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CONDITIONAL SUBSCRIPTION AGREEMENT
Dated as of January 7, 2002
by and between
USINTERNETWORKING, INC.,
debtor and debtor-in-possession
and
USINTERNETWORKING HOLDINGS, INC.
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ARTICLE I PURCHASE AND SALE OF COMPANY COMMON STOCK........................................1
Section 1.01. Purchase and Sale of Company Common Stock.............................1
Section 1.02. The Closing...........................................................2
ARTICLE II COVENANTS........................................................................2
Section 2.01. Plan Confirmation Process.............................................2
Section 2.02. Plan Support Agreements...............................................4
Section 2.03. No Solicitation.......................................................4
Section 2.04. Access to Information; Confidentiality; Monthly Statements............6
Section 2.05. Commercially Reasonable Efforts; Notification.........................7
Section 2.06. Fees and Expenses.....................................................8
Section 2.07. Public Announcements.................................................10
Section 2.08. Minutes..............................................................10
ARTICLE III CONDITIONS PRECEDENT...........................................................10
Section 3.01. Conditions to Each Party's Obligation To Close.......................10
Section 3.02. Additional Conditions to Purchaser's Obligations.....................11
Section 3.03. Additional Conditions to Company's Obligations.......................14
ARTICLE IV TERMINATION, AMENDMENT AND WAIVER...............................................14
Section 4.01. Termination..........................................................14
Section 4.02. Effect of Termination................................................19
Section 4.03. Amendment............................................................19
Section 4.04. Extension; Waiver....................................................19
Section 4.05. Procedure for Termination, Amendment, Extension or Waiver............19
ARTICLE V GENERAL PROVISIONS...............................................................19
Section 5.01. Nonsurvival of Representations and Warranties........................19
Section 5.02. Notices..............................................................20
Section 5.03. Definitions..........................................................21
Section 5.04. Definitions Cross Reference Table....................................22
Section 5.05. Interpretation.......................................................24
Section 5.06. Severability.........................................................25
Section 5.07. Counterparts.........................................................25
Section 5.08. Entire Agreement; No Third-Party Beneficiaries.......................25
Section 5.09. Governing Law........................................................26
Section 5.10. Assignment...........................................................26
Section 5.11. Consent to Jurisdiction..............................................26
Section 5.12. Consents.............................................................27
Exhibit A-1 Plan of Reorganization
Exhibit A-2 Terms of Proposed Settlement with Holders of Convertible Subordinated Notes
Exhibit B Representations and Warranties of the Company
Exhibit C Representations and Warranties of the Purchaser
Exhibit D Form of Bidder Confidentiality Agreement
Schedule I Projections
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CONDITIONAL SUBSCRIPTION AGREEMENT ("Agreement") dated as of January 7,
2002, by and between USINTERNETWORKING, INC., a Delaware corporation, debtor and
debtor-in-possession (the "Company") under the Bankruptcy Case (as defined in
Section 5.03) in the Bankruptcy Court (as defined in Section 5.03), and
USINTERNETWORKING HOLDINGS, INC., a Delaware corporation (the "Purchaser").
WHEREAS, the Company wishes to issue and sell, and the Purchaser wishes
to purchase, upon the terms and conditions stated in this Agreement, an
aggregate of 81,250 shares of common stock, par value $0.001 per share, of the
Company (the "Company Common Stock") to be issued pursuant to the Plan of
Reorganization attached hereto as Exhibit A-1, as amended and completed in form
and substance mutually satisfactory to the Company and the Purchaser to (i)
provide for all U.S. Subsidiaries of the Company to file for bankruptcy
protection and reorganization under such Plan of Reorganization as part of a
consolidated plan of reorganization, (ii) reflect the terms and conditions set
forth in the Terms of Proposed Settlement with Holders of Convertible
Subordinated Notes attached hereto as Exhibit A-2 and (iii) complete the
provisions thereof to be completed prior to filing and the exhibits and
schedules thereto, including the forms of notes and warrant documentation, and
with such other changes, if any, and additions as the Company and the Purchaser
may mutually agree (the "Plan"), which such shares of Company Common Stock shall
constitute all of the outstanding capital stock of the Company upon the issuance
thereof following the confirmation of the Plan by the Bankruptcy Court;
WHEREAS, on January 7, 2002 (the "Petition Date") a petition (the
"Petition") was filed under Title ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the "Bankruptcy Code")
with the Bankruptcy Court commencing the Bankruptcy Case under such chapter and,
as a condition to the closing of the purchase of the Shares contemplated hereby,
the Company shall have obtained an order of the Bankruptcy Court confirming the
Plan; and
WHEREAS, the Company and the Purchaser desire to set forth certain
representations, warranties, covenants and agreements in connection with the
foregoing transactions and also to prescribe various conditions to such
transactions.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale of Company Common Stock
Section 1.01 Purchase and Sale of Company Common Stock. Subject to the
terms and conditions hereof, the Company agrees to issue to the Purchaser, and
the Purchaser agrees to purchase from the Company, on the Closing Date, 81,250
shares (the "Shares") of Company Common Stock at the purchase price of $1,000
per share, for an aggregate purchase price of $81,250,000.
Section 1.02 The Closing. Subject to the terms and conditions of this
Agreement, the issuance and purchase of the Shares as set forth in Section 1.01
shall take place at a closing (the "Closing") to be held at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇, at a time and on a date
jointly specified by the parties, which date shall be not later than five
business days after the satisfaction or waiver of all conditions precedent set
forth in Article III hereof, or at such other time and place as the Company and
the Purchaser may agree in writing (the day on which the Closing takes place
being referred to herein as the "Closing Date"). At the Closing, the Company
shall deliver to the Purchaser a certificate or certificates representing the
Shares to be issued in the Closing as set forth in Section 1.01 and the
Purchaser shall pay to the Company the purchase price therefor by wire transfer
of immediately available funds to the one or more accounts designated in writing
by the Company.
ARTICLE II
Covenants
Section 2.01 Plan Confirmation Process.
(a) The Company shall, as soon as reasonably practicable,
prepare and file with the Bankruptcy Court (i) a Disclosure Statement
with respect to the Plan meeting the requirements of Bankruptcy Code
Section 1125(b) (the "Disclosure Statement"); (ii) schedules and
statements of financial affairs meeting the requirements of Bankruptcy
Code Section 301 and Federal Rule of Bankruptcy Procedure 1007 (the
"Schedules and Statements"); and (iii) motions related to administration
of the Bankruptcy Case (the "First Day Motions") and motions related to
the approval of the Disclosure Statement by the Bankruptcy Court and
confirmation of the Plan (the "Approval Motions"). The First Day Motions
shall include a motion for Bankruptcy Court approval of this Agreement
and the Commitment Letter (the "Plan Procedure Motion"). The Plan, any
and all exhibits and attachments to the Plan, the Disclosure Statement,
the First Day Motions, including the Plan Procedure Motion, and the
Approval Motions shall be acceptable in form and substance to the
Purchaser and shall not be filed until consented to by the Purchaser.
(b) The Purchaser shall provide the Company with the
information concerning the Purchaser required to be included in the
Disclosure Statement.
(c) If the Company or any Company Subsidiary enters into a
debtor-in-possession financing facility or an agreement for use of cash
collateral, including the DIP Financing (as defined in the Plan) (a "DIP
Facility"), if the terms and conditions of such DIP Facility and the
Bankruptcy Court order authorizing the same shall include a carve-out,
which carve-out may be subject to generally applicable dollar
limitations, for the Company or any Company Subsidiary to pay any
expenses then such carve-out shall also cover the Company's payment of
the Post-Petition Purchaser Expenses described in Section 2.06(a) in a
manner no less favorable than the treatment of any of the Company's
legal, financial or other advisers' or professionals' fees and expenses.
