Exhibit 2.1
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ASSET PURCHASE AGREEMENT
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BETWEEN
BURNTSAND (NEW ENGLAND) INC.
AS BUYER
AND
PRIMIX SOLUTIONS INC.
AS SELLER
DATED AS OF NOVEMBER 14, 2001
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ARTICLE 1 DEFINITIONS................................................. 1
1.1 Definitions................................................. 1
ARTICLE 2 PURCHASE AND SALE........................................... 9
2.1 Purchase And Sale........................................... 9
2.2 Excluded Assets............................................. 10
2.3 Assumed Liabilities......................................... 11
2.4 No Other Liabilities Assumed................................ 12
2.5 Purchase Price; Allocation of Purchase Price................ 13
2.6 Closing..................................................... 13
2.7 Net Assumed Liabilities..................................... 14
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.................... 16
3.1 Corporate Existence and Power............................... 16
3.2 Corporate Authorization..................................... 16
3.3 Governmental and Other Authorization........................ 17
3.4 Non-contravention........................................... 17
3.5 Required Consents........................................... 17
3.6 SEC Filings; Financial Statements........................... 17
3.7 Absence of Certain Changes.................................. 18
3.8 No Undisclosed Liabilities.................................. 19
3.9 Material Contracts.......................................... 19
3.10 No Litigation............................................... 20
3.11 Compliance with Laws and Court Orders....................... 21
3.12 Properties.................................................. 21
3.13 Title to and Condition of Purchased Assets.................. 21
3.14 Fairness of Consideration................................... 22
3.15 Use of Proceeds............................................. 22
3.16 Debt........................................................ 22
3.17 Intellectual Property Rights................................ 22
3.18 Insurance Coverage.......................................... 25
3.19 Licenses and Permits........................................ 25
3.20 Privacy..................................................... 25
3.21 Status of Assumed Contracts................................. 26
3.22 Accounts Receivables........................................ 26
3.23 Finders' Fees............................................... 26
3.24 Environmental Compliance.................................... 26
3.25 No Representations to Employees or Consultants of Seller.... 27
3.26 Employee Matters............................................ 27
No Right to Purchase the Consulting Business or the
3.27 Purchased Assets............................................ 28
3.28 No Existing Discussions..................................... 29
3.29 Taxes....................................................... 29
3.30 Customers................................................... 29
3.31 Full Disclosure............................................. 29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER..................... 30
4.1 Corporate Existence and Power............................... 30
4.2 Corporate Authorization..................................... 30
4.3 Governmental Authorization.................................. 30
4.4 Non-contravention........................................... 30
4.5 Finders' Fees............................................... 31
4.6 No Litigation............................................... 31
ARTICLE 5 PRE-CLOSING COVENANTS....................................... 31
5.1 Advice of Changes........................................... 31
A-(i)
5.2 Maintenance of Business..................................... 31
5.3 Conduct of Business......................................... 31
5.4 Regulatory Approvals........................................ 33
5.5 Required Consents, Satisfaction of Closing Conditions....... 33
5.6 Access to Information....................................... 34
5.7 Confidentiality............................................. 34
5.8 Preparation and Delivery of Closing Schedules............... 35
5.9 Assumed Other Liabilities; Closing Seller Liabilities....... 35
5.10 Mengwall Loan Consent Agreement............................. 35
5.11 Factor Lender Consent and Capital Lessor's Consents......... 36
5.12 Advis Assignment............................................ 36
ARTICLE 6 SELLER STOCKHOLDER APPROVAL................................. 36
6.1 Seller Proxy Statement...................................... 36
6.2 Meeting of Seller Stockholders.............................. 37
6.3 No Other Negotiations....................................... 38
ARTICLE 7 ADDITIONAL COVENANTS OF BUYER AND SELLER.................... 39
7.1 Post-Closing Confidentiality................................ 39
7.2 Payment of Debts............................................ 40
7.3 Best Efforts; Further Assurances............................ 40
7.4 Watertown Lease............................................. 41
7.5 Books and Records; Personnel................................ 42
7.6 Certain Filings............................................. 42
7.7 Non-Compete................................................. 42
7.8 Assistance.................................................. 42
7.9 Consents.................................................... 43
ARTICLE 8 TAX MATTERS................................................. 43
8.1 Taxes....................................................... 43
8.2 Straddle Periods............................................ 43
8.3 Other Taxes................................................. 43
8.4 Treatment of Indemnity Payments............................. 43
ARTICLE 9 EMPLOYEE BENEFITS........................................... 44
9.1 Employees, Consultants and Offers by Buyer.................. 44
9.2 Seller's Employee Benefit Plans............................. 45
9.3 Compensation; Contractual Obligations....................... 45
9.4 Buyer Benefit Plans......................................... 46
9.5 Employment Taxes............................................ 46
9.6 No Solicitation of Former Employees......................... 46
9.7 No Third Party Beneficiaries................................ 46
9.8 WARN Act.................................................... 46
ARTICLE 10 CONDITIONS TO INITIAL CLOSING............................... 46
10.1 Initial Closing............................................. 46
10.2 Conditions to Obligation of Buyer........................... 47
10.3 Conditions to Obligation of Seller.......................... 48
ARTICLE 11 CONDITIONS TO CLOSING....................................... 48
11.1 Conditions to Obligations of Buyer and Seller............... 48
11.2 Conditions to Obligations of Buyer.......................... 49
ARTICLE 12 SURVIVAL; INDEMNIFICATION................................... 51
12.1 Survival.................................................... 51
12.2 Indemnification............................................. 51
12.3 Limitations on Seller Indemnification Obligations........... 52
12.4 Claim; Notice of Claim...................................... 52
A-(ii)
12.5 Contents of Notice of Claim................................. 53
12.6 Defense of Third-Party Claims............................... 53
12.7 Resolution of Claims........................................ 54
12.8 Release of Remaining Deferred Amount........................ 56
12.9 Exclusive Remedy; Equitable Relief.......................... 56
ARTICLE 13 TERMINATION................................................. 57
13.1 Termination by Mutual Consent............................... 57
13.2 Unilateral Termination...................................... 57
13.3 Liability for Termination................................... 57
13.4 Expenses.................................................... 57
ARTICLE 14 MISCELLANEOUS............................................... 58
14.1 Notices..................................................... 59
14.2 Amendments and Waivers...................................... 59
14.3 Expenses.................................................... 59
14.4 Successors and Assigns...................................... 59
14.5 Governing Law............................................... 59
14.6 Counterparts; Third Party Beneficiaries..................... 59
14.7 Entire Agreement............................................ 60
14.8 Captions.................................................... 60
14.9 Severability................................................ 60
14.10 Public Announcement......................................... 60
LIST OF EXHIBITS
TO
ASSET PURCHASE AGREEMENT
Exhibit A --Form of Voting Agreement
Exhibit B --Loan and Security Agreement
Exhibit C --Management Services Agreement
Exhibit D --Assignment and Assumption Agreement
Exhibit E --▇▇▇▇ of Sale and General Assignment
Exhibit F --Form of Employment Offer Letter
Exhibit G --Form of Employment Agreement
Exhibit H --Opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
Exhibit I --Intellectual Property License Agreement
Exhibit J --Trademark Assignment
Exhibit K --Domain Name Assignment
A-(iii)
LIST OF SCHEDULES
TO
ASSET PURCHASE AGREEMENT
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A-(iv)
ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of November 14,
2001 (the "AGREEMENT DATE"), is made and entered into by and between Burntsand
(New England) Inc., a
Delaware corporation ("BUYER"),
Primix Solutions Inc., a
Delaware corporation ("SELLER"). Seller and Buyer are referred to collectively
herein as the "PARTIES" and individually as a "PARTY".
R E C I T A L S
WHEREAS, Seller conducts the Consulting Business (as defined below).
WHEREAS, Buyer desires to purchase the Consulting Business (as defined
below) and all of the assets used to conduct the Consulting Business from Seller
and to assume the Assumed Liabilities (as defined below), and Seller desires to
sell to Buyer the Consulting Business and all of the assets of the Consulting
Business, upon and subject to the terms and conditions of this Agreement.
WHEREAS, Seller shall retain certain assets and liabilities that relate to
businesses of the Seller other than the Consulting Business and assets other
than the Purchased Assets.
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Buyer's willingness to enter into this Agreement,
certain stockholders of Seller are entering into a Voting Agreement with Buyer
and Seller in the form of EXHIBIT A attached hereto (the "VOTING AGREEMENT").
WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller
are entering into a Loan Agreement and a Pledge and Security Agreement in the
form of EXHIBIT B attached hereto (collectively, the "LOAN AGREEMENT").
WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller
are entering into a Management Services Agreement in the form of EXHIBIT C
attached hereto (the "MANAGEMENT SERVICES AGREEMENT").
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the parties hereby agree as follows.
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms have the meanings ascribed to them or
referenced below:
"AAA" has the meaning set forth in Section 12.7(c).
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with such specified other Person (where, for purposes of this
definition, "CONTROL" (including the correlative terms "CONTROLLED BY" or "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of a Person, whether
through the ownership of stock, by Contract or otherwise and shall include a
party's officers and directors).
"AGREEMENT" has the meaning set forth in the Preamble.
"AGREEMENT DATE" has the meaning set forth in the Preamble.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" has the meaning set forth in
Section 2.6(a)(iii).
"ASSIGNED RECEIVABLES" has the meaning set forth in Section 12.2(a).
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"ASSUMED CAPITAL LEASE LIABILITIES" has the meaning set forth in
Section 2.3(e).
"ASSUMED CONTRACTS" has the meaning set forth in Section 2.1(e).
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.
"ASSUMED LINE OF CREDIT LIABILITIES" has the meaning set forth in
Section 2.3(a).
"ASSUMED OTHER LIABILITIES" has the meaning set forth in Section 2.3(g).
"ASSUMED PREPAID LIABILITIES" has the meaning set forth in Section 2.3(f).
"ASSUMED VACATION LIABILITIES" has the meaning set forth in Section 2.3(c).
"ASSUMED WATERTOWN LEASE LIABILITIES" has the meaning set forth in
Section 2.3(d).
"AWARDED DAMAGES" has the meaning set forth in Section 12.7(c)(iii).
"BALANCE SHEET" has the meaning set forth in Section 3.6(b).
"BALANCE SHEET DATE" has the meaning set forth in Section 3.6(b).
"▇▇▇▇ OF SALE" has the meaning set forth in Section 2.6(b).
"BOOKS AND RECORDS" means, to the extent not already included in
Intellectual Property Deliverables, all books, records, books of account,
financial records, financial statements, files, data and papers, whether in hard
copy or computer format, used or held for use by Seller or any of its Affiliates
in connection with the conduct of the Consulting Business (other than the
corporate minute books of Seller), including, without limitation, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, lists of present
and former personnel and employment and consultants records, and any Tax return
relating exclusively to any Tax imposed on the Purchased Assets; PROVIDED,
HOWEVER, that Seller is entitled to retain originals of books, records, books of
account, financial records, financial statements, files, data and papers that
relate to businesses other than the Consulting Business and Tax returns,
financial records and financial statements of Seller, so long as Buyer is given
true and complete copies of such documents and records at the Closing or no
later than five (5) days thereafter.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which banks
are open for ordinary banking business in Boston, Massachusetts.
"BUYER" has the meaning set forth in the Preamble.
"BUYER ANCILLARY AGREEMENTS" means, collectively, the Loan Agreement, the
Management Services Agreement, the Assignment and Assumption Agreement (as
defined in Section 2.6(a)(iii)), the ▇▇▇▇ of Sale (as defined in
Section 2.6(a)(iii)), the Trademark Assignment, the Domain Name Assignment, and
the License Agreement (as such terms are defined in Section 11.2 below), and all
other agreements, assignments, certificates and documents that Buyer is to
execute and deliver pursuant to this Agreement.
"BUYER CLOSING ADJUSTMENT" has the meaning set forth in Section 2.7(c).
"BUYER INDEMNITEES" has the meaning set forth in Section 12.2(a).
"BUYER'S DC PLAN" has the meaning set forth in Section 9.2.
"BUYER'S LEASE" has the meaning set forth in Section 7.4.
"CAPITAL LESSORS' CONSENTS" has the meaning set forth in Section 5.11.
"CLAIM" has the meaning set forth in Section 12.4.
"CLOSING" has the meaning set forth in Section 2.6.
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"CLOSING CASH CONSIDERATION" has the meaning set forth in Section 2.5(a).
"CLOSING DATE" means the date of the Closing.
"CLOSING MATERIAL ADVERSE EFFECT" means any change, event, circumstance or
effect on the Purchased Assets or Seller that is, or could reasonably be
expected to be, individually or in the aggregate with all other changes, events
circumstances or effects, materially adverse to the Purchased Assets (including
but not limited to intangible assets) or Seller, or to the condition (financial
or otherwise), operations or assets (including but not limited to intangible
assets) of the Seller, excluding any such change, event, circumstance or effect
resulting directly from (i) the public announcement of the transactions
contemplated by this Agreement, (ii) changes in general economic conditions
(provided that such changes do not affect the Purchased Assets or Seller in a
disproportionate manner), (iii) changes in Seller's listing status on NASDAQ or
(iv) the reduction by a Seller Customer in the revenue paid under a services
contract pertaining to the Consulting Business and/or the termination by a
Seller Customer of such contract, which results directly from Buyer's material
breach or default of its obligations under the Management Services Agreement;
PROVIDED, HOWEVER, that the reduction by a Seller Customer in the revenue paid
under a services contract pertaining to the Consulting Business and/or the
termination by a Seller Customer of such contract, which (A) results directly
from Seller's material breach or default of its obligations under the Management
Services Agreement, and (B) has an aggregate value greater than Three Hundred
Thousand United States Dollars (U.S.$300,000) when aggregated with other service
contracts of such customer which have been so terminated or in which the
revenues paid thereunder have been so reduce, shall constitute a Closing
Material Adverse Effect.
"CLOSING RETAINED LIABILITIES" has the meaning set forth in Section 7.2.
"CLOSING SELLER LIABILITIES" has the meaning set forth in
Section 2.6(a)(ii).
"COBRA" has the meaning set forth in Section 3.26(h).
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 5.7.
"CONSULTING BUSINESS" means the professional services business conducted by
Seller in North America, and which includes, but is not limited to, the business
conducted by Seller in which Seller (i) provides business and management
consulting, systems integration and related IT services, as well as computer
software, and application design and development services to its customers and
clients, and (ii) licenses of technology, know-how and other Intellectual
Property Rights.
"CONSULTING BUSINESS RECEIVABLES" has the meaning set forth in
Section 2.1(f).
"CONSULTING SOURCE CODE" has the meaning set forth in Section 3.17(g).
"CONTESTED CLAIM" has the meaning set forth in Section 12.7(b).
"CONTRACT" means any written or oral contract, agreement, arrangement,
undertaking, indenture, lease, deed, mortgage, license, option, instrument, note
or other commitment.
"DAMAGES" has the meaning set forth in Section 12.2(a).
"DEFERRED AMOUNT" has the meaning set forth in Section 2.5(a).
"DEFERRED CONSENT" has the meaning set forth in Section 5.5(b).
"DISCLOSING PARTY" has the meaning set forth in Section 5.7.
"EMPLOYEE PLANS" has the meaning set forth in Section 3.26(b).
"EMPLOYMENT AGREEMENT" has the meaning set forth in Section 9.1(b).
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"EMPLOYMENT OFFER LETTERS" has the meaning set forth in Section 9.1(a).
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, ordinance, code, legally binding guideline or policy or rule of the
United States or of any other country or any judgment, order, decree,
injunction, permit or governmental restriction or any agreement with any
Governmental Authority, relating to the environment, natural resources, human
health and safety or to exposure to Hazardous Substances, and includes, but is
not limited to the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C.ss.9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C.ss.1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C.ss.6901 et seq., the Clean Water Act, 33 U.S.C. Sectionss.1251 et seq.,
the Clean Air Act, 42 ▇.▇.▇.▇▇. 7401 et seq., the Toxic Substance Control Act,
15 U.S.C.ss.2601 et seq., the Oil Pollution Act of 1990, 33 U.S.C.ss.2701 et
seq., and the Occupational Safety and Health Act, 29 U.S.C.ss.651 et seq., as
such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous state or local statutes and any applicable
transfer statutes.
"ENVIRONMENTAL LIABILITIES" means any and all Liabilities arising in
connection with or in any way relating to Seller (or any predecessor of Seller
or any prior owner of all or part of Seller's business and assets), any property
now or previously owned, leased or operated by Seller, the Consulting Business
(as currently or previously conducted by Seller or any of its Affiliates), the
Purchased Assets or any activities or operations occurring or conducted at the
real property owned, leased or used by Seller (including, without limitation,
offsite disposal), whether accrued, contingent, absolute, determined,
determinable or otherwise, which (i) arise under any Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations promulgated thereunder.
"ESTIMATED CLOSING BALANCE SHEET" has the meaning set forth in
Section 2.7(a).
"ESTIMATED CLOSING BALANCE SHEET CERTIFICATE" has the meaning set forth in
Section 2.7(a).
"EXCHANGE ACT" has the meaning set forth in Section 3.3.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.4.
"FACILITY" has the meaning set forth in Section 3.24.
"FACTOR LENDER CONSENT" has the meaning set forth in Section 5.11.
"FILED STATEMENTS" has the meaning set forth in Section 3.6(b).
"FINAL AWARD" has the meaning set forth in Section 12.7(c)(iii).
"FIRST RELEASE DATE" has the meaning set forth in Section 12.8.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means any national, federal, state, county,
municipal, district or local government or government body, whether of the
United States or another country, or any public administrative or regulatory
agency, political subdivision, commission, court, board or body, or
representative of any of the foregoing.
"HAZARDOUS SUBSTANCES" means any pollutant, contaminant, waste or chemical
or any toxic, radioactive, ignitable corrosive, reactive or otherwise hazardous
or toxic substance, having any
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constituent elements displaying any of the foregoing characteristics, as defined
in or regulated under any applicable Environmental Laws.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" has the meaning set forth in Section 12.4.
"INDEMNIFYING PARTY" has the meaning set forth in Section 12.4.
"INDEMNITEE" has the meaning set forth in Section 12.4.
"INDEPENDENT ACCOUNTANT" has the meaning set forth in Section 2.7(b).
"INITIAL CLOSING" has the meaning set forth in the Preamble to
Section 10.1.
"INITIAL CLOSING DATE" has the meaning set forth in the Preamble to
Section 10.1.
"INTELLECTUAL PROPERTY DELIVERABLES" means (i) any and all design and code
documentation, methodologies, processes, trade secrets, design information,
product information, formulae, routines, engineering specifications, technical
manuals and data, drawings, inventions, know-how, techniques, engineering work
papers, works-in-process, works of authorship and programmer's notes, which are
related to, used in, or derived from the Consulting Business, or products or
services which are offered as a part of or necessary to operate the Consulting
Business; (ii) all computer software and technologies developed by or for the
Consulting Business or used or marketed in connection with the Consulting
Business and all source code, object code, tools, supplements, modifications,
updates, corrections and enhancements of past and present versions, and versions
under development of such software and technologies; and (iii) the Seller Web
Sites.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in
Section 3.17(a).
"IP LICENSES" has the meaning set forth in Section 3.17(b).
"J.A.M.S." has the meaning set forth in Section 12.7(c).
"KNOWLEDGE" of a Party to this Agreement means, with respect to any fact,
circumstance, event or other matter in question, the actual knowledge of such
fact, circumstance, event or other matter by any officer or director of such
Party and, in the case of Seller, vice presidents. For purposes of this
definition, any such officer or director (or vice presidents in the case of
Seller) will be deemed to have actual knowledge of a particular fact,
circumstance, event or other matter if such fact, circumstance, event or other
matter is (i) such that an individual who has the duties and responsibilities of
such officer or director (or vice presidents, in the case of Seller) would be
reasonably expected to know such fact, circumstance, event or other matter in
the customary performance of his or her duties and responsibilities,
(ii) reflected in one or more documents (whether written or electronic,
including e-mails sent to or by such individual) in, or that have been in, such
individual's possession, including personal files of such individual, or
(iii) contained in the actual knowledge of another person whom such officer or
director (or vice presidents, in the case of Seller) would reasonably be
expected to inquire of such fact, circumstance, event or other matter.
"LOAN AGREEMENT" has the meaning set forth in the Recitals.
"LOAN AGREEMENT EFFECTIVE DATE" has the meaning set forth in
Section 7.4(c).
"LIABILITIES" means debts, liabilities and obligations, whether accrued or
fixed, absolute or contingent, matured or unmatured, determined or determinable,
known or unknown, including those arising under any law, action or governmental
order and those arising under any Contract.
"LICENSE AGREEMENT" has the meaning set forth in Section 11.2(g).
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"LIEN" means with respect to any property or asset, any mortgage, lien,
option, equitable interest, security interest, right of first refusal or other
restriction on transfer, easement, pledge, hypothecation, charge, debenture,
deed of trust, claim, title retention agreement or covenant of any nature or
other restriction, encumbrance or any other adverse claim of any kind in respect
of such property or asset or any restriction on the use of such property or
asset or any irregularity in title thereto.
"MANAGEMENT SERVICES AGREEMENT" has the meaning set forth in the Recitals.
"MATERIAL ADVERSE CHANGE" means any change, event, circumstance or effect on
the Consulting Business, the Purchased Assets or Seller that is, or could
reasonably be expected to be, individually or in the aggregate with all other
changes, events circumstances or effects, materially adverse to the Consulting
Business, the Purchased Assets (including but not limited to intangible assets)
or Seller, or to the condition (financial or otherwise), operations, results of
operations, customers, employees, or assets (including but not limited to
intangible assets) of the Consulting Business or Seller, excluding any such
change, event, circumstance or effect resulting directly from (i) the public
announcement of the transactions contemplated by this Agreement, or
(ii) changes in Seller's listing status on NASDAQ.
"MATERIAL CONTRACT" has the meaning set forth in Section 3.9(k).
"MENGWALL LOAN CONSENT AGREEMENT" has the meaning set forth in
Section 5.10.
"MENGWALL LOAN DOCUMENTS" has the meaning set forth in Section 5.10.
"NET ASSUMED LIABILITIES" has the meaning set forth in Section 2.7(c).
"NET CLOSING ASSETS" has the meaning set forth in Section 2.7(a).
"NON-PREVAILING PARTY" has the meaning set forth in Section 12.7(c)(i).
"NOTICE OF CLAIM" has the meaning set forth in Section 12.4.
"OTHER FILINGS" has the meaning set forth in Section 6.1(a).
"PARTY" has the meaning set forth in the Preamble.
"PERMITS" has the meaning set forth in Section 3.19.
"PERMITTED LIENS" means (i) liens for Taxes not yet due and payable (other
than liens for any Transaction Taxes arising from any transactions contemplated
by this Agreement or by any Buyer Ancillary Agreement or any Seller Ancillary
Agreement), (ii) mechanics', carriers', workmen's, warehousemen's, repairmen's
or other like liens arising in the ordinary course of business which are not yet
due and payable, or (iii) any liens set forth on SCHEDULE 1.2.
"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
a limited liability company, or a Governmental Authority.
"PRE-CLOSING PERIOD" has the meaning set forth in Section 5.2.
"PREPAID ASSETS" has the meaning set forth in Section 2.1(g).
"PREVAILING PARTY" has the meaning set forth in Section 12.7(c)(i).
"PRIOR FACILITY" has the meaning set forth in Section 3.24.
"PURCHASED ASSETS" has the meaning set forth in Section 2.1.
"PURCHASE PRICE" has the meaning set forth in Section 2.5(a).
"PURCHASE PRICE ALLOCATION" has the meaning set forth in Section 2.5(b).
"RECEIVING PARTY" has the meaning set forth in Section 5.7.
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"RELEASE DATE" has the meaning set forth in Section 12.8.
"REQUIRED CONSENTS" has the meaning set forth in Section 3.5.
"REQUIRED PREMISES" has the meaning set forth in Section 7.4.
"RESTRICTED PERIOD" has the meaning set forth in Section 7.7.
"RETAINED LIABILITIES" has the meaning set forth in Section 3.15.
"REVISED CLOSING BALANCE SHEET" has the meaning set forth in
Section 2.7(b).
"SEC" has the meaning set forth in Section 3.3.
"SECOND RELEASE DATE" has the meaning set forth in Section 12.8.
"SECURITIES ACT" has the meaning set forth in Section 3.6(a).
"SELLER" has the meaning set forth in the Preamble.
"SELLER ACQUISITION PROPOSAL" has the meaning set forth in Section 6.3.
"SELLER ANCILLARY AGREEMENTS" means, collectively, the Loan Agreement, the
Management Services Agreement, the Assignment and Assumption Agreement, the ▇▇▇▇
of Sale (as defined in Section 2.6(a)(iii)), the Trademark Assignment, the
Domain Name Assignment and the License Agreement, and all other agreements,
assignments, certificates and documents that Seller is to execute and deliver
pursuant to this Agreement.
"SELLER CAPITAL LEASES" has the meaning set forth in Section 2.3(e).
"SELLER CLOSING LIABILITIES" has the meaning set forth in
Section 2.6(a)(ii).
