. THE SELLERS MAKE NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ACQUIRED ASSETS, EXPRESS OR
IMPLIED, BEYOND THOSE EXPRESSLY MADE IN THIS AGREEMENT, INCLUDING ANY IMPLIED
REPRESENTATION OR WARRANTY AS TO THE CONDITION, MERCHANTABILITY, SUITABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS AGREEMENT, THE ACQUIRED ASSETS ARE BEING SOLD "AS
IS" AND "WHERE IS."
SECTION 9.06 Governing Laws. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ANY
CONFLICTS OF LAWS. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY FEDERAL COURT SITTING IN THE
CITY OF CHICAGO, UNLESS THERE IS NO FEDERAL COURT JURISDICTION, IN WHICH CASE
THE ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY STATE COURT
SITTING IN THE CITY OF CHICAGO AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING
AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM WITH RESPECT THERETO.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY
ACTION OR OTHER PROCEEDING BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
OR PARTIES HERETO WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY WAY
CONNECTED WITH OR RELATED TO, THIS AGREEMENT OR ANY PORTION THEREOF, WHETHER
BASED UPON CONTRACTUAL, STATUTORY, TORTIOUS OR OTHER THEORIES OF LIABILITY. EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT
ITS ADDRESS FOR NOTICE UNDER SECTION 9.03 OF THIS AGREEMENT. NOTHING IN THIS
SECTION 9.06 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW. THE CONSENTS TO JURISDICTION SET FORTH IN
THIS SECTION 9.06 SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN
THE VENUES SPECIFIED ABOVE AND SHALL HAVE NO EFFECT FOR ANY PURPOSE EXCEPT AS
PROVIDED IN THIS SECTION 9.06 AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY
PERSON OTHER THAN THE PARTIES HERETO.
SECTION 9.07 Expenses. Except as set forth in this Agreement, whether or not
the transactions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. The
foregoing shall not affect the legal right, if any, that any party hereto may
have to recover expenses from any other party that breaches its obligations
hereunder.
25
SECTION 9.08 Amendment. This Agreement and the Exhibits and Schedules hereto
may not be amended except by an instrument in writing signed on behalf of all
the parties hereto.
SECTION 9.09 Waiver. At any time prior to the Closing Date, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.10 Counterparts; Effectiveness. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement. This Agreement shall become
effective when each party hereto shall have received counterparts thereof signed
by all the other parties hereto.
SECTION 9.11 Integration; Parties of Interest. The rights and obligations of
the parties hereto pursuant to this Agreement and the Ancillary Agreements are
integrated and are not severable. Nothing in this Agreement, express or implied,
is intended to confer upon any person not a party to this Agreement any rights
or remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.12 Bulk Sales. The Purchaser hereby waives compliance by the Sellers
with any bulk sales or other similar laws in any applicable jurisdiction in
respect of the transactions contemplated by this Agreement.
SECTION 9.13 Cumulative Remedies. Except as otherwise expressly set forth in
this Agreement, all rights and remedies of each party hereto are cumulative of
each other and of every other right or remedy such party may otherwise have in
equity or at law, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of any other rights or
remedies.
SECTION 9.14 Further Assurances. In addition to the provisions of this
Agreement, from time to time after the Closing Date, the Sellers and the
Purchaser will use all commercially reasonable efforts to execute and deliver
such other instruments of conveyance, transfer, or assumption, as the case may
be, and take such other action as may be reasonably requested to implement more
effectively the conveyance and transfer of the Acquired Assets to the Purchaser
and the assumption of the Assumed Liabilities by the Purchaser.
ARTICLE 10.
DEFINITIONS
As used herein, the terms below shall have the following meanings.
"Acquired Assets" has the meaning set forth in Section 1.01.
26
"Acquired Contracts" means the Customer Contracts and all Contracts to
which either Seller is a party for the use of any domain name used or
related to the Businesses.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such other Person.
"Agreement" has the meaning set forth in Preamble.
"Ancillary Agreements" means the Note, the Pledge and Security
Agreements, the Technology License Agreement, the Transition Services
Agreements and the Trademark Assignment Agreement.
"A/R Servicing Agreement" means the Accounts Receivable Servicing
Agreement, dated as of the date hereof, by and among the Purchaser and the
Sellers.
"Assumed Liabilities" has the meaning set forth in Section 1.03.
"Balance Sheet" means the unaudited balance sheet of Target as of the
Balance Sheet Date.
"Balance Sheet Date" means December 31, 2000.
"Benefit Arrangements" has the meaning set forth in Section 3.14(a).
"Bonus" has the meaning set forth in Section 1.05(b).
"Businesses" means the (a) Central Division operations currently
consisting of fourteen (14) offices originally described as the ▇▇▇▇▇▇▇▇-
▇▇▇▇ operations and listed on Schedule 10 and (b) the I-Campus business.
"Cash Proceeds" has the meaning set forth in Section 1.05(a).
"Claim Notice" has the meaning set forth in Section 8.04(a).
"Claims" has the meaning set forth in Section 8.04(a).
"Closing" has the meaning set forth in Section 2.01.
"Closing Date" has the meaning set forth in Section 2.01.
"COBRA" means Part 6 of Title I of ERISA or any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means any agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase orders, letters
of credit, settlement agreements, franchise agreements, undertakings,
covenants not to compete, employment agreements, licenses, instruments,
obligations, commitments, understandings, policies, purchase and
27
sales orders, quotations and other executory commitments to which any
Person is a party or to which any of the assets of the any Person is
subject, whether oral or written, express or implied.
"Conveyance Documents" has the meaning set forth in Section 2.02(a).
"Credit Agreement" means the Credit Agreement, dated as of the date
hereof, by and among the Purchaser, as lender, and the Sellers, as
borrowers.
"Current Market Value" has the meaning set forth in Section
1.05(b)(i).
"Customer Contracts" means the Contracts described or listed on
Schedule 1.01.
"Direct Claim" has the meaning set forth in Section 8.04(a).
"Employee Covenants" has the meaning set forth in Section 5.04(d).
"Employee Plans" has the meaning set forth in Section 3.14(a).
"Equity Value Proceeds" has the meaning set forth in Section 1.05(d).
"Employment Offerees" has the meaning set forth in Section 5.04(a).
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or any agreement with any Governmental Authority
or other third party, relating to the environment, human health and safety
or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414
of the Code.
"Excluded Assets" has the meaning set forth in Section 1.02.
"Excluded Liabilities" has the meaning set forth in Section 1.04.
"Governmental Authority" means any nation or government, any state or
provincial or other political subdivision thereof, any province, city or
municipality, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States, or any
28
political subdivision thereof, any government authority, agency,
department, board, commission or instrumentality of the United States or
any political subdivision thereof and any tribunal or arbitrator(s) of
competent jurisdiction, and any self-regulatory organization.
"including" shall always be read as "including without limitation."
"Indemnified Party" has the meaning set forth in Section 8.04.
"Indemnifying Party" has the meaning set forth in Section 8.04.
"Intellectual Property" means all statutory and common law rights to
trademarks, service marks, trade names, logos, web sites, computer
software, mask work, invention, patent, trade secret, copyright,
technology, processes, inventions, proprietary data, formulae, research and
development data and concepts, computer software programs, customer and
prospect lists, field manuals and methodologies, know-how and trade secrets
or any other similar type of proprietary intellectual property right
(including without limitation any registrations or applications for
registration of any of the foregoing and renewals, extensions, re-issues
and the like related thereto) and all modifications, improvements, and
derivative works thereto, which is used or held for use in the operation of
the Businesses.
"International Plan" means an employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within 30 days without liability of the Sellers or any of its
ERISA Affiliates), or a plan or arrangement providing for severance,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits that (a) is exempt from ERISA pursuant
to Section 4(b)(4) of ERISA, (b) is maintained or contributed to by the
Sellers or any of its subsidiaries and (c) covers any employee or former
employee of the Sellers or any of its subsidiaries.
"knowledge" means, with respect to Sellers, the actual knowledge of
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Lien" means any interest in the Acquired Assets by a Person other
than the Sellers, including any mortgage, lien, pledge, charge, security
interest or encumbrance or other adverse claim of any kind in respect of
any Acquired Asset.
"Losses" has the meaning set forth in Section 8.03.
"Market Value" has the meaning set forth in Section 1.05(b)(i).
"Material Adverse Effect" means any event, condition or matter in
respect of the operation of the Businesses, the Acquired Assets and the
Assumed Liabilities that in the aggregate will result in or have a material
adverse effect on the Acquired Assets, the Assumed Liabilities, or the
ability of Purchaser to operate the Businesses or use the
29
Acquired Assets after the Closing in the manner in which such Businesses
are being operated or the Acquired Assets are being used as of the date
hereof.
"Multiemployer Plan" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Note" has the meaning set forth in Section 1.05(a).
"Passed-Through Contracts" has the meaning set forth in Section 5.06.
"Permitted Exceptions" means imperfections of title, restrictions or
encumbrances, if any, that (a) would not involve material costs to correct
or remove, (b) do not materially impair the use and operation of such asset
in the Businesses as currently conducted or (c) are caused solely by
Purchaser.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge and Security Agreement" means the Pledge and Security
Agreement, dated as of the date hereof, by and among the Purchaser, as
grantor, and the Sellers, as the secured parties.
"Pre-Closing Tax Period" means any tax period ending on or before the
Closing Date and the portion of any Straddle Period ending on the Closing
Date.
"Proceeding" means charge, complaint, action, order, writ, injunction,
judgment or decree outstanding or claim, application, demand, suit,
litigation, proceeding, labor dispute, arbitration or other alternative
dispute resolution proceeding, hearing or investigation.
"Property Taxes" has the meaning set forth in Section 5.07(b)(i).
"Purchase Price" has the meaning set forth in Section 1.05.
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Indemnified Party" has the meaning set forth in Section
8.03.
"Purchaser's Health Plans" has the meaning set forth in Section
5.04(c).
"Real Property" has the meaning set forth in Section 3.06(a).
"Representatives" means any officer, director, member, shareholder,
principal, attorney, agent, employee, accountant, consultant or other
representative.
"Securities Act" has the meaning set forth in Section 1.05(b).
30
"Seller" has the meaning set forth in the Preamble.
"Seller Indemnified Party" has the meaning set forth in Section 8.03.
"Sellers' Employee Liabilities" means all liabilities, obligations and
commitments arising out of or related to the employment (or termination of
employment) by the Sellers of its employees and former employees,
including, but not limited to, any obligation or liability for (a) accrued
but unpaid wages, salary, incentive or bonus compensation, vacation
benefits and pay, unpaid contributions to any Employee Plans or other
compensation, (b) all claims for severance or other termination benefits,
(c) all workers compensation claims, (d) employee tort claims or claims
under federal and state employee discrimination or sexual harassment laws
including claims under Title VII of the Civil Rights Act of 1964, and (e)
any actions, suits or proceedings brought by employees or former employees
which are set forth on Schedule 3.15(a).
"Sellers' Representatives" has the meaning set forth in Section
5.02(b).