The terms and
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conditions of any DIP Facility and the Bankruptcy Court order
authorizing the same shall be acceptable in form and substance to the
Purchaser and shall not be entered until consented to by the Purchaser.
(d) From the date of this Agreement to the earlier to occur
of the termination of this Agreement or the Closing, the Company shall
not, and shall not permit any Company Subsidiary to, do any of the
following without the prior consent of the Purchaser:
(i) consent to any relief from the automatic stay under
Section 362 of the Bankruptcy Code, except as otherwise
provided with respect to a DIP Facility;
(ii) file any amendment to the Plan, file any plan of
reorganization other than the Plan, consent to the
reduction of the exclusivity period under Bankruptcy
Code Section 1121 for the filing of a plan of
reorganization (the "Exclusivity Period") or fail timely
to file motions seeking to obtain orders of the
Bankruptcy Court extending the Exclusivity Period;
(iii) sell or abandon, or file any motion to sell or abandon,
any assets of the Company, other than sales to customers
in the ordinary course of business;
(iv) seek or consent to the conversion of the Bankruptcy Case
to a case under Chapter 7 of the Bankruptcy Code or the
appointment of a trustee or examiner under Bankruptcy
Code Section 1104;
(v) assume or reject, or have deemed assumed or rejected,
any contract, license, agreement, permit, concession,
franchise, real or personal property lease, sublease,
license or other occupancy agreement or other executory
arrangement or commitment of the Company or any of the
Company Subsidiaries (each, an "Executory Contract");
(vi) enter into any stipulation or agreement with the holder
of an Equipment Lease Secured Claim (as defined in the
Plan) which has elected "Alternative B" (as described in
Section 5.01 of the Plan) with respect to the amount or
treatment of such claim; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions.
(e) On or before January 15, 2002, the Company shall deliver
to the Purchaser a true, correct and complete list of all Executory
Contracts. The Purchaser and the Company shall negotiate in good faith
to develop the following lists, each of which shall be mutually
satisfactory in form and substance to the Purchaser and the Company: (i)
a list of which Executory Contracts shall be rejected (the "Rejection
List") and (ii) a list of those Executory Contracts for which a Final
Order authorizing assumption will be required as a condition to closing
(the "Required Contracts"). The orders submitted to
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the Bankruptcy Court authorizing (i) the assumption of all Required
Contracts and (ii) the rejection of all Executory Contracts specified
for rejection on the Rejection List shall be acceptable in form and
substance to the Purchaser and shall not be submitted to the Bankruptcy
Court for approval until consented to by the Purchaser.
(f) The Company acknowledges that it has reviewed and is
familiar with the terms and conditions of the Commitment Letter and, in
particular, the provisions of paragraph 3 of the Commitment Letter,
which provisions among other things limit and restrict the rights,
remedies and recourse of the Purchaser, the Company and third parties
against the Investor, and the liability of the Investor upon breach of
the Commitment Letter, as set forth therein (the "Liability Limitation
Provisions"). The Company, as debtor and debtor-in-possession, and the
Purchaser, each for itself and on behalf of its estate and its
successors and assigns (including without limitation any successor
Chapter 11 or Chapter 7 trustee), hereby irrevocably waives, releases
and forever renounces any rights it may have to challenge the
enforceability of, seek to amend, or negate the intended force and
effect of, the Liability Limitation Provisions, and acknowledges and
agrees that such provisions are fully enforceable and effective.
Section 2.02 Plan Support Agreements. The Company shall use commercially
reasonable efforts to cause, on or prior to the date of the hearing to approve
the Disclosure Statement, holders of the Company's claims classified as Class 5
Claims under the Plan who constitute at least one-half in number of such holders
and who hold in the aggregate at least two-thirds in amount of such obligations
to execute and deliver to the Company plan support agreements in form and
substance complying with Bankruptcy Code Section 1125 and otherwise satisfactory
to the Purchaser (the "Plan Support Agreements").
Section 2.03 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit
any Company Subsidiary to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other
advisor, agent or representative (collectively, "Representatives") of,
the Company or any Company Subsidiary to, (i) directly or indirectly
solicit, initiate or encourage the submission of any Alternative
Proposal (as defined in Section 2.03(e)), (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, or take any other action to
facilitate the making of, any proposal or expression of interest that
constitutes or is reasonably likely to lead to any Alternative Proposal
or (iii) enter into any agreement with respect to any Alternative
Proposal; provided, however, that so long as the Company is not
otherwise in breach of this Section 2.03, nothing in this Agreement
shall prohibit the Company or the Board of Directors of the Company (the
"Company Board") from taking any of the actions described in clause (ii)
of this subsection (a) (or prohibit the Company from entering into
confidentiality agreements as contemplated below), after approval by the
Bankruptcy Court of this Agreement (including, specifically, payment of
the Post-Petition Purchaser Expenses and the Transaction Fee as
contemplated by Sections 2.01 and 2.06 hereof), with respect to any
Person who has
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submitted on an unsolicited basis an Alternative Proposal or an
expression of interest believed by the Company in good faith to be bona
fide and indicating such Person's ability, desire and intent to make an
Alternative Proposal if the Company determines in good faith, after
consultation with counsel and an independent financial advisor, that
such proposal or expression of interest is reasonably likely to result
in a Superior Alternative Proposal and that taking such action is
required for the Company Board to comply with its fiduciary duties under
applicable law, provided further that prior to furnishing any such
alternative bidder with confidential information regarding the Company,
the Company will require that such bidder execute a confidentiality
agreement in substantially the form attached hereto as Exhibit --------
D. Without limiting the foregoing, it is agreed that any violation of
the restrictions set forth in the preceding sentence by any
Representative of the Company or any Company Subsidiary, whether or not
such person is purporting to act on behalf of the Company or any Company
Subsidiary or otherwise, shall be deemed to be a breach of this Section
2.03(a) by the Company.
(b) The Company shall as promptly as practicable (and in any
event within two business days) advise the Purchaser orally and in
writing of any Alternative Proposal or any inquiry with respect to, or
that could reasonably be expected to lead to, any Alternative Proposal,
the material terms and conditions of any such Alternative Proposal or
inquiry (including any changes thereto) and the identity of the person
making any such Alternative Proposal or inquiry. The Company shall keep
the Purchaser reasonably informed of the status and details (including
any change to the terms thereof) of any such Alternative Proposal or
inquiry and any related discussions and provide to the Purchaser as soon
as practicable after receipt or delivery thereof copies of all
correspondence and other written material sent or provided to the
Company by any third party in connection with any Alternative Proposal
or inquiry or sent or provided by the Company to any third party in
connection with any Alternative Proposal or inquiry.
(c) Unless the Company Board, after consultation with
outside counsel, determines in its good faith judgment that it is
required to do so in order to fulfill its fiduciary obligations under
applicable Law and the Company simultaneously terminates this Agreement
pursuant to Section 4.01(f), neither the Company Board nor any committee
thereof shall (i) withdraw or modify in a manner adverse to the
Purchaser, or publicly propose to withdraw or modify in a manner adverse
to the Purchaser, the approval or recommendation by the Company Board or
any such committee of this Agreement or the Transactions, (ii) approve
any letter of intent, agreement in principle, acquisition agreement or
other agreement relating to any Alternative Proposal (other than
confidentiality agreements to the extent required by Section 2.03(a)) or
(iii) approve or recommend, or publicly propose to approve or recommend,
any Alternative Proposal.
(d) Nothing contained in this Agreement shall prohibit the
Company or its directors from taking and disclosing to its stockholders
a position contemplated by Rules 14d-9 or 14e-2(a) promulgated under the
Exchange Act or from making any required disclosure to the Company's
stockholders if, in the good faith judgment of the Company
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Board, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable Law.
