UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934
(AMENDMENT NO. 1)
NAVISITE, INC.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
63935M109
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(CUSIP Number)
Charles N. Charnas
Vice President, Deputy General Counsel and Assistant Secretary
Hewlett-Packard Company
3000 Hanover Street MS 1050
Palo Alto, California 94304
Telephone: (650) 857-1501
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 20, 2002
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [_].
(Continued on following pages)
(Page 1 of 50 Pages)
CUSIP NO.63935M109 13D/A Page 2 of 50 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HEWLETT-PACKARD COMPANY
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP NO.63935M109 13D/A Page 3 of 50 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
COMPAQ COMPUTER CORPORATION
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
00
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP NO.63935M109 13D/A Page 4 of 50 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HEWLETT-PACKARD COMPANY FINANCIAL SERVICES COMPANY
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
00
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0%
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14 TYPE OF REPORTING PERSON
CO
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CUSIP NO.63935M109 13D/A Page 5 of 50 Pages
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ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended to add the following paragraph:
"This statement is being filed jointly by Hewlett-Packard Company, a
Delaware corporation ("HP"), Compaq Computer Corporation, a Delaware
corporation, and a wholly owned subsidiary of HP ("Compaq"), and Hewlett-Packard
Financial Services Company (formerly Compaq Financial Services Corporation), a
Delaware corporation and a wholly owned subsidiary of HP ("HPFS"). Compaq and
HPFS became wholly owned subsidiaries of HP, pursuant to a merger, May 3, 2002.
This amendment is being filed to amend the Schedule 13D (the "Schedule 13D")
filed with regard to the Shares on December 19, 2001. The Schedule 13D is
unchanged, except as otherwise set forth in this amendment. Capitalized terms
used herein but defined shall have the definitions set forth in the Schedule
13D."
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ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended by adding the following paragraph:
"On September 11, 2002, HPFS and ClearBlue Technologies, Inc., a
Delaware corporation ("CBT"), entered into a Note and Stock Purchase Agreement
(the "Purchase Agreement") pursuant to which HPFS transferred (i) a senior
secured convertible note of the Issuer in an aggregate principal amount of
$55,093,333.33 (the "NaviSite Note") which is convertible into 212,376,925
Shares and (ii) 3,207,053 shares issued by the Issuer to HPFS in lieu of cash
interest on the NaviSite Note, to ClearBlue Finance, Inc. ("CBT Finance"), a
wholly owned subsidiary of ClearBlue Technologies, Inc., in exchange for
1,447,368 shares of common stock, par value $0.01 per share, of CBT. The
foregoing description is qualified in its entirety by the terms of the Purchase
Agreement which is filed herewith as an exhibit and which is incorporated herein
by reference."
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended to read:
"(a) As of the date hereof, HP, Compaq and HPFS do not beneficially
own any shares.
(b) HP, Compaq and HPFS jointly disposed of the shares.
(c) HP, Compaq and HPFS sold (i) 3,207,053 shares owned beneficially
and of record and (ii) the NaviSite Note, which is convertible
into 212,376,925 shares, on September 11, 2002 as described in
Item 4.
(d) Not applicable.
(e) On September 11, 2002, HP, Compaq and HPFS ceased to be
beneficial holders of more than five percent of the Common Stock
of the Issuer."
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is amended to add the following paragraphs:
"On September 11, 2002 HPFS and CBT, entered into the Purchase
Agreement pursuant to which HPFS transferred (i) the NaviSite Note, which is
convertible into 212,376,925 Shares and (ii) 3,207,053 shares issued by the
Issuer to HPFS in lieu of cash interest on the NaviSite Note, to CBT Finance, a
wholly owned subsidiary of CBT in exchange for 1,447,368 shares of common stock,
par value $0.001 per share, of CBT. The foregoing description is qualified in
its entirety by the terms of the Purchase Agreement which is filed herewith as
an exhibit and which is incorporated herein by reference.
Pursuant to the Purchase Agreement, HPFS has entered into an Assignment
and Assumption Agreement with CBT Finance, dated as of September 11, 2002,
pursuant to which HPFS has assigned to CBT Finance its rights, and CBT Finance
has assumed HPFS' obligations, under the Note Purchase Agreement and the
Guarantee and Security Agreement dated as of November 8, 2001 and related
security agreements, among the Issuer, HPFS and certain Guarantors named
therein. The foregoing description is qualified in its entirety by the terms of
the Assignment and Assumption Agreement, which is filed herewith as an exhibit
and which is incorporated herein by reference.
CUSIP NO.63935M109 13D/A Page 6 of 50 Pages
Except for the transactions described above, to the best knowledge of
HP, Compaq and HPFS, there are no contracts, arrangements, understandings or
relationships (legal or otherwise), including, but not limited to, transfer or
voting of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies, between the persons enumerated in Item
2, and any other person, with respect to any securities of the Issuer, including
any securities pledged or otherwise subject to a contingency the occurrence of
which would give another person voting power or investment power over such
securities other than standard default and similar provisions contained in loan
agreements."
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Note and Stock Purchase Agreement dated as of September 11, 2002,
between HPFS and CBT.