"SELLER CLOSING ADJUSTMENT" has the meaning set forth in Section 2.7(c).
"SELLER CUSTOMERS" has the meaning set forth in Section 3.30.
"SELLER CUSTOMER ASSETS" has the meaning set forth in Section 2.1(h).
"SELLER EMPLOYEES" has the meaning set forth in Section 9.1(a).
"SELLER INDEMNITEES" has the meaning set forth in Section 12.2(b).
"SELLER IP RIGHTS" has the meaning set forth in Section 3.17(e).
"SELLER KEY MANAGEMENT EMPLOYEES" has the meaning set forth in
Section 9.1(b).
"SELLER LINE OF CREDIT" means that certain Factoring Agreement between
Seller and Pacific Business Funding, a division of Cupertino National Bank (the
"FACTOR LENDER"), dated as of August 15, 2001, as amended by that certain
Amendment to Factoring Agreement between Seller and Factor Lender dated as
August 15, 2001.
"SELLER PROXY STATEMENT" has the meaning set forth in Section 3.31(b).
"SELLER STOCKHOLDERS' MEETING" has the meaning set forth in
Section 3.31(b).
"SELLER-RETAINED RIGHTS" has the meaning set forth in Section 2.1(i).
"SELLER-RETAINED MARKS" has the meaning set forth in Section 2.2(h).
"SELLER'S DISCLOSURE LETTER" has the meaning set forth in the Preamble to
Article 3.
"SELLER SEC REPORTS" has the meaning set forth in Section 3.6(a).
"SELLER STOCKHOLDER APPROVALS" has the meaning set forth in Section 3.2.
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"SELLER TANGIBLE PERSONAL PROPERTY" has the meaning set forth in
Section 2.1(j).
"SELLER WEB SITES" means Seller's web site on the World Wide Web with the
Uniform Resource Locator ("URL") of "▇▇▇.▇▇▇▇▇▇.▇▇▇", and the web sites set
forth on SCHEDULE 3.17(B)(I), and any other external or internal web sites or
proposed web sites owned or operated in connection with the Consulting Business,
and all information, data, advertising, graphics, maps, pictures, illustrations,
text, sounds, layout, design, organization and other content of any type or
nature used or displayed on Seller Web Sites.
"SETTLED CLAIM" has the meaning set forth in Section 12.7(d).
"SOFTWARE" has the meaning set forth in Section 3.17(a).
"SOLVENCY CLAIMS" has the meaning set forth in Section 12.2(a).
"SPECIAL BUYER CLAIMS" has the meaning set forth in Section 12.3(a).
"SPECIAL SELLER CLAIMS" has the meaning set forth in Section 12.3(a).
"STOCKHOLDERS CLAIMS" has the meaning set forth in Section 12.2(a).
"STRADDLE PERIODS" has the meaning set forth in Section 8.2.
"SUBSIDIARY" or "SUBSIDIARIES" means, with respect to any Person: (a) any
corporation at least a majority of whose outstanding voting stock is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries; (b) any general partnership,
limited liability company, joint venture or similar entity, at least a majority
of whose outstanding partnership, membership, ownership or similar interests
shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; and
(c) any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For purposes of this definition, "voting stock" means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of the
directors (or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of
contingency.
"TAX" or "TAXES" means foreign, federal, state and local taxes of any kind
whatsoever (whether payable directly or by withholding), including all income,
capital, sales, use, transfer, customs duties, stamp, stock, registration,
franchise, social security, payroll, premium, employment, excise, property,
value added or other taxes of any kind whatsoever, together with any interest
and penalties, additions to tax or additional amounts with respect thereto,
whether disputed or not.
"TERMINATING PARTY" has the meaning set forth in Section 13.3.
"THIRD-PARTY CLAIM" has the meaning set forth in Section 12.4.
"TRADEMARK ASSIGNMENT" has the meaning set forth in Section 11.2.
"TRANSACTION TAXES" has the meaning set forth in Section 8.1.
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 9.1(c).
"TRANSFERRED PERMITS" has the meaning set forth in Section 2.1(d).
"UNCONTESTED CLAIM" has the meaning set forth in Section 12.7(a).
"WARN ACT" has the meaning set forth in Section 3.26.
"WATERTOWN LEASE" means that certain Sublease dated as of August 1, 2001 by
and between Seller and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Inc., a Massachusetts corporation (the
"LANDLORD"), pursuant to which Seller leases office space located on the ▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
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(the "WATERTOWN FACILITY"). The office space leased by Seller under the
Watertown Lease is hereinafter referred to as the "WATERTOWN PREMISES."
"WATERTOWN LEASE RELEASE" has the meaning set forth in Section 7.4(a).
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE. Except as otherwise provided below, upon and
subject to the terms and conditions of this Agreement, at the Closing, Buyer
agrees to purchase from Seller, and Seller agrees to sell, assign, transfer,
convey and deliver or cause to be sold, assigned, transferred, conveyed and
delivered to Buyer, free and clear of all Liens (other than Permitted Liens) and
claims, all right, title and interest in, to and under the assets, properties
and business, of every kind and description, wherever located, personal or
mixed, tangible or intangible, owned, leased or used by Seller or any of its
Affiliates in the conduct of the Consulting Business as the same shall exist on
the Closing Date (the "PURCHASED ASSETS"), and including, without limitation,
all right, title and interest in, to and under:
(a) All Intellectual Property Deliverables;
(b) all Intellectual Property Rights of Seller used in or related to
(i) the Consulting Business and (ii) any of the Purchased Assets (other than the
Seller Retained Marks (as defined in Section 2.2(h) below));
(c) all Books and Records;
(d) to the extent lawfully transferable, all Permits, including, without
limitation, the items listed on SCHEDULE 2.1(D) to the Seller's Disclosure
Letter (collectively, the "TRANSFERRED PERMITS");
(e) all right, title and interest of Seller and any Affiliate of Seller
in and to (i) any outstanding Contracts relating to the Consulting Business and
the Purchased Assets listed on SCHEDULE 2.1(E) to the Seller's Disclosure Letter
hereto (PROVIDED that Buyer shall have the right prior to the Closing Date to
provide Seller with written notice designating those Contracts set forth on
SCHEDULE 2.1(E) which Buyer in its sole discretion will not purchase and assume
under this Agreement, and SCHEDULE 2.1(E) shall be deemed amended accordingly),
and (ii) all contracts or agreements between Seller and any employee or
consultant of Seller to the extent that they relate to confidentiality,
nondisclosure, assignment of proprietary rights or noncompetition with respect
to the Consulting Business (collectively, the "ASSUMED CONTRACTS");
(f) all accounts receivable, notes receivable and other receivables, as
well as unbilled work-in-progress arising out of the Consulting Business and
outstanding at Closing which are set forth on SCHEDULE 2.1(F) (which
SCHEDULE 2.1(F) will be updated by Seller one (1) Business Day prior to the
Closing Date) (the "CONSULTING BUSINESS RECEIVABLES");
(g) all prepaid expenses, deposits and similar prepaid items relating to
the Consulting Business, including, but not limited to, ad valorem taxes leases
and rentals, and maintenance fees at the Closing (the "PREPAID ASSETS");
(h) all Seller Customers (as defined in Section 3.30) and prospect lists
of the Consulting Business (whether current or prior), and Seller Customer
account histories, correspondence, notes and plans for Seller Customers or
prospective customers of the Consulting Business, including all data regarding
such Seller Customers, and all other marketing, promotional, Seller Customer and
sales information, whether stored in written form, magnetic or electronic media
or in any other form, that have been or now are related to the Consulting
Business or that have been or are now used, developed or purchased in connection
with the Consulting Business (collectively, the "SELLER CUSTOMER ASSETS");
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(i) all of Seller's rights, claims, credits, causes of action or rights
of setoff against third parties arising out of the Consulting Business or the
Purchased Assets, whether liquidated or unliquidated, fixed or contingent, and
all rights of Seller under or pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers, contractors and other third parties
arising out of the Consulting Business; PROVIDED, HOWEVER, that Seller shall
retain all rights, claims, credits, causes of action, counterclaims, setoffs and
defenses, and all warranties, representations and guarantees that may be
asserted against third parties arising out of any of the Excluded Assets or any
of the Excluded Liabilities including without limitation any rights to
reimbursement for damages, fees or expenses related thereto (collectively, the
"SELLER-RETAINED RIGHTS");
(j) all tangible assets used or held for use in connection with the
Consulting Business and located at the Watertown Facility, including, but not
limited to, (i) all furniture, fixtures (including leasehold improvements to the
Watertown Premises), furnishings, office equipment, machinery, vehicles,
equipment, computers, servers, spare parts, documentation, technical materials,
advertising materials, promotional literature, sales or marketing-related
materials and other tangible assets owned by Seller and used in to the
Consulting Business, together with all plates, camera-ready art, blocks,
negatives and similar material relating to any of the foregoing; (ii) all other
tangible assets (including without limitation workstations and personal
computers, the third-party software programs stored therein and the licenses
thereto, logbooks, notebooks, furniture, file cabinets, white boards, personal
office supplies and equipment) owned by Seller that at any time on or after the
Balance Sheet Date are or were held for use primarily by employees of Seller in
the conduct of the Consulting Business; and (iii) the personal property covered
by the invoices listed on SCHEDULE 3.13(B) (collectively, the "SELLER TANGIBLE
PERSONAL PROPERTY");
(k) except where the affected property has been replaced by Seller prior
to the Closing Date, all policy rights and proceeds payable under any insurance
policy covering the Purchased Assets for damage to the Purchased Assets or other
insurable or covered event affecting the condition of the Purchased Assets
occurring prior to the Closing Date; and
(l) all goodwill associated with the Consulting Business and the
Purchased Assets, together with the right to represent to third parties that
Buyer is the successor to the Consulting Business (other than goodwill
associated with the Seller-Retained Marks).
2.2 EXCLUDED ASSETS. Buyer and Seller expressly understand and agree that
the Purchased Assets will not include any assets of Seller not described in
Section 2.1 above or not related to the Consulting Business (the "EXCLUDED
ASSETS"), including without limitation the following:
(a) the Seller-Retained Rights;
(b) all capital stock, options and other securities of Seller or of any
Subsidiary of Seller;
(c) all rights, interests and claims of Seller under this Agreement;
(d) all Tax returns, corporate minutes, stock books of account,
financial and Tax records of Seller (not included in the definition of Books and
Records);
(e) all cash and cash equivalents of Seller (OTHER THAN the Consulting
Business Receivables, which ARE Purchased Assets);
(f) all Contracts to which Seller is a party or is bound or to which its
assets are subject that are not Assumed Contracts; and
(g) all refunds or rights of recovery relating to Taxes of Seller;
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(h) Seller's rights in and to the "
PRIMIX" trademarks, trade names,
service marks, domain names and related logos set forth on SCHEDULE 2.2(H) and
all goodwill associated therewith (the "SELLER-RETAINED MARKS"); and
(i) subject to Buyer's rights under Section 2.1(k) above, all insurance
policies of Seller.
2.3 ASSUMED LIABILITIES. Upon and subject to the terms the conditions of
this Agreement, Buyer agrees, effective at the time of the Closing, to assume
the following liabilities (the "ASSUMED LIABILITIES"):
(a) the liabilities of Seller outstanding as of the Closing Date under
the Seller Line of Credit which are set forth on SCHEDULE 2.3(A) (which
SCHEDULE 2.3(A) will be updated by Seller one (1) Business Day prior to the
Closing Date), but only to the extent such liabilities are secured by Consulting
Business Receivables (all of which liabilities are reflected on Balance Sheet)
(the "ASSUMED LINE OF CREDIT LIABILITIES"); PROVIDED that that Buyer shall not
be obligated to pay or assume any Assumed Line of Credit Liabilities unless and
until the Factor Lender shall have executed and delivered the Factor Lender
Consent (as defined in Section 5.11 below);
(b) subject to Section 5.5(b), the liabilities and obligations of Seller
under the Assumed Contracts, but only to the extent such liabilities and
obligations accrued or arose after the Closing Date for reasons other than any
breach, violation or default by Seller of any of the terms of any of the Assumed
Contracts;
(c) the obligations of Seller to make cash payments or provide credit to
the Transferred Employees (as defined in Section 9.1(c) below) with respect to
accrued vacation time as of the Transferred Employee Hire Date (as defined in
Section 9.1(c) below) in the respective amounts set forth opposite such
Transferred Employee's name on SCHEDULE 2.3(C) (which SCHEDULE 2.3(C) will be
updated by Seller one (1) Business Day prior to the Initial Closing Date) (the
"ASSUMED VACATION LIABILITIES"); PROVIDED that Buyer shall only be obligated to
assume and pay such payments or provide such credit to those Transferred
Employees who, prior to receipt of such payment from Buyer, execute and deliver
to Buyer an IRS Form W-9 or other appropriate tax withholding form;
(d) the liability of Seller outstanding as of the Closing Date under
Section 4 of the Watertown Lease to pay "Incremental Additional Rent" (as
defined therein) which is set forth on SCHEDULE 2.3(D) (which SCHEDULE 2.3(D)
will be updated by Seller one (1) Business Day prior to the Closing Date) (which
liability is reflected on Balance Sheet) (the "ASSUMED WATERTOWN LEASE
LIABILITIES"); PROVIDED that in no event shall Assumed Watertown Lease
Liabilities exceed Eight Hundred Forty-Six Thousand Five Hundred Seventy-One
United States Dollars (U.S $846,571); PROVIDED FURTHER, that Buyer shall not be
obligated to pay or assume any Assumed Watertown Lease Liabilities unless and
until the Landlord shall have executed and delivered the Watertown Lease Release
(as defined in Section 7.4 below);
(e) the liabilities of Seller outstanding as of the Closing Date under
the capital leases (the "SELLER CAPITAL LEASES") set forth on SCHEDULE 2.3(E)
(which SCHEDULE 2.3(E) will be updated by Seller one (1) Business Day prior to
the Closing Date) (all of which liabilities are reflected on Balance Sheet) (the
"ASSUMED CAPITAL LEASE LIABILITIES") PROVIDED, that Buyer shall not be obligated
to pay or assume any Assumed Capital Lease Liabilities unless and until the
applicable lessor shall have executed and delivered the Capital Lessors' Consent
(as defined in Section 5.11 below) with respect to such liabilities;
(f) the obligations and liabilities of Seller outstanding as of the
Closing Date for Seller Customer deposits, prepaid amounts or advance payments
for work not yet delivered or included in the definition of Consulting Business
Receivables set forth on SCHEDULE 2.3(F) (which SCHEDULE 2.3(F) will be updated
by Seller one (1) Business Day prior to the Closing Date) (all of which
liabilities are reflected on Balance Sheet) (the "ASSUMED PREPAID LIABILITIES");
and
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(g) the liabilities of Seller outstanding as of the Closing Date set
forth on SCHEDULE 2.3(G) (which SCHEDULE 2.3(G) will be updated by Seller and
Buyer one (1) Business Day prior to the Closing Date) (the "ASSUMED OTHER
LIABILITIES").
2.4 NO OTHER LIABILITIES ASSUMED. As a material consideration and
inducement to Buyer to enter into this Agreement, Seller will retain, and will
be solely responsible for paying, performing and discharging when due, and Buyer
will not assume or otherwise have or acquire any obligation, responsibility or
liability for, any Excluded Liabilities (as hereinafter defined). The term
"EXCLUDED LIABILITIES" means any and all Liabilities of Seller or any of its
Affiliates, whether now existing or hereafter arising, other than the Assumed
Liabilities. By way of example and not by way of limitation, the Excluded
Liabilities that are not being assumed by Buyer include:
(a) any and all Taxes now or hereafter due and payable by Seller or any
Affiliate of Seller, including without limitation, any Transaction Taxes (as
defined in Section 8.1 of this Agreement) and any other Taxes on, or arising
from, Seller's sale, assignment, transfer and delivery to Buyer of any of the
Purchased Assets pursuant to this Agreement, including the assignment and
transfer of the Seller Operating Leases pursuant to Section 7.4(b);
(b) any and all Taxes attributable or related to any of the Purchased
Assets that relate in any manner to, or first arose during, any time period or
portion thereof ending on or prior to the Closing Date, and any related
Liabilities of Seller and its Affiliates;
(c) any and all Liabilities now or hereafter arising from or with
respect to, any sale, license, provision, performance or delivery by Seller or
any of its Affiliates of a product or service that has been sold, licensed,
provided, performed or delivered by Seller or any of its Affiliates prior to the
Closing Date (including all past sales and licenses of the products and services
in connection with Consulting Business by Seller or any of its Affiliates or
predecessors that occurred prior to the Closing Date);
(d) any and all Liabilities arising from any breach, violation or
default by Seller or any of its Affiliates of any Contract (including, without
limitation, any lease or license), to which Seller or any of its Affiliates is a
party or is bound (including, but not limited to, any breach, violation or
default by Seller or any of its Affiliates of any of the Assumed Contracts that
occurred or first arose prior to the Closing);
(e) any liabilities, obligations, debts or duties of Seller under any
Contract that is not an Assumed Contract;
(f) other than the Assumed Vacation Liabilities, any and all Liabilities
to current, former or future employees of Seller related to or arising from or
with respect to any past, present or future act or omission of Seller or any of
its Affiliates, including any Liabilities to such employees for the payment of
any and all wages or accrued and unused vacation time or for the reimbursement
of any expenses incurred by such employees;
(g) other than the Assumed Vacation Liabilities, any and all Liabilities
arising from the past, present or future termination by Seller or any of its
Affiliates of the employment of any current, former or future officers,
directors, employees, consultants or contractors of Seller, any other claims
brought against Seller arising from the past, present or future employment by
Seller or any of its Affiliates of any person, or arising from any duties or
obligations under any past, present or future employee benefit plans or
compensation arrangements of Seller or any of its Affiliates;
(h) any and all past, present or future Liabilities of Seller or any of
its Affiliates to employees of Seller under the Employee Plans, ERISA, COBRA,
the WARN Act, the Code or any severance pay obligations of Seller;
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(i) any and all Liabilities arising from the violation (or alleged
violation) by Seller or any of its Affiliates of any statute, law, ordinance,
regulation, order, judgment or decree of any Governmental Authority or any
jurisdiction (other than Assumed Liabilities);
(j) any and all Liabilities relating to or arising out of any of the
Excluded Assets (including, but not limited to, any Liabilities now existing or
hereafter arising under any Contract of Seller that is not an Assumed Contract);
(k) any and all Liabilities arising from any claim, action, demand,
lawsuit, investigation or proceeding instituted by or against Seller or from the
actual or alleged infringement or misappropriation by Seller of any Intellectual
Property Rights of a third party;
(l) any Environmental Liability; and
(m) any and all Liabilities arising as a result of any failure to comply
with any "bulk sales", "bulk transfer" or similar laws in connection with the
transactions contemplated by this Agreement.
2.5 PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE.
(a) In consideration of Seller's transfer of good and marketable title
to, and delivery of, the Purchased Assets to Buyer, effective upon the Closing,
Buyer shall (i) pay to Seller in cash at the Closing an amount equal to the sum
of Six Million United States Dollars (U.S.$6,000,000) plus the amount of any
Seller Closing Adjustment (as defined in Section 2.7(c) below), LESS
(1) amounts constituting Closing Seller Liabilities (as defined in
Section 2.6(a)(ii) below), (2) amounts owed to Buyer under the Loan Agreement
and set off by Buyer, (3) amounts owed to Buyer under the Management Services
Agreement and set off by Buyer, and (4) the amount of any Buyer Closing
Adjustment (as defined in Section 2.7(c) below) (the "CLOSING CASH
CONSIDERATION"); (ii) make payment on behalf of Seller of the Closing Seller
Liabilities as provided in Section 2.6(a)(ii) below; (iii) assume the Assumed
Liabilities (and no other Liabilities) of Seller; and (iv) agree, as provided in
Article 12 of this Agreement, to pay Seller in cash, at the time provided in
Article 12 of this Agreement, the Deferred Amount (as defined below) minus the
amount of Damages that Buyer is entitled to recover from the Deferred Amount
pursuant to Claims (as defined in Section 12.4) in accordance with Article 12 of
this Agreement (the "PURCHASE PRICE"). As used herein, the "DEFERRED AMOUNT"
means the sum of One Million United States Dollars (U.S.$1,000,000) in cash. The
Parties acknowledge and agree that Buyer shall be the sole owner of the Deferred
Amount and Seller has no right or interest therein until all or any portion of
the Deferred Amount is required to be paid and released to Seller under the
terms of Article 12 of this Agreement, and that subject to the provisions of
Article 12, Buyer shall be entitled to retain the Deferred Amount as a
non-exclusive remedy in respect of Seller's indemnification obligations under
this Article 12 in accordance with the terms thereof.
(b) Seller and Buyer will use commercially reasonable efforts to agree
by the Closing Date, to allocate the Purchase Price among the Purchased Assets
in accordance with the allocation requirements of Section 1060 of the Code (the
"PURCHASE PRICE ALLOCATION"). Seller and Buyer agree that the Purchase Price
Allocation may be amended or modified by mutual agreement of the Parties,
including, without limitation, to reflect any subsequent adjustments to the
Purchase Price, including the adjustments referred to in Section 8.4, to
establish a final Purchase Price Allocation prior to the filing of the
applicable Tax returns by Buyer and Seller in a manner that is consistent with
Section 1060 of the Code and the regulations promulgated thereunder. For all Tax
purposes, Buyer and Seller agree to report the transactions contemplated in this
Agreement in a manner consistent with the final Purchase Price Allocation agreed
to by the Parties under this Section 2.5(b) and Section 8.4, and will not take
any position inconsistent with the final Purchase Price Allocation agreed to by
the Parties under this Section 2.5(b) in any Tax return, in any refund claim, in
any litigation or otherwise.
2.6 CLOSING. The closing and consummation (the "CLOSING") of the purchase
and sale of the Purchased Assets and the assumption of the Assumed Liabilities
hereunder shall take place at the
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offices of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, two
(2) Business Days following the satisfaction or waiver of the conditions
precedent to the Initial Closing and the Closing set forth in Article 10 and
Article 11, respectively. At the Closing, upon the satisfaction or waiver of all
conditions precedent to the Initial Closing and the Closing set forth in
Article 10 and Article 11, respectively:
(a) Buyer shall:
(i) Pay to Seller the Closing Cash Consideration in immediately
available funds by wire transfer to an account of Seller with a bank designated
by Seller by notice to Buyer not later than one (1) Business Day prior to the
Closing Date (or if not so designated, then by certified or official bank check
payable in immediately available funds to the order of Seller in such amount);
(ii) Pay on behalf of Seller the Liabilities of Seller set forth on
SCHEDULE 2.6(A)(II), which SCHEDULE 2.6(A)(II) will be updated by the Seller and
Buyer one (1) Business Day prior to the Closing Date (the "CLOSING SELLER
LIABILITIES"); and
(iii) deliver to Seller the Assignment and Assumption Agreement
substantially in the form of EXHIBIT D (the "ASSIGNMENT AND ASSUMPTION
AGREEMENT") and the ▇▇▇▇ of Sale and General Release substantially in the form
of EXHIBIT E (the "▇▇▇▇ OF SALE") executed by Buyer and the other items required
to be delivered by Buyer under Section 11.3.
(b) At the Closing, Seller shall deliver, or cause to be delivered or
surrender control over (as appropriate), to Buyer, or otherwise do, each of the
following:
(i) the Assignment and Assumption Agreement, duly executed by or on
behalf of Seller;
(ii) the ▇▇▇▇ of Sale, duly executed by or on behalf of Seller;
(iii) pay in full the Closing Retained Liabilities (as defined in
Section 7.2 below), and provide Buyer with reasonably satisfactory evidence of
the same; and
(iv) the Purchased Assets and the portion of the Watertown Premises
covered by the Buyer's Lease, and the other items required to be delivered by
Seller under Section 11.2.
2.7 NET ASSUMED LIABILITIES.
(a) Estimated Closing Balance ▇▇▇▇▇.▇▇▇ (1) Business Day prior to the
Closing Date, Seller shall deliver to Buyer an estimated balance sheet of Seller
(excluding Seller's non-North American subsidiaries) dated as of the Closing
Date, prepared in accordance with GAAP (except with respect to Seller Tangible
Personal Property, which shall be valued at the assumed fair market value of
such property as agreed to by Seller and Buyer prior to Closing), consistently
applied, and setting forth the Net Closing Assets (as defined below) and all
assets and Liabilities of Seller (excluding Seller's non-North American
subsidiaries) as of the Closing Date (the "ESTIMATED CLOSING BALANCE SHEET").
For purposes of this Agreement, "NET CLOSING ASSETS" means as of the date of
determination the (i) total net book value of all Consulting Business
Receivables and Prepaid Assets, and (ii) the assumed fair market value of Seller
Tangible Personal Property as agreed to by Seller and Buyer prior to Closing
Date, LESS (b) all deductions which are required by GAAP to be reflected on the
Estimated Closing Balance Sheet. The Estimated Closing Balance Sheet, when
delivered to Buyer, shall be accompanied by a certificate of the Chief Financial
Officer of Seller representing and warranting to Buyer that the Estimated
Closing Balance Sheet is true and complete, has been prepared in accordance with
GAAP applied on a basis consistent (except with respect to Seller Tangible
Personal Property, which shall be valued at the assumed fair market value of
such property as agreed to by Seller and Buyer prior to Closing Date) with that
used for preparation of the Seller's Filed Statements, and fairly presents the
financial position of Seller as of the Closing Date (the "ESTIMATED CLOSING
BALANCE SHEET CERTIFICATE").