"Straddle Period" means any taxable period beginning before and ending
after the Closing Date.
"Subsequent Asset Purchase Agreement" means the other Asset Purchase
Agreement dated as of the date hereof between the parties hereto.
"Subsequent Note" means the note issued pursuant to the Subsequent
Asset Purchase Agreement.
"Target" has the meaning set forth in the Preamble.
"Tax" and, with correlative meaning, "Taxes" means with respect to any
Person (1) all federal, state, local, county, foreign and other taxes,
assessments or other government charges, including, without limitation, any
income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
registration, recording, documentary, conveyancing, gains, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Governmental Authority (a "Taxing Authority") responsible
for the imposition of any such tax (domestic or foreign), or (2) liability
for the payment of any amounts of the type described in (1) relating to any
other Person as a result of being party to any agreement to indemnify such
other Person, being a successor or transferee of such other Person, or
being a member of the same affiliated consolidated, combined, unitary or
other group with such other Person (including any liability for Taxes under
Treasury Regulation Section 1.1502-6).
"Tax Returns" means any return (including information return), report,
notice, form, declaration, claim for refund, estimate, election, or
information statement or other document relating to any Tax, including any
schedule or attachment thereto, and any
31
amendment thereof filed or to be filed with any Taxing Authority in
connection with the determination, assessment or collection of Taxes.
"Technology License Agreement" has the meaning set forth in Section
2.02(a).
"Third Party Claim" has the meaning set forth in Section 8.04(a).
"Third Party Licenses" means those agreements, between a Seller and a
third party granting a license to Intellectual Property to either Seller.
"Trademark Assignment Agreement" has the meaning set forth in Section
2.02(a).
"Transferred Employees" has the meaning set forth in Section 5.04(a).
"Transition Services Agreements" has the meaning set forth in Section
2.02(a).
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988.
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32
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
MARCHFIRST, INC.
By: /s/
------------------------
Name:
Title:
MARCHFIRST CONSULTING, INC.
By: /s/
------------------------
Name:
Title:
WH ACQUISITION CORP.
By: /s/
------------------------
Name:
Title:
S-1
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of April 2, 2001 (this
"Agreement"), is between WH Acquisition Corp., an Illinois corporation
("Grantor"), and marchFIRST, Inc., a Delaware corporation, as agent (the
"Agent") for itself and marchFIRST Consulting, Inc., a Delaware corporation
(collectively, the "Secured Parties").
WHEREAS, on the date hereof, Grantor and the Secured Parties have entered
into an Asset Purchase Agreement (the "First Purchase Agreement"), pursuant to
which Grantor is acquiring assets associated with the Secured Parties' Central
Division operations, and I-Campus business, as further described in Schedule
1.01 of the First Purchase Agreement (the "First Acquired Assets");
WHEREAS, on the date hereof, Grantor, Secured Parties and the sole
stockholder of the Grantor have entered into an Asset Purchase Agreement (the
"Second Purchase Agreement") pursuant to which Grantor may acquire, subject to
fulfillment of certain conditions, the Secured Parties' HostOne, SAP, VAR
hardware business, and BlueVector businesses and certain other assets of Secured
Parties, as further described in Schedule 1.01 of the Second Purchase Agreement
(the "Second Acquired Assets," and together with the First Acquired Assets, the
"Acquired Assets"); and
WHEREAS, pursuant to the First Purchase Agreement, the Grantor has agreed
to pay to the Secured Parties $27.75 million in the form of a secured promissory
note (the "First Note") and to grant to Secured Parties a security interest in
the First Acquired Assets and any additional assets of the Grantor; and
WHEREAS, upon the consummation of the Second Purchase Agreement, the First
Note would be cancelled and replaced with a secured promissory note (the "Second
Note") in principal amount of $29.75 million plus the outstanding principal
amount of the First Note, and the Second Note would be secured by all of the
Acquired Assets and any additional assets of the Grantor.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Grantor and the Secured Parties agree
as follows:
SECTION 1 DEFINITIONS; GRANT OF SECURITY.
1.1. General Definitions. In this Agreement, the following terms shall
have the following meanings:
"Account Debtor" shall mean each Person who is obligated on a Receivable or
any Supporting Obligation related thereto.
"Agreement" shall have the meaning set forth in the preamble.
"Affiliate" means, with respect to any person or entity: (a) any other
person or entity which directly or indirectly controls, is controlled by, or is
under common control with, such person or entity, and (b) any other person who
is an officer or director of (i) such person or entity, or (ii) any person or
entity described in clause (a). For purposes of this definition, "control" means
the power to direct the management or policies of such person or entity,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; the terms "controlling" and "controlled" shall have
correlative meanings; and any person or entity that beneficially owns 20% or
more of the total voting power of the voting equity interests of any person or
entity shall be deemed to control such person or entity.
"Chattel Paper" shall mean all "chattel paper" as defined in Article 9 of
the UCC.
"Collateral" shall have the meaning assigned in Section 1.3.
"Collateral Records" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"Collateral Support" shall mean all property (real or personal) assigned,
hypothecated or otherwise securing any Collateral and shall include any security
agreement or other agreement granting a lien or security interest in such real
or personal property.
"Commercial Tort Claims" shall mean all "commercial tort claims" as defined
in Revised Article 9.
"Commodities Accounts" shall mean all "commodity accounts" as defined in
Article 9 of the UCC.
"Controlled Foreign Corporation" shall mean "controlled foreign
corporation" as defined in the United States Internal Revenue Code of 1986, as
amended from time to time.
"Copyright Licenses" shall mean any and all agreements providing for the
granting of any right in or to Copyrights (whether Grantor is licensee or
licensor thereunder).
"Copyrights" shall mean all United States, state and foreign copyrights,
all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C.
901 of the U.S. Copyright Act), whether registered or unregistered, now or
hereafter in force throughout the world, all registrations and applications
therefor, all rights corresponding thereto throughout the world, all extensions
and renewals of any thereof, the right to ▇▇▇ for past, present and future
infringements of any of the foregoing, and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.
"Documents" shall mean all "documents" as defined in Article 9 of the UCC.
-2-
"Deposit Accounts" shall mean all "deposit accounts" as defined in
Article 9 of the UCC.
"Equipment" shall mean: (i) all "equipment" as defined in the UCC, (ii) all
machinery, manufacturing equipment, data processing equipment, computers, office
equipment, furnishings, furniture, appliances, fixtures and tools (in each case,
regardless of whether characterized as equipment under the UCC) and (iii) all
accessions or additions thereto, all parts thereof, whether or not at any time
of determination incorporated or installed therein or attached thereto, and all
replacements therefor, wherever located, now or hereafter existing, including
any fixtures.
"Event of Default" shall mean any Event of Default under the First Note or
the Second Note.
"General Intangibles" (i) shall mean all "general intangibles" as defined
in Article 9 of the UCC and (ii) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all tax refunds, all
licenses, permits, concessions and authorizations, all Assigned Agreements, all
Intellectual Property and all Payment Intangibles (in each case, regardless of
whether characterized as general intangibles under the UCC).
"Goods" (i) shall mean all "goods" as defined in Article 9 of the UCC and
(ii) shall include, without limitation, all Inventory and Equipment and any
computer program embedded in the goods and any supporting information provided
in connection with such program if (x) the program is associated with the goods
in such a manner that is customarily considered part of the goods or (y) by
becoming the owner of the goods, a Person acquires a right to use the program in
connection with the goods (in each case, regardless of whether characterized as
goods under the UCC).
"Instruments" shall mean all "instruments" as defined in Article 9 of the
UCC.
"Insurance" shall mean: (i) all insurance policies covering any or all of
the Collateral (regardless of whether the Secured Parties is the loss payee
thereof) and (ii) any key man life insurance policies.
"Intellectual Property" shall mean, collectively, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"Inventory" shall mean: (i) all "inventory" as defined in the UCC and
(ii) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in any Grantor's business; all goods in which any
Grantor has an interest in mass or a joint or other interest or right of any
kind; and all goods which are returned to or repossessed by any Grantor, all
computer programs embedded in any goods and all accessions thereto and products
thereof (in each case, regardless of whether characterized as inventory under
the UCC).
-3-
"Investment Related Property" shall mean: (i) all "investment property" (as
such term is defined in Article 9 of the UCC) and (ii) all of the following
(regardless of whether classified as investment property under the UCC): all
Pledged Equity Interests, Pledged Debt, the Collateral Account, Securities
Accounts, Commodities Accounts, Deposit Accounts and certificates of deposit.
"Letter of Credit Right" shall have the meaning specified in Revised
Article 9.
"Liens" means any lien, security interest, mortgage, pledge, hypothecation,
assignment, encumbrance, claim or interest of any kind or nature.
"Money" shall mean "money" as defined in the UCC.
"Non-Assignable Contract" shall have the meaning assigned in Section 3.5.
"Obligations" means all obligations of the Grantor to the Secured Parties
evidenced by the First Note or the Second Note.
"Patent Licenses" shall mean all agreements providing for the granting of
any right in or to Patents (whether Grantor is licensee or licensor thereunder).
"Patents" shall mean all United States, state and foreign patents and
applications for letters patent throughout the world, all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
of any of the foregoing, all rights corresponding hereto throughout the world,
and all proceeds of the foregoing including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit and the right
to ▇▇▇ for past, present and future infringements of any of the foregoing.
"Permitted Liens" means Liens in favor of the Secured Parties; Liens on the
Acquired Assets in existence prior to Grantor's purchase of the Acquired Assets;
Liens for current taxes not delinquent or for taxes being contested in good
faith; Liens in connection with the acquisition of fixed or capital assets after
the date hereof and attaching only to the property being acquired and the
products and proceeds thereof; Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment insurance or other forms
of governmental insurance or benefits; and Liens of mechanics, carriers,
landlords, materialmen and other like Liens arising in the ordinary course of
business in respect of obligations which are not delinquent or which are being
contested in good faith.
"Pledged Debt" shall mean all Indebtedness owed to Grantor, issued by the
obligors named therein, the instruments evidencing such Indebtedness, and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness.
"Pledged Equity Interests" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
-4-
"Pledged LLC Interests" shall mean all interests in any limited liability
company and the certificates, if any, representing such limited liability
company interests and any interest of Grantor on the books and records of such
limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests.
"Pledged Partnership Interests" shall mean all interests in any general
partnership, limited partnership, limited liability partnership or other
partnership and the certificates, if any, representing such partnership
interests and any interest of Grantor on the books and records of such
partnership or on the books and records of any securities intermediary
pertaining to such interest and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such partnership interests.
"Pledged Trust Interests" shall mean all interests in a Delaware business
trust or other trust and the certificates, if any, representing such trust
interests and any interest of Grantor on the books and records of such trust or
on the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such trust interests.
"Pledged Stock" shall mean all shares of capital stock owned by Grantor and
the certificates, if any, representing such shares and any interest of Grantor
in the entries on the books of the issuer of such shares or on the books of any
securities intermediary pertaining to such shares, and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares.