Exhibit 2. Assignment and Assumption Agreement between HPFS and CBT Finance.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: September 20, 2002 HEWLETT-PACKARD COMPANY
/s/ CHARLES N. CHARNAS
By: ------------------------------------
Name: Charles N. Charnas
Title: Vice President
Deputy General Counsel and
Assistant Secretary
COMPAQ COMPUTER CORPORATION
/s/ CHARLES N. CHARNAS
By: ------------------------------------
Name: Charles N. Charnas
Title: Treasurer and
Assistant Secretary
HEWLETT-PACKARD FINANCIAL SERVICES COMPANY
/s/ CHARLES N. CHARNAS
By: ------------------------------------
Name: Charles N. Charnas
Title: Assistant Secretary
Page 7 of 50 Pages
EXHIBIT INDEX
Exhibit No. Page
----------- ----
1 Note and Stock Purchase Agreement dated as of September 11, 2002,
between HPFS and CBT.................................................. 8
2 Assignment and Assumption Agreement between HPFS and CBT Finance...... 49
Page 8 of 50 Pages
EXHIBIT 1
EXECUTION COPY
NOTE AND STOCK PURCHASE AGREEMENT, dated as of September 11, 2002
(this "Agreement"), by and between Hewlett-Packard Financial Services Company
("HPFS") and ClearBlue Technologies, Inc., a Delaware corporation ("CBT").
WHEREAS, CBT and HPFS have each determined that the transactions
contemplated by this Agreement, on the terms and conditions of this Agreement,
would be advantageous and beneficial to their respective corporations and
shareholders; and
WHEREAS, the parties hereto desire to consummate the transactions
contemplated herein, pursuant to which (a) HPFS will transfer to CBT, or at
CBT's direction, a wholly-owned subsidiary, all shares, whether certificated or
uncertificated,(collectively, the "Shares") of Common Stock, par value $0.01 per
share, of NaviSite, Inc., a Delaware corporation ("NaviSite") owned by HPFS
(including, without limitation, 3,207,053 shares in certificated form), (b) HPFS
will transfer to CBT, or at CBT's direction, a wholly-owned subsidiary, the 12%
Convertible Note (including all accrued and unpaid interest), dated as of
November 8, 2001, of NaviSite, including all rights under that certain Note
Purchase Agreement, dated as of October 29, 2001, by and among NaviSite, CMGI,
Inc, a Delware corporation. ("CMGI"), and Compaq Finacial Services Corporation,
now known as HPFS (the "Note"), and assign to CBT, or at CBT's direction, a
wholly-owned subsidiary, which will assume, that certain Guarantee and Security
Agreement and related agreements, including all rights thereunder (collectively,
the "Security Agreements") and (c) CBT will transfer to HPFS 1,447,368 shares of
common stock (the "ClearBlue Shares"), par value $0.01 per share, of CBT,
representing 22% of the issued and outstanding equity securities of CBT
(including as issued and outstanding the Common Shares being issued to CMGI
pursuant to that certain Note and Stock Purchase Agreement by and between CBT
and CMGI).
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.1. DEFINITIONS. As used herein, the following terms shall
have the following meanings:
"ACT" means the Securities Act of 1933, as amended, and the rules and
regulations issued in respect thereto.
"ENCUMBRANCE" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
Page 9 of 50 Pages
"LAW" means any law, statute, regulation, rule, ordinance, requirement
or other binding action or requirement of any governmental, regulatory or
administrative body, agency or authority or any court of judicial authority.
"ORDER" means any decree, order, judgment, writ, award, injunction,
stipulation or consent of or by any Federal, state or local government or any
court, administrative agency or commission or other governmental authority or
agency, domestic or foreign.
"PERSON" means any individual, corporation, general or limited
partnership, joint venture, association, limited liability company, joint stock
company, trust, business, bank, trust company, estate (including any
beneficiaries thereof), unincorporated entity, cooperative, association,
government branch, agency or political subdivision thereof or organization of
any kind.
"TRANSACTION DOCUMENTS" means any ancillary contracts, agreements or
other documents that are to be entered into in connection with the transactions
contemplated hereby.
ARTICLE II
Exchange of Stock and Notes
---------------------------
SECTION 2.1. EXCHANGE. Subject to the terms and conditions of this
Agreement, at the Closing HPFS agrees to transfer to CBT, or, at CBT's
direction, to ClearBlue Technologies Equity, Inc. ("Equity") and ClearBlue
Finance, Inc. ("Finance"), the Shares and the Note and to assign to CBT, or at
CBT's direction, Finance, the Security Agreements, and CBT agrees to transfer to
HPFS the ClearBlue Shares.
SECTION 2.2. THE CLOSING.
(a) Subject to the terms and conditions of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Heller Ehrman White & McAuliffe LLP, 120 West 45th
Street, New York, NY 10036, at 10:00 a.m. New York City Time no later than the
second business day following the day the last of the conditions set forth in
Article V shall have been fulfilled or waived (other than those that this
Agreement contemplates will be satisfied at or immediately prior to the
Closing), or at such other time and place as shall be mutually agreed upon by
HPFS and CBT (the "Closing Date").