(e) For purposes of this Agreement:
"Alternative Proposal" means:
(i) any proposal or offer for a merger, consolidation, dissolution,
recapitalization, reorganization or business combination involving the Company
or any Company Subsidiary;
(ii) any proposal or offer for, directly or indirectly in one
transaction or a series of related transactions, the issuance by the Company or
sale, exchange or other transfer by its securityholders of 50% or more of (x)
any class of its equity securities, (y) the aggregate principal amount of the
Company's outstanding 7% Convertible Subordinated Notes due November 1, 2004
(the "Notes") or (z) the aggregate amount of the Company's capitalized lease
obligations;
(iii) any proposal or offer to acquire in any manner, directly or
indirectly in one transaction or a series of related transactions, 50% or more
of (w) any class of the Company's equity securities or (x) the aggregate
principal amount of outstanding Notes or (y) the aggregate amount of the
Company's capitalized lease obligations or (z) the consolidated total assets of
the Company and the Company Subsidiaries; or
(iv) except for the Plan, any proposal, offer or plan intended to be
consummated in any proceedings by the Company or any Company Subsidiary under
the Bankruptcy Code including any such proposal to be implemented under Chapter
11 of the Bankruptcy Code or pursuant to a proposed plan of reorganization of
the Company or of any Company Subsidiary.
"Superior Alternative Proposal" means any Alternative Proposal which the
Company Board determines, in good faith (after consultation with a financial
advisor), is superior, by an amount not less than $5,000,000 (representing the
sum of the Transaction Fee plus a minimum increment of $4,000,000), from a
financial point of view to the Company's creditors and holders of Company Common
Stock, taken as a whole, to the Transactions and reasonably capable of being
completed, taking into account all financial, regulatory, legal and other
aspects of such proposal.
Section 2.04 Access to Information; Confidentiality; Monthly Statements.
(a) The Company shall, and shall cause each Company
Subsidiary to, afford to the Purchaser, and to the Purchaser's officers,
employees, accountants, counsel, financial advisors and other
representatives reasonable access, on reasonable notice and during
normal business hours during the period prior to the Closing Date, to
all their respective properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall, and
shall cause each Company Subsidiary to, furnish promptly to the
Purchaser such information concerning its business, properties and
personnel as the Purchaser may reasonably request. All information
exchanged pursuant
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to this Section 2.04(a) shall be subject to the confidential disclosure
agreement dated January 4, 2002, between the Company and the Purchaser
(the "Confidentiality Agreement").
(b) The Company shall furnish to the Purchaser as soon as
practicable and, in any event, within 25 days after the end of each
month, (i) copies of all statements, schedules and reports for such
month required to be provided by the Company to the United States
Trustee pursuant to Sections 1106(a)(1) and 704(8) of the Bankruptcy
Code and (ii) a customer list and calculations of revenue base for such
month each in a form reasonably satisfactory to the Purchaser.
Section 2.05 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, the Company shall use all commercially reasonable
efforts to take, or cause to be taken, all reasonable actions, and to
do, or cause to be done, all things reasonably necessary, proper or
advisable to bring about the confirmation of the Plan. Upon the terms
and subject to the conditions set forth in this Agreement, the Purchaser
shall use all commercially reasonable efforts to meet with customers at
the request of the Company. Upon the terms and subject to the conditions
set forth in this Agreement, each of the Company and the Purchaser shall
use all commercially reasonable efforts to take, or cause to be taken,
all reasonable actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable to bring about the
satisfaction of all other conditions to the other party's obligations to
close (including, in the case of the Purchaser, use of commercially
reasonable efforts to enforce the Commitment Letter, which the Purchaser
shall not amend or waive without the Company's consent); provided,
however, that nothing in this Agreement shall obligate either the
Company or the Purchaser, or any of their respective Affiliates, to
waive or modify any of the terms and conditions of this Agreement or any
of the documents contemplated hereby.
(b) (i) The Company shall give prompt notice to the
Purchaser of (x) any representation or warranty set forth in Exhibit B
being or becoming untrue or inaccurate in any material respect as of any
date on or after the date hereof (as if then made, except to the extent
such representation or warranty is expressly made only as of a specific
date, in which case as of such date), (y) the failure by it to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement or
(z) any change, effect, event, occurrence, state of facts or development
of which it becomes aware that has had or would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse
Effect; and (ii) the Purchaser shall give prompt notice to the Company
of (x) any representation or warranty set forth in Exhibit C being or
becoming untrue or inaccurate in any material respect as of any date on
or after the date hereof (as if then made, except to the extent such
representation or warranty is expressly made only as of a specific date,
in which case as of such date), (y) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this
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Agreement or (z) any change, effect, event, occurrence, state of facts
or development of which it becomes aware that has had or would
reasonably be expected to have, individually or in the aggregate, a
Purchaser Material Adverse Effect; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
Section 2.06 Fees and Expenses.
(a) All reasonable fees and expenses incurred by the
Purchaser in connection with the Bankruptcy Case and the Transactions
shall be paid by the Company, whether or not the Closing occurs. As of
the Petition Date, the Company shall have paid the Purchaser's
reasonable fees and expenses incurred to date and shall have deposited
in an account established by the Purchaser (the "Purchaser Retainer
Account") $175,000 as security for payment of fees and expenses incurred
during the Bankruptcy Case (the "Post-Petition Purchaser Expenses").
Such amount is intended solely as an advance on account of the
Post-Petition Purchaser Expenses and is neither a minimum payment nor a
maximum payment for any period hereunder. The Company hereby authorizes
the Purchaser to apply funds on deposit from time to time in the
Purchaser Retainer Account against the Purchaser's Post-Petition
Purchaser Expenses set out in any statements delivered by the Purchaser
to the Company, the office of the United States Trustee and counsel to
any official committee appointed in the Bankruptcy Case. The Company
will within five business days of the date of receipt of such a
statement transmit by wire transfer an additional amount necessary to
restore the Purchaser Retainer Account to $175,000. On the Petition Date
or as soon thereafter as reasonably practicable and in any event not
later than January 15, 2002, the Company shall file the Plan Procedure
Motion seeking Bankruptcy Court authority for (i) payment of
Post-Petition Purchaser Expenses on a weekly basis within five business
days of the date of receipt of a statement therefor, copies of which
have been provided to the office of the United States Trustee and
counsel to any official committee appointed in the Bankruptcy Case, and
(ii) payment of any deficiency in payment of the Post-Petition Purchaser
Expenses, after application of the Purchaser Retainer Account and the
Purchaser Fee Prepayment, as administrative expenses under Bankruptcy
Code Section 503(b) (on a pari passu basis with all other administrative
claims under Bankruptcy Code Section 503(b)). The Plan Procedure Motion
shall request that the payment of the Post-Petition Purchaser Expenses
from the Purchaser Retainer Account and replenishment of the Purchaser
Retainer Account as provided herein shall not require Bankruptcy Court
approval unless a motion is filed, prior to the expiration of said five
business day period, by the Company, the office of the United States
Trustee or any official committee appointed in the Bankruptcy Case and
served on the Purchaser requesting Bankruptcy Court review of the
reasonableness of the fees and expenses set forth in such statement. As
of the Petition Date, the Company shall have also made an additional
payment of $175,000, by wire transfer of immediately available funds to
an account specified by the Purchaser therefor (the "Purchaser Fee
Prepayment"), as partial prepayment of Post-Petition Purchaser Expenses.
The Purchaser Fee Prepayment will be fully earned upon payment and shall
not be refundable in any
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event. Although the Company shall be entitled to apply the Purchaser Fee
Prepayment against the final statement submitted by the Purchaser to the
Company for expenses reimbursable hereunder, such amount is a minimum
payment on account of expenses but is not a maximum amount of expenses
for any period and shall not in any way limit the amount of expenses
reimbursable hereunder.