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The representations in such Estimated Closing Balance Sheet Certificate and the
accompanying Estimated Closing Balance Sheet shall be deemed representations of
Seller for purposes of Article 12.
(b) Revised Closing Balance Sheet.On or prior to the thirtieth (30th)
day following receipt by Buyer of the Estimated Closing Balance Sheet, Buyer may
provide Seller with a written notice, signed by an authorized representative of
Buyer, stating whether Buyer believes that the calculations of Net Closing
Assets set forth in the Estimated Closing Balance Sheet correctly reflect Net
Closing Assets of Seller as of the Closing Date as determined in accordance with
GAAP (except with respect to Seller Tangible Personal Property, which shall be
valued at the assumed fair market value of such property as agreed to by Seller
and Buyer prior to Closing Date), and if the Net Closing Assets does not in
Buyer's view so correctly reflect Net Closing Assets of Seller as of the Closing
Date, then such certificate of Buyer shall include Buyer's revised calculation
of Net Closing Assets, together with calculations in reasonable detail
substantiating such revised calculations (the "REVISED CLOSING BALANCE SHEET").
In the event that Buyer fails to timely provide the Seller with the Revised
Closing Balance Sheet within the above thirty (30) day period, then Net Closing
Assets shall be as set forth in the Estimated Closing Balance Sheet. In the
event that the calculations of Net Closing Assets set forth in the Revised
Closing Balance Sheet, if any, differ from such calculations in the Estimated
Closing Balance Sheet, then within thirty (30) days of the Seller's receipt of
the Revised Closing Balance Sheet, Seller may either:
(i) agree with such revised calculations of Net Closing Assets set
forth in the Revised Closing Balance Sheet by countersigning such Revised
Closing Balance Sheet and delivering a copy thereof to Buyer within such thirty
(30) day period, whereupon Seller shall be deemed to have agreed with and will
be bound by the calculations of Net Closing Assets set forth in the Revised
Closing Balance Sheet. If Seller shall not have responded within the thirty
(30) day period after receipt of the Revised Closing Balance Sheet, then Seller
shall be deemed to have agreed with and will be bound by calculations of Net
Closing Assets set forth in the Revised Closing Balance Sheet.
(ii) reject such revised calculations of Net Closing Assets set
forth in the Revised Closing Balance Sheet by sending a written notice of
rejection to Buyer within such thirty (30) day period setting forth the basis
for Seller's rejection of some or all of the calculations in the Revised Closing
Balance Sheet, whereupon Buyer and Seller shall confer in good faith for a
period of ten (10) days after Buyer's timely receipt of the notice of rejection
in an effort to reach agreement on the calculations; PROVIDED that if after such
period the parties have not reached such an agreement and either party believes
that such dispute cannot be resolved through negotiation, then Buyer and Seller
shall appoint a mutually and reasonably satisfactory independent certified
public accountant (the "INDEPENDENT ACCOUNTANT") to review the computations of
both Buyer and Seller, and make a final written determination of Net Closing
Assets as of the Closing Date, which determination shall be conclusive and
binding on Buyer and Seller. The Independent Accountant's engagement pursuant to
this Section 2.7(b)(ii) shall be limited solely to determining the Net Closing
Assets as of the Closing Date. If Net Closing Assets as determined by the
Independent Accountant differ by 5% (in the aggregate) or more from Net Closing
Assets as set forth in the Estimated Closing Balance Sheet, then the fees and
costs of the Independent Accountant shall be borne by Seller. If the Net Closing
Assets as determined by the Independent Accountant differ by less than 5% (in
the aggregate) from Net Closing Assets as set forth in the Estimated Closing
Balance Sheet, then the fees and costs of the Independent Accountant shall be
borne by Buyer.
(c) Net Assumed Liabilities.For purposes of this Agreement, the term
"NET ASSUMED LIABILITIES" shall be the amount equal to the difference of
(a) Net Closing Assets (as finally determined pursuant to this Section 2.7),
minus (b) the sum of (i) the Assumed Line of Credit Liabilities, (ii) the
Assumed Vacation Liabilities, (iii) Eight Hundred Forty-Six Thousand Five
Hundred Seventy-One United States Dollars (U.S.$846,571), which is the deemed
amount of the Assumed Watertown Lease Liabilities for purposes of this
Section 2.7 only, (iv) the Assumed Capital Lease Liabilities, (v) the Assumed
Prepaid Liabilities and (vi) the Assumed Other Liabilities. The Parties
acknowledge that it is
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their mutual intent that Net Assumed Liabilities equal zero at the Closing, and
hereby agree that in the event that Net Assumed Liabilities is calculated to be
an amount (i) greater than Zero United States Dollars ($0) (as finally
determined pursuant to this Section 2.7), then the Closing Cash Consideration
shall be increased dollar for dollar by the total amount of such excess (a
"SELLER CLOSING ADJUSTMENT"), or (ii) less than Zero United States Dollars ($0)
(as finally determined pursuant to this Section 2.7), then the Closing Cash
Consideration shall be reduced dollar for dollar by the total amount of such
deficiency (a "BUYER CLOSING ADJUSTMENT"); PROVIDED that if following the
Closing Net Assumed Liabilities is finally determined, pursuant to the
procedures set forth in this Section 2.7, to be an amount different than Net
Assumed Liabilities calculated based on the Estimated Closing Balance Sheet at
the Closing and used to effect a Seller Closing Adjustment or a Buyer Closing
Adjustment (as the case may be), then each Party agrees following such final
determination to promptly make payment to the other Party as may be required to
correct any previous adjustment to the Closing Cash Consideration made at the
Closing. Each Party agrees to indemnify and hold the other Party harmless
against any Damages (as defined in Section 12.2(a) below) incurred by such other
Party related to or arising from the failure of the Party to pay any amounts
required under this Section 2.7(c).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that, except as expressly set
forth in the letter signed by Seller dated as of the Agreement Date and
addressed to Buyer which is being delivered to Buyer concurrently with the
Parties' execution and delivery of this Agreement (the "SELLER'S DISCLOSURE
LETTER"), each of the representations, warranties and statements contained in
the following sections of this Article 3 is true and correct on and as of the
Agreement Date and will be true and correct as of the Closing Date. For all
purposes of this Agreement, the statements contained in the Seller's Disclosure
Letter and its schedules shall also be deemed to be representations and
warranties made and given by Seller to Buyer pursuant to this Article 3.
3.1 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of
Delaware and has all necessary corporate power and authority and all
necessary governmental licenses, authorizations, permits, consents and approvals
to own, lease and operate its properties and to carry on its business as now
conducted. Seller is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction in which its failure to be so qualified and
in good standing would have a material adverse effect on the Consulting Business
or the Purchased Assets. Seller has heretofore delivered to Buyer true and
complete copies of its certificate of incorporation and bylaws as currently in
effect. Seller is not in violation of its certificate of incorporation and
bylaws as currently in effect. SCHEDULE 3.1 to the Seller's Disclosure Letter
lists every Subsidiary of Seller.
3.2 CORPORATE AUTHORIZATION. Seller has all necessary corporate power and
authority to enter into this Agreement and each of the Seller Ancillary
Agreements, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of this Agreement and each of the Seller
Ancillary Agreements, the sale of the Purchased Assets to Buyer under this
Agreement and the consummation of all the transactions contemplated hereby and
thereby on the terms and subject to the conditions set forth herein and therein
have been duly and validly authorized by Seller by all necessary corporate and
stockholder actions and approvals of Seller's Board of Directors (which action
and approvals have been obtained and carried out in compliance with applicable
law, the rule and regulations of NASDAQ, Seller's certificate of incorporation
and bylaws, each as amended to date, and all Contracts binding on Seller),
subject only to the approval of this Agreement and the transactions contemplated
hereby by the Seller's stockholders (the "SELLER STOCKHOLDER APPROVALS"). If the
transactions contemplated by this Agreement are deemed to constitute a sale of
all or substantially all of the assets of Seller under
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applicable law, then the affirmative vote of the holders of a majority of the
outstanding shares of Seller's common stock is sufficient for Seller's
stockholders to approve and adopt this Agreement and approve the transactions
contemplated hereby, and no other approval of any holder of any securities of
Seller is required in connection with the consummation of the transactions
contemplated hereby. This Agreement and each Seller Ancillary Agreement has been
duly and validly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Buyer) this Agreement and each of the
Seller Ancillary Agreements constitutes, legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms.
3.3 GOVERNMENTAL. The execution, delivery and performance by Seller of
this Agreement and each Seller Ancillary Agreement and the consummation of the
transactions contemplated hereby and thereby require no consent, approval,
authorization, registration or other action by or in respect of, or filing with,
any Governmental Authority, bankruptcy trustee, creditors' committee, receiver
or any other Person, except for the filing of a Form 8-K (or Form 10-Q in lieu
thereof) and the Seller Proxy Statement (as defined in Section 3.30(b) below)
with the Securities and Exchange Commission ("SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
3.4 NON-CONTRAVENTION. The execution, delivery and performance by Seller
of this Agreement and each Seller Ancillary Agreement, and the consummation of
the transactions contemplated hereby and thereby do not and will not
(i) violate or conflict with any provision of the certificate of incorporation
and bylaws of Seller, (ii) violate or conflict, in any material respect, with
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Seller, the Consulting Business or the
Purchased Assets, (iii) result in a violation or breach by Seller of, conflict
with, or constitute a default (or an event which with the giving of notice or
the lapse of time or both, would become a breach or default) by Seller (or give
rise to any right of termination, rescission, amendment, cancellation, payment
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, trust, license, franchise, permit, agreement, lease
or other Contract, instrument or obligation to which Seller is a party, or by
which it or any of the Purchased Assets may be bound or otherwise affecting the
Purchased Assets, including, without limitation, the Assumed Contracts, or
(iv) result in the creation of any Liens (other than Permitted Liens) on any of
the Purchased Assets.
3.5 REQUIRED CONSENTS. SCHEDULE 3.5 to the Seller's Disclosure Letter sets
forth each Contract or other instrument binding upon Seller or any Permit
requiring a consent, approval, filing, notice or other action by any Person as a
result of the execution, delivery and performance of this Agreement and the
Seller Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby (the "REQUIRED CONSENTS").
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has filed, all forms, reports and documents required to be
filed by Seller with the SEC since the effective date of the registration
statement of Seller's initial public offering, except where the failure to make
such filings, either individually or in the aggregate, could not be reasonably
be expected to result in a material adverse effect on the Purchased Assets, the
Consulting Business or Seller, respectively. All such required forms, reports
and documents (including those that Seller may file subsequent to the date
hereof) are referred to herein as the "SELLER SEC REPORTS." As of their
respective dates, the Seller SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Seller SEC Reports and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent
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corrected prior to the date of this Agreement by a subsequently filed Seller SEC
Report. None of Seller's subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Seller SEC Reports (the "FILED
STATEMENTS"), including each Seller SEC Report filed after the date hereof until
the Closing, (i) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (ii) was prepared from
the books and records of Seller in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange
Act) and (iii) fairly presented the consolidated financial position of Seller
and its Subsidiaries as at the respective dates thereof and the consolidated
results of Seller operations and cash flows for the periods indicated, except
that the unaudited interim financial statements may not contain footnotes and
were or are subject to normal and recurring year-end adjustments. Seller has
delivered to Buyer, attached as SCHEDULE 3.6 to the Seller's Disclosure Letter
the unaudited balance sheet of the Consulting Business dated as of
September 30, 2001 (THE "BALANCE SHEET") (such date of September 30, 2001 being
hereinafter referred to as the "BALANCE SHEET DATE"). The Balance Sheet:
(i) presents fairly, in all material respects, in conformity with GAAP applied
on a consistent basis (except as may be otherwise expressly indicated in the
notes thereto), the financial position of the Consulting Business as at
September 30, 2001 (subject to normal year-end adjustments) and (ii) has been
prepared from the books and records of Seller. Seller has no material debt,
Liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, except for (i) those shown on the
Balance Sheet, (ii) those that may have been incurred by Seller after the
Balance Sheet Date in the ordinary course of Seller's business consistent with
its past practices, and that are not in excess of $20,000, either individually
or collectively, and are not required to be set forth in the Balance Sheet under
GAAP, (iii) those incurred in connection with this Agreement and the other
agreements to be entered into pursuant to this Agreement, and (iv) those set
forth in SCHEDULE 3.6(B). All reserves established by Seller that are set forth
in or reflected in the Balance Sheet are adequate and were determined in
accordance with GAAP. All books of account and other accounting records of
Seller with respect to the Consulting Business are in Seller's possession and
made up to date and contain the information necessary to prepare financial
statements in accordance with GAAP.
3.7 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 3.7 to the
Seller's Disclosure Letter, between the Balance Sheet Date and the Agreement
Date, the Consulting Business has been conducted in the ordinary course
consistent with past practices and there has not been:
(a) any Material Adverse Change;
(b) any incurrence, assumption or guarantee by Seller of any
indebtedness for borrowed money with respect to the Consulting Business or
otherwise;
(c) any creation or other incurrence of any Lien on any Purchased Asset
(other than Permitted Liens);
(d) any physical damage, destruction or other casualty loss (whether or
not covered by insurance) having a significant effect on the Consulting Business
or on any Purchased Asset, or on Seller;
(e) any transaction or commitment made, or any Contract entered into, by
Seller or any of its Affiliates of Seller, or relating to the Consulting
Business or any Purchased Asset (including the acquisition or disposition of any
assets) or any relinquishment by Seller or any of its Affiliates of any Contract
or other right relating to the Consulting Business or any Purchased Asset or
otherwise, other than (1) transactions and commitments in the ordinary course of
business consistent with past practices
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which are not material to the Consulting Business or Seller and (2) those
contemplated by this Agreement;
(f) any change in any method of accounting or accounting practice by
Seller;
(g) any (i) employment, deferred compensation, severance, retirement or
other similar agreement entered into with any officer or employee of Seller or
any of its Affiliates with respect to the Consulting Business (or any amendment
to any such existing agreement), (ii) grant of any severance or termination pay
to any officer or employee of Seller or any of its Affiliates with respect to
the Consulting Business or (iii) change in compensation or other benefits
payable to any officer or employee of Seller or any of its Affiliates with
respect to the Consulting Business pursuant to any severance or retirement plans
or policies thereof;
(h) any labor dispute or any activity or proceeding by a labor union or
representative thereof to organize any employees of Seller or of the Consulting
Business, any entry by Seller into a collective bargaining agreement, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to employees of Seller;
(i) to Seller's knowledge, any adverse change in Seller's relationships
with its material customers, vendors or suppliers, or any material adverse
change to the status on any project under a consulting engagement, in each case,
as it relates to the Consulting Business;
(j) any capital expenditure, or commitment for a capital expenditure,
for additions or improvements to property, plant and equipment used in the
Consulting Business or by Seller; or
(k) the incurrence by Seller of any material Liability or the making of
any material expenditure other than (i) Liabilities arising under this
Agreement, and (ii) Liabilities incurred in the ordinary course of the
Consulting Business consistent with its past practices which are not material
thereto.
3.8 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 3.8 to the
Seller's Disclosure Letter, there are no Liabilities of Seller of any kind
whatsoever, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a Liability,
other than:
(a) Liabilities provided for in the Balance Sheet; and
(b) Liabilities incurred by Seller in good faith in the ordinary course
of Seller's business consistent with past practice (in type, amount and
otherwise) and occurring since the Balance Sheet Date.
3.9 MATERIAL CONTRACTS. SCHEDULE 3.9 to the Seller's Disclosure Letter
sets forth a list of each of the following written or oral Contracts relating to
the Consulting Business or the Purchased Assets, including leases, licenses,
permits, assignments, mortgages, transactions, obligations, commitments or other
instruments, to which Seller is a party or to which Seller is or any of the
Purchased Assets are bound:
(a) any Contract providing for payments (whether fixed, contingent or
otherwise) by or to Seller relating to the Consulting Business in an aggregate
amount of $30,000 or more, which payments remain due and owing by Seller;
(b) any dealer, distributor, OEM (Original Equipment Manufacturer), VAR
(Value Added Reseller), sales representative, agency or similar agreement under
which (i) any third party is authorized to sell, sublicense, lease, distribute,
market or take orders for, any product, service or technology of Seller relating
to the Consulting Business or to provide training or other services to Seller's
client or customers, or (ii) Seller is authorized to provide, sell, sublicense,
lease, distribute or take orders for any product, service or technology of a
third party related to the Consulting Business;
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(c) any joint venture, investment or partnership Contract which has
involved, or is reasonably expected to involve, a sharing of profits, expenses
or losses with any other party or the joint development of any product, service,
software or other technology with any third party, in each case, relating to the
Consulting Business or the Purchased Assets;
(d) any Contract for or relating to the employment or other service of
any officer, employee or consultant of Seller relating to the Consulting
Business or any other type of Contract with any officer, employee or consultant
of Seller relating to the Consulting Business that is not immediately terminable
by Seller without cost or other liability;
(e) any Contract, including any indenture, mortgage, trust deed,
promissory note, loan agreement, security agreement or guarantee, for the
borrowing of money, for a line of credit or for a leasing transaction of a type
required to be capitalized in accordance with Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board;
(f) any Contract under which Seller is lessee of or holds or operates
any items of tangible personal property or real property owned by any third
party;
(g) any Contract that restricts Seller (with respect to the Consulting
Business or the Purchased Assets) from: (i) engaging in any aspect of Seller's
business; (ii) participating or competing in any line of business or in any
market; (iii) freely setting prices for Seller's products, services or
technologies (including most favored customer pricing provisions);
(iv) engaging in any business in any market or geographic area; or
(v) soliciting potential employees, consultants, contractors or other suppliers
or customers;
(h) any consulting or similar agreement under which Seller, with respect
to the Consulting Business, provides any advice or services to a third party for
an annual compensation to Seller of $30,000 per year or more;
(i) any Contract with any labor union or collective bargaining unit;
(j) any other Contract that is material to Seller (which relates or is
relevant to Seller's financial condition or solvency) or the Consulting Business
or that involves a future commitment by Seller related to the Consulting
Business that is in excess of $30,000; and
(k) any other Contract not made or entered into in the ordinary course
of the Consulting Business; and
Each Contract disclosed in any Schedule to the Seller's Disclosure Letter or
required to be disclosed pursuant to this Section 3.9 (each, a "MATERIAL
CONTRACT") is a valid and binding agreement of Seller and is in full force and
effect, and neither of Seller or, to the knowledge of Seller, any other party
thereto is in default or breach in any material respect under the terms of any
such Material Contract, and, to the knowledge of Seller, no event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute an event of default thereunder. Other than as set forth on
SCHEDULE 3.9 to the Seller's Disclosure Letter, Seller is not, and has not been
a party to any material contract or arrangement that has not been set forth in a
written Contract. True and complete copies of each Material Contract have been
delivered to Buyer and its counsel.
3.10 NO LITIGATION. There is no litigation, including, without limitation,
any claim, action, suit, investigation or proceeding of any nature pending or,
to the knowledge of Seller, threatened, at law or in equity, by way of
arbitration or before any court or other Governmental Authority that: (i) may
adversely affect, contest or challenge Seller's authority, right or ability to
sell or convey any of the Purchased Assets or the Consulting Business to Buyer
under this Agreement or to otherwise perform Seller's obligations under this
Agreement or any of the Seller Ancillary Agreements, as applicable;
(ii) challenges or contests Seller's right, title or ownership in any of the
Purchased Assets or asserts any Lien on any of the Purchased Assets (OTHER
THANPermitted Liens); (iii) seeks to enjoin, prevent or
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hinder the consummation of any of the transactions contemplated by this
Agreement or any of the Seller Ancillary Agreements; (iv) would impair or have
an adverse effect on Buyer's right or ability to own, use, commercialize or
otherwise exploit any of the Purchased Assets or impair or have an adverse
effect on the value of any of the Purchased Assets; or (v) involves a wrongful
termination, harassment or other employment-related claim by any employee of the
Consulting Business or that would adversely affect or prevent Buyer from hiring
or employing any employee of Seller. There are no judgments, decrees,
injunctions or orders of any Governmental Authority or arbitrator binding on
Seller which (i) adversely affect any of the Purchased Assets or the Consulting
Business, (ii) would enjoin, prevent, hinder or conflict with any of the
transactions contemplated by this Agreement or (ii) would impair or adversely
affect Buyer's rights in any of the Purchased Assets at any time on or after the
Closing.
3.11 COMPLIANCE WITH LAWS AND COURT ORDERS. Seller has complied in all
material respects with, and has not received any written notices of violation
with respect to, any domestic or foreign, national, state, regional, provincial
or local statute, law or regulation applicable to the Consulting Business,
Seller's conduct of the Consulting Business or any of the Purchased Assets,
including, but not limited to, securities laws and franchise and business
opportunity or business investment laws.
3.12 PROPERTIES.
(a) SCHEDULE 3.12(A) to the Seller's Disclosure Letter sets forth the
Watertown Lease, and each other lease or sublease of real property used in the
Consulting Business or on which any of the Purchased Assets are located (and
each amendment or supplement thereof).
(b) To Seller's knowledge, there are no developments affecting any of
the Purchased Assets that are pending or threatened, which would be reasonably
expected to materially and adversely affect Buyer's ownership or clean title of
any of the Purchased Assets following the Closing (other than the existence of
Permitted Liens at the Closing).
(c) Except as set forth on SCHEDULE 3.12(C), the Watertown Lease and all
leases of personal property related to the Consulting Business or the Purchased
Assets are in good standing, in full force and effect and are valid, binding and
enforceable in accordance with their respective terms and there does not exist
under any such lease any default or any event which with notice or lapse of time
or both would constitute a default under such lease.
3.13 TITLE TO AND CONDITION OF PURCHASED ASSETS.
(a) Except as set forth in SCHEDULE 3.13(A) to the Seller Disclosure
Letter, Seller owns all of the Purchased Assets and Seller has good, exclusive
and marketable title in and to all the Purchased Assets, free and clear of all
Liens whatsoever (other than Permitted Liens). Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good and marketable
title in and to, or a valid leasehold interest in, each of the Purchased Assets,
free and clear of all Liens (other than Permitted Liens). No other person has
any right, title or interest in any assets utilized by Seller in the Consulting
Business (except for the rights and interests in Assumed Contracts of the other
Persons who are parties to such Assumed Contracts). Except as set forth in
SCHEDULE 3.13(A) to the Seller's Disclosure Letter, none of the Purchased Assets
is licensed by Seller to any third party. Title to all of the Purchased Assets
is freely transferable from Seller to Buyer free and clear of all Liens (other
than Permitted Liens and as set forth on SCHEDULE 3.13(A)) without obtaining the
consent or approval of any person or party (other than any Required Consents).
(b) The tangible personal property included in the Purchased Assets is
in good working condition and repair consistent with the operating condition of
such equipment in Buyer's industry, normal wear and tear excepted.
SCHEDULE 3.13(B) contains a true and complete list of all Seller Tangible
Personal Property as of the Agreement Date (which SCHEDULE 3.13(B) will be
updated to reflect Seller Tangible Personal Property as of the Closing Date by
Seller and delivered to Buyer at least one
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(1) Business Day prior to the Closing Date). The Buyer's acquisition of the
Purchased Assets will enable Buyer to operate the Consulting Business as it is
currently being operated by Seller.
(c) SCHEDULE 3.13(C) contains a true and complete list of all Prepaid
Assets of Seller as of the Agreement Date (which SCHEDULE 3.13(C) will be
updated to reflect Prepaid Assets of Seller as of the Closing Date by Seller and
delivered to Buyer at least one (1) Business Day prior to the Closing Date).
3.14 FAIRNESS OF CONSIDERATION. Seller's Board of Directors has determined
that the Purchase Price (including the Buyer's assumption of the Assumed
Liabilities) represents fair and reasonably equivalent consideration for the
Purchased Assets and title thereto to be transferred to Buyer at the Closing
under this Agreement. The sale and transfer of the Purchased Assets to Buyer as
contemplated by this Agreement and the Seller Ancillary Agreements is made in
exchange for fair and reasonably equivalent consideration, and Seller is not now
insolvent and Seller will not be rendered insolvent by the sale, transfer and
assignment of the Purchased Assets pursuant to this Agreement and the Seller
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby. Seller is not entering into this Agreement and the
transactions contemplated hereby with the intent to defraud, delay or hinder its
creditors.
3.15 USE OF PROCEEDS. Seller represents and warrants to Buyer that the
cash payment to be paid by Buyer to Seller for the Purchased Assets at the
Closing is sufficient to pay off in full all of Seller's outstanding Liabilities
as of the Closing Date (that are not Assumed Liabilities or Seller Closing
Liabilities paid by Buyer on behalf of Seller at the Closing) and all
Liabilities arising under the WARN Act, whether now existing or arising within
the six (6) month period following the Closing Date (all such Liabilities of
Seller being hereinafter collectively referred to as the "RETAINED
LIABILITIES"). No proceedings for the liquidation, dissolution, merger or
disposition of all or substantially all the assets of, or bankruptcy,
reorganization, moratorium, assignment for the benefit of creditors or other
similar transaction or arrangement with respect to Seller or any of its
Affiliates, is pending or, to the best knowledge of Seller, threatened, and no
corporate action in view of any such transaction or arrangement has been taken.