(b) Subject to the conditions set forth in this Agreement, the parties
agree to consummate the following transactions at the Closing:
(i) CBT shall assign and transfer to HPFS good and valid title in
and to the ClearBlue Shares, free and clear of any Encumbrance, by physically
delivering to HPFS one or more stock certificates representing the ClearBlue
Shares being sold, duly endorsed or accompanied by duly executed stock powers
sufficient to vest in HPFS or its nominee good and marketable title to such
ClearBlue Shares; and
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Page 10 of 50 Pages
(ii) (a) HPFS shall assign and transfer to CBT, or at CBT's
direction, to Finance and/or Equity, good and valid title in and to the Shares
and the Note, free and clear of any Encumbrance, other than any requirement that
NaviSite and CMGI consent to the transfer of the Note, by physically delivering
to CBT, Finance and/or Equity one or more stock certificates representing the
Shares being sold, duly endorsed or accompanied by duly executed stock powers
sufficient to validly transfer such Shares to CBT or its nominee, and by
delivering to CBT or its nominee the Note, together with an appropriate allonge
or other debt transfer instrument sufficient to validly transfer the Note,
subject to the receipt of NaviSite's and CMGI's consent and (b) CBT, or at CBT's
direction, Finance, shall assume pursuant to an assignment and assumption
agreement the obligations of HPFS under the Note and the Security Agreements
effective when the assignment and transfer of the Note is effective.
ARTICLE III
Representations and Warranties of HPFS
--------------------------------------
HPFS represents and warrants to CBT that the statements contained in
this Article III are true and correct as of the date of this Agreement and will
be true and correct as of the Closing as though made as of the Closing, except
to the extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties will be true
and correct as of such date).
SECTION 3.1. POWER AND AUTHORITY; ENFORCEABILITY. HPFS is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. HPFS has all requisite capacity, power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance by HPFS of this Agreement and the consummation by it of
the Contemplated Transactions (as defined below) have been duly authorized by
the Board of Directors of HPFS, and no other corporate action on the part of
HPFS is necessary to authorize the execution and delivery by HPFS of this
Agreement or the consummation by it of the Contemplated Transactions. No vote
of, or consent by, the holders of any class or series of capital stock issued by
HPFS is necessary to authorize the consummation of the Contemplated
Transactions. This Agreement has been duly executed and delivered and, upon
execution by CBT, will constitute a valid and legally binding obligation of
HPFS, enforceable against HPFS in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
SECTION 3.2. OWNERSHIP; TRANSFERABILITY. HPFS is the legal and
beneficial owner of the Shares and the Note, free and clear of any Encumbrance,
and, other than restrictions under the Act and restrictions reflected in a
legend on the certificates representing the Shares and the requirement that
NaviSite and CMGI consent to the transfer of the Note, there are no restrictions
on transfer of the Shares and the Note pursuant to the terms of this Agreement.
There are no voting trusts, voting agreements, proxies or other agreements,
instruments or
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Page 11 of 50 Pages
understandings with respect to the voting of the Shares being sold by HPFS to
CBT to which HPFS is a party. Other than the Note, there are no options,
warrants, or purchase, subscription, call, conversion, exchange or other
contracts or instruments permitting HPFS to sell, exchange or otherwise deliver,
or to purchase, acquire or otherwise receive, securities of NaviSite.
SECTION 3.3. ACQUISITION ENTIRELY FOR OWN ACCOUNT. This Agreement is
made with HPFS in reliance upon HPFS' representation to CBT that (a) the
ClearBlue Shares to be received by HPFS will be acquired for investment for
HPFS' own account, and not with a view to the resale or distribution of any part
thereof, and (b) HPFS has no present intention of selling, granting any
participation in, or otherwise distributing the same, except, in the case of (a)
and (b) of this Section, as permitted by the Act.
SECTION 3.4. RESTRICTED SECURITIES. HPFS understands that the
ClearBlue Shares are characterized as "restricted securities" under the Federal
securities laws inasmuch as they are being acquired in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act only in certain
limited circumstances.
SECTION 3.5. CONSENTS AND APPROVALS. Subject to the accuracy of the
representations and warranties made by CBT in Article IV hereof, neither the
execution, delivery and performance of this Agreement by HPFS, nor the
consummation by HPFS of any transaction related hereto including the transfer,
sale and delivery of the Note and Shares will require any consent, approval,
license, Order or authorization of, filing, registration, declaration or taking
of any other action with, or notice to, any Person, other than such consents,
approvals, filings or actions (a) as may be required under the Federal
securities laws which have or will be made, (b) which have already been
obtained, and (c) of NaviSite and CMGI to the transfer of the Note.
SECTION 3.6. CONFLICTS. Other than obtaining the consent of navisite
and CMGI to the transfer of the Note, the execution and delivery by HPFS of this
Agreement and the Transaction Documents to which it is or will become a party
does not, and the consummation of the transactions contemplated by this
Agreement (the "Contemplated Transactions") and the Transaction Documents to
which it is or will become a party shall not, (a) contravene, conflict with, or
result in any violation or breach of any provision of the certificate of
incorporation or by-laws of HPFS, (b) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, contract or other agreement, instrument
or obligation to which HPFS is a party or by which it or any of its properties
or assets may be bound, or (c) conflict or violate any permit, concession,
franchise, license, judgment, Order, decree, statute, law, ordinance, rule or
regulation of any government, governmental instrumentality or court, domestic or
foreign, applicable to HPFS or any of its properties or assets, except in the
case of (b) and (c) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not, individually or in the
aggregate, materially and adversely affect the Shares and the Note being
conveyed by HPFS to CBT, or at CBT's direction, to Equity and Finance hereunder.