(b) In addition to the fees and expenses payable pursuant to
Section 2.06(a), the Company shall pay to the Purchaser a fee of
$1,000,000 (the "Transaction Fee") if any of the following events occur:
(i) this Agreement is terminated pursuant to Section
4.01(b), Section 4.01(c) or clause (i) of Section
4.01(d) and (x) at or prior to the time of such
termination an Alternative Proposal from a proponent not
affiliated with or acting in concert with the Purchaser
or any of the Purchaser's Affiliates has been publicly
announced and (y) within 18 months of such termination
the Company consummates, or obtains a court order
approving, any Alternative Proposal (in which event such
fee shall be payable immediately upon such consummation
or approval);
(ii) the Purchaser terminates this Agreement pursuant to
Section 4.01(e) or clause (ii) of 4.01(d) (in which
event such fee shall be payable immediately upon such
termination); or
(iii) the Company terminates this Agreement pursuant to
Section 4.01(f) (in which event such fee shall be paid
simultaneously with such termination).
The Transaction Fee shall be paid by wire transfer of immediately
available funds and as an expense of sale prior to the payment of any
proceeds of any Alternative Proposal and the attachment of any Lien on
such proceeds (subject only to the prior prepayment in full of loans
under the DIP Facility, if any, approved and entered into as
contemplated by Section 2.01(c)). The Company and the Purchaser agree
that the Purchaser has expended substantial funds and other resources in
connection with the Transactions and that the Purchaser will suffer
substantial harm if the Transactions are not consummated (because it
will then be impossible to realize the benefits that would arise
therefrom), that the precise amount of such harm is difficult to
determine, and that it would be unfair for the Purchaser to bear such
harm in view of the fact that both the Purchaser and the Company hope to
benefit from the Transactions. The Transaction Fee is agreed to
constitute liquidated damages (and not a penalty). In the event that
this Agreement is terminated pursuant to Section 4.01(g) at a time when
one or more of the conditions to termination set forth in Section
4.01(b), Section 4.01(c), Section 4.01(d) (subject only to the lapse of
time without cure), Section 4.01(e) or Section 4.01(f) have been met,
then such termination shall be deemed for purposes of this Section
2.06(b) to be a termination pursuant to Section 4.01(b), Section
4.01(c), Section 4.01(d), Section 4.01(e) or Section 4.01(f), as the
case may be.
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(c) Notwithstanding clauses (a) and (b) of this Section
2.06, the Post-Petition Purchaser Expenses and the Transaction Fee shall
not exceed $1,750,000 in the aggregate.
Section 2.07 Public Announcements. The Purchaser and the Company shall
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 2.08 Minutes. On or before the Closing Date, the Company shall
deliver true and correct copies of all minutes of meetings of the Company's
Board of Directors and stockholders and each Company Subsidiary's Board of
Directors and stockholders, which minutes shall accurately record, in all
material respects, all actions taken by the Company's Board of Directors and
stockholders and each Company Subsidiary's Board of Directors and stockholders
through the Closing Date.
ARTICLE III
Conditions Precedent
Section 3.01 Conditions to Each Party's Obligation To Close. The
respective obligation of each party to consummate the Closing under this
Agreement shall be subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Antitrust. The waiting period (and any extension
thereof), if any, applicable to the Transactions under the HSR Act shall
have been terminated or shall have expired. Any consents, approvals and
filings under any foreign antitrust Law required for the consummation of
Transactions shall have been obtained or made.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other
legal restraint or prohibition preventing the consummation of the
Transactions shall be in effect; provided, however, that prior to
asserting this condition the party asserting such condition shall have
used its commercially reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
(c) Confirmation of the Plan. The Bankruptcy Court shall
have entered an order confirming the Plan (the "Confirmation Order") and
the Confirmation Order shall be a Final Order in form and substance
satisfactory to the Purchaser in all respects.
-10-
Section 3.02 Additional Conditions to Purchaser's Obligations. The
obligation of the Purchaser to consummate the Closing under this Agreement shall
be subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of the Company set
forth in Exhibit B hereto (as such representations and warranties would
read if all qualifications as to materiality and Company Material
Adverse Effect were deleted therefrom) shall be true and correct in all
respects as of the Closing (except for particular representations or
warranties which expressly speak only as of a specific date or time
other than the Closing Date, which shall be true and correct in all
respects as of such specified date or time), except as has not had and
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) The Company shall have performed and complied in all
material respects with all covenants and agreements contained in this
Agreement required to be performed or complied with by it on or before
the Closing Date.
(c) Since November 30, 2001, except as set forth in Section
1.8(c) of the Company Disclosure Schedule, there shall not have been the
occurrence of any Company Material Adverse Effect or any change, effect,
event, occurrence, state of facts or development that, individually or
in the aggregate, would reasonably be expected to give rise to a Company
Material Adverse Effect;
(d) Attached hereto as Schedule I are projections prepared
by the Purchaser with respect to the Company and the Company
Subsidiaries (the "Projections"). As of the Closing, the Company and the
Company Subsidiaries on a consolidated basis shall have not failed to
meet any of the projections set forth in the Projections of iMap
Revenue, Total Revenue, EBITDA or EBITDA Minus Capitalized Labor and
Consulting for any period ended on any date prior to the Closing by more
than the Permitted Divergence set forth under such projection. In
addition, since November 30, 2001, there shall not have been the
occurrence of any change, effect, event, occurrence, state of facts or
development that, individually or in the aggregate, would reasonably be
expected to result in the Company and the Company Subsidiaries on a
consolidated basis failing to meet any of the projections set forth in
the Projections of iMap Revenue, Total Revenue, EBITDA or EBITDA Minus
Capitalized Labor and Consulting for any period ending on any date on or
after the Closing by more than the Permitted Divergence set forth under
such projection. iMap Revenue, Total Revenue, EBITDA and EBITDA Minus
Capitalized Labor and Consulting shall be calculated on a consolidated
basis for the Company and the Company Subsidiaries consistent with the
calculation thereof in the preparation of the Projections, it being
understood that there shall be excluded (i) any amount to be added
arising from the reduction of any reserve and (ii) any amount to be
subtracted arising from Company Fee Claims and Post-Petition Purchaser
Expenses.
(e) The Company shall have executed and delivered to the
Purchaser at and as of the Closing a certificate, duly executed by the
Company's chief executive officer and
-11-
chief financial officer, in form and substance satisfactory to the
Purchaser and the Purchaser's counsel, certifying that the conditions
specified in clauses (a), (b), (c) and (d) of this Section 3.02 have
been satisfied.
(f) There shall not have occurred since the date of this
Agreement (i) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States,
(ii) any material adverse change in United States currency exchange
rates or a material suspension of, or limitation on, the markets
therefor, (iii) a declaration of a banking moratorium or any material
suspension of payments in respect of banks in the United States or (iv)
in the case of any of the foregoing existing on the date of this
Agreement, a material acceleration or worsening thereof.
(g) There shall not have been commenced (and not dismissed
with prejudice or irrevocably withdrawn) or threatened any suit, action
or proceeding by any Governmental Entity or any other Person either (a)
outside of the Bankruptcy Court or (b) against the Purchaser or any of
its Affiliates related to the Company or any Transaction: (i) seeking to
restrain or prohibit the making or consummation of any Transaction, or
seeking to obtain from the Company or the Purchaser or any of their
respective Affiliates any material damages or any other material remedy,
(ii) seeking to prohibit or limit the ownership or operation by the
Company or the Purchaser or any of their respective Affiliates of any
material portion of the business or assets of the Company and the
Company Subsidiaries taken as whole or any material business or asset of
the Purchaser and any of its Affiliates, or to compel the Company, the
Purchaser or any of their respective Affiliates to dispose of or hold
separate any material portion of the business or assets of the Company
and the Company Subsidiaries taken as whole or of the Purchaser and its
Subsidiaries taken as a whole, as a result of any Transaction, (iii)
seeking to impose material limitations on the ability of the Purchaser
or any of its Affiliates to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, or (iv) which
otherwise has had or would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect which, in the
case of any of the types of suits, actions or proceedings described in
clauses (i) through (iv) above, is reasonably determined by the
Purchaser to present a significant risk of having one of the effects
described in one or more of such clauses.