"Proceeds" shall mean: (i) all "proceeds" as defined in Article 9 of the
UCC, (ii) payments or distributions made with respect to any Investment Related
Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
"Purchase Documents" means the First Purchase Agreement, the Second
Purchase Agreement and the notes issued under those agreements.
"Receivables" shall mean all rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, including,
without limitation all such rights constituting or evidenced by any Account,
Chattel Paper, Instrument, General Intangible or Investment Related Property,
together with all of Grantor's rights, if any, in any goods or other property
giving rise to such right to payment and all Collateral Support and Supporting
Obligations related thereto and all Receivables Records.
-5-
"Receivables Records" shall mean (i) all original copies of all documents,
instruments or other writings or electronic records or other Records evidencing
the Receivables, (ii) all books, correspondence, credit or other files, Records,
ledger sheets or cards, invoices, and other papers relating to Receivables,
including, without limitation, all tapes, cards, computer tapes, computer discs,
computer runs, record keeping systems and other papers and documents relating to
the Receivables, whether in the possession or under the control of Grantor or
any computer bureau or agent from time to time acting for Grantor or otherwise,
(iii) all evidences of the filing of financing statements and the registration
of other instruments in connection therewith, and amendments, supplements or
other modifications thereto, notices to other creditors or Secured Parties, and
certificates, acknowledgments, or other writings, including, without limitation,
lien search reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto and (v) all other written or
non-written forms of information related in any way to the foregoing or any
Receivable.
"Record" shall have the meaning specified in Revised Article 9.
"Requisite Obligees" shall have the meaning assigned in Section 7.
"Revised Article 9" shall mean the 1999 Official Text of Article 9 of the
Uniform Commercial Code with conforming amendments to Articles 1, 2, 2a, 4, 5,
6, 7 and 8 until such time as a version of such Official Text is adopted in the
State of Illinois and subsequent thereto shall mean the version of such Official
Text as adopted.
"Secured Obligations" shall have the meaning assigned in Section 2.1.
"Secured Parties" shall have the meaning set forth in the preamble.
"Securities Accounts" shall mean all "securities accounts" as defined in
Article 9 of the UCC
"Supporting Obligation" shall mean all "supporting obligations" as defined
in Revised Article 9.
"Trademark Licenses" shall mean any and all agreements providing for the
granting of any right in or to Trademarks (whether Grantor is licensee or
licensor thereunder).
"Trademarks" shall mean all United States, state and foreign trademarks,
trade names, corporate names, company names, business names, fictitious business
names, internet domain names, trade styles, service marks, certification marks,
collective marks, logos, other source or business identifiers, designs and
general intangibles of a like nature, all registrations and applications for any
of the foregoing, all extensions or renewals of any of the foregoing, all of the
goodwill of the business connected with the use of and symbolized by the
foregoing, the right to ▇▇▇ for past, present and future infringement or
dilution of any of the foregoing or for any injury to goodwill, and all proceeds
of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
-6-
"Trade Secret Licenses" shall mean any and all payments providing for the
granting of any right in or to Trade Secrets (whether Grantor is licensee or
licensor thereunder).
"Trade Secrets" shall mean all trade secrets and all other confidential or
proprietary information and know-how now or hereafter owned or used in, or
contemplated at any time for use in, the business of Grantor (all of the
foregoing being collectively called a "Trade Secret"), whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or refer-ring in any way to such
Trade Secret, the right to ▇▇▇ for past, present and future infringement of any
Trade Secret, and all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of Illinois or, when the context implies, the Uniform Commercial
Code as in effect from time to time in any other applicable jurisdiction.
1.2. Definitions; Interpretation. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the UCC or, if not defined in either
of the foregoing, in Revised Article 9. References to "Sections", "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect. All references herein to provisions of the UCC shall include
all successor provisions under any subsequent version or amendment to any
Article of the UCC.
1.3. Grant of Security. Grantor hereby grants to the Agent, for the
benefit of the Secured Parties, a security interest and continuing lien on all
of Grantor's right, title and interest in, to and under the following, in each
case whether now owned or existing or hereafter acquired or arising and wherever
located (all of which being hereinafter collectively referred to as the
"Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Documents;
(d) General Intangibles;
(e) Goods;
(f) Instruments;
(g) Insurance;
-7-
(h) Intellectual Property;
(i) Investment Related Property;
(j) Letter of Credit Rights;
(k) Money;
(l) Receivables and Receivable Records;
(m) Commercial Tort Claims;
(n) to the extent not otherwise included above, all Collateral
Support and Supporting Obligations relating to any of the
foregoing; and
(o) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any
of the foregoing.
For avoidance of doubt it is expressly understood and agreed that, to
the extent the Uniform Commercial Code is revised subsequent to the date
hereof such that the definition of any of the foregoing terms included in
the description of Collateral is changed, the parties hereto desire that
any property which is included in such changed definitions which would not
otherwise be included in the foregoing grant on the date hereof be included
in such grant immediately upon the effective date of such revision, it
being the intention of Grantor that the description of Collateral set forth
above be construed to include the broadest possible range of assets (except
as specifically excluded by Section 1.4 hereof). Notwithstanding the
immediately preceding sentence, the foregoing grant is intended to apply
immediately on the date hereof to all Collateral to the fullest extent
permitted by applicable law regardless of whether any particular item of
Collateral is currently subject to the UCC.
Notwithstanding anything herein to the contrary, Grantor may at any
time sell, assign or otherwise transfer any or all of the Collateral to any
person and such person shall receive said assets free and clear of any
Liens and security interests created hereunder or otherwise in favor of
Agent and/or the Secured Parties, provided that such transfer is not in
violation of the affiliate transaction covenant in Section 6(d) of the
First Purchase Agreement. Each of the Agent and each Secured Party hereby
agrees that any and all Liens and security interests which the Agent and/or
one or more Secured Parties has on any Collateral shall be automatically
released upon any sale, assignment or other transfer of such Collateral by
Grantor (and each of Agent and each Secured Party agrees to execute such
documents, and do such other things as Grantor reasonably requires to
evidence each such release), provided that such Liens shall automatically
attach to the Proceeds thereof.
1.4. Certain Limited Exclusions. Notwithstanding anything herein to the
contrary, in no event shall the Collateral include and Grantor shall not grant,
and shall not be deemed to have
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granted, a security interest in, any of Grantor's right, title or interest (a)
in any Intellectual Property if the grant of such security interest shall
constitute or result in the abandonment, invalidation or rendering unenforceable
any right, title or interest of any Grantor therein; (b) in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder, to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement, result in a
breach or termination of the terms of, or constitute a default under or
termination of any such license, contract or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Section 9-318(4) of
the Uniform Commercial Code (or any successor provision or provisions,
including, without limitation, Section 9-406 of Revised Article 9) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity; provided, that upon the ineffectiveness, lapse or
termination of any such provision, the Collateral shall include, and Grantor
shall be deemed to have granted a security interest in, all such rights and
interests as if such provision had never been in effect; (c) in any of the
outstanding capital stock or other equity interest of a Controlled Foreign
Corporation, in excess of 65% of the voting power of all classes of capital
stock of such Controlled Foreign Corporation entitled to vote or (d) in any
obligation or liability of any Secured Party to the Grantor or any agreement or
contract between Grantor and any of the Secured Parties.
SECTION 2 SECURITY FOR OBLIGATIONS; GRANTOR REMAINS LIABLE.
2.1. Security for Obligations. This Agreement secures, and the Collateral
is collateral security for, the prompt and complete payment or performance in
full when due, whether at stated maturity, by declaration, acceleration, demand
or otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S)362(a)), of all Obligations of Grantor (collectively, the "Secured
Obligations").
2.2. Grantor Remains Liable.
(a) Anything contained herein to the contrary notwithstanding:
(i) Grantor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed;
(ii) the exercise by the Agent of any of Secured Parties' rights
hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the
Collateral; and
(iii) Neither Secured Parties shall have any obligation or
liability under any contract or agreement included in the Collateral
by reason of this Agreement, nor shall the Secured Parties be
obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
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(b) Neither the Secured Parties nor any purchaser at a foreclosure
sale under this Agreement shall be obligated to assume any obligation or
liability under any contract and agreement included in the Collateral
unless the Secured Parties or any such purchaser otherwise expressly agrees
in writing to assume any or all of said obligations.
SECTION 3 REPRESENTATIONS AND WARRANTIES AND COVENANTS.
3.1. Generally.
(a) Representations and Warranties. Grantor hereby represents and
warrants that as of the date hereof:
(i) its chief executive office or its sole place of business is
and has always been located at the place indicated on Schedule 3.1(A)
(as amended or supplemented from time to time), and the jurisdiction
of organization of Grantor is Illinois;
(ii) the full legal name of Grantor is as set forth in the
opening paragraph of this Agreement it has not never done business
under any other name (including any tradename or fictitious business
name); and
(iii) Grantor is not bound as debtor under a security agreement
entered into by another Person.
(b) Covenants and Agreements. Grantor hereby covenants and agrees
that:
(i) at the expense of Secured Parties, it shall execute all UCC
financing statements and execute all other documents and take all
other reasonable action requested from time to time by the Agent to
perfect and maintain the continuous first priority status of the
Agent's security interest in the Collateral (subject only to Permitted
Liens and to the rights of the United States government (including any
agency or department thereof) with respect to United States government
Receivables);
(ii) it shall notify the Agent within ten days following the
establishment of any additional office or business location or a
change or addition to any location where it keeps Equipment, Inventory
and any Documents relating to the Collateral evidencing the same and
provide such other information in connection therewith as the Agent
may reasonably request;
(iii) it shall notify the Agent within ten days following any
change in Grantor's name, identity, corporate structure, sole place of
business, chief executive office or jurisdiction of organization
identifying such change and providing such other information in
connection therewith as the Agent may reasonably request; and
-10-
(iv) it shall notify the Agent within 10 days following the
acquisition or creation of any material asset constituting Collateral
if a security interest in such asset is perfected in any manner other
than the filing of a financing statement.
3.2. Receivables. Grantor covenants and agrees that it shall keep and
maintain at its own cost and expense satisfactory and complete records of the
Receivables, including, but not limited to, the originals of all documentation
with respect to all Receivables and records of all payments received and all
credits granted on the Receivables, all merchandise returned and all other
dealings therewith.
3.3. Investment Related Property. Grantor hereby covenants and agrees
that:
(i) if any issuer of any Pledged Partnership Interests or
Pledged LLC Interests takes any action to cause such Pledged
Partnership Interests or Pledged LLC Interests to be treated as
securities for purposes of the Uniform Commercial Code, Grantor shall
promptly notify the Secured Parties in writing of any such election or
action and, in such event, shall take all steps necessary or advisable
to establish the Secured Parties' "control" thereof; and
(ii) except as provided in the next sentence, in the event
Grantor receives any dividends, interest or distributions on any
Investment Related Property, or any securities or other property upon
the merger, consolidation, liquidation or dissolution of any issuer of
any Investment Related Property, then (a) such dividends, interest or
distributions and securities or other property shall be included in
the definition of Collateral without further action and (b) Grantor
shall immediately take all steps, if any, necessary or advisable to
ensure the validity, perfection, priority and, if applicable, control
of the Secured Parties over such Investment Related Property
(including, without limitation, delivery thereof to the Secured
Parties).