3.16 DEBT. SCHEDULE 3.16 to the Seller's Disclosure Letter lists all
accounts payable and notes payable of Seller, including any accounts
representing short-term or long-term Liabilities for borrowed moneys, as of the
Agreement Date.
3.17 INTELLECTUAL PROPERTY RIGHTS.
(a) For purposes of this Agreement, "INTELLECTUAL PROPERTY RIGHTS" means
any rights exercisable or available in any jurisdiction of the world
constituting industrial or intellectual property rights or protections whether
owned, licensed or otherwise used or held, including without limitation all of
the following:
(i) patents, patent applications and the inventions, designs and
improvements described and claimed therein, patentable inventions, and other
patent rights (including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are amended,
modified, withdrawn, or resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names and URLs, designs, logos, or corporate names
(including, in each case, the goodwill associated therewith), whether registered
or unregistered, and all registrations and applications for registration
thereof;
(iii) copyrights, including all renewals and extensions, copyright
registrations and applications for registration, and non-registered copyrights
and moral rights;
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(iv) trade secrets, confidential business information, concepts,
ideas, designs, research or development information, processes, procedures,
techniques, technical information, specifications, operating and maintenance
manuals, engineering drawings, methods, know-how, data, mask works, discoveries,
inventions, modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright, trademark, or trade
secret protection); and
(v) computer software programs, including all source code, object
code, and documentation related thereto ("SOFTWARE").
(b) Disclosure.
(i) SCHEDULE 3.17(B)(I) to the Seller's Disclosure Letter sets forth
all United States and foreign patents and patent applications, trademark and
service ▇▇▇▇ registrations and applications, Internet domain name registrations
and applications, and copyright registrations and applications owned by Seller
for use in connection with the Consulting Business, specifying as to each item,
as applicable: (A) the nature of the item, including the title; (B) the owner of
the item; (C) the jurisdictions in which the item is issued or registered or in
which an application for issuance or registration has been filed; and (D) the
issuance, registration or application numbers and dates. No Affiliate of Seller
owns or has any rights in or to any of the Purchased Assets (including any
Intellectual Property Rights related to the Consulting Business or the Purchased
Assets).
(ii) SCHEDULE 3.17(B)(II) to the Seller's Disclosure Letter sets
forth (A) all licenses, sublicenses and other agreements or permissions ("IP
LICENSES") used in connection with the Consulting Business under which the
Seller is a licensee or otherwise is authorized to use or practice any
Intellectual Property Rights owned by a third party (OTHER THAN licenses of
computer software that is generally available to the public under a
non-negotiated "shrink-wrap" license at a per copy license fee of less than
$1,000 per copy); (B) all Contracts providing for the development of any
computer software, content (including textual content and visual, photographic
or graphics content), technology or Intellectual Property Rights for (or for the
benefit or use of) Seller relating to the Consulting Business or the purchase or
other acquisition by Seller of any computer software, content (including textual
content and visual or graphics content), technology or other Intellectual
Property Rights to (or for the benefit or use of) Seller and relating to the
Consulting Business or any Purchased Asset; and (C) any Contract under which
Intellectual Property Rights or any software used in or marketed in connection
with the Consulting Business has been licensed to any third party. The IP
Licenses, include without limitation, all licenses of any computer software,
technology or other Intellectual Property Rights that is used or incorporated in
any past, current or potential product or service offered in connection with the
Consulting Business that is under development. Except as set forth on
SCHEDULE 3.17(B)(II) to the Seller's Disclosure Letter, none of the Intellectual
Property Rights included in the Purchased Assets is licensed from any third
party (other than licenses of computer software that is generally available to
the public under a non-negotiated "shrink-wrap" license at a per copy license
fee of less than $1,000 per copy).
(c) Ownership. Except as set forth on SCHEDULE 3.17(C) to the Seller's
Disclosure Letter, the Consulting Business owns, free and clear of all Liens
(other than Permitted Liens), has valid and enforceable rights in, and has the
unrestricted right to use, sell, license, transfer or assign, all Intellectual
Property Rights that is material to the business of the Consulting Business.
(d) Licenses; Sufficiency. Except as set forth on SCHEDULE 3.17(D),
Seller has a valid and enforceable license to use all Intellectual Property
Rights not owned by Seller that are used by Seller in connection with the
Consulting Business. The IP Licenses set forth in SCHEDULE 3.17(B)(II) to the
Seller's Disclosure Letter constitute all licenses, sublicenses and other
agreements or permissions of third parties that are necessary for Seller to
conduct the Consulting Business without infringing the Intellectual Property
Rights of any third party.
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(e) Infringement.
(i) Neither the conduct of the Consulting Business, nor any
Intellectual Property Rights owned by Seller that are used in the Consulting
Business or included in the Purchased Assets, infringes or misappropriates any
Intellectual Property Rights of any third party. Assuming that all Required
Consents are obtained, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, will (a) constitute a
breach or default under any Contract granting or governing any Intellectual
Property Rights that are Purchased Assets or that are used in connection with
the Consulting Business ("SELLER IP RIGHTS"); (b) cause or give rise to any
rights of forfeiture or termination with respect to any Seller IP Rights; or
(c) diminish, impair or limit the exercise of any of the Seller IP Rights by the
Buyer on and after the Closing. There are no royalties, honoraria, fees or other
payments payable by Seller to any third person with respect to any Seller IP
Rights, and none will become payable as a result of the consummation of the
transactions contemplated by this Agreement.
(ii) To Seller's knowledge, no current or former employee or
independent contractor performing or having performed services in connection
with the conduct of the Consulting Business is (a) using any trade secrets or
proprietary information of any third party without permission; (b) otherwise in
breach of any invention-assignment, confidentiality, non-competition or other
agreement with any former employer or other third party by virtue of such
services with respect to the Consulting Business; or (c) subject to any
agreement under which any technology currently used in conducting the Consulting
Business has been transferred in whole or in part to a third party.
(iii) No claim or action is pending or, to Seller's knowledge,
threatened, and Seller knows of no basis for any claim that challenges the
validity, enforceability, ownership, or right to use, sell or license, any
Intellectual Property Rights used in connection with the Consulting Business,
and no Intellectual Property Right used in connection with the Consulting
Business is subject to any outstanding order, ruling, decree, stipulation,
charge or agreement restricting in any manner the use or the licensing thereof.
(iv) Seller has not received any notice that it has infringed upon
or otherwise misappropriated or violated the Intellectual Property Rights of any
third party or received any claim, charge, complaint, demand or notice alleging
any such infringement, misappropriation or violation, or knows of any basis for
any such claim.
(v) To the knowledge of the Seller, no third party is infringing
upon or otherwise misappropriating or violating any material Intellectual
Property Rights used in connection with the Consulting Business.
(f) Protection of Intellectual Property. Seller has taken commercially
reasonable and customary precautions to protect the secrecy, confidentiality,
and value of the Consulting Business' trade secrets and the proprietary nature
and value of the Intellectual Property Rights related to the Consulting Business
or included in the Purchased Assets. Without limiting the generality of the
foregoing, all current and former employees and independent contractors
providing any services relating to the Consulting Business have executed and
delivered to Seller (i) agreements regarding the protection of confidential
information and (ii) valid written assignments of all Seller IP Rights that
would otherwise be owned by such persons absent such assignments. None of
Seller's current or former employees or independent contractors owns or has
retained any right, title or interest in or to any Seller IP Rights.
(g) Source Code. Except as a part of customer engagements in the
ordinary course of business consistent with past practice, no Consulting Source
Code (as defined below) has been (a) delivered to any source code escrow agent
or other third party or (b) assigned or licensed to any other party. "CONSULTING
SOURCE CODE" means any human-readable computer code, portion thereof, or
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information or algorithm contained or disclosed therein, that constitutes Seller
IP Rights. Except as a part of customer engagements in the ordinary course of
business consistent with past practice, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
may reasonably be expected to result in the release of any Consulting Source
Code to a third party. SCHEDULE 3.17(G) to the Seller's Disclosure Letter
identifies each agreement and instrument (whether written or oral) pursuant to
which any Consulting Source Code has been or may be required to be deposited
with any third party (except as a part of customer engagements in the ordinary
course of business consistent with past practice), and describes whether the
execution of this Agreement or the consummation of the transactions contemplated
herein may reasonably be expected to result in the release of any Consulting
Source Code.
(h) No Government Involvement. No government funding, facilities of any
educational institution or research center, or funding from third parties (other
than funds received in consideration for capital stock of Seller) was used in
the creation of any Seller IP Rights. To Seller's knowledge, no current or
former employee or independent contractor that was involved in or contributed to
the creation of any Seller IP Rights performed services for any government,
educational institution or research center at any time when performing services
for Seller.
(i) Conformity to Warranties. All software and other products and
services developed, marketed, licensed or otherwise provided or furnished by
Seller to customers in connection with the Consulting Business, conform to all
their applicable contractual commitments, express and implied warranties,
product specifications and product documentation and to any representations
provided to customers by Seller and its Affiliates and their respective
employees, representatives and/or agents.
3.18 INSURANCE COVERAGE. SCHEDULE 3.18 sets forth a true and complete list
of each insurance policy and fidelity bonds (including a description of the
policy, the endorsements, the coverage and deductibles applicable thereto)
relating to the Purchased Assets and/or the conduct of Consulting Business.
There is no claim by Seller pending under any of such policies or bonds. Such
policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) are in full force and effect. Seller
does not have any knowledge of any threatened termination of, premium increase
with respect to, or material alteration of coverage under, any of such policies
or bonds.
3.19 LICENSES AND PERMITS. SCHEDULE 3.19 to the Seller's Disclosure Letter
correctly describes each license, franchise, permit, certificate, registration
approval or other similar authorization that is necessary to conduct the
Consulting Business (the "PERMITS") together with the name of the Government
Authority issuing such Permit. Except as set forth on SCHEDULE 3.19 to the
Seller's Disclosure Letter, (i) the Permits are valid and in full force and
effect, (ii) Seller is not in default, and no condition exists that with notice
or lapse of time or both would constitute a default, under the Permits and
(iii) none of the Permits will be terminated or impaired or become terminable,
in whole or in part, as a result of the transactions contemplated hereby. Upon
consummation of such transactions, Buyer will have all of the right, title and
interest in all the Permits.
3.20 PRIVACY. The Purchased Assets do not include any personally
identifiable information regarding individuals that is subject to any applicable
laws and regulations relating to (a) the privacy of users of Seller's products
and services and the Seller Web Sites, and (b) the collection, storage and
transfer of any personally identifiable information collected by Seller or by
third parties having authorized access to Seller's records.
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3.21 STATUS OF ASSUMED CONTRACTS. Each Assumed Contract, other than those
Assumed Contracts described in clause (iii) of the definition of such term, is
in full force and effect and Seller is not in breach or default thereunder and,
to Seller's knowledge, no other party thereto is in breach or default
thereunder. No Assumed Contract by its terms will result in any product or
service of Buyer (excluding any product or service included among the Purchased
Assets) being priced or repriced in manner that is adverse to Buyer. All
material professional services and other consulting or advisory projects are on
budget and schedule (within a five percent (5%) deviation in the aggregate) and
all professional services and other consulting or advisory projects are
substantially on budget and schedule, and Seller has not received any notice
from any customer, client or third party to the contrary.
3.22 ACCOUNTS RECEIVABLES. The Consulting Business Receivables as of the
Agreement Date are set forth on SCHEDULE 2.1(F). The Consulting Business
Receivables as of the Closing Date will be set forth on the update
SCHEDULE 2.1(F) delivered by Seller to Buyer at least one (1) Business Day prior
to the Closing Date and attached hereto. All accounts, notes receivable and
other receivables (other than receivables collected since the Balance Sheet
Date) reflected on the Balance Sheet are, valid, genuine and are not subject to
any right of offset or defense against payment of any amount thereof, and are
not subject to any discounts. All accounts, notes receivable and other
receivables arising out of or relating to the Consulting Business at the Balance
Sheet Date have been included in the Balance Sheet, and all accounts, notes
receivable and other receivables arising out of or relating to the Consulting
Business after the Balance Sheet Date and prior to the Closing Date arose in the
ordinary course of the Consulting Business consistent with past practice, and
are valid, genuine and are, valid, genuine and are not subject to any right of
offset or defense against payment of any amount thereof, and are not subject to
any discounts.
3.23 FINDERS' FEES. Except as set forth on SCHEDULE 3.23 to the Seller's
Disclosure Letter, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Seller who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
3.24 ENVIRONMENTAL COMPLIANCE. Seller has at all times prior to the
Agreement Date and prior to the Closing Date complied in all material respects
with all applicable Environmental Laws both in respect of the Consulting
Business as carried on from time to time and in respect of any of the facilities
at which the Consulting Business is now conducted or at which any Purchased
Assets are located (each, a "FACILITY") and any prior facility or site at which
the Consulting Business or other business has been conducted by Seller or its
predecessors in interest or at which any Purchased Assets have been located
(each, a "PRIOR FACILITY"). Seller is not aware of any circumstances that may
cause Seller to be in non-compliance or violation of any Environmental Laws and
Seller is not aware of any circumstances affecting the Consulting Business that
might justify the imposing of any requirement by a competent authority in
accordance with such authority's powers and obligations under the Environmental
Laws which would, if the requirement were not complied with, result in there
being a non-compliance or violation of any Environmental Laws. There are no
past, pending or (to Seller's knowledge) threatened proceedings, claims or
actions against Seller brought under any Environmental Laws before any court,
arbitrator or other body which have had or which would, in the event of a
judgment, decision, ruling or order being unfavorable to Seller, have a Material
Adverse Effect on the Consulting Business or any of the Purchased Assets. To
Seller's knowledge, no part of any Facility or any Prior Facility has been
contaminated (whether by the deposit, spillage, disposal, discharge, release or
leaching of any Hazardous Substances) and as a result of any contamination no
part of any Facility or any Prior Facility represents a hazard to health or to
the environment. Seller is not aware of any circumstances which may give rise or
have in the past given rise to any Liability (whether under statute or at common
law) in nuisance in respect of any Facility or any Prior Facility or the
operation of the Consulting Business.
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3.25 NO REPRESENTATIONS TO EMPLOYEES OR CONSULTANTS OF SELLER. Seller has
made no representations to any employee or consultant of Seller concerning the
length of time (if any) that the employee's or consultant's work or employment
with Buyer may continue or the compensation or benefits or other terms or
conditions of employment (if any) with Buyer to be offered to employees or
consultants of Seller by Buyer.
3.26 EMPLOYEE MATTERS.
(a) Generally. Seller: (i) has never been and is not now subject to a
union organizing effort; (ii) is not subject to any collective bargaining
agreement with respect to any of its employees; (iii) is not subject to any
other Contract with any trade or labor union, employees' association or similar
organization; and (iv) has no current labor disputes and has had no material
labor disputes or claims of unfair labor practices. Seller has good labor
relations, and Seller has no knowledge of any facts indicating that the
consummation of the transactions provided for herein will adversely affect its
labor relations, and Seller has no knowledge that any Seller Key Management
Employee or Seller Employee, intends to leave Seller's employ or to decline to
accept employment with Buyer following the Initial Closing. No Seller Key
Management Employee or Seller Employee, has given notice that such employee
intends to terminate his or her employment with Seller. There are no strikes,
material slowdowns, work stoppages or lockouts, or threats thereof by or with
respect to any employees of Seller. Seller is in compliance in all material
respects with all applicable laws regarding employment practices, terms and
conditions of employment, and wages and hours (including ERISA), the Worker
Adjustment Retraining and Notification Act, as amended (the "WARN ACT") or any
similar national, state or local law) and has correctly classified employees as
exempt employees and non-exempt employees under the Fair Labor Standards Act.
Except as set forth in SCHEDULE 3.26(A) to the Seller's Disclosure Letter,
Seller has no contracts, agreements, arrangements or commitments with any Seller
Key Management Employee or Seller Employee currently in effect that are not
terminable at will (other than agreements with the sole purpose of providing for
the confidentiality of proprietary information or assignment of inventions). All
independent contractors have been properly classified as independent contractors
for the purposes of federal and applicable state tax laws, laws applicable to
employee benefits and other applicable laws. Each of Seller Key Management
Employee and Seller Employee is legally permitted to be employed by Seller in
the jurisdiction in which such employee is employed. Seller will have no
liability to any employee or to any organization or any other entity as a result
of the termination of any Seller Key Management Employee or Seller Employee
leasing arrangement.
(b) Employee Plans. SCHEDULE 3.26(B) to the Seller's Disclosure Letter
contains a list of all employment and consulting agreements, pension,
retirement, disability, medical, dental or other health plans, life insurance or
other death benefit plans, profit sharing, deferred compensation agreements,
stock, option, bonus or other incentive plans, vacation, sick, holiday or other
paid leave plans, severance plans or other similar employee benefit plans
maintained by Seller or any of its Affiliates which cover any Seller Key
Management Employee or Seller Employee of Seller or its Affiliates (the
"EMPLOYEE PLANS"), including all "employee benefit plans" as defined in
Section 3(3) of ERISA. Seller has delivered true and complete copies or
descriptions of all the Employee Plans to Buyer's legal counsel. No Employee
Plan is a "multiemployer plan" within the meaning of Section 3(37) or ERISA and
no Employee Plan is subject to Title IV of ERISA. Neither Seller nor any of
Seller's 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. The Purchased Assets are not now nor will they after the
passage of time be subject to any Lien (other than a Permitted Lien) imposed
under Code Section 412(n) by reason of the failure of Seller or its Affiliates
to make timely installments or other payments required by Code Section 412.
(c) No Employment Agreements. To Seller's knowledge, no Seller Key
Management Employee or Seller Employee is in material violation of any term of
any employment Contract or any
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other Contract, or any restrictive covenant, relating to the right of any such
employee to be employed by Seller or to use trade secrets or proprietary
information of others, and the employment of any Seller Key Management Employee
and Seller Employee does not subject Seller to any liability to any third party.
(d) Immigration Law Compliance. Except as set forth on SCHEDULE 3.26(D)
to Seller's Disclosure Letter, to Seller's knowledge, no Seller Key Management
Employee or Seller Employee holds any visa from the United States Government and
Seller is not sponsoring any such employees with respect to any visa or other
authorization. All Seller Key Management Employees and Seller Employees were
hired in compliance with all laws, statutes, regulations and requirements for
the lawful hiring of employees who are not citizens of the United States of
America.
(e) No Parachute Agreements. Except as disclosed on SCHEDULE 3.26(E) to
the Seller's Disclosure Letter, neither Seller nor any of its Affiliates, with
respect to any Seller Key Management Employee and Seller Employee, is a party to
any (i) agreement with any of its executive officers or other key employees of
the Consulting Business (A) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
Seller in the nature of any of the transactions contemplated by this Agreement,
(B) providing any term of employment or compensation guarantee, or
(C) providing severance benefits, retirement benefits or other benefits after
the termination of employment of such employee regardless of the reason for such
termination of employment, or (ii) agreement or plan, including any stock option
plan, stock appreciation rights plan or stock purchase plan, any of the benefits
of which will be materially increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement.
(f) Employee List. A list of all employees, officers and consultants of
the Consulting Business and their current compensation and benefits as of the
Agreement Date is set forth on SCHEDULE 3.26(F) to the Seller's Disclosure
Letter.
(g) Contributions. All contributions due from Seller or any of its
Affiliates with respect to any of the Employee Plans and all employee social
security contributions have been made or accrued on the Balance Sheet, and no
further contributions will be due or will have accrued thereunder as of the
Closing Date, other than contributions accrued after the Balance Sheet Date in
the ordinary course of business, consistent with past practice as a result of
operations of the Consulting Business after the Balance Sheet Date, all of which
have been paid.
(h) Continuation of Coverage; COBRA. The group health plans (as defined
in Section 4980B(g) of the Code) that benefit employees of the Consulting
Business are in compliance, in all material respects, with the continuation
coverage requirements of Section 4980B of the Code. As of the Closing Date,
there are no material outstanding, uncorrected violations under the
Consolidation Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
with respect to any of the Employee Plans that could materially adversely affect
the Consulting Business or the Purchased Assets after the Closing Date.
(i) No Liabilities for Terminating Employees. Since the Balance Sheet
Date, neither Seller nor any of its Affiliates has incurred any Liabilities in
connection with the termination of any employees of the Consulting Business, and
as of and prior to the Balance Sheet Date, neither Seller nor any of its
Affiliates has incurred any Liabilities in connection with the termination of
any employees of the Consulting Business except as reflected in the Balance
Sheet.
3.27 NO RIGHT TO PURCHASE THE CONSULTING BUSINESS OR THE PURCHASED
ASSETS. There are no options, rights of first refusal, preemptive rights,
rights of first offer or other rights or agreements outstanding to any third
party relating to any Seller Acquisition Proposal (as defined in Section 6.3).
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3.28 NO EXISTING DISCUSSIONS. Neither Seller or any of its Affiliates nor
any director, officer, stockholder, employee or agent of Seller or any such
Affiliate is engaged, directly or indirectly, in any discussions or negotiations
with any third party relating to any transaction that would be inconsistent with
the accomplishment of the sale of the Purchased Assets hereunder, such as,
without limitation, any Seller Acquisition Proposal (as defined in
Section 6.3).
3.29 TAXES.
(a) Definition of Seller. As used in this Section 3.29, the term
"SELLER" shall mean and include each and every North American Subsidiary of
Seller, if any.
(b) Tax Returns. Seller has filed all material Tax returns that it was
required to file. All such Tax returns were correct and complete in all
respects. All Taxes owed by Seller (whether or not shown on any Tax return) have
been paid. Seller is not currently the beneficiary of any extensions of time
within which to file any Tax return. To Seller's knowledge, no claim has ever
been made by an authority in a jurisdiction where Seller does not file Tax
returns that it is or may be subject to Taxation by that jurisdiction.
(c) Withholdings. Seller has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party relating to the Consulting Business.
(d) No Dispute. There is no dispute or claim concerning any Tax
liability of Seller either (i) claimed or raised by any authority in writing or
(ii) as to which the directors and officers of Seller has knowledge based on
personal contact with any agent of such authority.
(f) Tax Reserves. The unpaid Taxes of Seller (i) did not, as of the most
recent fiscal month end, exceed the reserve for Tax liability (other than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Balance Sheet (rather than in any notes
thereto) and (ii) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Seller in filing Seller's Tax returns.
(g) Third-Party Tax Liabilities. Seller is not a party to any Tax
allocation, indemnity or sharing agreement. Seller has not been a member of an
affiliated group filing a consolidated federal income Tax return (other than a
group the common parent of which was Seller. Seller has no liability for the
Taxes of any person (other than Seller and its Subsidiaries) under Treasury
Regulation Section1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise. The Purchased
Assets are free from any Tax Lien (other than a Permitted Lien).
3.30 SELLER CUSTOMERS. SCHEDULE 3.30 is a true and complete list of each
customer, client or licensee of the Consulting Business for which Seller is
currently performing services, or has provided services or sold or licensed
products to within the last two years (the "SELLER CUSTOMERS") and, with respect
to each such customer, client or licensee, states whether it is a past or
current customer or licensee, what products or services were sold, licensed or
provided to and the amount of revenue for each such customer, client or
licensee.
3.31 FULL DISCLOSURE.
(a) All of the representations and warranties made by Seller under
Article 3 of this Agreement (as qualified by Seller's Disclosure Letter) and in
the certificates delivered by Seller to Buyer at the Closing are true, correct
and complete in all material respects and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
such representations, warranties or statements, in light of the circumstances
under which they are made, not misleading.
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(b) The information supplied by Seller for inclusion or incorporation by
reference in the proxy statement to be filed with the SEC (the "SELLER PROXY
STATEMENT") shall not, on the date the Seller Proxy Statement is mailed to
Seller's stockholders, at the time of the meeting of Seller's stockholders (the
"SELLER STOCKHOLDERS' MEETING") to consider the Seller Stockholder Approvals or
as of the Closing, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Seller Stockholders' Meeting which has become
false or misleading. The Seller Proxy Statement will comply as to form in all
material respects with the provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder and the rules and regulations of
NASDAQ. If at any time prior to the Closing Date any event relating to Seller or
any of its affiliates, officers or directors should be discovered by Seller
which is required to be set forth in a supplement to the Seller Proxy Statement,
Seller shall promptly inform Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the Agreement Date and as of
the Closing Date that:
4.1 CORPORATE EXISTENCE AND POWER. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of
Delaware and has all necessary corporate power and authority and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted.