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Page 12 of 50 Pages
SECTION 3.7. BROKERS, ETC. HPFS is not obligated to pay any fee or
commission to any broker, finder or other similar Person in connection with the
transactions contemplated by this Agreement.
SECTION 3.8. LITIGATION. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the knowledge of HPFS,
threatened against or affecting HPFS, at law or in equity, before any court,
arbitration panel, tribunal or governmental commission, bureau, agency or
instrumentality which seeks to enjoin or restrain, or could reasonably be
expected to have the effect of delaying, the consummation of the transactions
contemplated by this Agreement or limit the ability of HPFS to perform any of
its obligations hereunder.
SECTION 3.9. INFORMATION. Without undertaking any investigation, HPFS
is not aware of any material adverse change in the condition (financial or
otherwise), business or results of operations of NaviSite and its subsidiaries
taken as a whole except as publicly disclosed by NaviSite subsequent to the date
of the most recent financial statements included with NaviSite's filings with
the Securities and Exchange Commission.
SECTION 3.10. NAVISITE DEFAULT. To the Knowledge of HPFS, NaviSite is
not in default under any agreement or contract with HPFS and HPFS is not aware
of any default under, or challenges to the validity of, the Note.
SECTION 3.11. NAVISITE NON-PUBLIC INFORMATION. HPFS acknowledges that
it is aware that CBT may have material non-public information concerning
NaviSite.
SECTION 3.12. SECURITY INTEREST. In connection with that certain
Guarantee and Security Agreement (the "Guarantee Security Agreement"), dated as
of November 8, 2001, by and among NaviSite, Inc., Clickhear, Inc. and Compaq
Financial Services Corporation, now known as Hewlett-Packard Financial Services
Company (the "Collateral Representative"), the UCC-1 financing statement filed
with respect to NaviSite, Inc. was in proper form for filing with the
appropriate state office with respect to that portion of the Collateral (as
defined in the Guarantee Security Agreement) of NaviSite that could be perfected
by filing a financing statement in such state office under the UCC (as defined
in the Guarantee Security Agreement). A copy of such filed UCC-1 financing
statement is attached hereto as Exhibit D. The Collateral Representative has not
(i) authorized any termination or other amendment to the financing statement,
except as set forth on Schedule 3.12 attached hereto, (ii) agreed to any
amendment of the Guaranty Security Agreement, or (iii) agreed to subordinate its
rights under the Guarantee Security Agreement.
ARTICLE IV
Representations and Warranties of CBT
-------------------------------------
CBT represents and warrants to HPFS that, except as set forth in the
CBT Disclosure Schedule, the statements contained in this Article IV are true
and correct as of the date of this Agreement and will be true and correct as of
the Closing as though made as of the
5
Page 13 of 50 Pages
Closing, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties will be true and correct as of such date). The CBT Disclosure
Schedule shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this Article IV. The
disclosures in any section or subsection of the CBT Disclosure Schedule shall
qualify other sections and subsections in this Article IV only to the extent it
is clear from a reading of the disclosure that such disclosure is applicable to
such other sections and subsections. As used in this Agreement, a "CBT Material
Adverse Effect" shall mean any material adverse change, event, circumstance or
development with respect to, or material adverse effect on, the business,
assets, liabilities, condition (financial or other), or results of operations of
CBT and the Subsidiaries, taken as a whole (other than changes, events,
circumstances or developments that are the result of economic factors affecting
the economy as a whole or that are the result of factors generally affecting the
industry or specific markets in which CBT competes). For the avoidance of doubt,
the parties agree that the terms "material", "materially" or "materiality" as
used in this Agreement with an initial lower case "m" shall have their
respective customary and ordinary meanings, without regard to the meaning
ascribed to CBT Material Adverse Effect.
SECTION 4.1. EXISTENCE; POWER AND AUTHORITY. CBT is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. CBT has the requisite corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance by CBT of this Agreement and the consummation by it of
the Contemplated Transactions have been duly authorized by the Board of
Directors of CBT, and no other corporate action on the part of CBT is necessary
to authorize the execution and delivery by CBT of this Agreement or the
consummation by it of the Contemplated Transactions. No vote of, or consent by,
the holders of any class or series of capital stock issued by CBT is necessary
to authorize the consummation of the Contemplated Transactions. This Agreement
has been duly executed and delivered and, upon execution by HPFS, will
constitute a valid and legally binding obligation of CBT, enforceable against
CBT in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (b) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
SECTION 4.2. OWNERSHIP; TRANSFERABILITY. The ClearBlue Shares have
been duly authorized and when issued, will be duly and validly issued, fully
paid and non-assessable.