(h) On or before May 24, 2002, the Confirmation Order shall
have been entered in form and substance satisfactory to the Purchaser in
all respects, and on or before the Closing Date, the Confirmation Order,
in such form and without any modifications not agreed to by the
Purchaser, shall have become a Final Order.
(i) The Bankruptcy Court shall not have entered any order
dismissing the Bankruptcy Case or converting the Bankruptcy Case to a
case under Chapter 7 of the Bankruptcy Code.
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(j) Pursuant to the Confirmation Order or otherwise the
Bankruptcy Court shall have entered Final Orders, in form and substance
satisfactory to the Purchaser in all respects, authorizing (i) the
assumption of all Required Contracts and (ii) the rejection of all
Executory Contracts specified for rejection on the Rejection List.
(k) [Intentionally Omitted]
(l) The Purchaser shall have confirmed to its satisfaction
in good faith that costs of cure in connection with assumptions of
Executory Contracts (including all payments after the commencement of
the Bankruptcy Case, under the "doctrine of necessity" or otherwise, of
pre-petition amounts due under such Executory Contracts) and any
increased costs incurred in connection with entry into new Contracts
with parties to rejected Executory Contracts (based upon a comparison of
the present value of aggregate future costs under the rejected Executory
Contract and the new Contract, using a 6% discount rate) will not exceed
$4,400,000 in the aggregate.
(m) The Purchaser shall have confirmed to its satisfaction
in good faith that Adequate Protection Payments (as defined in the Plan)
have not exceeded in the aggregate $1,500,000 in any calendar month.
(n) The Purchaser shall have confirmed to its satisfaction
in good faith that allowed Company Fee Claims will not exceed $6,500,000
in the aggregate.
(o) The Purchaser shall have confirmed to its satisfaction
in good faith that the aggregate amount of (i) allowed Miscellaneous
Secured Claims (as defined in the Plan) plus (ii) the amount by which
(x) the aggregate amount of Equipment Lease Secured Claims (as defined
in the Plan) of holders electing "Alternative B" (as described in
Section 5.01 of the Plan) less the aggregate amount of Plan Notes (as
defined in the Plan) not issued as a result of such elections exceeds
(y) the aggregate amount of the Equipment Lease Secured Claims of such
holders as provided in "Alternative A" (as described in Section 5.01 of
the Plan) plus (iii) allowed Priority Tax Claims (as defined in the
Plan) will not exceed the sum of (A) $19,543,526 plus (B) unpaid
interest accruing after December 31, 2001 on Miscellaneous Secured
Claims and Priority Tax Claims to the extent allowable as part of any
such Claim under the Bankruptcy Code minus (C) the sum of all principal
payments, if any, paid in respect of the foregoing obligations on or
after December 19, 2001, whether made as Adequate Protection Payments
(as defined in the Plan) or otherwise.
(p) The Company and MSLI GP shall have executed each of the
following agreements required to be entered into under the Strategic
Alliance Agreement dated December 16, 2001 between the Company and
Microsoft Corporation, in each case in form and substance reasonably
satisfactory to the Purchaser in all respects: the Service Provider
License Agreement, Microsoft Enterprise Agreement, Microsoft Business
Agreement and Microsoft Select Agreement. The Purchaser acknowledges
that the drafts of the Service Provider License Agreement (subject to
completion of pricing terms and terms of usage in form and substance
reasonably satisfactory to the Purchaser in all
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respects), Microsoft Enterprise Agreement, Microsoft Business Agreement
and Microsoft Select Agreement provided by the Company to the Purchaser
on or prior to the date hereof are in form and substance reasonably
satisfactory to the Purchaser in all respects.
Section 3.03. Additional Conditions to Company's Obligations. The
obligation of the Company to consummate the Closing under this Agreement shall
be subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of the Purchaser set
forth in Exhibit C (as such representations and warranties would read if
all qualifications as to materiality and Purchaser Material Adverse
Effect were deleted therefrom) shall be true and correct in all respects
as of the Closing (except for particular representations or warranties
which expressly speak only as of a specific date or time other than the
Closing Date, which shall be true and correct in all respects as of such
specified date or time), except as has not had and would not reasonably
be expected to have, individually or in the aggregate, a Purchaser
Material Adverse Effect.
(b) The Purchaser shall have performed and complied in all
material respects with all covenants and agreements contained in this
Agreement required to be performed or complied with by it on or before
the Closing Date.
(c) The Purchaser shall have executed and delivered to the
Company at and as of the Closing a certificate, duly executed by the
Purchaser's chief executive officer and chief financial officer, in form
and substance reasonably satisfactory to the Company and the Company's
counsel, certifying that the conditions specified in clauses (a) and (b)
of Section 3.03 have been satisfied.
(d) The Investor and the Purchaser shall have executed and
delivered to the Company a subscription agreement among the Purchaser,
the Company and the Investor with respect to a $25,000,000 investment by
the Investor in the Purchaser having terms reasonably acceptable to the
Company.