3.4. Intellectual Property Collateral. Grantor hereby covenants and agrees
as follows:
(a) it shall use good faith effort to report to the Secured
Parties (i) the filing of any application to register any Intellectual
Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office, or any state registry or
foreign counterpart of the foregoing (whether such application is
filed by Grantor or through any agent, employee, licensee, or designee
thereof) and (ii) the registration of any Intellectual Property
Collateral by any such office;
(b) it shall, promptly upon the reasonable request of the
Secured Parties, execute and deliver to the Secured Parties any
document required to acknowledge, confirm, register, record, or
perfect the Secured Parties' interest in any part of the Intellectual
Property Collateral, whether now owned or hereafter acquired.
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SECTION 4 ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES.
4.1. Further Assurances.
(a) To the extent permitted by applicable law, Grantor hereby
authorizes the Agent to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of Grantor. Grantor agrees that a carbon,
photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement
and may be filed as a financing statement in any and all jurisdictions.
Grantor shall furnish to the Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
(b) Grantor hereby authorizes the Agent to file a record or records
(as defined in Revised Article 9), including, without limitation, financing
statements, in all jurisdictions and with all filing offices as the Agent
may determine, in its sole discretion, are necessary or advisable to
perfect the security interest granted to the Secured Parties herein. Such
financing statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral
that describes such property in any other manner as the Agent may
determine, in its sole discretion, is necessary, advisable or prudent to
ensure the perfection of the security interest in the Collateral granted to
the Secured Parties herein, including, without limitation, describing such
property as "all assets" or "all personal property."
SECTION 5 SECURED PARTIES APPOINTED ATTORNEY-IN-FACT.
5.1. Power of Attorney. Grantor hereby irrevocably appoints the Agent
(such appointment being coupled with an interest) as Grantor's attorney-in-fact,
with full authority in the place and stead of Grantor and in the name of
Grantor, the Secured Parties or otherwise, from time to time in the Agent's
discretion to take the following actions:
(a) to prepare, sign and file any UCC financing statements in the
name of Grantor as debtor; and
(b) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens
(other than Liens permitted under this Agreement or the Purchase Documents)
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Secured Parties in its sole discretion, any such payments
made by the Secured Parties to become obligations of Grantor to the Secured
Parties, due and payable immediately without demand.
5.2. No Duty on the Part of Secured Parties. The powers conferred on the
Secured Parties hereunder are solely to protect the interests of the Secured
Parties in the Collateral and
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shall not impose any duty upon the any Secured Parties to exercise any such
powers. The Secured Parties shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be responsible
to Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
SECTION 6 EFFECT OF EVENT OF DEFAULT AND REMEDIES.
6.1. Generally.
(a) If any Event of Default shall have occurred and be continuing,
the Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it
at law or in equity, all the rights and remedies of the Secured Parties on
default under the UCC (whether or not the UCC applies to the affected
Collateral), and also may pursue any of the following separately,
successively or simultaneously:
(i) require Grantor to, and Grantor hereby agrees that it shall
at its expense and promptly upon request of the Agent forthwith,
assemble all or part of the Collateral as directed by the Agent and
make it available to the Secured Parties at a place to be designated
by the Agent that is reasonably convenient to both parties;
(ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the Agent deems
appropriate; and
(iv) without notice except as specified below, sell, assign,
lease, license (on an exclusive or non-exclusive basis) or otherwise
dispose of the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Secured Parties' offices or
elsewhere, for cash, on credit or for future delivery, at such time or
times and at such price or prices and upon such other terms as the
Agent may deem commercially reasonable.
(b) The Secured Parties or any Secured Parties may be the purchaser
of any or all of the Collateral at any such sale and the Secured Parties
shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Secured Obligations as
a credit on account of the purchase price for any Collateral payable by the
Secured Parties at such sale. Each purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of
any Grantor, and Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it
now has or may at any time in the future have under any rule of law or
-13-
statute now existing or hereafter enacted. Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days
notice to Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Secured Parties shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The Secured
Parties may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Grantor hereby waives any claims against the Secured Parties
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Secured Parties accepts
the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantor
shall be liable for the deficiency and the fees of any attorneys employed
by the Secured Parties to collect such deficiency. Grantor further agrees
that a breach of any of the covenants contained in this Section will cause
irreparable injury to the Secured Parties, that the Secured Parties has no
adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section shall be
specifically enforceable against Grantor, and Grantor hereby waives and
agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable
prior to their stated maturities. Nothing in this Section shall in any way
alter the rights of the Secured Parties hereunder.
(c) The Secured Parties may sell the Collateral without giving any
warranties as to the Collateral. The Secured Parties may specifically
disclaim any warranties of title or the like. This procedure will not be
considered to adversely effect the commercial reasonableness of any sale of
the Collateral.
(d) If the Secured Parties sells any of the Collateral on credit, the
Secured Obligations will be credited only with payments actually made by
the purchaser and received by the Secured Parties and applied to the
indebtedness of the purchaser. In the event the purchaser fails to pay for
the Collateral, the Secured Parties may resell the Collateral.
(e) The Secured Parties shall have no obligation to ▇▇▇▇▇▇▇▇ any of
the Collateral.
6.2. Investment Related Property. Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, the Secured Parties may be compelled, with respect to any sale
of all or any part of the Investment Related Property conducted without prior
registration or qualification of such Investment Related Property under the
Securities Act and/or such state securities laws, to limit purchasers to those
who will agree, among other things, to acquire the Investment Related Property
for their own account, for investment and not with a view to the distribution or
resale thereof Grantor acknowledges that any such private sale may be at prices
and on terms less favorable than those
-14-
obtainable through a public sale without such restrictions (including a public
offering made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Secured Parties shall have no obligation to engage in public sales and
no obligation to delay the sale of any Investment Related Property for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it. If the Secured Parties determines to exercise its right to sell
any or all of the Investment Related Property, upon written request, Grantor
shall and shall cause each issuer of any Pledged Stock to be sold hereunder,
each partnership and each limited liability company from time to time to furnish
to the Secured Parties all such information as the Secured Parties may request
in order to determine the number and nature of interest, shares or other
instruments included in the Investment Related Property which may be sold by the
Secured Parties in exempt transactions under the Securities Act and the rules
and regulations of the Securities and Exchange Commission thereunder, as the
same are from time to time in effect.
6.3. Intellectual Property Collateral. Anything contained herein to the
contrary notwithstanding, upon the occurrence and during the continuation of an
Event of Default, the Secured Parties shall have the right (but not the
obligation) to bring suit or otherwise commence any action or proceeding in the
name of any Grantor, the Secured Parties or otherwise, in the Secured Parties'
sole discretion, to enforce any Intellectual Property Collateral, in which event
Grantor shall, at the request of the Secured Parties, do any and all lawful acts
and execute any and all documents required by the Secured Parties in aid of such
enforcement and Grantor shall promptly, upon demand, reimburse and indemnify the
Secured Parties as provided in Section 9 hereof in connection with the exercise
of its rights under this Section, and, to the extent that the Secured Parties
shall elect not to bring suit to enforce any Intellectual Property Collateral as
provided in this Section, Grantor agrees to use all reasonable measures, whether
by action, suit, proceeding or otherwise, to prevent the infringement of any of
the Intellectual Property Collateral by others and for that purpose agrees to
diligently maintain any action, suit or proceeding against any Person so
infringing as shall be necessary to prevent such infringement;
6.4. Application of Proceeds. Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Secured Parties in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Secured Parties against,
the Secured Obligations in the following order of priority: first to the payment
of all costs and expenses of such sale, collection or other realization,
including reasonable compensation to the Secured Parties and its agents and
counsel, and all other expenses, liabilities and advances made or incurred by
the Secured Parties in connection therewith, and all advances made by the
Secured Parties hereunder for the account of the applicable Grantor, and to the
payment of all costs and expenses paid or incurred by the Secured Parties in
connection with the exercise of any right or remedy hereunder or under the
Credit Agreement, all in accordance with the terms hereof or thereof; second, to
the extent of any excess, to the payment of all other Secured Obligations; and
third, to the extent of any excess
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such proceeds, to the payment to or upon the order of Grantor or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
SECTION 7 CONTINUING SECURITY INTEREST.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations be binding upon Grantor, its successors and assigns,
and inure, together with the rights and remedies of the Secured Parties
hereunder, to the benefit of the Secured Parties and its successors, transferees
and assigns.
SECTION 8 STANDARD OF CARE; SECURED PARTIES MAY PERFORM.
The powers conferred on the Secured Parties hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Secured Parties shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Secured Parties shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Secured Parties accords its own property.
Neither the Secured Parties nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or otherwise. If any Grantor fails to perform any agreement
contained herein, the Secured Parties may itself perform, or cause performance
of, such agreement, and the expenses of the Secured Parties incurred in
connection therewith shall be payable by Grantor.
SECTION 9 MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall be
given in accordance with Section 9.03 of the First Purchase Agreement and Second
Purchase Agreement. No failure or delay on the part of the Secured Parties in
the exercise of any power, right or privilege hereunder or under any other
Purchase Documents shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Purchase Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
The rights and obligations of the parties hereto pursuant to this Agreement, the
First Purchase Agreement and the Ancillary Agreements (as defined in the First
Purchase Agreement) are integrated and are not severable. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists. This Agreement shall be
binding upon and
-16-
inure to the benefit of the Secured Parties and Grantor and their respective
successors and assigns. No Grantor shall, without the prior written consent of
the Secured Parties, assign any right, duty or obligation hereunder. This
Agreement and the other Purchase Documents embody the entire agreement and
understanding between Grantor and the Secured Parties and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Purchase Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties. This
Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and the Secured Parties have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
WH Acquisition Corp.
By: /s/
------------------------
Its:
marchFIRST, Inc.
By: /s/
------------------------
Its:
marchFIRST Consulting, Inc.
By: /s/
------------------------
Its:
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SCHEDULE 3.1
TO PLEDGE AND SECURITY AGREEMENT
(A) Chief Executive Office of Grantor:
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-1
TECHNOLOGY LICENSE AND LINKING AGREEMENT
This Agreement is made and entered into as of March 30, 2001 (the
"Effective Date"), by and among WH Acquisition Corp., an Illinois corporation
("Licensor") and marchFIRST, Inc., a Delaware corporation and marchFIRST
Consulting, Inc., a Delaware corporation (collectively, the "Licensee").
WHEREAS, Licensee and Licensor have entered into an Asset Purchase
Agreement, dated as of March 30, 2001(the "Asset Purchase Agreement"), pursuant
to which Licensor has acquired certain assets and assumed certain liabilities
from Licensee; and
WHEREAS, pursuant to the Asset Purchase Agreement, Licensor is acquiring
certain technology and other intellectual property as part of those assets; and
WHEREAS, Licensee desires to obtain a license from Licensor to continue to
use certain of the intellectual property, as more specifically described and
defined below, in connection with the businesses, practice groups and locations
not being sold to Licensor under the Asset Purchase Agreement as well as related
to potential other sales of Licensee's other assets;
WHEREAS, Licensor is prepared to license certain intellectual property to
the Licensee, subject to the terms and conditions set forth in this Agreement;
and
WHEREAS, Licensor desires to obtain the right to establish a link from
Licensee's website to Licensor's website, subject to the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth below, the parties agree as follows:
Article 1. DEFINITIONS.