SECTION 4.3. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with CBT in reliance upon its representation to HPFS that (a) the Shares and the
Note to be received by CBT, or at CBT's direction, Equity and Finance,
respectively, will be acquired for investment for such entity's own account, and
not with a view to the resale or distribution of any part thereof, and (b) each
of CBT, Equity and Finance has no present intention of selling, granting any
participation in, or otherwise distributing the same, except, in the case of (a)
and (b) of this Section, as permitted by the Act.
6
Page 14 of 50 Pages
SECTION 4.4. RESTRICTED SECURITIES. CBT understands that the Shares
are characterized as "restricted securities" under the Federal securities laws
and that under such laws and applicable regulations such securities may be
resold without registration under the Act only in certain limited circumstances.
SECTION 4.5. LEGENDS. It is understood that the certificate(s)
evidencing the Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSION,
AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A
REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933
AND APPLICABLE STATE LAWS AND RULES OR UNLESS SUCH TRANSFER MAY BE EFFECTED
WITHOUT VIOLATION OF THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE STATE
LAWS AND RULES.
SECTION 4.6. NO CONFLICT.
(a) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will (with
or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Certificate of Incorporation or bylaws of CBT;
(ii) contravene, conflict with, or result in a violation of any
federal, state, local, or other administrative order, constitution, law,
ordinance, principle of common law, regulation or statute ("Legal Requirement"),
or any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other governmental body or by any arbitrator (an "Order") to which CBT, or
any of the assets owned or used by CBT, may be subject;
(iii) contravene, conflict with, or result in a violation or
breach of any provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any material contract or agreement of CBT; or
(iv) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by CBT.
(b) CBT is not nor will it be required to give any notice to or obtain
any consent from any person or governmental entity in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
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SECTION 4.7. CAPITALIZATION.
(a) The authorized capital stock of CBT consists of (i) 10,000,000
shares of common stock, par value $0.01 (the "Common Shares"), of which
5,000,000 shares are issued and outstanding, and (ii) 10,000,000 shares of
preferred stock, par value $0.01, none of which are issued and outstanding.
Effective as of the Closing Date, 131,579 additional Common Shares will be
issued to CMGI.
(b) Section 4.7 of the CBT Disclosure Schedule sets forth a complete
and accurate list, as of the date of this Agreement, of the holders of capital
stock of CBT, showing the number of shares of capital stock, and the class or
series of such shares, held by each stockholder. Section 4.7 of the Disclosure
Schedule also indicates all outstanding Common Shares that constitute restricted
stock or that are otherwise subject to a repurchase or redemption right,
indicating the name of the applicable stockholder, the vesting schedule
(including any acceleration provisions with respect thereto), and the repurchase
price payable by CBT. All of the issued and outstanding shares of capital stock
of CBT have been duly authorized and validly issued and are fully paid and
nonassessable. All of the issued and outstanding shares of capital stock of CBT
have been offered, issued and sold by CBT in compliance with all applicable
federal and state securities laws.
(c) Section 4.7 of the CBT Disclosure Schedule sets forth a complete
and accurate list, as of the date of this Agreement of: (i) all stock option
plans or other stock or equity-related plans of CBT (the "CBT Stock Plans"),
indicating for each CBT Stock Plan the number of Common Shares issued to date
under such Plan, the number of Common Shares subject to outstanding options
under such Plan and the number of Common Shares reserved for future issuance
under such Plan; (ii) all holders of outstanding options to acquire Common
Shares, indicating with respect to each option the CBT Stock Plan under which it
was granted, the number of Common Shares subject to such option, the exercise
price, the date of grant, and the vesting schedule (including any acceleration
provisions with respect thereto); and (iii) all holders of outstanding warrants
to acquire Common Shares, indicating with respect to each warrant the agreement
or other document under which it was granted, the number of shares of capital
stock, and the class or series of such shares, subject to such warrant, the
exercise price, the date of issuance and the expiration date thereof. CBT has
provided to HPFS an opportunity to review complete and accurate copies of all
CBT Stock Plans, forms of all stock option agreements evidencing options and all
warrants. All of the shares of capital stock of CBT subject to options and
warrants will be, upon issuance pursuant to the exercise of such instruments,
duly authorized, validly issued, fully paid and nonassessable.
(d) Except as set forth in Section 4.7 of the CBT Disclosure Schedule,
(i) no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
CBT is authorized or outstanding, (ii) CBT has no obligation (contingent or
otherwise) to issue any subscription, warrant, option, convertible security or
other such right, or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of CBT, (iii) CBT has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest
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therein or to pay any dividend or to make any other distribution in respect
thereof, and (iv) there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to CBT.
(e) Except as set forth in Section 4.7 of the CBT Disclosure Schedule,
there is no agreement, written or oral, between CBT and any holder of its
securities, or, to the best of CBT's knowledge, among any holders of its
securities, relating to the sale or transfer (including agreements relating to
rights of first refusal, co-sale rights or "drag-along" rights), registration
under the Securities Act, or voting, of the capital stock of CBT.
SECTION 4.8. SUBSIDIARIES.
(a) Section 4.8 of the CBT Disclosure Schedule sets forth: (i) the
name of each Subsidiary; (ii) the number and type of outstanding equity
securities of each Subsidiary and a list of the holders thereof; (iii) the
jurisdiction of organization of each Subsidiary; (iv) the names of the officers
and directors of each Subsidiary; and (v) the jurisdictions in which each
Subsidiary is qualified or holds licenses to do business as a foreign
corporation or other entity.