4.2 CORPORATE AUTHORIZATION. Buyer has all necessary corporate power and
authority to enter into this Agreement and each Buyer Ancillary Agreement, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each of the Buyer Ancillary
Agreements, the purchase of the Purchased Assets by Buyer and the assumption of
the Assumed Liabilities from Seller by Buyer, in each case pursuant to this
Agreement, and the consummation of all the transactions contemplated by this
Agreement and the Buyer Ancillary Agreements on the terms and subject to the
conditions set forth herein and therein, have been duly and validly authorized
by Buyer by all necessary corporate action and approved by Buyer's Board of
Directors, which action and approval have been obtained and carried out in
compliance with applicable law and Buyer's certificate of incorporation and
bylaws, each as amended to date. This Agreement, and each of the Buyer Ancillary
Agreements has been, duly and validly executed and delivered by Buyer, and
(assuming due authorization, execution and delivery by Seller and the
enforceability of this Agreement and the Buyer Ancillary Agreement against
Seller) this Agreement and each of the Buyer Ancillary Agreements constitutes,
legal, valid and binding obligations of Buyer enforceable against Buyer in
accordance with their respective terms.
4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement and each Buyer Ancillary Agreement and the consummation
of the transactions contemplated hereby and thereby require no material consent,
approval, authorization or other action by or in respect of, or filing with, any
Governmental Authority with respect to Buyer.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by Buyer of
this Agreement and each Buyer Ancillary Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate the
certificate of incorporation or bylaws of Buyer or (ii) violate any applicable
law, rule, regulation, judgment, injunction, order or decree in any material
respect.
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4.5 FINDERS' FEES. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Seller or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.
4.6 NO LITIGATION. There is no litigation, including, without limitation,
any claim, action, suit, investigation or proceeding of any nature pending or,
to the knowledge of Buyer, threatened, at law or in equity, by way of
arbitration or before any court or other Governmental Authority that may be
reasonably expected to adversely affect, contest or challenge Buyer's authority,
right or ability to purchase any of the Purchased Assets or to assume any
Assumed Liability under this Agreement or to otherwise perform Buyer's
obligations under this Agreement or any of the Buyer Ancillary Agreements, as
applicable.
4.7 PAYMENT OBLIGATIONS. Buyer has sufficient cash on hand or readily
available to satisfy its payment obligations hereunder.
ARTICLE 5
PRE-CLOSING COVENANTS
5.1 ADVICE OF CHANGES. Seller will promptly advise Buyer in writing of any
(a) event occurring subsequent to the Agreement Date that would render any
representation or warranty of Seller contained in this Agreement, if made on or
as of the date of such event, the Initial Closing Date or the Closing Date,
untrue or inaccurate in any material respect, (b) breach of any covenant or
obligation of Seller pursuant to this Agreement or any Seller Ancillary
Agreement, or (c) Material Adverse Change with respect to Seller, the Consulting
Business or the Purchased Assets. Buyer will promptly advise Seller in writing
of any (a) event occurring subsequent to the Agreement Date that would render
any representation or warranty of Buyer contained in this Agreement, if made on
or as of the date of such event, the Initial Closing Date or the Closing Date,
untrue or inaccurate, or (b) breach of any covenant or obligation of Buyer
pursuant to this Agreement or any Buyer Ancillary Agreement.
5.2 MAINTENANCE OF BUSINESS. After and including the time of the execution
of this Agreement until and including the time of the Closing (the "PRE-CLOSING
PERIOD"), Seller will use its commercially reasonable best efforts to preserve
the business and relationships with Seller Customers, suppliers, licensors,
licensees, employees, consultants and others with whom it has business dealings
in connection with the Consulting Business. During the Pre-Closing Period, if
Seller becomes aware of a material deterioration in the relationship with any
material Seller Customer, supplier, licensors, licensees, employee, consultant
or business partner in connection with the Consulting Business, it will promptly
bring such information to Buyer's attention in writing and, if requested by
Buyer, will exert its commercially reasonable best efforts to promptly restore
the relationship. During the Pre-Closing Period, if Buyer becomes aware of a
material deterioration in the relationship with any material Seller Customer in
connection with the Consulting Business (to the extent Buyer is performing
services for such customers under the Management Services Agreement), it will
promptly bring such information to Seller's attention in writing.
5.3 CONDUCT OF BUSINESS. Except as expressly contemplated by this
Agreement, during the Pre-Closing Period, Seller will continue to conduct (or
cause to be conducted) the Consulting Business in the ordinary course consistent
with its past practice, and Seller will not, without the prior written consent
of Buyer:
(a) take any action which would reasonably be expected to result in a
Material Adverse Change with respect to, Seller, the Consulting Business as
currently conducted or the Purchase Assets;
(b) amend its Certificate of Incorporation or Bylaws;
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(c) take any action that which could reasonably be expected to result in
the incurrence, creation or assumption by Seller of (i) any Lien on any of the
Purchased Assets (other than a Permitted Lien), (ii) any Liabilities or any
indebtedness for borrowed money (including incurring any additional liability,
debt or obligation under the Watertown Lease, the Seller Line of Credit
(PROVIDED that Seller may draw additional amounts under the Seller Line of
Credit until such time as the Loan Agreement Effective Date (as defined in
Section 7.4(c) below), if such draw does not cause the outstanding balance under
the Seller Line of Credit to exceed ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Dollars (U.S.$1,800,000), or (iii) any contingent liability as a
guarantor or surety with respect to the obligations of others;
(d) pay or discharge, or agree to pay or discharge, any Liability of
Seller or any Lien on any asset or property of Seller in an amount in excess of
$20,000 (except payments on the Seller Line of Credit, as set forth in
SCHEDULE 5.3(D), or as expressly contemplated by this Agreement, the Management
Services Agreement or the Loan Agreement);
(e) lend or advance any money, other than reasonable and normal advances
to employees for bona fide expenses that not material in amount and are incurred
in the ordinary course consistent with past practice;
(f) sell, license, transfer, convey, move, relocate or dispose of any
Purchased Asset other than in the ordinary course consistent with past practice;
(g) except as expressly contemplated by this Agreement, enter into any
material lease, license, contract or arrangement for the purchase or sale of any
property or asset, whether real or personal, tangible or intangible, or transfer
or relocate any Seller Tangible Person Property away from the Watertown
Facility;
(h) transfer or relocate any Seller Employee or Seller Key Management
Employee to any other division or position of employment or consulting within
Seller or any of Seller's Affiliates;
(i) terminate the employment of any Seller Employee or Seller Key
Management Employee (except as contemplated by Section 9.1);
(j) encourage or otherwise act to cause any Seller Employee or Seller
Key Management Employee not to accept any offer of employment by Buyer made
pursuant to Article 9 hereof;
(k) grant or pay any bonus, increased salary, royalty, severance or
employee or other benefit or special remuneration to any employee or consultant
(without the prior written consent of Buyer), or amend or enter into any
employment, consulting or severance or similar agreement with any such person;
(l) amend or terminate or fail to renew any Assumed Contracts;
(m) with respect to the Consulting Business or the Purchased Assets,
license any technology or Intellectual Property Rights to any third party, other
than in the ordinary course consistent with past practice, or acquire any
Intellectual Property Rights (or any license thereto) from, any third party,
other than in the ordinary course consistent with past practice;
(n) change or terminate any insurance coverage for or with respect to
the Consulting Business or the Purchased Assets;
(o) agree to any audit assessment by any Tax authority or file any
federal or state income or franchise tax return with respect to the Consulting
Business or any of the Purchased Assets unless copies of such returns have first
been delivered to Buyer for its review at a reasonable time prior to filing;
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(p) materially change the pricing or other material terms of Seller's
products or services relating to the Consulting Business;
(q) waive any material right or claim related to the Consulting Business
or any of the Purchased Assets or any of the Assumed Liabilities;
(r) Incur any indebtedness for borrowed money including incurring any
additional indebtedness under the Seller Line of Credit (PROVIDED that Seller
may draw additional amounts under the Seller Line of Credit prior to the Loan
Agreement Effective Date if such draw does not cause the outstanding balance
under the Seller Line of Credit to exceed ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (U.S.$1,800,000), under the Seller Capital Leases and
Seller Operating Leases, or trade debt or guarantee any such indebtedness of
another person, extend or enter into any commitment to make an extension of any
indebtedness, except immaterial transactions in each case in the ordinary course
of business consistent with past practice, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Seller, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing (except pursuant to the Loan Agreement);
(s) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock of Seller;
(t) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Seller or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof; and
(u) agree to do any of the things described in the preceding clauses
(a) through (s).
5.4 REGULATORY APPROVALS. Seller will promptly prepare, execute and file,
or join in the execution and filing of, any application, registration,
notification, consent or other document that may be necessary in order to obtain
the authorization, approval or consent of any Governmental Authority which is
required, or which Buyer may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement or any other
transactions contemplated by this Agreement or any Seller Ancillary Agreement.
5.5 REQUIRED CONSENTS, SATISFACTION OF CLOSING CONDITIONS.
(a) Prior to the Initial Closing Date, Seller shall use its commercially
reasonable best efforts to obtain in writing the Required Consents and any other
consent from all persons necessary to permit Seller to assign and transfer all
of the Purchased Assets to Buyer, free and clear of all Liens (except for
Permitted Liens), and to perform all of its obligations under, and to conclude
the transactions contemplated by, this Agreement and the Seller Ancillary
Agreements. Seller will use its commercially reasonable best efforts to remove,
discharge or terminate any Liens on the Purchased Assets prior to the Initial
Closing. Seller will use its commercially reasonable best efforts to satisfy or
cause to be satisfied all the conditions precedent which are set forth in
Section 10.2 on or before the Initial Closing, and all the conditions precedent
which are set forth in Section 11.1 and Section 11.2 on or before the Closing.
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(b) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign or transfer any contract
(including any Assumed Contracts), or any claim, right or benefit arising
thereunder or resulting therefrom, if such attempted assignment or transfer
thereof, without the Required Consent of a third party thereto, would constitute
a breach thereof or in any way adversely affect the rights of the Buyer
thereunder, as determined by Buyer in its reasonable discretion. If such
Required Consent (a "DEFERRED CONSENT") is not obtained prior to the Closing, or
if an attempted assignment or transfer thereof would be ineffective or would
affect the rights thereunder so that the Buyer would not receive all such rights
and benefits under such contract at Closing, then (a) the Seller shall use its
commercially reasonable best efforts to assist the Buyer in obtaining such
Deferred Consent as soon as practicable, and (b) until such Deferred Consent is
obtained, Seller and Buyer will cooperate, in all reasonable respects, to
provide Buyer the benefits under the contract to which such Deferred Consent
relates. Seller shall hold such contract, claim, right or benefit in trust for
the benefit of Buyer. In particular, in the event that any such Deferred Consent
is not obtained prior to the Closing, then Buyer and Seller shall enter into
such agreements and arrangements (including licensing, subleasing or
subcontracting, if permitted) to provide to the parties the economic and
operational equivalent of obtaining such Deferred Consent and assigning or
transferring such contract, including the enforcement for the benefit of Buyer
of all claims or rights arising thereunder. Compliance by Seller with this
Section 5.5(b) shall not excuse Seller from any breach of representation,
warranty, or covenant of Seller resulting from such non-assignment or the
failure to disclose the need to receive any such consent.
(c) Buyer will use its best efforts to satisfy or cause to be satisfied
all the conditions precedent which are set forth in Section 11.3 on or before
the Closing Date.
5.6 ACCESS TO INFORMATION. Subject to the terms and conditions of this
Agreement relating to the confidentiality and use of confidential and
proprietary information, Seller will allow Buyer and its advisors and agents
access at reasonable times to the files, books, records, technology, contracts,
employees, contractors and officers of Seller with respect to the Consulting
Business and the Purchased Assets, including, but not limited to, any and all
information relating to the taxes, commitments, contracts, leases, licenses,
employees, customers, consultants, liabilities, financial condition and real,
personal and intangible property of the Consulting Business; PROVIDED, HOWEVER,
that on and after the Closing Date, Seller will afford promptly to Buyer and its
agents reasonable access to its books of account, financial and other records
(including, without limitation, accountant's work papers), information,
employees and auditors to the extent necessary or useful for Buyer in connection
with any audit, investigation, dispute or litigation or any other reasonable
business purpose relating to the Consulting Business; PROVIDED that any such
access by Buyer shall not unreasonably interfere with the conduct of the
business of Seller following the Closing.
5.7 CONFIDENTIALITY. All copies of financial information, customers,
marketing and sales information, pricing, marketing plans, business plans,
financial and business projections, employees, consultants, customer lists,
methodologies, inventions, software, technology, know-how, product designs,
product specifications and drawings, trade secrets, and other confidential
and/or proprietary information of a party to this Agreement are hereinafter
referred to as "CONFIDENTIAL INFORMATION." A party who owns and discloses its
Confidential Information is referred to below as a "DISCLOSING PARTY" and a
party who receives or is given access to a Disclosing Party's Confidential
Information is referred to below as a "RECEIVING PARTY." Each party hereto
agrees that all Confidential Information of another party that is disclosed to
such party in the course of negotiating the transactions contemplated by this
Agreement or conducting due diligence in connection herewith will be held in
confidence, and will not be used or disclosed by the Receiving Party except for
the purposes relating to this Agreement for which such Confidential Information
was disclosed, and upon termination of this Agreement or the consummation of the
transactions contemplated hereby, subject to the last sentence of this
Section 5.7 and Section 7.1 below, will be promptly destroyed by the Receiving
Party or returned to the Disclosing
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Party, upon the Disclosing Party's written request. No party's employees will be
given access to Confidential Information of another party except on a "need to
know" basis and such employees shall be informed of the need to keep such
Confidential Information confidential. It is agreed that Confidential
Information will not include information that: (i) was known to such Receiving
Party before receipt of such information from the Disclosing Party; (ii) is or
becomes generally known to the public through no breach of this Section or any
act or omission on the part of the Receiving Party; (iii) is disclosed by a
third party having the legal right to disclose such information with no
obligation of confidence to the Disclosing Party, or is required to be disclosed
as a result of court order or similar process; or (iv) is independently
developed by the Receiving Party without use of any of the Disclosing Party's
Confidential Information (as evidenced by a contemporaneous writing). Effective
upon the Closing, the foregoing provisions of this Section will terminate with
respect to any obligation of Buyer to refrain from using or disclosing or to
return to Seller any Confidential Information of Seller that relates to any of
the Consulting Business or the Purchased Assets.
5.8 PREPARATION AND DELIVERY OF CLOSING SCHEDULES. Seller will timely
prepare and deliver to Buyer prior to the Closing the Estimated Closing Balance
Sheet. Seller will timely prepare and deliver to Buyer prior to the Closing the
updated (i) SCHEDULE 2.1(F) (reflecting Consulting Business Receivables updated
as of the Closing Date), (ii) SCHEDULE 2.3(A) (reflecting Assumed Line of Credit
Liabilities updated as of the Closing Date), (iii) SCHEDULE 2.3(D) (reflecting
Assumed Watertown Lease Liabilities updated as of the Closing Date),
(iv) SCHEDULE 2.3(E) (reflecting Assumed Capital Lease Liabilities updated as of
the Closing Date), (v) SCHEDULE 2.3(F) (reflecting the updated Assumed Prepaid
Liabilities as of the Closing Date), (vi) SCHEDULE 3.13(B) (reflecting Seller
Tangible Personal Property updated as of the Closing Date), and
(vii) SCHEDULE 3.13(C) (reflecting Prepaid Assets updated as of the Closing
Date). Seller will timely prepare and deliver to Buyer prior to the Initial
Closing Date SCHEDULE 2.3(C)(reflecting Assumed Vacation Liabilities updated as
of the Closing Date).
5.9 ASSUMED OTHER LIABILITIES; CLOSING SELLER LIABILITIES. Each of Seller
and Buyer shall have used their respective commercially reasonable best efforts
to update and deliver to the other prior to the Closing Date
(i) SCHEDULE 2.3(G) (reflecting the updated Assumed Other Liabilities as of the
Closing Date), and (ii) SCHEDULE 2.6(A)(II) (reflecting the updated Closing
Seller Liabilities as of the Closing Date).
5.10 MENGWALL LOAN CONSENT AGREEMENT. Seller agrees to enter into and
deliver prior to the effectiveness of the Loan Agreement, and will use its
commercially reasonable best efforts to get ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "LENDER") to
enter into and deliver prior to the Initial Closing, in a form and substance
acceptable to Buyer, Lender's (a) agreement to subordinate any security interest
and other Liens in favor of Lender relating to the Purchased Assets under that
certain (i) Promissory Note in a principal amount of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (U.S.$2,500,000) dated July 18, 2001 issued to
Lender by Seller, (ii) Modification Agreement dated as of July 18, 2001 between
Seller and Lender, and (iii) Security Agreement dated as of July 18, 2001
between Seller and Lender, and other related agreements and documents
(collectively, the "MENGWALL LOAN DOCUMENTS"), in favor of the security interest
of Buyer in certain assets of Seller under the Loan Agreement; (b) consent to
the sale and transfer of the Purchased Assets and the Consulting Business to
Buyer pursuant to this Agreement and the Seller Ancillary Agreements;
(c) consent to Seller's borrowings of amounts under the Loan Agreement and the
grant by Seller to Buyer of a security interest in certain assets of Seller
pursuant to the Loan Agreement; (d) waiver of any existing breach or default
under the Mengwall Loan Documents, or any breach or default thereunder which
could reasonably result from Seller's execution, delivery or performance of this
Agreement or any of the Seller Ancillary Agreements; (e) agreement to terminate
and release any and all Liens in favor of the Lender under Mengwall Loan
Documents relating to any of the Purchased Assets (conditioned upon and
effective as of the Closing) and the Seller Operating Leases (as defined in
Section 7.4(b) below); and (f) waiver of any remedies or
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rights to receive payment under the Mengwall Loan Documents at or following the
Closing until all Retained Liabilities have been paid in full by Seller (the
"MENGWALL LOAN CONSENT AGREEMENT").
5.11 FACTOR LENDER CONSENT AND CAPITAL LESSORS' CONSENTS. Seller agrees to
enter into and deliver prior to the Initial Closing, and will use its
commercially reasonable best efforts to cause the Factor Lender to enter into
and deliver prior to the Initial Closing, in a form and substance acceptable to
Buyer, the Factor Lender's (a) consent to the sale and transfer of the Purchased
Assets and the Consulting Business to Buyer pursuant to this Agreement and the
Seller Ancillary Agreements; (b) consent to Seller's borrowings of amounts under
the Loan Agreement and the grant by Seller to Buyer of a security interest in
the Purchased Assets and other assets of Seller under the Loan Agreement
(PROVIDED that such security interest shall be subordinate to the security
interest of the Factor Lender in the Consulting Business Receivables of Seller
securing outstanding indebtedness under the Seller Line of Credit); (c) waiver
of any existing breach or default under the Seller Line of Credit, or any breach
or default thereunder which could reasonably result from Seller's execution,
delivery or performance of this Agreement or any of the Seller Ancillary
Agreements; (d) the termination of Seller's right to make further draws or
receive additional advances under the Seller Line of Credit as of the Loan
Agreement Effective Date; and (e) the agreement of the Factor Lender to Buyer's
assumption of the Assumed Line of Credit Liabilities and all of Seller's rights
thereunder pursuant to this Agreement upon terms acceptable to Buyer (the
"FACTOR LENDER CONSENT"). Seller agrees to enter into and deliver prior to the
Closing, and will use its commercially reasonable best efforts to get each
lessor under each of the Seller Capital Leases to enter into and deliver prior
to the Closing, the agreement of each such lessor, in a form and substance
acceptable to Buyer, to Seller's assignment and Buyer's assumption of the
Assumed Capital Lease Liabilities pursuant to this Agreement (the "CAPITAL
LESSORS' CONSENTS").
5.12 ADVIS ASSIGNMENT. Promptly following the Agreement Date, Seller shall
cause Advis, Inc., a
Delaware corporation ("ADVIS"), to execute and deliver to
Buyer prior to the Initial Closing an assignment agreement in a form and
substance acceptable to Buyer, pursuant to which Advis assigns and transfers to
Buyer all of Advis' right, title and interest in and to the Purchased Assets to
Buyer free and clear of all Liens, conditioned upon and effective as of the
Closing Date (the "ADVIS ASSIGNMENT"). Seller agrees to, and agrees to cause
Advis to, execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
in order to consummate or implement expeditiously the Advis Assignment.
ARTICLE 6
SELLER STOCKHOLDER APPROVAL
6.1 SELLER PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
Seller will prepare, and subject to Buyer's review and approval (which will not
be unreasonably withheld), file with the SEC, the Seller Proxy Statement. Each
of Buyer and Seller shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Seller Proxy Statement, or in any amendments,
revisions or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Seller
Proxy Statement. Seller will cause the Seller Proxy Statement to be mailed to
its stockholders at the earliest practicable time following the conclusion of
SEC review (if any) of the Seller Proxy Statement. Promptly after the date of
this Agreement, Seller will promptly prepare and make in a timely manner any
other filings required to be filed by it under the Exchange Act, the Securities
Act or any other federal, state or foreign laws relating to the transactions
contemplated by this Agreement or the rules of NASDAQ or any applicable stock
exchange (the "OTHER FILINGS").
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(b) Seller will notify Buyer promptly upon the receipt of any comments
from the SEC or its staff or any other government officials in connection with
any filing made pursuant this Section 6.1 and of any request by the SEC or its
staff or any other government officials for amendments, revisions or supplements
to the Seller Proxy Statement or Other Filings, or for additional information
and will supply Buyer with copies of all correspondence between Seller or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Seller Proxy
Statement, the transactions contemplated by this Agreement or any Other Filing.
Seller will cause all documents that it is filing with the SEC or other
regulatory authorities under this Section 6.1 to comply in all material respects
with all applicable requirements of law and the rules and regulations
promulgated thereunder. Seller will promptly inform Buyer of any event which is
required under applicable law or regulation to be set forth in a supplement,
revision or amendment to the Seller Proxy Statement or Other Filing.
6.2 MEETING OF SELLER STOCKHOLDERS.
(a) Promptly after the Agreement Date, Seller will take all action
necessary in accordance with applicable law, Seller's certificate of
incorporation and bylaws, each as amended to date, and all Contracts binding on
Seller to convene the Seller Stockholders' Meeting (including any adjournments
thereof) to be held as promptly as practicable, and in any event (to the extent
permissible under applicable law) within 35 days after the clearance by the SEC
of the preliminary Seller Proxy Statement, for the purpose of voting upon
approval and adoption of this Agreement and approval of the transactions
contemplated hereby. Subject to Section 6.2(c), Seller will use its commercially
reasonable best efforts to solicit from its stockholders proxies in favor of the
adoption and approval of this Agreement and the approval of the transactions
contemplated hereby, and will take all other action necessary to secure the vote
or consent of its stockholders required by the rules of the Nasdaq Stock Market
and applicable law, Seller's certificate of incorporation and bylaws, each as
amended to date, and all Contracts binding on Seller, to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Seller may
adjourn or postpone the Seller Stockholders' Meeting to the extent necessary to
ensure that any necessary amendment, revision or supplement the Seller Proxy
Statement is provided to Seller's stockholders in advance of a vote on this
Agreement and that the approval of the transactions contemplated hereby, or if
as of the time for which the Seller Stockholders' Meeting is originally
Scheduled (as set forth in the Seller Proxy Statement) there are insufficient
shares of Seller's common stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Seller
Stockholders' Meeting. Seller shall ensure that the Seller Stockholders' Meeting
is called, noticed, convened, held and conducted, and that all proxies solicited
by the Seller in connection with the Seller Stockholders' Meeting are solicited,
in compliance with applicable law, Seller's certificate of incorporation and
bylaws, each as amended to date, the rules of the Nasdaq Stock Market and all
other applicable legal requirements. Seller's obligation to call, give notice
of, convene and hold the Seller Stockholders' Meeting in accordance with this
Section 6.2(a) shall not be limited to or otherwise affected by the
commencement, disclosure, announcement or submission to Seller of any Seller
Acquisition Proposal (as defined in Section 6.3 below) or Seller Superior Offer
(as defined below), or by any withdrawal, amendment or modification of the
recommendation of the Board of Directors of Seller with respect to this
Agreement and the transactions contemplated hereby.
(b) Subject to Section 6.2(c): (i) the Board of Directors of Seller
shall recommend that Seller's stockholders vote in favor of and adopt and
approve this Agreement and approve the transactions contemplated hereby at the
Seller Stockholders' Meeting; (ii) the Seller Proxy Statement shall include a
statement to the effect that the Board of Directors of Seller has recommended
that Seller's stockholders vote in favor of and adopt and approve this Agreement
and the transactions contemplated hereby at the Seller Stockholders' Meeting;
and (iii) neither the Board of Directors of Seller nor any committee thereof
shall withdraw, amend or modify, or propose or resolve to withdraw,
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amend or modify in a manner adverse to Buyer, the recommendation of the Board of
Directors of Seller that Seller's stockholders vote in favor of and adopt and
approve this Agreement and the transactions contemplated hereby.