1.1 "Licensee Services" means consulting, integration and support services,
including but not limited to systems integration, network design and e-
commerce solutions.
1.2 "Technology" means (i) the various methods, processes, tools, frameworks,
templates and methodologies which is part of the Intellectual Property (as
defined herein), developed and used by Licensee in the provision of Licensee
Services; (ii) the software, know-how, and proprietary data related to such
methods, processes, tools, frameworks, templates, and methodologies; and
(iii) white papers related to the Licensee Services.
1.3 "Intellectual Property" shall have the meaning as provided in the Asset
Purchase Agreement.
Article 2. GRANT OF RIGHTS.
2.1 Licensor hereby grants to the Licensee, a royalty-free, non-exclusive, non-
assignable, perpetual worldwide, license to use, modify and sublicense the
Technology during the Term for the sole purpose of providing Licensee
Services and/or selling any other of Licensee's businesses, offices,
practices or other material assets (the "Scope"). Notwithstanding the
foregoing, Licensee understands and agrees that the license granted
hereunder does not include any rights to any modifications, improvements,
derivative work, enhancements, upgrades, new releases, and/or other
developments related to the Intellectual Property by Licensor made or
developed at any time after the date hereof.
2.2 Provided that Licensee's use of the Technology complies with the Scope, the
Technology may be used by Licensee in conjunction with other intellectual
property developed by or licensed to Licensee. The Licensee is authorized
hereunder to sublicense the Technology without the consent of Licensee to
any third party that purchases a business, office, practice or other
material assets from Licensee. Each sublicense shall (a) be in writing and
impose upon the sublicensee the obligations of Licensee hereunder and grant
no rights greater than those provided herein; (b) be assignable by the
sublicensee only to a third party that acquires the business of the
sublicensee, subject to the new sublicensee assuming the same obligations as
provided herein and assuming rights no greater than those provided herein;
and (c) provide that upon the liquidation of Licensee, such sublicense will
constitute a direct license with and from Licensor. Promptly after execution
of each sublicense, Licensee will provide Licensor with a copy of each
sublicense and thereafter such sublicense shall automatically be deemed to
be a direct license between Licensor and the sublicensee(s).
2.3 Work Product. Each party shall own any and all improvements, modifications,
derivative work, enhancements, upgrade, new releases, and/or other
developments related to the Technology it (or a sublicensee, in the case of
Licensee)may develop ("Work Product").
Article 3. WARRANTY.
3.1 The license hereunder and the Technology are provided to Licensee "AS IS"
without warranty or representation of any kind whatsoever The Licensee
assumes all risk of use of the Technology and shall protect and indemnify
Licensor from any claims from use thereof. IN NO EVENT SHALL LICENSOR HAVE
ANY LIABILITY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE
DAMAGES.
3.2 Other than as provided in Section 2.3 above: (i) Licensee acknowledges, and
each sublicensee shall acknowledge, that the Intellectual Property and the
proprietary rights in such intellectual property are and shall remain the
exclusive property of Licensor; and (ii) the Licensee and any sublicensee
shall not take any action (a) that jeopardizes Licensor's proprietary rights
therein or (b) to acquire or attempt to acquire any right in the
Intellectual Property.
2
Article 4. CONFIDENTIALITY. Licensee and each sublicensee shall hold the
Technology in confidence and shall not use it except as permitted hereunder; or
disclose it, in whole or in part, to any third party other than (i) with the
prior written consent of Licensor or (ii) to clients or prospective clients in
the ordinary course, subject to the obligation of confidentiality as provided
herein. The foregoing shall not apply to any Technology that (a) was generally
available to the Licensee or the sublicensees from public or published sources,
provided that such publication did not violate this Agreement or occur through
the fault or omission of Licensee or the sublicensee, as the case may be; (b)
was lawfully obtained by Licensee or the sublicensee, as the case may be, from a
source under no obligation of confidentiality, directly or indirectly to
Licensor, Licensee or any sublicensee(s); or (c) was disclosed to the public
with the written approval of Licensor. Notwithstanding the foregoing, (i)
Licensee or any sublicensee shall be permitted to submit a document containing
the Technology to government authorities to the extent such submission is
required by applicable law and provided further that the Licensee or
sublicensee, as the case may be, takes whatever steps are lawfully available to
secure confidential treatment of such submission, and (ii) Licensee shall be
permitted to disclose the Technology to any sublicensee(s), subject to such
sublicensee(s) agreement to the foregoing obligations of confidentiality and
non-disclosure.
Article 5. TERM. This Agreement shall take effect as of the date hereof and
shall be for a perpetual term (the "Term"). Notwithstanding the foregoing, this
Agreement may be terminated upon notice by either party in the event the other
party materially fails to perform any material obligation hereunder that is
unremedied within 30 days of written notice.
Article 6. RIGHT TO LINK FROM LICENSEE'S WEBSITE. Licensee grants to Licensor
the right and license to establish and maintain a hyperlink from Licensee's
website "▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇" (or replacement site) (the "Licensee Website") to
Licensor's website for a period of one (1) year after the Effective Date. For
such period, Licensee shall not directly or indirectly permit any other party
that provides business consulting services to establish or maintain a link of
any kind from or to the Licensee Website. Licensee shall provide Licensor, upon
the Effective Date, reasonable and necessary standard linking instructions to
execute the foregoing.
Article 7. MISCELLANEOUS.
7.1 Licensor and the Licensee are independent parties. Nothing in this Agreement
shall be construed to make the Licensee an agent, employee, franchisee,
partner or legal representative of Licensor.
7.2 Neither party shall be liable for any failure or delay in performing an
obligation under this Agreement that is due to a force majeure event.
7.3 Notices required or permitted to be sent hereunder shall be in writing and
addressed to the parties as follows, by registered mail or overnight
delivery service, or to such other
3
address as a party may indicate in writing to the other and shall be deemed
to have been given the date when sent:
If to Licensor: WH Acquisition Corp.
c/o divine, inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
If to the LICENSEE: marchFIRST, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
7.4 No waiver, amendment or other modification of this Agreement shall be
effective unless confirmed in writing by the Party against whom enforcement
is sought.
7.5 This Agreement shall be governed by and interpreted in accordance with the
laws, and all disputes under or relating to this Agreement shall be decided
by the laws (without regard to provisions regarding conflicts of law) of the
State of Illinois. Any dispute shall be heard exclusively in the federal or
state courts located Chicago, Illinois.
7.6 This Agreement constitutes the complete and entire statement of all terms,
conditions and representations of the agreement between Licensor and
Licensee with respect to its subject matter.
7.7 The rights and obligations of the parties hereto pursuant to this Agreement
and the Ancillary Agreements are integrated and are not severable. Nothing
in this Agreement, express or implied, is intended to confer upon any person
not a party to this Agreement any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
4
IN WITNESS WHEREOF, Licensor and the Licensee have caused this Agreement to be
executed by their duly authorized representatives identified below.
WH ACQUISITION CORP. MARCHFIRST, INC.
BY: /s/ BY: /s/
-------------------------- --------------------------
NAME: NAME:
TITLE: TITLE:
MARCHFIRST CONSULTING, INC.
BY: /s/
--------------------------
NAME:
TITLE:
5
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this "Agreement"), dated as of
April 2, 2001, is by and among marchFIRST, Inc., a Delaware corporation,
marchFIRST Consulting, Inc. (collectively, the "Sellers"), and WH Acquisition
Corp., an Illinois corporation (the "Purchaser").
WHEREAS, Purchaser, Sellers have entered into an Asset Purchase
Agreement dated as of the date hereof (the "Purchase Agreement"), pursuant to
which Purchaser purchased certain of the assets of Sellers (the "Acquired
Assets"), including Sellers' Central Division operations and I-Campus business;
WHEREAS, from and after the Closing Date, Purchaser desires to utilize
certain of Sellers' employees to manage or administer the Businesses or Acquired
Assets; and
WHEREAS, Sellers desire to provide the transition services described
in this Agreement to Purchaser on the terms and subject to the conditions stated
herein.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and obligations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Purchaser
and Sellers agree as follows:
1 DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms will
have the following respective meanings:
"Change of Control" means (i) other than pursuant to the Purchase
Agreement or the Subsequent Asset Purchase Agreement, a sale of all or
substantially all of the assets of Sellers, whether in a single transaction or a
series of transactions, (ii) the merger or consolidation of Sellers with or into
any corporation or the merger of another corporation into Sellers if the effect
is that fifty percent (50%) or more of the total voting power entitled to vote
in the election of the board of directors of the surviving or new corporation is
held by a person or persons other than the shareholders of Sellers immediately
prior to such transaction, or (iii) the occurrence of any other event which
results in fifty percent (50%) or more of the total voting power entitled to
vote in the election of the board of directors of Sellers being held by a person
or persons other than the shareholders of Sellers who, individually or as a
group, held 50% or more of such voting power immediately prior to such event.
"Transition Period" means, for each Transition Service, a transition
period (commencing on the Closing Date) set forth opposite such Transition
Service on Exhibit A hereto and any attachments thereto.
"Transition Services" means the services set forth on Exhibit A hereto
and any attachments thereto (which are incorporated by reference herein) in
connection with Purchaser's operations after the Closing Date.
1.2 Other Defined Terms. The following terms will have the meanings
set forth for such terms in the Sections set forth below:
Term Section
---- -------
Acquired Assets Recitals
Agreement Recitals
Fees 4.1
Sellers Recitals
Seller Indemnitees 6.6(a)
Purchase Agreement Recitals
Purchaser Recitals
Purchaser Indemnitees 6.5(a)
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Purchase Agreement.
2 TRANSITION SERVICES
2.1 Provision of Transition Services.
(a) Sellers will make available to Purchaser each of the
Transition Services, commencing on the Closing Date, for the applicable
Transition Period, unless earlier terminated as provided herein, on the
terms and subject to the conditions set forth herein.
(b) Sellers will perform the Transition Services in a manner
substantially similar to the manner in which such services were generally
performed by Sellers prior to the Closing Date. Sellers agree to perform
the Transition Services using the same standard of care that it uses in
performing such services in its own affairs. Sellers will only be obligated
to provide Transition Services during normal business hours and in a manner
consistent with past practice; provided, however, that performance of the
Transition Services shall be had or done in such a manner so as not to
unreasonably interfere with the normal conduct of Seller's business or
operations.
2.2 Use of Transition Services. Purchaser will not resell any
Transition Service or otherwise use any Transition Service in any way other than
in connection with Purchaser's conduct consistent with past practice.