(b) Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
Each Subsidiary is duly qualified to conduct business and is in good standing
under the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing, individually or in the
aggregate, has not had and would not reasonably be expected to have a CBT
Material Adverse Effect. Each Subsidiary has all requisite power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. CBT has provided to HPFS an opportunity to
review complete and accurate copies of the charter and by-laws of each
Subsidiary. No Subsidiary is in default under or in violation of any provision
of its charter or by-laws. All of the issued and outstanding shares of capital
stock of each Subsidiary are duly authorized, validly issued, fully paid and
nonassessable. All shares of each Subsidiary that are held of record or owned
beneficially by either CBT or any Subsidiary are held or owned free and clear of
any restrictions on transfer (other than restrictions under the Act and state
securities laws), claims, Encumbrances, options, warrants, rights, contracts,
calls, commitments, equities and demands. There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which CBT or any
Subsidiary is a party or which are binding on any of them providing for the
issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary.
(c) CBT does not control directly or indirectly or have any direct or
indirect equity participation or similar interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
association or entity which is not a Subsidiary.
(d) "SUBSIDIARY" shall mean any corporation, partnership, trust,
limited liability company or other non-corporate business enterprise in which
CBT (or another Subsidiary) holds
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stock or other ownership interests representing (a) more than 50% of the voting
power of all outstanding stock or ownership interests of such entity or (b) the
right to receive more than 50% of the net assets of such entity available for
distribution to the holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such entity.
SECTION 4.9. FINANCIAL STATEMENTS. Section 4.9 of the CBT Disclosure
Schedule contains: (a) unaudited consolidated balance sheets of CBT and the
Subsidiaries as at December 31, 2001 and the related unaudited consolidated
statements of income, changes in stockholders' equity, and cash flow for the
fiscal year then ended, and (b) an unaudited consolidated balance sheet of CBT
and the Subsidiaries as at June 30, 2002 (the "Interim Balance Sheet") and the
related unaudited consolidated statements of income, changes in stockholders'
equity, and cash flow for the six months then ended, including in each case the
notes thereto. Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of CBT and the Subsidiaries as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP,
subject, in the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Interim Balance Sheet);
the financial statements referred to in this Section 4.8 reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than CBT and the Subsidiaries are
required by GAAP to be included in the consolidated financial statements of CBT.
SECTION 4.10. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of CBT and the Subsidiaries, all of which
have been made available to Buyer, are complete and correct. The minute books of
CBT and the Subsidiaries contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of CBT and the
Subsidiaries, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books.
SECTION 4.11. TITLE TO PROPERTIES; ENCUMBRANCES. Section 4.11 of the
CBT Disclosure Schedule hereto contains a complete and accurate list of all real
property, leaseholds, or other interests therein owned by CBT and the
Subsidiaries. CBT has provided HPFS an opportunity to review copies of the deeds
and other instruments (as recorded) by which CBT and the Subsidiaries acquired
such real property and interests, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of CBT or the Subsidiaries
and relating to such property or interests. CBT and the Subsidiaries own (with
good and marketable title in the case of real property, subject only to the
matters permitted by the following sentence) all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) that they
purport to own, including all of the properties and assets reflected in the
Interim Balance Sheet (except for assets held under capitalized leases disclosed
to HPFS and personal property sold since the date of the Interim Balance Sheet,
as the case may be, in the ordinary course of business), and all of the
properties and assets purchased or otherwise acquired by CBT and the
Subsidiaries since the date of the Interim Balance Sheet (except for personal
property
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acquired and sold since the date of the Interim Balance Sheet in the ordinary
course of business and consistent with past practice). All material properties
and assets reflected in the Balance Sheet and the Interim Balance Sheet are free
and clear of all Encumbrances and are not, in the case of real property, subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Interim
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the Interim
Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(c) liens for current taxes not yet due, and (d) with respect to real property,
(i) minor imperfections of title, if any, none of which is substantial in
amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of CBT or the Subsidiaries, and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto.
SECTION 4.12. ABSENCE OF CERTAIN CHANGES. Since June 30, 2002, there
has occurred no event or development which, individually or in the aggregate,
has had, or could reasonably be expected to have in the future, a CBT Material
Adverse Effect.
SECTION 4.13. UNDISCLOSED LIABILITIES. None of CBT or the Subsidiaries
has any liability (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated and whether due or to become due), except for
(a) liabilities shown on the Interim Balance Sheet, (b) liabilities which have
arisen since June 30, 2002, in the ordinary course of business and (c)
contractual and other liabilities that would not reasonably be required by GAAP
to be reflected on a balance sheet and (d) liabilities incurred after June 30,
2002, in the ordinary course of business and which are not material in amount.
SECTION 4.14. TAX MATTERS.