(c) Nothing in this Agreement shall prevent the Board of Directors of
the Seller from withholding, withdrawing, amending or modifying its
recommendation in favor of this Agreement and the transactions contemplated
hereby, or from endorsing or recommending a Seller Superior Offer (as defined
below) if (i) a Seller Superior Offer is made to the Seller and is not
withdrawn, (ii) the Seller shall have provided written notice to Buyer (a
"NOTICE OF SELLER SUPERIOR OFFER") advising Buyer that the Seller has received a
Seller Superior Offer, summarizing the material terms and conditions of such
Seller Superior Offer and identifying the person or entity making such Seller
Superior Offer, (iii) Buyer shall not have, within five (5) Business Days of
Buyer's receipt of the Notice of Seller Superior Offer, made an offer that the
Seller's Board of Directors by a majority vote determines in its good faith
judgment (after consultation with a financial advisor of national standing) to
be at least as favorable to Seller's stockholders as such Seller Superior Offer
(it being agreed that the Board of Directors of Seller shall convene a meeting
to consider any such offer by Buyer promptly following the receipt thereof),
(iv) the Board of Directors of Seller concludes in good faith, after
consultation with its outside legal counsel, that, in light of such Seller
Superior Offer, the failure to withhold, withdraw, amend or modify such
recommendation would violate the fiduciary duties of the Board of Directors of
Seller to Seller's stockholders under applicable law and (v) Seller shall not
have violated any of the restrictions set forth in Section 6.3 or any of the
provisions of this Section 6.2. Seller shall provide Buyer with at least two
(2) Business Days prior notice (or such lesser prior notice as provided to the
members of the Seller's Board of Directors) of any meeting of the Seller's Board
of Directors at which Seller's Board of Directors is reasonably expected to
consider any Seller Acquisition Proposal (as defined in Section 6.3) to
determine whether such Seller Acquisition Proposal is a Seller Superior Offer.
Nothing contained in this Section 6.2(c) shall limit the Seller's obligation to
hold and convene the Seller Stockholders' Meeting (regardless of whether the
recommendation of the Board of Directors of Seller shall have been withdrawn,
amended or modified). For purposes of this Agreement, "SELLER SUPERIOR OFFER"
shall mean (a) an unsolicited, bona fide Seller Acquisition Proposal that the
Board of Directors of the Seller determines in good faith (after consultation
with a financial advisor of national standing) to be substantially more
favorable to the Seller stockholders than the sale and purchase of the Purchased
Assets and the Consulting Business pursuant to this Agreement and the other
transactions contemplated hereby, and (b) which requires by its terms that as a
condition to the consummation of the transaction contemplated by such written
offer the sale and purchase of the Purchased Assets and the Consulting Business
pursuant to this Agreement and the other transactions contemplated hereby be
terminated; PROVIDED, HOWEVER, that any such offer shall not be deemed to be a
"Seller Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the good faith
determination of the Seller's Board of Directors (after consultation with its
financial advisor) to be obtained by such third party on a timely basis.
6.3 NO OTHER NEGOTIATIONS. During the Pre-Closing Period, Seller will not,
and will not authorize, encourage or permit any director, officer, employee,
stockholder, Affiliate or agent of Seller or any attorney, investment banker or
other person on Seller's or their behalf (each, a "SELLER REPRESENTATIVE") to,
directly or indirectly: (i) solicit, initiate, encourage or induce the making,
submission or announcement of any offer or proposal from any person concerning
any Seller Acquisition Proposal (as defined below); (ii) formally consider any
inquiry, offer or proposal received from any party concerning any Seller
Acquisition Proposal; (iii) furnish any information regarding the Consulting
Business or any of the Purchased Assets to any person (other than Buyer) in
connection with or in response to any inquiry, offer or proposal for or
regarding any such Seller Acquisition Proposal; (iv) participate in any
discussions or negotiations with any person (other than Buyer) with respect to
any Seller Acquisition Proposal; (v) cooperate with, facilitate or encourage any
effort or attempt by any person (other than Buyer) to effect any Seller
Acquisition Proposal; or (vi) execute, enter into or become bound by any
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letter of intent, agreement, commitment or understanding between Seller and any
person (other than Buyer) that is related to, provides for or concerns any
Seller Acquisition Proposal; PROVIDED that Seller will be entitled to respond to
such inquiry, offer or proposal by indicating that Seller is not interested in
any such Seller Acquisition Proposal; PROVIDED, FURTHER, that Seller may
disclose the provisions of this Section 6.3 in response to an unsolicited
inquiry from any person or group, and prior to the Seller Stockholder Approvals
at the Seller Stockholders' Meeting, this Section 6.3 shall not prohibit Seller
from furnishing nonpublic information regarding Seller and its subsidiaries to,
or entering into or participating in discussions or negotiations with, any
person or group who has submitted (and not withdrawn) to Seller an bona fide
unsolicited, written Seller Acquisition Proposal or otherwise consider and
evaluate the terms of any such Seller Acquisition Proposal, if the Board of
Directors of Seller reasonably concludes (after consultation with a financial
advisor of national standing) that such proposal may constitute a Seller
Superior Offer if (1) neither Seller nor any Seller Representative nor its
subsidiaries shall have violated any of the restrictions set forth in this
Section 6.3, (2) the Board of Directors of Seller concludes in good faith (after
consultation with its outside legal counsel) that the failure to take such
action would violate the fiduciary obligations of the Board of Directors of
Seller to Seller's stockholders under applicable law, (3) prior to furnishing
any such nonpublic information to, or entering into any such discussions or
negotiations with, such person or group, Seller gives Buyer written notice of
the identity of such person or group and all of the material terms and
conditions of such Seller Acquisition Proposal and of Seller's intention to
furnish nonpublic information to, or enter into discussions with, such person or
group, and Seller receives from such person or group an executed confidentiality
agreement containing terms which shall not restrict Seller from complying with
its disclosure obligations under this Agreement and which shall otherwise
contain customary limitations on the use and disclosure of all non-public
information furnished to such person or group or on behalf of the Seller and
other terms no less favorable to Seller than those set forth in the
Confidentiality Agreement, and (4) contemporaneously with furnishing any such
nonpublic information to such person or group, Seller furnishes such nonpublic
information to Buyer. Seller has terminated any and all prior discussions,
negotiations and considerations of any inquiry, offer or proposal by any third
party related to or concerning a Seller Acquisition Proposal. During the
Pre-Closing Period, Seller will promptly notify Buyer orally and in writing of
any inquiries, offers or proposals received by Seller or its directors,
officers, employees, stockholders, affiliates or agents regarding any Seller
Acquisition Proposal and will identify the party making the inquiry, offer or
proposal and the nature and terms of such inquiry, offer or proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding two sentences by any authorized Seller Representative
or any of its subsidiaries shall be deemed to be a breach of this Section 6.3 by
Seller.
As used herein, the term "SELLER ACQUISITION PROPOSAL" means any commitment,
agreement, arrangement or transaction involving or providing for the possible
disposition of any portion of the Purchased Assets or the Consulting Business,
whether by way of merger, consolidation, sale of assets, sale of stock, stock
exchange, dividend, tender offer and/or any other form of business combination
or disposition.
ARTICLE 7
ADDITIONAL COVENANTS OF BUYER AND SELLER
7.1 POST-CLOSING CONFIDENTIALITY. Seller hereby covenants and agrees with
Buyer that, after the Closing or after any termination of this Agreement, Seller
and its Affiliates will hold, and will use their best efforts to cause their
respective officers, directors, employees, accountants, attorneys, consultants,
advisors and agents to hold in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
Confidential Information concerning the Consulting Business and the Purchased
Assets, except to the extent that such information can be shown to have been
(i) previously known on a non-confidential basis by Seller, or (ii) in the
public domain through no fault of Seller or its Affiliates. The obligation of
Seller and its Affiliates to hold any such information
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in confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their own
similar information.
7.2 PAYMENT OF DEBTS. Seller hereby covenants and agrees with Buyer that
Seller will use the Closing Cash Consideration to be paid by Buyer to Seller at
the Closing for the Purchased Assets to pay off in full and retire (i) at the
Closing, the Seller's Retained Liabilities (as defined in Section 3.15) set
forth on SCHEDULE 7.2 (which SCHEDULE 7.2 will be updated and delivered by
Seller to Buyer at least one (1) Business Day prior to the Closing) (the
"CLOSING RETAINED LIABILITIES"), and (ii) the remaining Seller's Retained
Liabilities as promptly as practicable following the Closing (which payments
shall in any event be made within 30 days of the Closing and before any of such
Retained Liabilities become due; PROVIDED that any payment of Retained
Liabilities owed to an Affiliate need only be paid when such liabilities are
due). Seller further covenants and agrees with Buyer that Seller shall not use
any portion of such cash payment from Buyer for any purpose other than the
payment and retirement of Retained Liabilities until all material Retained
Liabilities have been paid or satisfied in full. In particular, Seller covenants
and agrees that Seller shall not transfer any portion of such cash payment to
(i) any Person who is not owed Retained Liabilities, or (ii) any Affiliate of
Seller (even if owed Retained Liabilities, such as any amounts owing to the
Lender), until all other Retained Liabilities have been paid off in full. Buyer
hereby covenants and agrees with Seller that Buyer will use Closing Cash
Consideration to the extent necessary to pay off in full and retire at the
Closing the Seller Closing Liabilities, and following the Closing Buyer will
promptly pay or perform the Assumed Liabilities.
7.3 BEST EFFORTS; FURTHER ASSURANCES.
(a) On the terms and subject to the conditions of this Agreement, Buyer
and Seller will use their best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement, including removing any Liens on any of the Purchased Assets
(other than Permitted Liens). Seller and Buyer agree to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement and the
Seller Ancillary Agreements (including, but not limited to, termination
statements and UCC Forms), and to vest in Buyer good and marketable title to the
Purchased Assets, and to enable Buyer to operate the Consulting Business
following the Closing in substantially the same manner as operated by Seller
immediately prior to the Initial Closing, including but not limited to the
release to Buyer of any Consulting Business Receivables securing the Seller Line
of Credit. Following the Closing, in the event that Seller receives any payments
or notices from any Seller Customers or in respect of any Consulting Business
Receivables Seller agrees to (i) promptly notify Buyer of the same; (ii) hold
such payments and notices in trust for the benefit of Buyer, and
(iii) immediately turn over and deliver to Buyer such payments (in whatever form
received and with proper endorsement or assignment) and any notices; PROVIDED
that any payments received by Seller in respect of any Assigned Receivables (as
defined in Section 12.2 below) may be retained by Seller. Seller will have no
right or interest in or to any payments received by it in respect of any
Consulting Business Receivables (other than Assigned Receivables), and Buyer
will have the right to endorse Seller's name on all payments received in respect
of any Consulting Business Receivables (other than Assigned Receivables).
(b) Subject to Seller's right to retain Seller-Retained Rights,
conditioned on and effective as of the Closing, Seller hereby constitutes and
appoints, effective as of the date hereof, Buyer and its successors and assigns
as the true and lawful attorney of Seller with full power of substitution in the
name of Buyer, or in the name of Seller but for the benefit of Buyer, (i) to
collect for the account of Buyer any items of Purchased Assets and (ii) to
institute and prosecute all proceedings which Buyer may in its sole discretion
deem proper in order to assert or enforce any right, title or interest in, to or
under the Purchased Assets or to remove any Lien pending against the Purchased
Assets, and to defend or compromise any and all actions, suits or proceedings in
respect of the Purchased Assets.
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Buyer shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest in
respect thereof.
7.4 WATERTOWN LEASE, ASSUMPTION OF SELLER OPERATING LEASES AND INTERIM
OPERATING AGREEMENTS.
(a) Watertown Lease.The parties acknowledge that it is their mutual
intention and objective that Buyer enter into, prior to the Initial Closing (as
defined in the Preamble to Article 10), a separate lease covering that portion
of the Watertown Premises consisting of a portion of the third floor of the
Watertown Facility (the "REQUIRED PREMISES"), at a rent and on other terms and
conditions that are acceptable to Buyer in its sole discretion (the "BUYER'S
LEASE"). Upon the Agreement Date, Seller agrees to use its diligent good faith
efforts to cooperate with Buyer to initiate and conduct discussions with the
Landlord (and if necessary, the master lessor) of the Watertown Facility in
order to enable Buyer and the Landlord to enter into the Buyer's Lease prior to
the Initial Closing. The Parties will also, in connection with Buyer's attempt
to secure the Buyer's Lease, attempt in good faith to negotiate with the
Landlord and enter into a release agreement, in a form and substance reasonably
acceptable to Buyer and Seller, releasing Buyer and Seller from any and all
Liabilities incurred or arising under the Watertown Lease for periods prior to
and including the effectiveness of the Buyer's Lease (the "WATERTOWN LEASE
RELEASE"). Upon the effectiveness of the Buyer's Lease and the Watertown Lease
Release, Buyer shall promptly take possession of the Required Premises.
Notwithstanding the foregoing, Buyer shall have no obligation to enter into the
Buyer Lease or the Waterhouse Lease Release, or to agree to any particular
terms, conditions or rent under any lease agreement for the lease of any part of
the Watertown Premises or to lease any space in the Watertown Facility.
(b) Assumption of Seller Operating Leases.Upon the effectiveness of the
Buyer's Lease, Seller shall transfer and assign, and Buyer shall accept and
assume the operating leases of Seller (the "SELLER OPERATING LEASES") set forth
on SCHEDULE 7.4(B) hereto and the liabilities of Seller outstanding as of the
date of transfer and assignment under the Seller Operating Leases (the "ASSUMED
OPERATING LEASE LIABILITIES"). In the event that any Seller Operating Leases are
in the name of an Affiliate of Seller (including a Subsidiary of Seller), Seller
shall promptly cause such party to assign such Seller Operating Lease to Buyer.
Upon the effectiveness of the assignment of any Seller Operating Lease to Buyer,
Seller agrees to promptly deliver, and to cause any Affiliate of Seller to
promptly deliver, possession and control of any equipment or personal property
covered by such Seller Operating Lease, all of which is in good working order
and condition (subject to normal wear and tear). Seller agrees to enter into and
deliver prior to the assignment of the Seller Operating Leases pursuant to this
Section 7.4(b), and will use its commercially reasonable best efforts to cause
each lessor under each of the Seller Operating Leases to enter into and deliver
prior to the assignment of the Seller Operating Leases pursuant to this
Section 7.4(b), the approval and agreement of each such lessor, in a form and
substance acceptable to Buyer, to Buyer's assumption of the Seller Operating
Leases and the Assumed Operating Lease Liabilities pursuant to this Agreement.
Seller agrees to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be
reasonably necessary or desirable in order expeditiously assign and transfer the
Seller Operating Leases to Buyer.
(c) Management Services Agreement and Loan Agreement. It is the mutual
intent of the Parties that upon the Initial Closing the Management Services
Agreement will become effective and Buyer will be available to provide services
to and on behalf of Seller pursuant to the terms and conditions thereof. It is
the mutual intent of the Parties that upon the Initial Closing and after SEC
review, if any, and Seller's mailing of the Seller Proxy Statement to
stockholders of Seller (the "LOAN AGREEMENT EFFECTIVE DATE"), the Loan Agreement
will become effective subject to the terms and conditions thereof.
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7.5 BOOKS AND RECORDS; PERSONNEL. At all times after the Closing Date,
Seller shall allow Buyer and any agents of Buyer, upon reasonable advance notice
to Seller, access to all Books and Records retained by Seller and the personnel
of Seller, to the extent necessary in connection with (i) the preparation, audit
or review of any financial statements required to be prepared, filed or
furnished pursuant to the Securities Act, the Exchange Act or the rules and
regulations of the SEC promulgated thereunder or any other applicable laws
(including any applicable Canadian securities law or exchange requirements),
(ii) Tax returns (including those necessary to establish Tax credits) or audits,
or reports to or filings with any Governmental Authority, or (iii) preparation
for, existing or future arbitration or litigation or employment or other
matters, in each case during normal business hours at Seller's principal place
of business or at any location where such Books and Records are stored, and
Buyer shall have the right, at its cost, to make copies of any such Books and
Records.
7.6 CERTAIN FILINGS. Seller and Buyer shall cooperate with and assist each
other (i) in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or desirable, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.
7.7 NON-COMPETE. As a material inducement and consideration for Buyer to
enter into this Agreement, for a period of three (3) years from and after the
Closing Date (the "RESTRICTED PERIOD"), Seller shall not without the prior
written consent of Buyer or within North America, directly or indirectly, carry
on any business, or own (in whole or in part), operate, manage, advise, assist
or lend funds to or invest, in any manner with, any Person which competes, or
intends to compete, in whole or in part, directly or indirectly, with (i) the
Consulting Business, or (ii) the business of Buyer and any Subsidiary or parent
company of Buyer as presently conducted as of the Closing; PROVIDED that Seller
may use, transfer, sell or otherwise obtain the benefit of any net operating
losses held by it as of the Closing Date. During the Restricted Period, Seller
further agrees not to solicit, interfere with, disrupt or attempt to disrupt the
relationship between Buyer, or any Subsidiary or parent company of Buyer, and
any third party, including without limitation contacting or soliciting any
Seller Customers or Transferred Employee or knowingly contacting or soliciting
any customer, supplier or employee of Buyer or any Subsidiary or parent company
of Buyer, and not to endorse or promote any products or services which are
competitive with the Consulting Business or the business of Buyer or any
Subsidiary or parent company of Buyer as presently conducted as of the Closing.
In the event of a breach of any of the covenants set forth in this Section 7.7,
Seller agrees that the damage to Buyer would be irreparable and that Buyer shall
be entitled to an injunction against the Seller restraining such breach in
addition to any other remedies provided by law or equity. In the event that any
covenant in this Section 7.7 is held to be invalid, illegal or unenforceable by
any court of competent jurisdiction or any other governmental authority, the
parties agree and understand that such covenant shall not be voided but rather
shall be construed to impose limitations upon Seller's activities no greater
than allowable under then applicable law. Nothing contained in this Section 7.7
shall be deemed to modify or limit any terms or conditions of any of the
Employment Agreements.
7.8 ASSISTANCE. Seller shall reasonably assist and cooperate with the
efforts of Buyer and its accountants and auditors to prepare, review or audit
any financial statements (including but not limited to pro forma financial
statements) that Buyer may from time to time be required to prepare, file or
furnish pursuant to any applicable Canadian securities laws or exchange
requirements, the Securities Act, the Exchange Act, the rules and regulations of
the SEC promulgated thereunder, any rules or regulations of the Toronto Stock
Exchange, NASDAQ or other stock exchange, or under any other applicable laws.
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7.9 CONSENTS. Following the Closing, Seller shall, at its own expense, use
its good faith commercially reasonable best efforts to assist and cooperate
Buyer in promptly obtaining any and all Required Consents of third parties and
any other authorizations, approvals and consents of any Governmental Authority
or other party required or deemed desirable by Buyer in connection with the
Agreement and the Seller Ancillary Agreements that have not been obtained at or
prior to the Initial Closing or the Closing, and to transfer and vest all right,
title and interest in the Purchased Assets in Buyer.
ARTICLE 8
TAX MATTERS
8.1 TAXES. Seller shall be responsible for, and shall promptly pay in
full, any and all Taxes that may be incurred by Seller or any Affiliate of
Seller in connection with the sale and transfer of the Purchased Assets
contemplated by this Agreement, including, without limitation, any recordation,
transfer, documentary taxes and fees, stamps and any sales, use, excise and
value added taxes (collectively, "TRANSACTION TAXES"). Seller shall be
responsible for preparing and filing any Tax return relating to such Transaction
Taxes and shall promptly provide a copy of such Tax return to Buyer. Buyer, on
the one hand and Seller, on the other hand, agree to reasonably cooperate in
lawful efforts to minimize the amount of any such Transaction Taxes and in the
filing of all necessary documentation and all Tax returns, reports and forms
with respect to all such Transaction Taxes, including any available pre-Closing
filing procedures.
8.2 STRADDLE PERIODS. All property taxes, personal property taxes and
similar AD VALOREM obligations in respect of the Purchased Assets that relate to
periods beginning prior to the Closing Date and ending after the Closing Date
("STRADDLE PERIODS") shall be prorated as of the Closing Date. Seller's
estimated accrued liability at the Closing for any of the above-described Taxes
and charges that are due and payable after the Closing Date shall be withheld
from Closing Cash Consideration by Buyer at the Closing. Buyer shall prepare and
file, or shall cause to be prepared and filed, on a timely basis, all Straddle
Period tax returns. Buyer shall provide each Straddle Period Tax return to
Seller for review not less than ten (10) business days in advance of the due
date thereof (which return shall be subject to Seller's approval not to be
unreasonably withheld), and Buyer shall pay Seller's prorated portion of the tax
shown to be due on each such return not less than five (5) business days before
the due date of such payment; PROVIDED that in the event that Buyer has not
withheld from the Closing Cash Consideration an amount which is sufficient to
fully pay Seller's prorated portion of the Tax due on such return, then upon
notice from Buyer Seller shall promptly pay Buyer such amount. Buyer agrees to
promptly return to Seller any portion of the Closing Cash Consideration retained
by it pursuant to this Section 8.2 not used to pay Seller's prorated portion of
such Taxes for a Straddle Period.
8.3 OTHER TAXES. Except as provided in Section 8.2 above, (i) Seller shall
be responsible for and shall pay any and all Taxes with respect to the Purchased
Assets relating to all periods (or portions thereof) ending on or prior to the
Closing Date, and (ii) Buyer shall be responsible for and shall pay any and all
Taxes with respect to the Purchased Assets relating to all periods (or portions
thereof) ending after the Closing Date.
8.4 TREATMENT OF INDEMNITY PAYMENTS. All payments (i) made by Seller to or
for the benefit of Buyer pursuant to any indemnification obligations of Seller
under this Agreement and (ii) made by Buyer to or for the benefit of Seller
pursuant to any indemnification obligations of Buyer under this Agreement, will
be treated as adjustments to the Purchase Price for Tax purposes and such agreed
treatment will govern for purposes of this Agreement, unless otherwise required
by law.
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ARTICLE 9
EMPLOYEE BENEFITS
9.1 EMPLOYEES, CONSULTANTS AND OFFERS BY BUYER.
(a) Seller will use its best commercial efforts to cooperate with Buyer
to ensure that the Seller employees listed on SCHEDULE 9.1(A) hereto (the
"SELLER EMPLOYEES") enter into mutually acceptable employment arrangements
pursuant to general terms of employment set forth on such SCHEDULE 9.1(A) and
the employment offer letter in substantially the form attached hereto as
EXHIBIT F (the "EMPLOYMENT OFFER LETTER"), and a confidentiality and invention
assignment agreement acceptable to Buyer, with Buyer, prior to the Initial
Closing.
(b) Seller will use its best commercial efforts to cooperate with Buyer
to ensure that the Seller key management employees listed on SCHEDULE 9.1(B)
hereto (the "SELLER KEY MANAGEMENT EMPLOYEES") enter into mutually acceptable
employment arrangements pursuant to general terms of employment set forth on
such SCHEDULE 9.1(B) and the Employment Offer Letter or the employment and
non-competition agreement in substantially the form attached hereto as
EXHIBIT G (the "EMPLOYMENT AGREEMENT"), as provided on such Schedule, and a
confidentiality and invention assignment agreement acceptable to Buyer, with
Buyer, prior to the Initial Closing.
(c) On or prior to the Initial Closing, Buyer shall make offers of
employment and/or consulting positions to the Seller Employees and the Seller
Key Management Employees, and certain other employees and consultants in the
Consulting Business that are selected by Buyer in its sole and absolute
discretion; PROVIDED, that Buyer may terminate at any time after the date of
hire of such employees or consultants (the "TRANSFERRED EMPLOYEE HIRE DATE"),
with or without notice or cause the services of any individual who accepts such
offer of employment or service. Any such offers shall be at such pay and/or
benefit levels in accordance with Buyer's standard hiring employment and
consultant practices and shall be for "at will" employment. The Seller Key
Management Employees and certain other key employees and consultants will be
required by Buyer to execute such non-competition and non-solicitation or
similar agreements as Buyer deems appropriate. The employees and consultants of
Seller who accept and commence service with Buyer are hereinafter collectively
referred to as the "TRANSFERRED EMPLOYEES" (such definition is used for ease of
reference and is not intended to suggest that any consultant is an employee of
Seller or Buyer). As of the Transferred Employee Hire Date, Seller will
cooperate in an orderly transfer of service, will transfer all service and
personnel records for Transferred Employees and will not take, and will cause
each of its Affiliates or Subsidiaries not to take, any action which would
impede, hinder, interfere or otherwise compete with Buyer's effort to hire any
Transferred Employees. Except for Buyer's assumption of the Assumed Vacation
Liabilities as of the Transferred Employee Hire Date, Buyer shall not assume
responsibility for any Transferred Employee until such person commences service
with Buyer. Buyer shall not assume any employment contract or arrangement
between Seller and any Transferred Employees or any obligation or liability of
Seller thereunder, all of which contracts, arrangements and related obligations
shall be retained by Seller. Seller hereby consents to the offers of employment
and service by Buyer and the hiring of the Transferred Employees by Buyer
following the Agreement Date and the Initial Closing Date, and waives and hereby
releases, with respect to the employment or engagement by Buyer of such
Transferred Employees, any claims, causes of action or rights Seller or its
Affiliates may have against Buyer or any Affiliate of Buyer or any such
Transferred Employee arising from or in any way related to the Buyer's hiring,
and employment of, any Transferred Employee, including but not limited to
claims, causes of action or rights arising under any non-competition,
non-solicitation, assignment of inventions, confidentiality or employment
agreement to the extent such Transferred Employees are performing services for
Buyer, regardless of whether the transactions contemplated by this Agreement are
actually consummated. This Section 9.1(c) shall survive the termination of this
Agreement.