ARTICLE IV
Termination, Amendment and Waiver
Section 4.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of the Purchaser and the
Company;
(b) by either the Purchaser or the Company (i) if the
Closing does not occur on or before June 7, 2002 (the "Outside Date"),
unless the failure to consummate the Closing is the result of a breach
of this Agreement by the party seeking to terminate this Agreement or
(ii) any Governmental Entity issues an order, decree or ruling or takes
any
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other action permanently enjoining, restraining or otherwise prohibiting
the Closing and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by the Purchaser, if:
(i) on or before the date that is five business days after
the Petition Date, the Company has not filed the First
Day Motions with the Bankruptcy Court, provided,
however, that the Purchaser's right to terminate this
Agreement pursuant to this clause (i) of this Section
4.01(c), shall expire 10 days after the Purchaser's
receipt of a written request from the Company alerting
the Purchaser to the fact that it is entitled to
exercise its termination right under this clause and
requesting that the Purchaser exercise or waive such
right;
(ii) on or before the date that is three weeks after the
Petition Date, the Plan has not been amended and
completed in form and substance mutually satisfactory to
the Company and the Purchaser or, the Plan having been
so agreed upon, the Company has not filed the Plan with
the Bankruptcy Court, provided, however, that the
Purchaser's right to terminate this Agreement pursuant
to this clause (ii) of this Section 4.01(c), shall
expire 10 days after the Purchaser's receipt of a
written request from the Company alerting the Purchaser
to the fact that it is entitled to exercise its
termination right under this clause and requesting that
the Purchaser exercise or waive such right;
(iii) on or before the date that is five weeks after the
Petition Date, the Bankruptcy Court has not entered an
order in form and substance satisfactory to the
Purchaser in all respects allowing the Plan Procedure
Motion which order shall have become a Final Order
within 10 days after entry and which among other things
shall have approved this Agreement, including expressly
(i) authorizing and directing the payment of the
Post-Petition Purchaser Expenses and the Transaction Fee
on the terms described in Section 2.06(a) and Section
2.06(b) and (ii) finding valid and enforceable the
provisions of Section 2.01(f) (the "Plan Procedure
Order"), provided, however, that the Purchaser's right
to terminate this Agreement pursuant to this clause
(iii) of this Section 4.01(c), shall expire eight weeks
after the Petition Date unless exercised within such
period;
(iv) the Company and the Purchaser are unable to reach
mutually satisfactory resolution with respect to the
Rejection List and the Required Contracts as
contemplated by Section 2.01(e), provided, however, that
the Purchaser's right to terminate this Agreement
pursuant to this clause (iv) of this Section 4.01(c),
shall expire 30 days after the Company's delivery of the
complete list of all Executory Contracts contemplated by
the first sentence
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of Section 2.01(e) of this Agreement, unless exercised
within such 30-day period;
(v) on or before April 15, 2002, the Bankruptcy Court has
not entered an order in form and substance satisfactory
to the Purchaser in all respects approving the
Disclosure Statement;
(vi) on or before May 24, 2002, the Confirmation Order is not
entered in form and substance satisfactory to the
Purchaser in all respects;
(vii) the Bankruptcy Court enters any order (A) dismissing the
Bankruptcy Case or converting the Bankruptcy Case to a
case under Chapter 7 of the Bankruptcy Code or (B)
appointing a Chapter 11 trustee or an examiner with
enlarged powers relating to the operation of the
business (beyond those set forth in Section 1106(a)(3)
and (4) of the Bankruptcy Code);
(viii) the Company's exclusive right to file or solicit a plan
under Section 1121 of the Bankruptcy Code is not
extended or is terminated or the Bankruptcy Court enters
any order (A) amending, supplementing, altering,
staying, vacating, rescinding or otherwise modifying the
Plan Procedure Order or the Confirmation Order or (B)
granting relief from the automatic stay to any creditor
holding or asserting a lien or reclamation claim having
a value of greater than $500,000 individually or
$1,000,000 in the aggregate, provided, however, that the
Purchaser's right to terminate this Agreement pursuant
to this clause (viii) of this Section 4.01(c), shall
expire 15 days after the Purchaser's receipt of a
written request from the Company alerting the Purchaser
to the fact that it is entitled to exercise its
termination right under this clause and requesting that
the Purchaser exercise or waive such right;
(ix) the Purchaser shall have determined in good faith, on or
prior to the Closing Date, that costs of cure in
connection with assumption of Executory Contracts
(including all payments after the commencement of the
Bankruptcy Case, under the "doctrine of necessity" or
otherwise, of pre-petition amounts due under such
Executory Contracts) and any increased costs incurred in
connection with entry into new Contracts with parties to
rejected Executory Contracts (based upon a comparison of
the present value of aggregate future costs under the
rejected Executory Contract and the new Contract, using
a 6% discount rate) are reasonably likely to exceed
$4,400,000 in the aggregate;
(x) the Plan Support Agreements shall not have been executed
and delivered in accordance with Section 2.02 by the
date of entry of an order approving the Disclosure
Statement, provided, however, that the Purchaser's right
to terminate this Agreement pursuant to this clause (x)
of this Section 4.01(c), shall expire 5 days after the
Purchaser's receipt of a
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written request from the Company alerting the Purchaser
to the fact that it is entitled to exercise its
termination right under clause and requesting that the
Purchaser exercise or waive such right;
(xi) there shall have been any acceleration under a DIP
Facility that has not been rescinded;
(xii) the Company shall fail to (A) deliver any statement,
schedule, report, list, calculation or other information
required to be delivered in accordance with Section
2.04(b) hereof and such failure shall not have been
cured by the date which is 30 days after the giving of
written notice to the Company of such failure or (B)
make any payment required to be made pursuant to Section
2.06(a) of this Agreement (as approved in the Plan
Procedure Order) when due;
(xiii) the Purchaser shall have determined in good faith, on or
prior to the Closing Date, that the aggregate amount of
(i) allowed Miscellaneous Secured Claims (as defined in
the Plan) plus (ii) the amount by which (x) the
aggregate amount of Equipment Lease Secured Claims (as
defined in the Plan) of holders electing "Alternative B"
(as described in Section 5.01 of the Plan) less the
aggregate amount of Plan Notes (as defined in the Plan)
not issued as a result of such elections exceeds (y) the
aggregate amount of the Equipment Lease Secured Claims
of such holders as provided in "Alternative A" (as
described in Section 5.01 of the Plan) plus (iii)
allowed Priority Tax Claims (as defined in the Plan) is
reasonably likely to exceed the sum of (A) $19,543,526
plus (B) unpaid interest accruing after December 31,
2001 on Miscellaneous Secured Claims and Priority Tax
Claims to the extent allowable as part of any such Claim
under the Bankruptcy Code minus (C) the sum of all
principal payments, if any, paid in respect of the
foregoing obligations on or after December 19, 2001,
whether made as Adequate Protection Payments (as defined
in the Plan) or otherwise;
(xiv) the Purchaser shall have determined in good faith, on or
prior to the Closing Date, that allowed Company Fee
Claims are reasonably likely to exceed $6,500,000 in the
aggregate; or
(xv) the Purchaser shall have determined in good faith, on or
prior to the Closing Date, that Adequate Protection
Payments (as defined in the Plan) have exceeded or are
reasonably likely to exceed in the aggregate $1,500,000
in any calendar month;
(d) by the Purchaser, if either: (i) any representation or
warranty of the Company contained in Exhibit B hereto (as such
representations and warranties would read if all qualifications as to
materiality and Company Material Adverse Effect were deleted therefrom)
is or becomes untrue or inaccurate in any respect as of any date at or
-17-
after the date of this Agreement (as though such representation or
warranty were made at and as of such date, except for particular
representations or warranties that expressly speak only as of a specific
date or time, the accuracy of which shall be determined as of such date
or time), which untruth or inaccuracy would give rise to the failure of
the condition set forth in Section 3.02(a) and cannot be or has not been
cured by the date which is seven days prior to the Outside Date or (ii)
the Company breaches or fails to perform in any material respect any of
its covenants contained in this Agreement (other than covenants to which
Section 4.01(c) applies), which breach or failure to perform would give
rise to the failure of a condition set forth in Section 3.02 and cannot
be or has not been cured by the date which is seven days prior to the
Outside Date;
(e) by the Purchaser, if (i) the Company Board or any
committee thereof withdraws the Plan or modifies the Plan in a manner
adverse to the Purchaser, or publicly resolves to withdraw the Plan or
modify the Plan in a manner adverse to the Purchaser or withdraws or
modifies its approval or recommendation of this Agreement or the
Transactions, or approves or recommends, or resolves to approve or
recommend, any Alternative Proposal; or (ii) if the Company or any
Company Subsidiary or any of their respective Representatives takes any
action or actions that constitute a breach, in any material respect, of
Section 2.03;
(f) by the Company, if (i) the Company Board has received a
Superior Alternative Proposal, (ii) in light of such Superior
Alternative Proposal the Company Board shall have determined in good
faith, after consultation with outside counsel, that it is required for
the Company Board to withdraw or modify its approval or recommendation
of this Agreement or any Transaction in order to act in a manner
consistent with its fiduciary duty under applicable Law, (iii) the
Company has notified the Purchaser in writing of the determinations
described in clause (ii) above, (iv) at least three business days
following receipt by the Purchaser of the notice referred to in clause
(iii) above, and taking into account any revised proposal made by the
Purchaser since receipt of the notice referred to in clause (iii) above,
such Superior Alternative Proposal remains a Superior Alternative
Proposal and the Company Board has again made the determinations
referred to in clause (ii) above, (v) the Company is in compliance with
Section 2.03, (vi) the Company simultaneously pays the fees due under
Sections 2.06(a) and 2.06(b), (vii) the Company Board concurrently
approves, and the Company concurrently enters into, a definitive
agreement providing for the implementation of such Superior Alternative
Proposal and (viii) the Purchaser is not at such time entitled to
terminate this Agreement pursuant to Section 4.01(d)(ii); or
(g) by the Company, if (i) any representation or warranty of
the Purchaser contained in Exhibit C hereto (as such representations and
warranties would read if all qualifications as to materiality and
Purchaser Material Adverse Effect were deleted therefrom) is or becomes
untrue or inaccurate in any respect as of any date at or after the date
of this Agreement (as though such representation or warranty were made
at and as of such date, except for particular representations or
warranties that expressly speak only as of a specific date or time, the
accuracy of which shall be determined as of such date or
-18-
time), which untruth or inaccuracy would give rise to the failure of the
condition set forth in Section 3.03(a) and cannot be or has not been
cured by the date which is seven days prior to the Outside Date or (ii)
the Purchaser breaches or fails to perform in any material respect any
of its covenants contained in this Agreement, which breach or failure to
perform would give rise to the failure of a condition set forth in
Section 3.03 and cannot be or has not been cured by the date which is
seven days prior to the Outside Date.