(a) Each of CBT and the Subsidiaries has filed on a timely basis all
Tax Returns that it was required to file, and all such Tax Returns were complete
and accurate and disclose all Taxes required to be paid by CBT and each
Subsidiary. Neither CBT nor any Subsidiary is or has ever been a member of a
group of corporations with which it has filed (or been required to file)
consolidated, combined or unitary Tax Returns, other than a group of which only
CBT and the Subsidiaries are or were members. Each Affiliated Group has filed
all Tax Returns that it was required to file with respect to any Affiliated
Period, and all such Tax Returns were complete and accurate and disclose all
Taxes required to be paid by CBT and each Subsidiary. Each of CBT and the
Subsidiaries has paid on a timely basis all Taxes that were due and payable and
each member of an Affiliated Group has paid all Taxes that were due and payable
with respect to all Affiliated Periods. The unpaid Taxes of CBT and the
Subsidiaries for tax periods through June 30, 2002, do not exceed the accruals
and reserves for Taxes (excluding accruals and reserves for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the Interim Balance Sheet. Neither CBT nor any Subsidiary has any actual
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or potential liability for any Tax obligation of any taxpayer (including any
affiliated group of corporations or other entities that included CBT or any
Subsidiary during a prior period) other than CBT and the Subsidiaries. All Taxes
that CBT or any Subsidiary is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Entity. All Taxes (whether or not shown on any Tax
Return) owed by any of CBT and any Affiliated Group have been timely paid.
(b) CBT has provided to HPFS an opportunity to review complete and
accurate copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by CBT or any
Subsidiary since December 31, 2001 and complete and accurate copies of the
portion of the Tax Returns, examination reports and statements of deficiency
assessed against or agreed to with respect to any member of an Affiliated Group
relating to the activities of CBT or a Subsidiary for all Affiliated Periods
since December 31, 2001. All deficiencies assessed against CBT, any Subsidiary
or any Affiliated Group have been paid in full. The federal income Tax Returns
of CBT and each Subsidiary and each member of an Affiliated Group have been
audited by the Internal Revenue Service or are closed by the applicable statute
of limitations for all taxable years through the taxable year specified in
Section 4.9(b) of the CBT Disclosure Schedule. No examination or audit of any
Tax Return of CBT or any Subsidiary or any member of an Affiliated Group with
respect to an Affiliated Period] by any Governmental Entity is currently in
progress or, to the knowledge of CBT, threatened or contemplated. Neither CBT
nor any Subsidiary nor any member of an Affiliated Group has been informed by
any jurisdiction that the jurisdiction believes that CBT or any Subsidiary or
any member of an Affiliated Group was required to file any Tax Return that was
not filed. Neither CBT nor any Subsidiary nor any member of an Affiliated Group
has waived any statute of limitations with respect to Taxes or agreed to an
extension of time with respect to a Tax assessment or deficiency.
(c) Neither CBT nor any Subsidiary: (i) is a "consenting corporation"
within the meaning of Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), and none of the assets of CBT or the Subsidiaries are
subject to an election under Section 341(f) of the Code; (ii) has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Code; or (iii) has any actual or potential liability for any Taxes of any
person (other than CBT and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of federal, state, local, or foreign law), or
as a transferee or successor, by contract, or otherwise.
(d) None of the assets of CBT or any Subsidiary: (i) is "tax-exempt
use property" within the meaning of Section 168(h) of the Code; or (ii) directly
or indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(e) Neither CBT nor any Subsidiary has undergone a change in its
method of accounting resulting in an adjustment to its taxable income pursuant
to Section 481 of the Code.
(f) Except as set forth on Section 4.14 of the CBT Disclosure
Schedule, as a direct or indirect result of the transactions contemplated by
this Agreement, no payment or other
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benefit by CBT, and no acceleration of the vesting of any options, payments or
other benefits by CBT will be (or under Section 280G of the Code and the
Treasury Regulations thereunder be presumed to be) a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the Code
and the Treasury Regulations thereunder, without regard to whether such payment
or acceleration is reasonable compensation for personal services performed or to
be performed in the future.
(g) As used in this Agreement:
"AFFILIATED GROUP" shall mean a group of corporations with which CBT
or a Subsidiary has filed (or was required to file) consolidated, combined,
unitary or similar Tax Returns.
"AFFILIATED PERIOD" shall mean any period in which CBT or a Subsidiary
was a member of an Affiliated Group.
"TAXES" shall mean all taxes, charges, fees, levies or other similar
assessments or liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment, insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof.
"TAX RETURNS" shall mean all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.15. ASSETS.
(a) CBT or the applicable Subsidiary is the true and lawful owner, and
has good title to, all of the assets (tangible or intangible) purported to be
owned by CBT or the Subsidiaries, free and clear of all Encumbrances. Each of
CBT and the Subsidiaries owns or leases all tangible assets sufficient for the
conduct of its businesses as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from material defects, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used.
(b) Section 4.15(b) of the CBT Disclosure Schedule lists individually
(i) all fixed assets (within the meaning of GAAP) of CBT or the Subsidiaries
having a book value greater than $100,000, indicating the cost, accumulated book
depreciation (if any) and the net book value of each such fixed asset as of June
30, 2002, and (ii) all other assets of a tangible nature (other than
inventories) of CBT or the Subsidiaries whose book value exceeds $100,000.
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(c) All assets of CBT and each of its Subsidiaries that were acquired
by CBT or such Subsidiary from an affiliate of CBT were acquired for fair value
in arms-length transactions.