2.3 Nature of Transition Service. Purchaser acknowledges and
understands that the Transition Services provided hereunder are transitional in
nature and are furnished by Sellers solely for the purpose of facilitating the
operation and administration of the Businesses or Acquired Assets. Purchaser
acknowledges and understands that Sellers are not in the business of providing
Transition Services to third parties and has no long term interest in continuing
this Agreement. Purchaser agrees to use commercially reasonable efforts to make
a transition to its own internal organization or any other third party suppliers
for the Transition Services as promptly as practicable.
3 FURTHER AGREEMENTS
3.1 Compliance With Laws. Each of the parties hereto will
comply in all material respects with all federal, state and local laws,
administrative rules and regulations relating to Purchaser's operations and its
employment practices, including, but not limited to, compensation, hours of
employment, opportunities for employees or applicants for employment, insurance,
labor relations, and safety and record keeping. Each of the parties hereto, at
its own expense, will obtain all material permits and licenses which may be
required under any applicable federal, state, or local law, administrative rule
or regulation by virtue or any act performed by such party or as a result of
this Agreement.
3.2 Reasonable Assurance. When reasonable grounds for
insecurity arise with respect to the performance of either party, the other
party may in writing demand adequate assurance of due performance from the other
party and until such party receives such adequate assurance may if commercially
reasonable suspend any performance for which such party has not already received
the agreed return. The reasonableness of grounds for insecurity and the adequacy
of any assurance offered will be determined according to commercial standards.
After receipt of a justified demand, failure to provide within a reasonable time
not exceeding thirty (30) days such assurance of due performance as is adequate
under the circumstances of the particular case is a repudiation of this
Agreement, and then the demanding party may immediately terminate this
Agreement.
3.3 Personnel. Transition Services will be performed by
Sellers' employees or by third parties under contract with Sellers. Sellers will
be solely responsible for the payment of all direct and indirect compensation
(including fringe benefits) for Sellers personnel assigned to perform services
under this Agreement, and will be responsible for worker's compensation
insurance, employment taxes and other employer liabilities relating to Seller's
personnel.
3.4 Independent Contractor Relationship. For purposes of this
Agreement, Sellers will be deemed an independent contractor of the Purchaser.
Nothing contained in or performed pursuant to this Agreement will be construed
as creating a partnership, agency, or joint venture between Purchaser and
Sellers and, except as may be otherwise expressly provided in this Agreement,
neither party will become bound by any representation, act or omission of the
other party.
4 FEES; FEE ESTIMATES; FEE CHANGES; BILLING AND PAYMENT
4.1 Fees. Purchaser will pay to Sellers fees ("Fees") on a
monthly basis, prorated on a daily basis for any partial months, which are based
on the fees set forth on Exhibit A hereto in respect of Transition Services.
Fees will be paid in advance by the fifth day of each month based on a request
of service requested by the "Buyer" by the last day of the previous month.
During each succeeding quarter during the term of this Agreement, Purchaser will
pay to Sellers such revised Fees as may be set by Sellers, in its sole
discretion but consistent with past practice applicable to Sellers' operations.
Revised Fees will become effective on the first day of each quarter.
4.2 Fee Changes. Sellers acknowledge and agrees that changes in
its business structure, including the reduction or expansion of Sellers'
operations, or changes in the business structure of Purchaser may impact the
expense structure associated with providing Transition Services. Notwithstanding
anything to the contrary in this Article IV, Sellers may increase or decrease
their Fees consistent with its past practice applicable to Sellers' operations
upon ten (10) days written notice to Purchaser, setting forth the impact of any
changes in Sellers' or Purchaser's business structure or its expense structure.
4.3 Billing and Payment. Any payments required to be made
hereunder will be due and payable within five (5) days of the date of invoice.
Purchaser will pay any value-added tax and any tariff, duty, export or import
fee, sales tax, use tax, service tax or other tax or charge subsequently imposed
by any government or government agency on Sellers or Purchaser with respect to
Transition Services or the execution or performance of this Agreement.
5 TERM; TERMINATION; OBLIGATIONS UPON TERMINATION; NO REVIVAL
5.1 Term. Sellers will make available to Purchaser each of the
Transition Services, commencing on the Closing Date, for the applicable
Transition Period, unless earlier terminated as provided herein. The Transition
Period for any Transition Service may be extended for additional periods only as
may be mutually agreed in writing by the parties hereto.
5.2 Termination by Purchaser. Purchaser may terminate this
Agreement for any reason upon 30 days written notice.
5.3 Termination by Sellers.
(a) Sellers may terminate this Agreement at any time, upon
written notice of such termination to Purchaser, in the event of a material
breach of this Agreement by Purchaser. Such termination will become
effective 10 days from the date such notice of termination is given unless
within said 10-day period such material breach and any intervening material
breaches have been cured.
(b) Sellers may terminate this Agreement immediately, upon
written notice of such termination to Purchaser, in the event that: (i) a
Change of Control occurs, (ii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, liquidation, dissolution, or similar proceeding,
domestic or foreign, is instituted by or against Purchaser or Purchaser
takes any steps toward, or to authorize, such a proceeding or (iii)
Purchaser becomes insolvent, generally fails or is unable to pay its debts
as they mature, admits in writing its inability to pay its debts as they
mature, makes a general assignment for the benefit of its creditors, enters
into any composition or similar agreement, or suspends the transaction of
all or a substantial portion of its usual business.
5.4 Obligations Upon Termination. Notwithstanding any other
provision in this Agreement stating or implying the contrary, whether this
Agreement is terminated by Purchaser or by Sellers, (i) Purchaser will remain
liable for the payment of Fees accruing for the period prior to termination even
though such Fees may not become due until after termination and (ii) in the
event of a termination by Seller pursuant to Sections 5.3(c) or 5.3(b), all non-
cancelable obligations incurred by Sellers to third persons pursuant to and in
accordance with the terms and conditions of this Agreement which require payment
of monies after termination will constitute reimbursable costs to Sellers
hereunder; provided, that Sellers will use commercially reasonable efforts to
minimize such costs.
5.5 No Revival. Performance of Transition Services by Seller
after notice of termination is given hereunder will not operate as a renewal or
revival of this Agreement or as a waiver of such termination.
5.6 Survival. In the event of termination of this Agreement,
Section 3.4, and Article VI will continue in full force and effect.
6 NO WARRANTIES; LIMITATION ON LIABILITY
6.1 NO WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SELLERS
MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, WITH RESPECT TO ANY TRANSITION SERVICE TO BE PROVIDED
HEREUNDER.
6.2 Force Majeure. Neither party will be liable to the other
for any failure to perform or for delay in performance of its obligations
hereunder caused by circumstances beyond its reasonable control, including, but
not limited to, fire, flood, earthquake, war, insurrection, riot, sabotage,
epidemic, labor disputes, acts of God, acts of any government or agency thereof
or judicial action. The non-performing party will be excused from performance of
its obligations only to the extent and for such time as the cause which prevents
performance continues.
6.3 CONSEQUENTIAL AND OTHER DAMAGES. AS BETWEEN EACH OTHER,
NEITHER PURCHASER NOR SELLERS WILL BE LIABLE, WHETHER IN CONTRACT, IN TORT
(INCLUDING NEGLIGENCE AND STRICT LIABILITY), OR OTHERWISE, FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER, WHICH IN ANY WAY ARISE
OUT OF, RELATE TO OR ARE A CONSEQUENCE OF, ITS PERFORMANCE OR NONPERFORMANCE
HEREUNDER, OR THE PROVISION OF OR FAILURE TO PROVIDE ANY SERVICE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, BUSINESS INTERRUPTIONS AND
CLAIMS OF CUSTOMERS.
6.4 LIMITATION OF LIABILITY. IN ANY EVENT, THE LIABILITY OF
SELLER WITH RESPECT TO THIS AGREEMENT FOR THINGS DONE IN CONNECTION HEREWITH,
INCLUDING, BUT NOT LIMITED TO, THE PERFORMANCE OR BREACH HEREOF, OR FROM THE
SALE, DELIVERY OR PROVISION OF ANY TRANSITION SERVICE PROVIDED UNDER OR COVERED
BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, WILL NOT EXCEED THE
FEES PREVIOUSLY PAID TO SELLER BY PURCHASER FOR TRANSITION SERVICES PROVIDED
HEREUNDER, EXCEPT TO THE EXTENT THAT SELLERS' ACTIONS ARE FOUND BY A FINAL
JUDGMENT OR OPINION OF AN ARBITRATION OR A COURT OF APPROPRIATE JURISDICTION TO
CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN WHICH CASE SUCH LIMITATION
WILL NOT APPLY.
6.5 Defense and Indemnification By Sellers.
(a) Sellers agree to protect, defend, hold harmless and
indemnify Purchaser and its directors, officers, employees and agents
(hereinafter collectively referred to as "Purchaser Indemnitees") from and
against any and all claims, demands, lawsuits, judgments, penalties,
actions, liabilities, losses and expenses (including, but not limited to,
reasonable attorneys' fees) of any nature whatsoever (including, but not
limited to, those involving death of or injury to persons (including
employees of the Purchaser Indemnitees and Sellers), or damage to property)
actually or allegedly arising out of, in whole or in part, the performance
of the Transition Services hereunder, except to the extent that any such
claims, demands, lawsuits, judgments, penalties, actions, liabilities,
losses and expenses are found by a final judgment or opinion of an
arbitrator or a court of appropriate jurisdiction to have been caused by
the negligence or willful misconduct of Purchaser's employees or agents.
The parties agree that the indemnities set forth herein will apply only to
third party claims against Purchaser and not to claims between the parties
arising out of or connected to this Agreement.
(b) Each Purchaser Indemnitee will promptly notify Sellers
in writing of any claim, action, demand or lawsuit for which such Purchaser
Indemnitee intends to claim indemnification hereunder (however, failure to
give such notice will not relieve Seller from its obligations hereunder).
Sellers agree that Purchaser will have the right to take control of the
defense of all claims, actions, demands or lawsuits which are indemnified
against hereunder using legal counsel reasonably acceptable to Sellers;
provided, however, that Purchaser will not have the right to settle or
compromise any claim without the written consent of Sellers, which consent
will not be unreasonably withheld. Sellers will cooperate fully with
Purchaser and its legal representatives in the investigation and defense of
any claim, action, demand or lawsuit covered by this indemnification.
6.6 Indemnification By Purchaser.
(a) Purchaser agrees to hold harmless and indemnify
Sellers and its directors, officers, employees and agents (hereinafter
collectively referred to as "Sellers Indemnitees") from and against any and
all claims, demands, lawsuits, judgments, penalties, actions, liabilities,
losses and expenses (including, but not limited to, reasonable attorneys'
fees) of any nature whatsoever (including, but not limited to, those
involving death of or injury to persons (including employees of the Sellers
Indemnitees and Purchaser) or damage to property), actually or allegedly
arising out of, in whole or in part, any negligent act or omission or
willful misconduct of Purchaser or Purchaser's employees or agents in
performing the Transition Services hereunder, except to the extent that
such claims, demands, lawsuits, judgments, penalties, actions, liabilities,
losses and expenses are found by a final judgment or opinion of an
arbitrator or a court of appropriate jurisdiction also to have been caused
by the negligence or willful misconduct of Sellers' employees or agents.