Section 4.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or the Purchaser as provided in Section 4.01,
this Agreement shall forthwith become void and have no effect other than the
last sentence of Section 2.04(a), Section 2.06, this Section 4.02 and Article V,
which provisions shall survive such termination, and all obligations of the
parties hereunder (other than pursuant to such enumerated provisions) shall
terminate without any liability or obligation on the part of the Purchaser or
the Company, to any other party, except that such termination will not affect
the respective rights or obligations of the parties with respect to any willful
breach of any representation, warranty or covenant set forth in this Agreement
prior to such termination.
Section 4.03. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
Section 4.04. Extension; Waiver. At any time prior to the Closing Date,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
Section 4.05. Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 4.01, an amendment of this
Agreement pursuant to Section 4.03 or an extension or waiver pursuant to Section
4.04 shall, in order to be effective, require in the case of the Purchaser or
the Company, action by its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE V
General Provisions
Section 5.01. Nonsurvival of Representations and Warranties. Except as
provided in the last sentence of this Section 5.01, none of the representations,
warranties and covenants in this Agreement (including any rights arising out of
any inaccuracy of such representations and warranties or any breach of such
covenants) or in any instrument delivered pursuant to this Agreement shall
survive the Closing. This Section 5.01 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Closing.
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Section 5.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) seven days after mailing by certified mail, (ii) when delivered by
hand, (iii) one business day after confirmation of receipt by telecopy or (iv)
one business day after sending by overnight delivery service, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to the Purchaser, to
USinternetworking Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
USinternetworking, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 5.03. Definitions. For purposes of this Agreement:
An "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
The "Bankruptcy Case" means the court proceedings with respect to the
Company as debtor and debtor-in-possession in the Bankruptcy Court.
The "Bankruptcy Court" means the United States Bankruptcy Court for the
District of Maryland (Baltimore).
A "Company Fee Claim" means a claim under Section 330(a), Section 331 or
Section 503(b) of the Bankruptcy Code for compensation for professional services
rendered and reimbursement of expenses in the Bankruptcy Case, but specifically
excluding any claim of the Purchaser for payment of any fees or reimbursement of
any costs and expenses.
A "Company Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or development that, individually or together with
all other such changes, effects, events, occurrences, states of facts or
developments with respect to which such phrase is used in any specific instance,
(i) is materially adverse to the current or future business, assets, condition,
financial or otherwise, or results of operations of the Company and the Company
Subsidiaries taken as a whole (other than any change, effect, event, occurrence,
state of facts or development that results predominantly from any (A) change in
GAAP or interpretations thereof applicable to both the Company and the Purchaser
or (B) change in the trading price of the Company's outstanding common stock),
or (ii) prevents the Company from being able to perform its obligations under
this Agreement and consummate the Transactions in accordance with this
Agreement.
A "Final Order" means an order or judgment entered on the docket by the
Clerk of the Bankruptcy Court or any other court exercising jurisdiction over
the subject matter and the parties (i) that has not been reversed, stayed,
modified or amended, (ii) as to which no appeal, certiorari proceeding,
reargument or other review or rehearing has been requested or is still pending,
and (iii) as to which the time for filing a notice of appeal or petition for
certiorari or request for reargument or further review or rehearing has expired.
"Knowledge" of any specified corporation means the actual knowledge, as
of the date of this Agreement or the Closing Date, as the case may be, of any
current executive officer of such corporation of the fact or matter in question
(and, in the case of "Knowledge" of the Company
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shall also include the actual knowledge, as of the date of this Agreement or the
Closing Date, as the case may be, of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇.
A "Person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "Subsidiary" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
Section 5.04. Definitions Cross Reference Table. The following terms
defined elsewhere in this Agreement in the Sections set forth below shall have
the respective meanings therein defined:
Term Definition
---- ----------
"Affiliate" Section 5.03
"Affiliated Group" Section 1.10(j) of Exhibit B
"Agreement" Preamble
"Alternative Proposal" Section 2.03(e)
"Approval Motions" Section 2.01(a)
"Bankruptcy Case" Section 5.03
"Bankruptcy Code" Recitals
"Bankruptcy Court" Section 5.03
"Closing" Section 1.02
"Closing Date" Section 1.02
"Code" Section 1.9(n) of Exhibit B
"Commitment Letter" Section 1.6 of Exhibit C
"Company" Preamble
"Company Benefit Plan" Section 1.10(a) of Exhibit B
"Company Board" Section 2.03(a)
"Company By-laws" Section 1.1 of Exhibit B
"Company Capital Stock" Section 1.4(b) of Exhibit B
"Company Charter" Section 1.1 of Exhibit B
"Company Common Stock" Recitals
"Company Disclosure Schedule" Section 1.1 of Exhibit B
"Company Fee Claim" Section 5.03
"Company Intellectual Property Rights" Section 1.15(a) of Exhibit B
"Company Material Adverse Effect" Section 5.03
"Company SEC Documents" Section 1.6 of Exhibit B
"Company Subsidiaries" Section 1.1 of Exhibit B
"Confidentiality Agreement" Section 2.04(a)
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"Confirmation Order" Section 3.01(c)
"Consent" Section 1.5(b) of Exhibit B
"Contract" Section 1.5(a) of Exhibit B
"DIP Facility" Section 2.01(c)
"Disclosure Statement" Section 2.01(a)
"Employee Benefit Plan" Section 1.10(j) of Exhibit B
"Employment Agreements" Section 1.10(j) of Exhibit B
"Environmental Laws" Section 1.19 of Exhibit B
"ERISA" Section 1.10(a) of Exhibit B
"ERISA Affiliate" Section 1.10(j) of Exhibit B
"Exchange Act" Section 1.5(b) of Exhibit B
"Exclusivity Period" Section 2.01(d)
"Executory Contract" Section 2.01(d)
"Filed Company SEC Documents" Section 1.8(a) of Exhibit B
"Final Order" Section 5.03
"First Day Motions" Section 2.01(a)
"Foreign Company Subsidiary" Section 1.2 of Exhibit B
"GAAP" Section 1.6 of Exhibit B
"Governmental Entity" Section 1.5(b) of Exhibit B
"Hazardous Substance" Section 1.19 of Exhibit B
"HSR Act" Section 1.5(b) of Exhibit B
"Investor" Section 1.6 of Exhibit C
"IRS" Section 1.10(b) of Exhibit B
"Judgment" Section 1.5(a) of Exhibit B
"Knowledge" Section 5.03
"Law" Section 1.5(a) of Exhibit B
"Leases" Section 1.22 of Exhibit B
"Liability Limitation Provisions" Section 2.01(f)
"Liens" Section 1.2 of Exhibit B
"Notes" Section 2.03(e)
"Outside Date" Section 4.01(b)
"PCBs" Section 1.19 of Exhibit B
"Pension Plan" Section 1.10(j) of Exhibit B
"Person" Section 5.03
"Petition" Recitals
"Petition Date" Recitals
"Plan" Recitals
"Plan Procedure Motion" Section 2.01(a)
"Plan Procedure Order" Section 4.01(c)
"Plan Support Agreements" Section 2.02
"Post-Petition Purchaser Expenses" Section 2.06(a)
"Projections" Section 3.02(d)
"Purchaser" Preamble
"Purchaser Disclosure Schedule" Section 1.2 of Exhibit C
"Purchaser Material Adverse Effect" Section 1.1 of Exhibit C
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"Purchaser Retainer Account" Section 2.06(a)
"Rejection List" Section 2.01(e)
"Representatives" Section 2.03(a)
"Required Contracts" Section 2.01(e)
"Revised Company Charter" Section 1.8(b) of Exhibit B
"Schedules and Statements" Section 2.01(a)
"SEC" Section 1.5(b) of Exhibit B
"Securities Act" Section 1.6 of Exhibit B
"Senior Employee" Section 1.8(a) of Exhibit B
"Shares" Section 1.01
"Subsidiary" Section 5.03
"Superior Alternative Proposal" Section 2.03(e)