9.2 SELLER'S EMPLOYEE BENEFIT PLANS.
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(a) Seller shall retain all obligations and liabilities under the
Employee Plans in respect of each employee or former employee (including any
beneficiary thereof) who is not a Transferred Employee. Except as expressly set
forth herein, Seller shall retain all Liabilities in respect of claims made and
benefits accrued as of and including the Transferred Employee Hire Date by
Transferred Employees under the Employee Plans, and neither Buyer nor any of its
Affiliates shall have any Liability with respect thereto. No assets of any
Employee Plan shall be transferred to Buyer or any of its Affiliates or to any
plan of Buyer or any of its Affiliates, except that at the request of a
Transferred Employee, and to the extent permitted by applicable law or
regulation, Seller will perform and undertake all acts as may be necessary to
rollover or otherwise transfer the vested interests of such Transferred Employee
in any qualified or non-qualified pension or Section 401(k) plans of Seller to a
defined contribution plan established by Buyer ("BUYER'S DC PLAN") or to an
individual retirement account designated by such Transferred Employee, PROVIDED,
HOWEVER, that any direct rollover to the Buyer's DC Plan will be subject to the
policies and procedures of Buyer with respect to direct rollovers generally
except that to the extent that a Transferred Employee transfers a loan
obligation to Buyer's DC Plan, Buyer's DC Plan shall continue to accept
repayments of such loan amounts and shall otherwise administer such loans in
accordance with their terms and ERISA until such loan amounts are repaid or are
foreclosed upon. Accrued benefits or account balances of Transferred Employees
under the Employee Plans shall be fully vested as of the Transferred Employee
Hire Date.
(b) With respect to the Transferred Employees (including any beneficiary
or dependent thereof), Seller shall be liable for and obligated to pay and
indemnify and hold Buyer and its Affiliates harmless from any and all expenses,
contracts, agreements, commitments, obligations, claims, suits, and other
Liabilities of any nature whatsoever, whether known or unknown, accrued or not
accrued, fixed of contingent or arising hereafter, directly or indirectly
(i) arising under any group life, accident, medical, dental or disability plan
or similar arrangement (whether or not insured) to the extent that such
Liability relates to contributions or premiums accrued (whether or not payable),
or to claims incurred (whether or not reported), on or prior to the Transferred
Employee Hire Date, (ii) arising under any worker's compensation arrangement to
the extent such Liability relates to any period prior to the Transferred
Employee Hire Date, including Liability for any retroactive worker's
compensation premiums attributable to such period (iii) arising under the
Employee Plans to the extent any such Liability relates to the period prior to
the Transferred Employee Hire Date, and (iv) severance obligations, if any, due
a Transferred Employee or any employee of Seller as a result of or in connection
with the transactions contemplated by this Agreement under any severance plan of
Seller or any of its Affiliates; PROVIDED, that the foregoing shall not alter
Buyer's obligations with respect to the Assumed Vacation Liabilities as provided
in Section 2.3(c). Seller shall be responsible for any COBRA coverage and
coverage continuation notices required to be provided with respect to any
employees and former employees terminated by Seller, and Buyer shall be
responsible for such matters with respect to any Transferred Employees
terminated by Buyer after the Transferred Employee Hire Date.
9.3 COMPENSATION; CONTRACTUAL OBLIGATIONS. Seller shall be liable for and
obligated to pay and indemnify and hold Buyer and its Affiliates harmless from
any and all expenses, contracts, agreements, commitments, obligations, claims,
suits, and other liabilities of any nature whatsoever, whether known or unknown,
accrued or not accrued, fixed or contingent or arising hereafter, directly or
indirectly, with respect to (i) the employment with Seller or termination of
employment with Seller of any current or future employee or consultant of Seller
or any of its Affiliates, including without limitation Transferred Employees,
whether in connection with the transactions contemplated hereby or otherwise;
(ii) any claims of discrimination, harassment or wrongful termination under
state or federal law provided such claims arise from an employee's employment or
service with or termination by Seller; (iii) any other claims or obligations
arising out of the terms and conditions of employment (including under any
employment agreement with Seller or the payment of benefits to employees or
their benefits under any Employee Plan), of any person by Seller or its
Affiliates or associated with the Consulting Business, whether for salary,
wages, bonuses, profit sharing, commissions, severance, vacation pay, sick pay
or
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otherwise; (v) any duties or obligations of Seller or administrators under any
existing or future Employee Plans or any employment agreement of Seller or other
employee benefit plans of Seller or any of its Affiliates; or (vi) any present
or future obligations or liabilities of Seller or any of its Affiliates to
prior, existing or future employees of Seller or any of its Affiliates, whether
or not specifically described in this Article 9.
9.4 BUYER BENEFIT PLANS. Buyer or one of its Affiliates will recognize all
service of the Transferred Employees with Seller, as required by applicable law
(including Section 401 ET SEQ. of the Code) and otherwise for purposes of
eligibility to participate in those employee benefit plans, within the meaning
of Section 3(3) of ERISA, in which the Transferred Employees are enrolled by
Buyer or one of its Affiliates immediately after the Transferred Employee Hire
Date. Buyer will give each Transferred Employee credit for service with Seller
for purposes of determining the level of vacation benefit to which such
Transferred Employee is eligible under Buyer vacation policy.
9.5 EMPLOYMENT TAXES. Seller shall be responsible for any withholding or
employment Taxes with respect to any of the Transferred Employees which accrue,
arise from or become payable during the period of such person's employment or
service with Seller or arise out of the termination of such person's employment
or service with Seller, and shall indemnify and hold Buyer harmless against the
same. Seller shall be responsible for filing all federal, state and local
employment Tax returns with respect to such Transferred Employees attributable
to periods of employment or service with Seller.
9.6 NO SOLICITATION OF FORMER EMPLOYEES. For a period of three (3) years
after the Closing Date, Seller shall not solicit or encourage, directly or
indirectly any Transferred Employee to terminate his employment with Buyer or to
become an employee of or consultant to Seller, without the prior written consent
of Buyer; provided, that, notwithstanding the foregoing, Seller may at any time
make general solicitations for employment to persons, including Transferred
Employees. General solicitations shall include any solicitations for employment
by Seller that is not targeted primarily to one or more of the Transferred
Employees.
9.7 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 Seller or of any of
its Affiliates in respect of continued employment (or resumed employment) with
either Buyer or the Consulting Business or any of their Affiliates and no
provision of this Article 9 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 any plan or arrangement which may be established by Buyer or
any of its Affiliates. No provision of this Agreement shall constitute a
limitation or restriction on any rights to amend, modify or terminate after the
Transferred Employee Hire Date or the Closing Date any such plans or
arrangements of Buyer or any of its Affiliates, or to terminate the employment
of any Transferred Employee.
9.8 WARN ACT. In the event that Seller effects a reduction or cessation of
the operations or workforce prior to or subsequent to the Initial Closing Date,
Seller shall perform and undertake all acts as may be necessary to comply with
the applicable provisions of the WARN Act (as defined in Section 3.26 hereof)
and laws or if such acts are not performed, pay and perform all liabilities and
penalties under the WARN Act (including any liabilities with regard to any
Transferred Employees).
ARTICLE 10
CONDITIONS TO INITIAL CLOSING
10.1 INITIAL CLOSING. The initial closing (the "INITIAL CLOSING") will
have occurred upon the date (the "INITIAL CLOSING DATE") on which all of the
conditions to the Initial Closing set forth in Section 10.2 and Section 10.3 are
either satisfied or waived in writing by the appropriate party prior to such
Initial Closing.
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10.2 CONDITION TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Initial Closing is subject to the satisfaction (or waiver in
writing by Buyer prior to Initial Closing) of the following further conditions:
(a) Seller Covenants; Representations and Warranties. (i) Seller shall
have performed in all material respects all of its covenants and obligations in
this Agreement required to be performed by it on or prior to the Initial Closing
Date, (ii) the representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by Seller pursuant
hereto shall be true and correct in all material respects (or in all respects,
to the extent any such representation and warranty is already qualified by
materiality) as of the Initial Closing, with the same force and effect as if
made as of the Initial Closing (other than such representations and warranties
that are expressly made as of another date) and (iii) Buyer shall have received
a certificate dated as of the date of the Initial Closing, and signed by an
authorized executive officer of Seller to the foregoing effect.
(b) No Material Adverse Change. From the Balance Sheet Date until the
date of the Initial Closing, there will have been no Material Adverse Change and
Buyer will have received a certificate to such effect, dated as of the date of
the Initial Closing, signed by an authorized executive officer of Seller.
(c) Corporate Approvals. This Agreement and the transactions
contemplated hereby, including the sale and transfer of the Purchased Assets by
Seller to Buyer on the terms and conditions set forth herein, shall have been
duly and validly approved and adopted by the written consent or vote of Seller's
Board of Directors.
(d) No Litigation. There shall not be threatened, instituted or pending
any action or proceeding by any Person before any Governmental Authority,
(i) seeking to restrain, prohibit or otherwise interfere with the ownership or
operation by Buyer or any of its Affiliates of all or any material portion of
the Purchased Assets, the Consulting Business or the business or assets of Buyer
or any of its Affiliates or to compel Buyer or any of its Affiliates to dispose
of all or any material portion of the Purchased Assets, the Consulting Business
or other assets of Buyer or any of its Affiliates or (ii) seeking to require
divestiture by Buyer or any of its Affiliates of any Purchased Assets.
(e) No Legal Restraints. There shall not be any action taken, or any
statute, rule, regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the purchase of the
Purchased Assets, by any Governmental Authority that, in the reasonable judgment
of Buyer could, directly or indirectly, result in any of the consequences
referred to in clauses 10.2(d)(i) and 10.2(d)(ii) above.
(f) Buyer's Lease and Seller Operating Leases. Buyer and the Landlord
shall have entered into and delivered the Buyer's Lease and the Watertown Lease
Release. Seller shall have transferred and assigned to Buyer, and Buyer shall
have assumed the Seller Operating Leases pursuant to Section 7.4(b) hereof.
(g) Required Consents. Seller shall have received and delivered to Buyer
all Required Consents listed on SCHEDULE 10.2(G) hereto, and all required
consents, authorizations or approvals from any Governmental Authorities, in form
and substance reasonably satisfactory to Buyer, and no such consent,
authorization or approval shall have been revoked.
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(h) TRANSFERRED EMPLOYEES. At least ninety percent (90%) of the Seller
Employees identified on SCHEDULE 9.1(A) attached hereto shall have accepted
employment with Buyer and executed and delivered to Buyer the Employment Offer
Letter, and all of the Seller Key Management Employees identified on
SCHEDULE 9.1(B) attached hereto and executed and delivered to Buyer the
Employment Agreement or the Employment Offer Letter as reflected on such
SCHEDULE 9.1(B).
(i) SELLER CLOSING CONSENTS; ADVIS ASSIGNMENT. The Mengwall Loan Consent
Agreement shall have been executed and delivered to Buyer by Seller and the
Lender, and shall be in effect and binding on the parties thereto, subject to
the terms and conditions set forth therein. The Factor Lender Consent shall have
been executed and delivered to Buyer by Seller and the Factor Lender, and shall
be in effect and binding on the parties thereto. Each of the Capital Lessors'
Consents shall have been executed by each of the lessors under the Seller
Capital Leases, and shall be in effect and binding on the parties thereto,
subject to the terms and conditions set forth therein. Buyer shall have received
the Advis Assignment duly executed by Advis.
(j) SELLER LEASE AGREEMENTS. The real property leases for the property
located at (i) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, and (ii) ▇▇▇▇ ▇▇ the Green, ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ (the "SELLER LEASE AGREEMENTS") shall have been
terminated under terms and conditions reasonably acceptable to Buyer and Seller,
and each of the lessors thereunder shall have released all claims against Seller
relating to any and all Liabilities incurred or arising under the applicable
Seller Lease Agreement for periods prior to and including the effective
termination date thereof, it being acknowledged by the Parties that Buyer is not
assuming any Liability or other obligation under the Seller Lease Agreements in
connection with this Agreement or the transactions contemplated by this
Agreement.
10.3 CONDITION TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Initial Closing is subject to the satisfaction (or waiver in
writing by Seller prior to Closing) of the following further conditions:
(a) BUYER COVENANTS; REPRESENTATIONS AND WARRANTIES. (i) Buyer shall
have performed in all material respects all of its covenants and obligations in
this Agreement required to be performed by it on or prior to the Initial Closing
Date, (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto shall be true and correct in all material respects (or in all respects,
to the extent any such representation and warranty is already qualified by
materiality) as of the Initial Closing, with the same force and effect as if
made as of the Initial Closing (other than such representations and warranties
that are expressly made as of another date) and (iii) Seller shall have received
a certificate dated as of the date of the Initial Closing, and signed by an
authorized executive officer of Buyer to the foregoing effect.
(b) BUYER'S LEASE. Buyer and the Landlord shall have entered into and
delivered the Buyer's Lease and the Watertown Lease Release.
ARTICLE 11
CONDITIONS TO CLOSING
11.1 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER. The obligations of
Buyer and Seller to consummate the Closing are subject to the satisfaction (or
waiver in writing by each Party prior to Closing) of the following condition:
(a) COMPLIANCE WITH LAW. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.
(b) SELLER STOCKHOLDER APPROVALS. The Seller Stockholder Approvals shall
have been validly obtained.
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11.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction (or waiver in writing by
Buyer prior to Closing) of the following further conditions:
(a) SELLER COVENANTS; REPRESENTATIONS AND WARRANTIES. (i) Seller shall
have performed in all material respects all of its covenants and obligations in
this Agreement required to be performed by it on or prior to the Closing Date,
except where the failure to so perform could not be expected to result in a
Closing Material Adverse Effect, (ii) the representations and warranties of
Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto shall be true and correct in all material
respects (or in all respects, to the extent any such representation and warranty
is already qualified by materiality) as of the Closing, with the same force and
effect as if made as of the Closing (other than such representations and
warranties that are expressly made as of another date), except where the failure
of a representation or warranty to be true and correct could not be expected to
result in a Closing Material Adverse Effect and (iii) Buyer shall have received
a certificate dated as of the date of the Closing, and signed by an authorized
executive officer of Seller to the foregoing effect.
(b) NO CLOSING MATERIAL ADVERSE EFFECT. From the Balance Sheet Date
until the date hereof, there will have been no Closing Material Adverse Effect
and Buyer will have received a certificate to such effect, dated as of the date
of the Closing, signed by an authorized executive officer of Seller.
(c) CORPORATE APPROVALS. This Agreement and the transactions
contemplated hereby, including the sale and transfer of the Purchased Assets by
Seller to Buyer on the terms and conditions set forth herein, shall have been
duly and validly approved and adopted by the written consent or vote of Seller's
Board of Directors.
(d) NO LITIGATION. There shall not be threatened, instituted or pending
any action or proceeding by any Person before any Governmental Authority,
(i) seeking to restrain, prohibit or otherwise interfere with the ownership or
operation by Buyer or any of its Affiliates of all or any material portion of
the Purchased Assets, the Consulting Business or the business or assets of Buyer
or any of its Affiliates or to compel Buyer or any of its Affiliates to dispose
of all or any material portion of the Purchased Assets, the Consulting Business
or other assets of Buyer or any of its Affiliates or (ii) seeking to require
divestiture by Buyer or any of its Affiliates of any Purchased Assets.
(e) NO LEGAL RESTRAINTS. There shall not be any action taken, or any
statute, rule, regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the purchase of the
Purchased Assets, by any Governmental Authority that, in the reasonable judgment
of Buyer could, directly or indirectly, result in any of the consequences
referred to in clauses 11.2(d)(i) and 11.2(d)(ii) above.
(f) SELLER'S COUNSEL LEGAL OPINIONS. Buyer shall have received the
opinion letter of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel to Seller dated the date of
the Closing, substantially in the form of EXHIBIT H attached hereto.
(g) INTELLECTUAL PROPERTY LICENSE AGREEMENT. Seller shall have duly
executed and delivered to Buyer the Intellectual Property License Agreement
between Seller and Buyer substantially in the form of EXHIBIT I attached hereto
(the "LICENSE AGREEMENT").
(h) BUYER'S LEASE AND SELLER OPERATING LEASES. Buyer and the Landlord
shall have entered into and delivered the Buyer's Lease and the Watertown Lease
Release. Seller shall have transferred and assigned to Buyer, and Buyer shall
have assumed the Seller Operating Leases pursuant to Section 7.4(b) hereof.
(i) REQUIRED CONSENTS. Seller shall have received all Required Consents
listed on SCHEDULE 10.2(G) hereto, and all required consents, authorizations or
approvals from any Governmental
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Authorities, in form and substance reasonably satisfactory to Buyer, and no such
consent, authorization or approval shall have been revoked.
(j) INTELLECTUAL PROPERTY ASSIGNMENTS. Seller shall have executed and
deliver to Buyer (i) assignments from Seller to Buyer of all registered and
unregistered trademarks and service marks included in the Purchased Assets, duly
executed on behalf of Seller by a duly authorized officer of Seller and
notarized, and in a form acceptable for recording with the United States Patent
and Trademark Office and in substantially the form of the Trademark Assignment
attached hereto as EXHIBIT J (the "TRADEMARK ASSIGNMENT"); and (ii) assignments
from Seller to Buyer of all Internet domain names, URLs and registrations
thereof that are included in the Purchased Assets, executed on behalf of Seller
by a duly authorized officer of Seller and notarized, in substantially the form
of the Domain Name Assignment in attached hereto as EXHIBIT K (the "DOMAIN NAME
ASSIGNMENT").
(k) ESTIMATED CLOSING BALANCE SHEET. Seller shall have timely delivered
to Buyer the Estimated Closing Balance Sheet and the Estimated Closing Balance
Sheet Certificate executed by the Chief Financial Officer of Seller.
(l) SELLER CLOSING SCHEDULES. Buyer shall have received
(i) SCHEDULE 2.1(F) (update as of the Closing Date), (ii) SCHEDULE 2.3(A)
updated as of the Closing Date, (iii) SCHEDULE 2.3(C) updated as of the Initial
Closing Date, (iv) SCHEDULE 2.3(D) updated as of the Closing Date,
(v) SCHEDULE 2.3(E) updated as of the Closing Date, (vi) SCHEDULE 2.3(F) updated
as of the Closing Date, (vii) SCHEDULE 2.3(G) updated as of the Closing Date,
(viii) SCHEDULE 2.6(A)(II) updated as of the Closing Date,
(ix) SCHEDULE 3.13(B) updated as of the Closing Date, (x) SCHEDULE 3.13(C)
updated as of the Closing Date, and (xi) SCHEDULE 7.2, updated as of the Closing
Date.
(m) DISCHARGE OF LIENS. All Liens (other than Permitted Liens) on or
pertaining to the Purchased Assets (other than Liens constituting Assumed
Liabilities) shall have been fully discharged or terminated by Seller, and Buyer
shall have received written documentation which reasonably confirms the same.
(n) SELLER CLOSING CONSENTS, ADVIS ASSIGNMENT. The Mengwall Loan Consent
Agreement shall have been executed and delivered to Buyer by Seller and the
Lender, and shall be in effect and binding on the parties thereto. The Factor
Lender Consent shall have been executed and delivered to Buyer by Seller and the
Factor Lender, and shall be in effect and binding on the parties thereto. Each
of the Capital Lessors' Consents shall have been executed by each of the lessors
under the Seller Capital Leases, and shall be in effect and binding on the
parties thereto. Buyer shall have received the Advis Assignment duly executed by
Advis.
(o) SELLER CLOSING DELIVERABLES. Seller shall have delivered to Buyer
the documents and items to be delivered to Buyer Seller as provided in
Section 2.6(b).
11.3 CONDITIONS TO OBLIGATION OF SELLER. THE OBLIGATION OF SELLER TO
CONSUMMATE THE CLOSING IS SUBJECT TO THE SATISFACTION (OR WAIVER IN WRITING BY
SELLER PRIOR TO CLOSING) OF THE FOLLOWING FURTHER CONDITIONS:
(A) BUYER COVENANTS; REPRESENTATIONS AND WARRANTIES. (i) Buyer shall
have performed in all material respects all of its covenants and obligations in
this Agreement required to be performed by it on or prior to the Closing Date,
(ii) the representations and warranties of Buyer contained in this Agreement and
in any certificate or other writing delivered by Buyer pursuant hereto shall be
true and correct in all material respects (or in all respects, to the extent any
such representation and warranty is already qualified by materiality) as of the
Closing, with the same force and effect as if made as of the Closing (other than
such representations and warranties that are expressly made as of another date)
and (iii) Seller shall have received a certificate dated as of the date of the
Closing, and signed by an authorized executive officer of Buyer to the foregoing
effect.
(b) INTELLECTUAL PROPERTY AND WEB SITE LICENSE AGREEMENT. Buyer shall
have executed and delivered to Seller the License Agreement between Seller and
Buyer attached hereto.
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(c) BUYER'S LEASE. Buyer and the Landlord shall have entered into and
delivered the Buyer's Lease and the Watertown Lease Release.
(d) BUYER CLOSING DELIVERABLES. Buyer shall have paid the Closing Cash
Consideration to Seller and delivered the other documents to be delivered to
Seller by Buyer as provided in Section 2.6(a).
ARTICLE 12
SURVIVAL; INDEMNIFICATION
12.1 SURVIVAL. The representations and warranties of the Parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing.
12.2 INDEMNIFICATION.
(a) SELLER INDEMNIFICATION. Subject to the limitations set forth in this
Article 12, Seller hereby indemnifies Buyer and any present or future officer,
director, employee, Affiliate, stockholder or agent of Buyer (collectively, the
"BUYER INDEMNITEES") against and agree to hold each of them harmless from any
and all damage, loss, liability, fine, penalty and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding) (reduced by the
actual Tax benefit claimed by a Party as a result thereof, such Tax benefit
being determined after taking into account the effect of recovery under this
Article 12 and calculated at such Party's incremental effective rate of Tax)
("DAMAGES") incurred or suffered by Buyer or any other Buyer Indemnitees arising
out of or related to:
(i) any misrepresentation or breach of a representation, warranty,
covenant or agreement made or to be performed by Seller pursuant to this
Agreement or any Seller Ancillary Agreement;
(ii) any Consulting Business Receivables which are (1) reasonably
determined by Buyer to be uncollectable prior to the First Release Date (as
defined below), or (2) following the First Release Date and prior to the Second
Release Date (as defined below) are reasonably determined by Buyer to be
uncollectable or are uncollected;
(iii) any Excluded Asset or any Excluded Liability or any Retained
Liability;
(iv) any Liability arising from any demand, claim, debt, suit, cause
of action or proceeding made or asserted by a stockholder, creditor, receiver,
or trustee in bankruptcy of Seller, or of the property or assets of either,
asserting that the transfer of the Purchased Assets to Buyer hereunder or the
transaction contemplated by this Agreement constitutes a fraudulent conveyance,
fraudulent transfer or a preference or similar claim under any applicable state
or federal law, including but not limited to the United States Bankruptcy Code
("SOLVENCY CLAIMS");
(v) any Liabilities or obligations to or claims by any stockholders
of Seller arising from or related to the consummation of the transactions
contemplated hereby ("STOCKHOLDER CLAIMS"); and
(vi) any Liability arising from any and all Transaction Taxes
payable by Seller pursuant to Section 8.1.
In the event that Buyer has fully set-off against the Deferred Amount in respect
of any Consulting Business Receivables determined by it to be uncollected or
uncollectable pursuant to a Claim for indemnification under
Section 12(a)(ii) above, then following such recovery and upon written notice
from Seller, Buyer will promptly assign to Seller such Consulting Business
Receivables ("ASSIGNED RECEIVABLES"). Buyer further agrees to promptly remit to
Seller any payment received by it in respect of any Assigned Receivables. The
Parties agrees to execute such documents and assignments as may be necessary to
carry into effect the effect and intent of this provision of Section 12.2(a).
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(b) BUYER INDEMNIFICATION. Subject to the limitations set forth in this
Article 12, Buyer hereby indemnifies Seller and any present or future officer,
director, employee, Affiliate, stockholder or agent of Seller (collectively, the
"SELLER INDEMNITEES") against and agrees to hold each of them harmless from any
and all Damages incurred or suffered by Seller or any other Seller Indemnitees
arising out of or related to (i) any misrepresentation or breach of a
representation, warranty, covenant or agreement made or to be performed by Buyer
pursuant to this Agreement or any Buyer Ancillary Agreement (including a
misrepresentation or breach of Buyer under Section 2.7 of this Agreement), or
(ii) any Assumed Liabilities.