The parties agree that the indemnities set forth herein will apply only to
third party claims against Sellers Indemnitees and not to claims between
the parties arising out of or connected to this Agreement.
(b) Sellers Indemnitees will promptly notify Purchaser in
writing of any claim, action, demand or lawsuit for which such Indemnitee
intends to claim indemnification hereunder (however, failure to give such
notice will not relieve Purchaser from its obligations hereunder). Sellers
agree that Purchaser will have the right to take control of the defense of
all claims, actions, demands or lawsuits which are indemnified against
hereunder; provided, however, that Purchaser will not settle or compromise
any claim without the prior written consent of Sellers, which consent shall
not be unreasonably withheld. Sellers will cooperate fully with Purchaser
and its legal representatives in the investigation and defense of any
claim, action, demand or lawsuit covered by this indemnification.
7 MISCELLANEOUS
7.1 Cooperation. The parties hereto will cooperate with each
other and will cause their officers, employees, agents, auditors and
representatives to cooperate with each other during the Transition Period to
facilitate the operation and administration of the Businesses or Acquired Assets
and to minimize any disruption to the respective businesses than might result
from the transactions contemplated hereby.
7.2 Entire Agreement, Assignment; Competing Agreements. This
Agreement (including the Exhibits, schedules and the other documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof,
including any transaction between or among the parties hereto and (ii) shall not
be assigned by operation of law or otherwise; provided, however, that Purchaser
may assign all or part of its rights or obligations under this Agreement to one
of its wholly owned subsidiaries so long as Purchaser remains liable for its
obligations hereunder.
7.3 No Third-Party Beneficiaries. This Agreement is solely for
the benefit of Purchaser and its successors and permitted assigns, with respect
to the obligations of Seller under this Agreement, and for the benefit of
Sellers, and their respective successors and permitted assigns, with respect to
the obligations of Purchaser under this Agreement, and this Agreement shall not
be deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
7.4 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (i)
confirmation of receipt of a facsimile transmission, (ii) confirmed delivery by
a standard overnight carrier or when delivered by hand, or (iii) the expiration
of three (3) business days after the day when mailed by registered or certified
mail (postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
(a) If to the Purchaser, to
divine, inc.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
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Sears Tower - Suite 5800
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Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If to either Seller, to:
marchFIRST, Inc.
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Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
7.5 Governing Laws. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO ANY CONFLICTS OF LAWS. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY FEDERAL COURT SITTING IN
THE CITY OF CHICAGO, UNLESS THERE IS NO FEDERAL COURT JURISDICTION, IN WHICH
CASE THE ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY STATE COURT
SITTING IN THE CITY OF CHICAGO AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING
AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM WITH RESPECT THERETO.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY
ACTION OR OTHER PROCEEDING BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY
OR PARTIES HERETO WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY WAY
CONNECTED WITH OR RELATED TO, THIS AGREEMENT OR ANY PORTION THEREOF, WHETHER
BASED UPON CONTRACTUAL, STATUTORY, TORTIUOUS OR OTHER THEORIES OF LIABILITY.
EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY
AT ITS ADDRESS FOR NOTICE UNDER SECTION 7.4 OF THIS AGREEMENT. NOTHING IN THIS
SECTION 7.5 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. THE CONSENTS TO JURISDICTION SET FORTH IN
THIS SECTION 7.5 SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN
THE VENUES SPECIFIED ABOVE AND SHALL HAVE NO EFFECT FOR ANY PURPOSE EXCEPT AS
PROVIDED IN THIS SECTION 7.5 AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY
PERSON OTHER THAN THE PARTIES HERETO.
7.6 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time only by mutual written agreement
of Purchaser and Seller. Any failure of Purchaser, on the one hand, or Sellers,
on the other hand, to comply with any term or provision of this Agreement may be
waived, with respect to Sellers, by Purchaser and, with respect to Purchaser, by
Sellers, by an instrument in writing signed by or on behalf of the appropriate
party, but such waiver or failure to insist upon strict compliance with such
term or provision shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure to comply.
7.7 Multiple Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
7.8 Integration. The rights and obligations of the parties
hereto pursuant to this Agreement, the Purchase Agreement and the Ancillary
Agreements are integrated and are not severable. Nothing in this Agreement
express or implied, is intended to confer upon any person not a party to this
Agreement any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
7.9 Interpretation. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
7.10 Cumulative Remedies. Except as otherwise expressly set
forth in this Agreement, all rights and remedies of each party hereto are
cumulative of each other and of every other right or remedy such party may
otherwise have in equity or at law, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
any other rights or remedies.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first above written.
MARCHFIRST, INC.
By: /s/
--------------------------------
Name:
Title:
MARCHFIRST CONSULTING, INC.
By: /s/
--------------------------------
Name:
Title:
WH ACQUISITION CORP.
By: /s/
--------------------------------
Name:
Title:
S-1
Exhibit A
---------
Personnel Cost:
Buyer will reimburse Seller for services provided by Seller based on
the pro rata usage of personnel assigned by Seller to complete task for Buyer.
Buyer and Seller will mutually agree to allocation of personnel costs by the
fifth business day of each month.
Occupancy Cost:
Buyer and Seller will allocate occupancy costs necessary to support
personnel provided by the Buyer. Costs will be calculated based on a proration
of space necessary to support personnel described above.
Hardware and Software Costs:
Hardware and software costs will be allocated between Buyer and Seller
based on utilization percentages that are mutually agreed to by the fifth
business day of each month.
EMPLOYEE SERVICES AGREEMENT
This Employee Services Agreement (this "Agreement"), dated as of April
2, 2001, is by and among marchFIRST, Inc., a Delaware corporation ("Seller"),
and WH Acquisition Corp., an Illinois corporation (the "Purchaser").
WHEREAS, Purchaser, Seller and a wholly owned subsidiary of Seller
have entered into an Asset Purchase Agreement dated as of the date hereof (the
"Purchase Agreement"), pursuant to which Purchaser has agreed to purchase
certain of the assets of Seller (the "Acquired Assets");
WHEREAS, from and after the Closing Date, Seller desires, from time to
time, to utilize certain Transferred Employees to assist in the operation of the
Excluded Assets; and
WHEREAS, Purchaser has agreed to make available services of such
employees to Seller on the terms and subject to the conditions stated herein.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and obligations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Purchaser
and Seller agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms will
have the following respective meanings:
"Change of Control" means (i) other than pursuant to the Purchase
Agreement or the Subsequent Asset Purchase Agreement, a sale of all or majority
of the assets of Seller (after giving effect to the transactions contemplated by
such agreement), whether in a single transaction or a series of transactions,
(ii) the merger or consolidation of Seller with or into any corporation or the
merger of another corporation into Seller if the effect is that fifty percent
(50%) or more of the total voting power entitled to vote in the election of the
board of directors of the surviving or new corporation is held by a person or
persons other than the shareholders of Seller immediately prior to such
transaction, or (iii) the occurrence of any other event which results in fifty
percent (50%) or more of the total voting power entitled to vote in the election
of the board of directors of Seller being held by a person or persons other than
the shareholders of Seller who, individually or as a group, held 50% or more of
such voting power immediately prior to such event.
"Transition Period" means, for each Transition Service, a transition
period (commencing on the Closing Date) set forth opposite such Transition
Service on Exhibit A hereto and any attachments thereto.
"Transition Services" means the services set forth on Exhibit A hereto
and any attachments thereto (which are incorporated by reference herein) in
connection with Seller's operations after the Closing Date.
1.2 Other Defined Terms. The following terms will have the meanings
set forth for such terms in the Sections set forth below:
Term Section
---- -------
Acquired Assets Recitals
Agreement Recitals
Fees 4.1
Seller Recitals
Purchase Agreement Recitals
Purchaser Recitals
Purchaser Indemnitees 6.4(a)
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Purchase Agreement.
ARTICLE II.
EMPLOYEES
2.1 Provision of Employee.
(a) Purchaser will make available to Seller each of the employees to
provide the Transition Services indicated for such employee,
commencing on the Closing Date, for the applicable Transition
Period, unless earlier terminated as provided herein, on the
terms and subject to the conditions set forth herein; provided,
however, that provision of such employee shall be made in a
manner so as not to interfere with the conduct of Purchaser's
business operations. Seller will have five business days to
exclude, upon approval of the Buyer, which approval shall not be
unreasonably withheld, an employee from the list who is necessary
for full time wind-down of Seller's operations.
(b) Such employees will perform the Transition Services under the
supervision of Seller and Seller shall be solely responsible for
the actions and omissions of such employee and the quality and
consequences of the Transition Services.
(c) Seller acknowledges such employees are only being made available
by Purchaser, and that Purchaser cannot and will not compel any
employee to provide such services and that an employee's failure
to do so shall not be considered a breach of this Agreement.
2.2 Use of Transition Services. Seller will use the Transition
Services for substantially the same purposes and in substantially
the same manner (including at no greater level of usage) as the
Seller used such Transition Services prior to the Closing Date.
Seller will not resell any Transition Service or otherwise use
any Transition Service in any way other than in connection with
Seller's conduct consistent with past practice.
2.3 Nature of Transition Service. Seller acknowledges and understands
that the Transition Services provided hereunder are transitional
in nature and are furnished by Purchaser solely for the purpose
of facilitating the operation of the Excluded Assets by Seller.
2
Seller acknowledges and understands that Purchaser is not in the business of
providing Transition Services to third parties and has no long term interest in
continuing this Agreement. Seller agrees to use commercially reasonable efforts
to make a transition to its own internal organization or any other third party
suppliers for the Transition Services as promptly as practicable.
ARTICLE III.
FURTHER AGREEMENTS
3.1 Compliance With Laws. Each of the parties hereto will comply in
all material respects with all federal, state and local laws, administrative
rules and regulations relating to Seller's operations and its employment
practices, including, but not limited to, compensation, hours of employment,
opportunities for employees or applicants for employment, insurance, labor
relations, and safety and record keeping. Each of the parties hereto, at its own
expense, will obtain all material permits and licenses which may be required
under any applicable federal, state, or local law, administrative rule or
regulation by virtue or any act performed by such party or as a result of this
Agreement.
3.2 Personnel. Transition Services will be performed by Purchaser's
employees. Purchaser will be solely responsible for the payment of all direct
and indirect compensation (including fringe benefits) for Purchaser personnel
assigned to perform services under this Agreement, and will be responsible for
worker's compensation insurance, employment taxes and other employer liabilities
relating to Purchaser's personnel.
3.3 Independent Contractor Relationship. For purposes of this
Agreement, Purchaser will be deemed an independent contractor of the Seller.
Nothing contained in or performed pursuant to this Agreement will be construed
as creating a partnership, agency, or joint venture between Purchaser and Seller
and, except as may be otherwise expressly provided in this Agreement, neither
party will become bound by any representation, act or omission of the other
party.
ARTICLE IV.