"Tax Return" Section 1.9(n) of Exhibit B
"Taxes" Section 1.9(n) of Exhibit B
"Third-Party Intellectual Property Rights" Section 1.15(b) of Exhibit B
"Transaction Fee" Section 2.06(b)
"Transactions" Section 1.4(a) of Exhibit B
"Voting Company Debt" Section 1.8(b) of Exhibit B
"Welfare Plan" Section 1.10(j) of Exhibit B
Section 5.05. Interpretation. When a reference is made in this Agreement
(or in Exhibit B or Exhibit C to this Agreement) to a Section, Exhibit or
Schedule, such reference shall be to a Section of, or Exhibit or Schedule to,
this Agreement unless otherwise indicated. When a reference is made in this
Agreement (or in Exhibit B or Exhibit C to this Agreement) to this Agreement,
such reference shall be deemed to include the Exhibits to this Agreement, the
Company Disclosure Schedule and the Purchaser Disclosure Schedule. The parties
to this Agreement are the Company and the Purchaser and references in this
Agreement to the "parties hereto" or the "parties hereunder" or like references
refer to the Company and the Purchaser. The words "hereof", "hereby", "herein"
and "hereunder", and words of similar import, when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". Whenever the terms "Company" or "Company
Subsidiary" are used in this Agreement (including Exhibit B and Exhibit C
hereto), each such term shall be deemed to include any predecessor corporation
or entity of such Person. The parties to this Agreement have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. It is expressly agreed
and understood that time shall be considered of the essence in connection with
the performance of the respective agreements, covenants and obligations
hereunder of each party hereto. The Company Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered sections
contained in Exhibit B and the disclosures in any paragraph of the Company
Disclosure Schedule shall not
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qualify other sections in Exhibit B. The mere listing (or inclusion of a copy)
of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made in Exhibit B (except to the
extent the representation or warranty has to do with the existence of the
document or other item itself). The parties intend that each representation,
warranty, covenant and condition contained herein shall have independent
significance. No investigation made by or on behalf of any Person, nor any
opportunity therefor, nor any actual or constructive knowledge thereby obtained,
including the fact that the Company or any Company Subsidiary or any other
Person has or may have from time to time prepared projections or forecasts more
or less optimistic in any respect than the Projections, shall be evidence that
any change, effect, event, occurrence, state of facts or development,
individually or in the aggregate, is or is not material or does or does not give
rise to a Company Material Adverse Effect or would or would not reasonably be
expected to have a Company Material Adverse Effect. If any party has breached
any covenant contained herein, or any representation or warranty made in Exhibit
B or Exhibit C is inaccurate, or any condition has failed to be satisfied, in
any respect, the fact that there exists another representation, warranty,
covenant or condition relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached, or which is
accurate, or which has been satisfied, shall not detract from or mitigate the
fact that the party is in breach of the first covenant, or that the first
representation or warranty is inaccurate, or that the first condition has failed
to be satisfied.
Section 5.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible without adverse economic effect or other material adverse effect upon
either party.
Section 5.07. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 5.08. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, taken together with the Exhibits hereto, the Company Disclosure
Schedule, the Purchaser Disclosure Schedule and the Confidentiality Agreement,
(a) constitute the entire agreement, and supersede all prior agreements,
understandings and statements, both written and oral, among the Company and the
Purchaser or any of their Affiliates and (b) does not and is not intended to
confer any rights or remedies upon, or give rise to any obligation of, any
Person other than the Company and the Purchaser; provided, however, that (i)
nothing in this Agreement shall affect or modify the Confidential Disclosure
Agreement for Investment Discussions dated June 26, 2001 between the Company and
▇▇▇▇ Capital Partners, LLC, (ii) the Investor and its Affiliates are intended
-25-
third party beneficiaries of, and shall be entitled to enforce, Section 2.01(f),
and (iii) the provisions of paragraph eight of that certain letter agreement
dated January 4, 2002 between the Purchaser and the Company shall not terminate
until the Bankruptcy Court has entered an order in form and substance
satisfactory to the Purchaser in all respects, which order shall have become a
Final Order, which shall have expressly authorized and directed the payment of
the Post-Petition Purchaser Expenses and the Transaction Fee on the terms
described in Section 2.06(a) and Section 2.06(b).
Section 5.09. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the State of New
York, without giving effect to any choice or conflict of law provision or rule
that would cause the application of the laws of any other jurisdiction.
Section 5.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to any of its Affiliates, but no such assignment shall relieve
the Purchaser of any of its obligations under this Agreement. Any purported
assignment without such consent shall be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
Section 5.11. Consent to Jurisdiction. Each party to this Agreement, by
its execution hereof, (i) hereby irrevocably submits to the exclusive
jurisdiction of the Bankruptcy Court for the purpose of any action arising in
whole or in part under or in connection with this Agreement, (ii) hereby waives
to the extent not prohibited by applicable Law, and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action, any claim that it is
not subject personally to the jurisdiction of the above-named court, that its
property is exempt or immune from attachment or execution, that any such action
brought in the above-named court should be dismissed on grounds of forum non
conveniens, should be transferred to any court other than the above-named court,
or should be stayed by reason of the pendency of some other proceeding in any
other court other than the above-named court, or that this Agreement or the
subject matter hereof may not be enforced in or by such court, and (iii) hereby
agrees not to commence any action arising out of or based upon this Agreement or
relating to the subject matter hereof other than before the above-named court
nor to make any motion or take any other action seeking or intending to cause
the transfer or removal of any such action to any court other than the
above-named court whether on the grounds of inconvenient forum or otherwise.
Each party hereby (x) consents to service of process in any such action in any
manner permitted by New York law; (y) agrees that service of process made in
accordance with clause (x) or made by registered or certified mail, return
receipt requested, at its address specified pursuant to Section 5.02, shall
constitute good and valid service of process in any such action; and (z) waives
and agrees not to assert (by way of motion, as a defense, or otherwise) in any
such action any claim that service of process made in accordance with clause (x)
or (y) does not constitute good and valid service of process. The provisions of
this Section 5.11 shall not restrict the ability of any party to enforce
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in any court any judgment obtained in the Bankruptcy Court or the appellate
courts having jurisdiction over matters brought therein.
Section 5.12. Consents. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be valid only if
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in Sections 4.04 and 4.05.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company and the Purchaser have duly executed
this Agreement, all as of the date first written above.
USINTERNETWORKING, INC., debtor and
debtor-in-possession
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CHIEF EXECUTIVE OFFICER
USINTERNETWORKING HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: PRESIDENT