12.3 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(a) BASKET. In no event shall Seller incur any liability for
indemnification under this Article 12 unless and until the aggregate amount of
all Damages incurred by any Buyer Indemnitees for which such Buyer Indemnitees
seek indemnification under Section 12.2(a) hereof exceeds the cumulative
aggregate amount of Fifty Thousand United States Dollars (U.S.$50,000);
PROVIDED, HOWEVER, that when the aggregate amount of all such Damages incurred
by any Buyer Indemnitees exceeds Fifty Thousand Dollars ($50,000), then Seller
shall thereafter be liable for all Damages (including the such Fifty Thousand
United States Dollars (U.S.$50,000) of such Damages); PROVIDED, FURTHER, that
the foregoing limitation shall not apply to any claims arising from or related
to (i) intentional misrepresentation or fraud (including fraudulent
concealment), (ii) any Excluded Asset or Excluded Liabilities, (iii) any
Solvency Claims or Stockholder Claims, or (iv) a misrepresentation or breach of
a representation, warranty or covenant of Seller arising under Sections 2.6(b),
2.7 or 3.13(a) of this Agreement (collectively, "SPECIAL SELLER CLAIMS"). In no
event shall Buyer incur any liability for indemnification under this Article 12
unless and until the aggregate amount of all Damages incurred by any Seller
Indemnitees for which such Seller Indemnitees seek indemnification under
Section 12.2(b) hereof exceeds the cumulative aggregate amount of Fifty Thousand
United States Dollars (U.S.$50,000); PROVIDED, HOWEVER, that when the aggregate
amount of all such Damages incurred by any Seller Indemnitees exceeds Fifty
Thousand United States Dollars (U.S.$50,000), then the Buyer shall thereafter be
liable for all Damages (including the such Fifty Thousand United States Dollars
(U.S.$50,000) of such Damages); PROVIDED, FURTHER, that the foregoing limitation
shall not apply to any claims arising from or related to (i) intentional
misrepresentation or fraud (including fraudulent concealment), (ii) any Assumed
Liabilities, or (iii) a misrepresentation or breach of a representation,
warranty or covenant of Buyer arising under Sections 2.6(a) or 2.7 of this
Agreement (collectively, "SPECIAL BUYER CLAIMS").
(b) PERIOD FOR MAKING CLAIMS. Notwithstanding anything herein to the
contrary, no Claim for Damages under this Article 12 may be brought after the
Second Release Date; PROVIDED, HOWEVER, that (i) Special Seller Claims,
(ii) Special Buyer Claims, (iii) Claims for a breach of a covenant of Seller
under Sections 5.7, 7.1, 7.2, 7.3, 7.5, 7.7, 7.9, 9.2, 9.3, 9.5 and 9.6, and
Article 8, and (iv) Claims for a breach of a covenant of Buyer under Sections
7.2, 7.3, 7.4, 9.1, and 9.4, and Article 8, may be brought at any time until
expiration of the statute of limitations applicable to the matters covered
thereby (giving effect to any waiver, mitigation, or extension thereof); and
PROVIDED, FURTHER, that any Claim properly asserted by a Buyer Indemnitee or
Seller Indemnitee prior to the Second Release Date may thereafter be prosecuted
and arbitrated as provided in this Article 12 and recovery on such Claim may be
had by the such indemnified party as provided herein.
12.4 CLAIM; NOTICE OF CLAIM. As used herein, the term "CLAIM" means a
claim for indemnification for Damages against the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") made by a party seeking
indemnification hereunder (the "INDEMNIFIED PARTY") (on its own behalf and/or on
behalf of its respective present or future officers, directors, employees,
Affiliates, shareholders or agents (the "INDEMNITEES") pursuant to this
Article 12. Buyer (and only Buyer or its successors) may give notice of a Claim
under this Agreement for indemnification for Damages incurred by Buyer or any
other Buyer Indemnitee and only Buyer may prosecute and arbitrate a Claim on
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behalf of Buyer or any other Buyer Indemnitee under this Article 12. Seller (and
only Seller or its successors) may give notice of a Claim under this Agreement
for indemnification for Damages incurred by Seller or any other Seller
Indemnitee, and only Seller may prosecute and arbitrate a Claim on behalf of
Seller or any other Seller Indemnitee under this Article 12. The Indemnified
Party will give written notice of a Claim executed by an officer of the
Indemnified Party (a "NOTICE OF CLAIM") to the Indemnifying Party promptly after
the Indemnified Party becomes aware of the existence of any potential claim by
the Indemnified Party or any of its Indemnitees for indemnification from the
Indemnifying Party under this Article 12 arising from or relating to (i) any
item listed in Section 12.2, or (ii) the assertion, whether orally or in
writing, against the Indemnified Party or any of its Indemnitees of a claim,
demand, suit, action, arbitration, investigation, inquiry or proceeding brought
by a third party against such Indemnified Party or any of its Indemnitees that
is based upon, or includes assertions relating to (in each such case, a
"THIRD-PARTY CLAIM") any item for which such Indemnified Party or its
Indemnitees is entitled to indemnification under Section 12.2(a) or 12.2(b), as
applicable. No delay on the part of an Indemnified Party in giving the
Indemnifying Party a Notice of Claim will relieve the Indemnifying Party from
any of its obligations under this Article 12 unless (and then only to the
extent) the Indemnifying Party is materially prejudiced thereby with respect to
such Claim. The assertion of any single Claim by a Party hereunder will not bar
such Party from asserting any other Claim or Claims hereunder.
12.5 CONTENTS OF NOTICE OF CLAIM. Each Notice of Claim by the Indemnified
Party or any given pursuant to Section 12.4 will contain the following
information:
(a) a good faith estimate of the reasonably foreseeable maximum amount
of the alleged Damages arising from such Claim (which amount may be the amount
of damages claimed by a third party in an action brought against such
Indemnified Party based on alleged facts, which if true, would give rise to
liability for Damages to such Indemnitee under this Article 12); and
(b) a brief description, in reasonable detail (to the extent reasonably
available to such Indemnified Party), of the facts, circumstances or events
giving rise to the alleged Damages based on such Indemnified Party's good faith
belief thereof, including the identity and address of any third-party claimant
(to the extent reasonably available to such Indemnified Party) and copies of any
formal demand or complaint.
12.6 DEFENSE OF THIRD-PARTY CLAIMS. In the case of any Third-Party Claim
that may give rise to a claim for indemnification pursuant to this Article 12,
the Indemnified Party shall defend, and shall have the right to compromise or
settle and select counsel for, any Third Party Claim and the costs and expenses
incurred by Indemnified Party in connection with such defense (including, but
not limited to, reasonable attorney's fees, other professionals' and experts'
fees and court or arbitration costs) will be included in the Damages for which
the Indemnified Party and the other Indemnitees may seek indemnity pursuant to a
demand for indemnification made hereunder. The Indemnifying Party shall have the
right to receive copies of all pleadings, notices and communications with
respect to any Third Party Claim to the extent that receipt of such documents by
the such Indemnifying Party does not affect any privilege relating to
Indemnified Party or the other Indemnitees, and may at its sole expense
participate in the defense of any claim or demand with its own counsel or in any
settlement negotiations with respect to the Third Party Claim. The Indemnified
Party shall not enter into any settlement of a Third Party Claim without the
prior written consent of Indemnifying Party, which consent shall not be
unreasonably withheld, PROVIDED, that if Indemnifying Party shall have consented
in writing to any such settlement, then the Indemnifying Party shall have no
power or authority to object to any demand for indemnification by the
Indemnified Party for the amount of such settlement and Indemnifying Party will
remain responsible to indemnify the Indemnified Party for all Damages they may
incur arising out of, resulting from, or caused by, the Third Party Claim to the
fullest extent provided in this Article 12.
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12.7 RESOLUTION OF CLAIMS. Any Notice of Claim received by an Indemnifying
Party pursuant to Sections 11.4 and 11.5 will be resolved as follows:
(a) UNCONTESTED CLAIMS. In the event that, within ten (10) calendar days
after a Notice of Claim is received by an Indemnifying Party pursuant to
Sections 11.4 and 11.5, such Indemnifying Party does not contest such Notice of
Claim in writing to the Indemnified Party as provided in Section 12.7(b) (an
"UNCONTESTED CLAIM"), such Indemnifying Party will be conclusively deemed to
have consented to the recovery by the Indemnified Party of the full amount of
such Damages specified in the Notice of Claim in accordance with this
Article 12 (which recovery, in the case of a recovery by Buyer on behalf of
itself or another Buyer Indemnitee, may be made by Buyer's retention (and
Seller's forfeit of any right to receive) of the appropriate portion of the
Deferred Amount), subject to the limitations on a party's indemnification
Liabilities set forth in this Article 12, and, without further notice, to have
stipulated to the entry of a final judgment for damages against the Indemnifying
Party for such amount in any court having jurisdiction over the matter where
venue is proper.
(b) CONTESTED CLAIMS. In the event that the Indemnifying Party gives the
Indemnified Party bringing such Claim written notice contesting all or any
portion of a Notice of Claim (a "CONTESTED CLAIM") within the ten (10) day
period specified in Section 12.7(a), then the Parties and such shall attempt in
good faith for a period of twenty (20) days to agree upon the rights of the
respective parties with respect to such Contested Claim. If no such agreement
can be reached after good faith negotiation, either party may submit the matter
to binding arbitration in accordance with the provisions of Section 12.7(c).
(c) ARBITRATION OF CONTESTED CLAIMS. Each of Buyer and Seller agrees
that any Contested Claim that is not resolved in accordance with
Section 12.7(b) will be submitted to mandatory, final and binding arbitration
before under the Commercial Arbitration Rules of the American Arbitration
Association or its successor (the "AAA"), pursuant to the United States
Arbitration Act, 9 U.S.C., Section 1 ET SEQ. and that any such arbitration will
be conducted in Boston, Massachusetts. In the event the AAA ceases to provide
arbitration services, then the term "AAA" shall thereafter mean and refer to
J.A.M.S./ENDISPUTE or its successor ("J.A.M.S."). Either Buyer or Seller may
commence the arbitration process called for by this Agreement by filing a
written demand for arbitration with the AAA and giving a copy of such demand to
each of the other parties to this Agreement. The arbitration will be conducted
by a single arbitrator in accordance with the provisions of the commercial
arbitration rules of the AAA then in effect (or, if AAA then means the J.A.M.S.,
J.A.M.S' Streamlined Arbitration Rules and Procedures in effect at the time of
filing of the demand for arbitration), subject to the provisions of this
Section 12.7(c); PROVIDED, HOWEVER, that if the amount sought to be recovered in
the Claim being arbitrated exceeds Two Hundred Fifty Thousand United State
Dollars (U.S.$250,000) then the arbitration will be conducted by a panel of
three (3) arbitrators consisting of one (1) arbitrator chosen by the
Indemnifying Party, one (1) arbitrator chosen by the Indemnified Party and one
(1) arbitrator unanimously chosen by the two (2) arbitrators just mentioned that
were selected by the Indemnified Party and the Indemnifying Party, and the
majority decision of such three arbitrators shall constitute the decision of
such arbitration panel entitled to render the Final Award (as defined below) in
such arbitration. The Parties will cooperate with the AAA and with each other in
promptly selecting a single arbitrator from AAA's roster of neutrals, and in
scheduling the arbitration proceedings in order to fulfill the provisions,
purposes and intent of this Agreement. The Parties covenant that they will
participate in the arbitration in good faith, and that they will share in its
costs in accordance with subparagraph (i) below. The provisions of this
Section 12.7(c) may be enforced by any court of competent jurisdiction. Subject
to the provisions of subparagraph (vii) below, judgment upon the Final Award or
any other final finding rendered by the arbitrator in the arbitration may be
entered in any court having competent jurisdiction.
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(i) PAYMENT OF COSTS. The Indemnified Party, on the one hand, and
the Indemnifying Party, on the other hand, will bear the expense of
deposits and advances required by the arbitrator in equal proportions,
but either party may advance such amounts, subject to recovery as an
addition or offset to any award. The arbitrator shall determine in the
Final Award (as defined below) the party who is the prevailing party (the
"PREVAILING PARTY") and the party who is not the Prevailing Party (the
"NON-PREVAILING PARTY"). The Non-Prevailing Party shall pay all
reasonable costs, fees and expenses related to the arbitration, including
reasonable fees and expenses of attorneys, accountants and other
professionals incurred by the Prevailing Party, the fees of the
arbitrator and the administrative fee of the arbitration proceedings. If
such an award would result in manifest injustice, however, the arbitrator
may apportion such costs, fees and expenses between such parties in such
a manner as the arbitrator deems just and equitable.
(ii) BURDEN OF PROOF. Except as may be otherwise expressly provided
herein, for any Contested Claim submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a judicial
proceeding governed exclusively by the internal laws of the State of
Delaware applicable to Contracts executed and entered into within the
State of
Delaware, without regard to the principles of choice of law or
conflicts of law of any jurisdiction.
(iii) AWARD. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of
law and a final written arbitration award setting forth the basis and
reasons for any decision reached (the "FINAL AWARD") and will deliver
such documents to the Indemnified Party and the Indemnifying Party,
together with a signed copy of the Final Award. Subject to the provisions
of subparagraph (vii) below, the Final Award will constitute a conclusive
determination of all issues in question (including any award of Damages),
binding upon the Indemnified Party and the Indemnifying Party, and will
include an affirmative statement to such effect. To the extent that the
Final Award determines that an Indemnified Party or any of its
Indemnitees has suffered or incurred Damages in connection with the
Contested Claim through the date of the Final Award ("AWARDED DAMAGES"),
the Final Award will set forth and award to the Indemnified Party the
amount of such Awarded Damages.
(iv) TIMING. The Indemnified Party, the Indemnifying Party and the
arbitrator will conclude each arbitration pursuant to this Section 12.7
as promptly as reasonably possible for the Contested Claim being
arbitrated.
(v) TERMS OF ARBITRATION. The arbitrator chosen in accordance with
these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of
this Agreement.
(vi) EXCLUSIVE PROCESS. Following the Closing Date, except as
specifically otherwise provided in this Agreement (including without
limitation the provisions of Section 12.9), and except as the parties may
otherwise agree pursuant to a written settlement or other agreement
between themselves), arbitration conducted in accordance with this
Agreement will be the sole and exclusive method of resolving any Claim
for indemnification made pursuant to this Article 12, other than any
Claim arising from fraud or intentional misrepresentation of a party.
(vii) TREATMENT OF DAMAGES. Upon issuance and delivery of the Final
Award as provided in subparagraph 11.7(c)(iii) above, Buyer will
immediately be entitled to recover as provided in subparagraph 11.7(e)
below the amount of any Awarded Damages awarded to Buyer or other Buyer
Indemnitee under such Final Award.
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(d) Settled Claims.If a Claim (including a Contested Claim) is settled
by a written settlement agreement executed by Buyer and the Seller (a "SETTLED
CLAIM"), then such parties shall resolve such Settled Claim as provided in such
settlement agreement.
(e) Payment of Damages.Any Damages that (i) the parties have agreed are
to be awarded to Buyer or any other Buyer Indemnitee pursuant to a Settled Claim
or (ii) have been awarded to Buyer or any other Buyer Indemnitee pursuant to a
Final Award of an arbitration conducted pursuant to this Section 12.7, and any
other Damages payable by Seller to Buyer or any other Buyer Indemnitee pursuant
to an Uncontested Claim or otherwise under this Article 12, shall be paid to
Buyer or such Buyer Indemnitee (as the case may be): (A) first, by Buyer's
reduction and set-off of an amount of the Deferred Amount, if any then remains,
equal to the amount of such Damages and Seller's forfeiture of any future right
to receive such amount of the Deferred Amount, and (B) only to the extent that
the then-current Deferred Amount, if any, is not equal to or greater than the
amount of such Damages, by Seller to Buyer directly in cash, subject to the
limits on the indemnification Liabilities of Seller set forth in Section 12.3.
Buyer will notify Seller in writing of any such reduction and set-off of the
Deferred Amount as promptly as practicable thereafter.
12.8 RELEASE OF REMAINING DEFERRED AMOUNT. Within seven (7) calendar days
following the sixtieth (60th) day following the Closing Date (the "FIRST RELEASE
DATE"), Buyer shall pay to Seller (i) Five Hundred Thousand United States
Dollars (U.S.$500,000) of the Deferred Amount, less (ii) that portion of the
Deferred Amount that has been previously set-off or is necessary to satisfy all
unsatisfied or disputed claims for Damages specified in any Notice of Claim
delivered to Seller before the First Release Date. Within seven (7) calendar
days following the one hundred and twentieth (120th) day following the Closing
Date (the "SECOND RELEASE DATE," together with the First Release Date, the
"RELEASE DATE"), Buyer shall pay to Seller (i) the portion of the Deferred
Amount not released to Seller on the First Release Date or set-off to satisfy
any claims for Damages on or prior to the First Release Date, less (ii) that
portion of the Deferred Amount that following the First Release Date has been
set-off or is necessary to satisfy all unsatisfied or disputed claims for
Damages specified in any Notice of Claim delivered to Seller before the Second
Release Date. If any Claims are pending but not resolved on the applicable
Release Date, then Buyer may retain possession and custody of that amount of the
Deferred Amount that equals the total maximum amount of Damages then being
claimed by Buyer in all such pending Claims.
12.9 EXCLUSIVE REMEDY; EQUITABLE RELIEF. The Parties agree that the rights
of the Parties to indemnification under this Article 12 shall be the sole and
exclusive rights and remedies of the Parties for the recovery of any Damages
relating to or arising under this Agreement, any Seller Ancillary Agreement or
any Buyer Ancillary Agreement; EXCEPT for any Damages arising from any Special
Seller Claims or any Special Buyer Claims, or claims related to or arising under
the Loan Agreement or the Management Services Agreement. Subject to the last
sentence of this Section 12.9, notwithstanding anything to the contrary in this
Agreement, the maximum Liability for any Claim of Damages made by a Buyer
Indemnitee relating to or arising under this Agreement or any Seller Ancillary
Agreement and a Buyer Indemnitee's sole and exclusive remedy therefor shall be
Buyer's right to retain and set off the Deferred Amount pursuant to Article 12,
except for Special Seller Claims and claims related to or arising under the Loan
Agreement or the Management Services Agreement. Subject to the last sentence of
this Section 12.9, notwithstanding anything to the contrary in this Agreement,
the maximum aggregate Liability for all Claims of Damages made by any Seller
Indemnitees relating to or arising under this Agreement or any Buyer Ancillary
Agreement shall be One Million United States Dollars (U.S.$1,000,000), except
for Special Buyer Claims and claims related to or arising under the Loan
Agreement or the Management Services Agreement. Nothing in this Agreement will
preclude or prevent any Party from seeking and obtaining equitable remedies or
relief not involving the recovery of money damages from any court of competent
jurisdiction (such as the remedies of injunctive relief or specific performance)
for any breach or violation of this Agreement.
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ARTICLE 13
TERMINATION
13.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Closing by the mutual written consent of Buyer and Seller.
13.2 UNILATERAL TERMINATION.
(a) Either Buyer or Seller, by giving written notice to the other, may
terminate this Agreement if a court of competent jurisdiction or other
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated hereby.
(b) Either Buyer or Seller, by giving written notice to the other, may
terminate this Agreement if the Closing shall not have occurred by midnight
Eastern Standard Time on March 31, 2002, in which case either Party, by giving
written notice to the other, may terminate this Agreement if the Closing shall
not have occurred by midnight Eastern Standard Time on March 31, 2002);
PROVIDED, FURTHER, that the right to terminate this Agreement pursuant to this
Section shall not be available to any party whose failure to perform in any
material respect any of its obligations or covenants under this Agreement
results in the failure of any condition set forth in Article 11 or if the
failure of such condition results from facts or circumstances that constitute a
breach of a representation or warranty or covenant made under this Agreement by
such party.
(c) Either Buyer or Seller may terminate this Agreement at any time
prior to the Closing if the Buyer (in the case of a termination by Seller) or
Seller (in the case of a termination by Buyer) has committed a material breach
of (i) any of such party's representations and warranties contained in this
Agreement or (ii) any of such party's covenants contained in this Agreement, and
has not cured such material breach within five (5) calendar days after the party
seeking to terminate this Agreement has given the other party written notice of
the material breach and its intention to terminate this Agreement pursuant to
this Section.
(d) Buyer, by giving written notice to Seller, may terminate this
Agreement if a Closing Material Adverse Effect shall occur.
(e) By Buyer, if the Board of Directors of Seller shall have withdrawn
or modified in a manner adverse to Buyer its approval of this Agreement or the
transactions contemplated hereunder, or shall have resolved to do any of the
foregoing.
(f) By Buyer, if Seller shall have materially and willfully breached the
Seller's obligations under the Loan Agreement or the Management Services
Agreement
(g) By Seller, if Buyer shall have materially and willfully breached the
Buyer's obligations under the Loan Agreement or the Management Services
Agreement.
13.3 LIABILITY FOR TERMINATION. Any termination of this Agreement under
Section 13.1 or Section 13.2 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
Termination of this Agreement by a Party (the "TERMINATING PARTY") in accordance
with the provisions of this Article (other than a termination governed by
Section 13.4 below) will not give rise to any obligation or liability on the
part of the Terminating Party on account of such termination, except as set
forth in Section 13.3, Section 13.4 and Article 14, each of which shall survive
termination of this Agreement; PROVIDED, HOWEVER, that nothing herein shall
relieve a party from liability for fraud or willful breach of this Agreement.
13.4 EXPENSES. If this Agreement is terminated by Buyer pursuant to
Section 13.2(c), Section 13.2(d) or Section 13.2(e), then Seller shall promptly
reimburse Buyer for its actual costs and
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expenses incurred in connection with its due diligence review, professional
advisory fees, document preparation, negotiation, execution, delivery and
performance of this Agreement and the related documents and agreements; PROVIDED
that Seller shall not be obligated to so reimburse Buyer as a result of a
termination of this Agreement by Buyer pursuant to Section 13.2(c) or
Section 13.2(d) if, and only if, (i) the material breach of the representation,
warranty or covenant was the result of events or matters outside of Seller's
control, or (ii) the Closing Material Adverse Effect was the result of events or
matters outside of Seller control.
ARTICLE 14
MISCELLANEOUS
14.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be given or made (and will
be deemed to have been duly given or made) (i) upon receipt, when delivered in
person or when delivered by telex or facsimile (to the telex or facsimile number
of the person to whom notice is given, provided that electronic confirmation of
receipt is obtained), (ii) upon receipt, when delivered by a courier service (as
shown by the records or such courier service), or (iii) on the earlier of actual
receipt or the third (3rd) Business Day following the date of deposit in the
United States mail, first class certified or registered mail, postage prepaid,
return receipt requested to the parties at the following addresses (or at such
other address for a party as will be specified by like notice):
if to Buyer, to:
Burntsand (New England) Inc.
c/o Burntsand Inc.
▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Burntsand Inc.
▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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if to Seller, to:
Primix Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
14.2 AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
14.3 EXPENSES. Except as set forth in Article 13 or as otherwise provided
herein, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not such transactions are consummated. Seller shall be
responsible for all fees and expenses incurred in connection with the printing
and filing with the SEC of the Proxy Statement (including any preliminary
materials related thereto) and any amendments or supplements thereto, and the
delivery of such materials to the Seller's stockholders.
14.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party hereto, except that Buyer may transfer or assign, in
whole or from time to time in part, to one or more of its Affiliates, the right
to purchase all or a portion of the Purchased Assets, but no such transfer or
assignment will relieve Buyer of its obligations hereunder.
14.5 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of
Delaware applicable to
contracts executed and performed entirely within the State of
Delaware, without
regard to the principles of choice of law or conflicts of law rules of such
state.
14.6 COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each Party hereto shall have received
a counterpart hereof signed by the other Party hereto. No provision of this
Agreement is intended to confer upon any Person other than the Parties hereto
any rights or remedies hereunder (other than the indemnification rights of Buyer
Indemnitees under Article 12).
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14.7 ENTIRE AGREEMENT. This Agreement, the Seller Ancillary Agreements,
the Buyer Ancillary Agreements constitute the entire agreement between the
Parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the Parties
with respect to the subject matter of this Agreement (including but not limited
to the letter from Buyer to Seller dated as of October 24, 2001).
14.8 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
14.9 SEVERABILITY. If any provision of this Agreement is for any reason
and to any extent deemed to be invalid or unenforceable, then such provision
shall not be voided but rather shall be enforced to the maximum extent then
permissible under then applicable law and so as to reasonably effect the intent
of the parties hereto, and the remainder of this Agreement will remain in full
force and effect. Nothing herein will be deemed to contradict the provisions of
Section 7.7 hereof.
14.10 PUBLIC ANNOUNCEMENT. Upon or following execution of this Agreement,
each Party may issue a press release, previously reviewed by the other Party and
with such other Party's consent, which shall not be unreasonably withheld,
announcing the transactions contemplated by this Agreement. Following execution
of this Agreement, the Parties agree to consult with each other before issuing
any other press release or making any other public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange (in which case the party subject to such requirement shall give prior
written notice of such requirement to the other party), will not issue any such
press release or make any such public statement prior to such consultation.
Following the Closing, each Party may issue such press releases, and make such
other disclosures, regarding the transaction completed hereunder as it
determines are required under applicable securities laws or regulatory rules.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
BURNTSAND (NEW ENGLAND) INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer and
Secretary
PRIMIX SOLUTIONS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
[SIGNATURE PAGE TO
ASSET PURCHASE AGREEMENT]
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