FEES; FEE ESTIMATES; FEE CHANGES; BILLING AND PAYMENT
4.1 Fees. Seller will pay to Purchaser fees ("Fees") on a monthly
basis, prorated on a daily basis for any partial months, which are based on the
fees set forth on Exhibit A hereto.
4.2 Billing and Payment. Any payments required to be made hereunder
will be due and payable within ten (10) days of the date of invoice. Seller will
pay any value-added tax and any tariff, duty, export or import fee, sales tax,
use tax, service tax or other tax or charge subsequently imposed by any
government or government agency on Seller or Purchaser with respect to
Transition Services or the execution or performance of this Agreement.
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ARTICLE V.
TERM; TERMINATION;
OBLIGATIONS UPON TERMINATION; NO REVIVAL
5.1 Term. Purchaser will make available to Seller each of the
Transition Services, commencing on the Closing Date, for the applicable
Transition Period, unless earlier terminated as provided herein. The Transition
Period for any Transition Service may be extended for additional periods only as
may be mutually agreed in writing by the parties hereto.
5.2 Termination by Seller. Seller may terminate this Agreement for
any reason upon written notice.
5.3 Termination by Purchaser.
(a) Purchaser may terminate this Agreement at any time, upon written
notice of such termination to Seller, in the event of a material breach of this
Agreement by Seller. Such termination will become effective 10 days from the
date such notice of termination is given unless within said 10-day period such
material breach and any intervening material breaches have been cured.
(b) Purchaser may terminate this Agreement immediately, upon written
notice of such termination to Seller, in the event that: (i) a Change of Control
occurs, (ii) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation, dissolution, or similar proceeding, domestic or
foreign, is instituted by or against Seller or Seller takes any steps toward, or
to authorize, such a proceeding or (iii) Seller becomes insolvent, generally
fails or is unable to pay its debts as they mature, admits in writing its
inability to pay its debts as they mature, makes a general assignment for the
benefit of its creditors, enters into any composition or similar agreement, or
suspends the transaction of all or a substantial portion of its usual business.
(c) Purchaser may cease to make an employee available for a
Transition Service (i) if the employee who is to provide such Service ceases to
be an employee of Purchaser or (ii) the Transition Service relates to any assets
or operation no longer owned and operated by Seller.
5.4 Obligations Upon Termination. Notwithstanding any other provision
in this Agreement stating or implying the contrary, whether this Agreement is
terminated by Purchaser or by Seller, Seller will remain liable for the payment
of Fees accruing for the period prior to termination even though such Fees may
not become due until after termination.
5.5 No Revival. Performance of Transition Services by Purchaser after
notice of termination is given hereunder will not operate as a renewal or
revival of this Agreement or as a waiver of such termination.
5.6 Survival. In the event of termination of this Agreement, Section
3.4, and Article VI will continue in full force and effect.
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ARTICLE VI.
NO WARRANTIES; LIMITATION ON LIABILITY
6.1 NO WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED HEREIN, PURCHASER
MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, WITH RESPECT TO ANY TRANSITION SERVICE TO BE PROVIDED
HEREUNDER.
6.2 Force Majeure. Neither party will be liable to the other for any
failure to perform or for delay in performance of its obligations hereunder
caused by circumstances beyond its reasonable control, including, but not
limited to, fire, flood, earthquake, war, insurrection, riot, sabotage,
epidemic, labor disputes, acts of God, acts of any government or agency thereof
or judicial action. The non-performing party will be excused from performance of
its obligations only to the extent and for such time as the cause which prevents
performance continues.
6.3 EXCULPATION; LIMITATION OF LIABILITY. NONE OF PURCHASER OR ITS
AFFILIATES OR ANY EMPLOYEE WHICH IS THE SUBJECT HEREOF SHALL BE LIABLE TO
SELLER, FOR ANY LOSS OR DAMAGE, INCLUDING WITHOUT LIMITATION LOSS OF TIME,
INCONVENIENCE, LOSS OF USE OF ANY EQUIPMENT OR PROPERTY DAMAGE CAUSED BY SUCH
EMPLOYEE, OR FOR ANY INDIRECT, SPECIAL, RELIANCE, INCIDENTAL OR CONSEQUENTIAL
LOSS OR DAMAGE ARISING OUT OF THIS AGREEMENT OR ANY OBLIGATION RESULTING
THEREFROM, OR THE PERFORMANCE BY ANY SUCH EMPLOYEE OF ANY TRANSITION SERVICE OR
ANY OTHER ACTION OR OMISSION BY ANY SUCH EMPLOYEE, WHETHER IN AN ACTION FOR OR
ARISING OUT OF ALLEGED BREACH OF CONTRACT, OR DELAY, NEGLIGENCE, STRICT TORT
LIABILITY OR OTHERWISE. THIS PARAGRAPH SHALL SURVIVE TERMINATION AND/OR
EXPIRATION OF THIS AGREEMENT. IN ANY EVENT, THE LIABILITY OF PURCHASER WITH
RESPECT TO THIS AGREEMENT FOR THINGS DONE IN CONNECTION HEREWITH, INCLUDING, BUT
NOT LIMITED TO, THE PERFORMANCE OR BREACH HEREOF, OR FROM THE SALE, DELIVERY OR
PROVISION OF ANY TRANSITION SERVICE PROVIDED UNDER OR COVERED BY THIS AGREEMENT,
WHETHER IN CONTRACT, TORT OR OTHERWISE, WILL NOT EXCEED THE FEES PREVIOUSLY PAID
TO PURCHASER BY SELLER FOR TRANSITION SERVICES PROVIDED HEREUNDER.
6.4 Defense and Indemnification By Seller.
(a) Seller agrees to protect, defend, hold harmless and indemnify
Purchaser and its directors, officers, employees and agents (hereinafter
collectively referred to as "Purchaser Indemnitees") from and against any and
all claims, demands, lawsuits, judgments, penalties, actions, liabilities,
losses and expenses (including, but not limited to, reasonable attorneys' fees)
of any nature whatsoever (including, but not limited to, those involving death
of or injury to persons (including employees of the Purchaser Indemnitees and
Seller), or damage to property) actually or allegedly arising out of, in whole
or in part, the performance of the Transition Services hereunder. The parties
agree that the indemnities set forth herein will apply
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only to third party claims against Purchaser and not to claims between the
parties arising out of or connected to this Agreement.
(b) Each Purchaser Indemnitee will promptly notify Seller in writing
of any claim, action, demand or lawsuit for which such Purchaser Indemnitee
intends to claim indemnification hereunder (however, failure to give such notice
will not relieve Seller from its obligations hereunder). Seller agrees that
Purchaser will have the right to take control of the defense of all claims,
actions, demands or lawsuits which are indemnified against hereunder using legal
counsel reasonably acceptable to Seller; provided, however, that Purchaser will
not have the right to settle or compromise any claim without the written consent
of Seller, which consent will not be unreasonably withheld. Seller will
cooperate fully with Purchaser and its legal representatives in the
investigation and defense of any claim, action, demand or lawsuit covered by
this indemnification.
ARTICLE VII.
MISCELLANEOUS
7.1 Entire Agreement, Assignment; Competing Agreements. This
Agreement (including the Exhibits, schedules and the other documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof,
including any transaction between or among the parties hereto and (ii) shall not
be assigned by operation of law or otherwise; provided, however, that Purchaser
may assign all or part of its rights or obligations under this Agreement to one
of its wholly owned subsidiaries so long as Purchaser remains liable for its
obligations hereunder.
7.2 No Third-Party Beneficiaries. This Agreement is solely for the
benefit of Purchaser and its respective successors and permitted assigns, with
respect to the obligations of Seller under this Agreement, and for the benefit
of Seller, and its successors and permitted assigns, with respect to the
obligations of Purchaser under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
7.3 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given upon (i) confirmation of
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (iii) the expiration of three
(3) business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
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(a) If to the Purchaser, to
divine, inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Sears Tower - Suite 5800
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If to either Seller, to:
marchFIRST, Inc.
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▇▇▇▇▇ ▇▇▇▇
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Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
with the copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
7.4 Governing Laws. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO ANY CONFLICTS OF LAWS. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY FEDERAL COURT SITTING IN
THE CITY OF CHICAGO, UNLESS THERE IS NO FEDERAL COURT JURISDICTION, IN WHICH
CASE THE ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY STATE COURT
SITTING IN THE CITY OF CHICAGO AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING
AND IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM WITH RESPECT THERETO.
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY OF
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ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION OR
OTHER PROCEEDING BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY OR PARTIES
HERETO WITH RESPECT TO ANY MATTER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH
OR RELATED TO, THIS AGREEMENT OR ANY PORTION THEREOF, WHETHER BASED UPON
CONTRACTUAL, STATUTORY, TORTIOUS OR OTHER THEORIES OF LIABILITY. EACH PARTY
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PARTY AT ITS ADDRESS
FOR NOTICE UNDER SECTION 7.3 OF THIS AGREEMENT. NOTHING IN THIS SECTION 7.4
SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW. THE CONSENTS TO JURISDICTION SET FORTH IN THIS SECTION
7.4 SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE VENUES
SPECIFIED ABOVE AND SHALL HAVE NO EFFECT FOR ANY PURPOSE EXCEPT AS PROVIDED IN
THIS SECTION 7.4 AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER
THAN THE PARTIES HERETO.
7.5 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time only by mutual written agreement
of Purchaser and Seller. Any failure of Purchaser, on the one hand, or Seller,
on the other hand, to comply with any term or provision of this Agreement may be
waived, with respect to Seller, by Purchaser and, with respect to Purchaser, by
Seller, by an instrument in writing signed by or on behalf of the appropriate
party, but such waiver or failure to insist upon strict compliance with such
term or provision shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure to comply.
7.6 Multiple Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
7.7 Integration. The rights and obligations of the parties hereto
pursuant to this Agreement, the Purchase Agreement and the Ancillary Agreements
are integrated and are not severable. Nothing in this Agreement, express or
implied, is intended to confer upon any person not a party to this Agreement any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
7.8 Interpretation. The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.
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7.9 Cumulative Remedies. Except as otherwise expressly set forth in
this Agreement, all rights and remedies of each party hereto are cumulative of
each other and of every other right or remedy such party may otherwise have in
equity or at law, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of any other rights or
remedies.
Buyer and Seller will mutually agree to the list of people required
each month by submitting a list of personnel needed and the number of days
needed for each employee. Seller will submit a sheet by the fifth business day
of each month identifying the personnel needed and the number of days requested
for the month. Seller will reimburse Buyer for direct salary cost of employee
and up to 15% for reimbursement of benefit costs.
[Signature pages follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first above written.
marchFIRST, INC.
By: /s/
--------------------------
Name:
Title:
WH ACQUISITION CORP.
By: /s/
--------------------------
Name:
Title:
S-1
Exhibit A
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Buyer and Seller will mutually agree to the list of people required
each month by submitting a list of personnel needed and the number of days
needed for each employee. Seller will submit a sheet by the fifth business day
of each month identifying the personnel needed and the number of days requested
for the month. Seller will reimburse Buyer for direct salary cost of employee
and up to 15% for reimbursement of benefit costs.
A-1