SECTION 4.16. OWNED REAL PROPERTY. Neither CBT nor any of its
Subsidiaries currently owns, or has owned in the past, any
real property.
SECTION 4.17. REAL PROPERTY LEASES. Section 4.17 of the CBT Disclosure
Schedule lists all leases or subleases pursuant to which CBT or a Subsidiary
leases or subleases from another party any real property (the "Leases") and
lists the term of such Lease, any extension and expansion options, and the rent
payable thereunder. CBT has provided HPFS an opportunity to review complete and
accurate copies of the Leases.
With respect to each Lease:
(a) such Lease is legal, valid, binding, enforceable and in full force
and effect;
(b) such Lease will continue to be legal, valid, binding, enforceable
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect immediately prior to the Closing;
(c) neither CBT nor any Subsidiary, to either's knowledge, nor, to the
knowledge of CBT, any other party, is in breach or violation of, or default
under, any such Lease, and no event has occurred, is pending or, to the
knowledge of CBT, is threatened, which, after the giving of notice, with lapse
of time, or otherwise, would constitute a breach or default by CBT or any
Subsidiary or, to the knowledge of CBT, any other party under such Lease;
(d) to each of CBT's and any Subsidiary's knowledge, there are no
disputes, oral agreements or forbearance programs in effect as to such Lease;
(e) neither CBT nor any Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
(f) to the knowledge of CBT, all facilities leased or subleased
thereunder are supplied with utilities and other services adequate for the
operation of said facilities; and
(g) CBT is not aware of any Encumbrance, easement, covenant or other
restriction applicable to the real property subject to such lease which would
reasonably be expected to materially impair the current uses or the occupancy by
CBT or a Subsidiary of the property subject thereto.
SECTION 4.18. INTELLECTUAL PROPERTY.
(a) Section 4.18(a) of CBT Disclosure Schedule lists (i) each patent,
patent application, copyright registration or application therefor, mask work
registration or application therefor, and trademark, service mark and domain
name registration or application therefor of CBT or any Subsidiary and (ii) each
Customer Deliverable of CBT or any Subsidiary.
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(b) Each of CBT and the Subsidiaries owns or possesses sufficient
legal rights to use all Intellectual Property necessary (i) to use, manufacture,
have manufactured, market and distribute the Customer Deliverables and (ii) to
operate the Internal Systems, without any known conflict with, or infringement
of, the rights of others. CBT or the appropriate Subsidiary has taken all
reasonable measures to protect the proprietary nature of each item of CBT
Intellectual Property, and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the knowledge of CBT, no
other person or entity has any rights to any of the CBT Intellectual Property
owned by CBT or the Subsidiaries (except pursuant to agreements or licenses
specified in Section 4.18(b) of the CBT Disclosure Schedule), and, to the
knowledge of CBT, no other person or entity is infringing, violating or
misappropriating any of the CBT Intellectual Property.
(c) To the knowledge of CBT, none of the Customer Deliverables, or the
marketing, distribution, provision or use thereof, infringes or violates, or
constitutes a misappropriation of, any Intellectual Property rights of any
person or entity. To the knowledge of CBT, none of the Internal Systems, or the
use thereof, infringes or violates, or constitutes a misappropriation of, any
Intellectual Property rights of any person or entity. Section 4.18(c) of the CBT
Disclosure Schedule lists any complaint, claim or notice, or written threat
thereof, received by CBT or any Subsidiary alleging any such infringement,
violation or misappropriation; and CBT has provided to HPFS an opportunity to
review complete and accurate copies of all written documentation in the
possession of CBT or any Subsidiary relating to any such complaint, claim,
notice or threat. CBT has provided to HPFS an opportunity to review complete and
accurate copies of all written documentation in CBT's possession relating to
claims or disputes known to CBT concerning any CBT Intellectual Property.
(d) Section 4.18(d) of the CBT Disclosure Schedule identifies each
license or other agreement pursuant to which CBT or a Subsidiary has licensed,
distributed or otherwise granted any rights to any third party with respect to,
any CBT Intellectual Property. Except as described in Section 4.18(d) of the CBT
Disclosure Schedule, neither CBT nor any Subsidiary has agreed to indemnify any
person or entity against any infringement, violation or misappropriation of any
Intellectual Property rights with respect to any Customer Deliverables.
(e) Section 4.18(e) of the CBT Disclosure Schedule identifies each
item of CBT Intellectual Property that is owned by a party other than CBT or a
Subsidiary, and the license or agreement pursuant to which CBT or a Subsidiary
uses it (excluding off-the-shelf software programs licensed by CBT pursuant to
"shrink wrap" licenses).
(f) Neither CBT nor any Subsidiary has disclosed the source code for
the Software or other confidential information constituting, embodied in or
pertaining to the Software to any person or entity, except pursuant to the
agreements listed in Section 4.18(f) of the CBT Disclosure Schedule, and CBT has
taken reasonable measure to prevent disclosure of such source code.
(g) All of the copyrightable materials (including Software)
incorporated in or bundled with the Customer Deliverables have been created by
employees of CBT or a Subsidiary
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within the scope of their employment by CBT or a Subsidiary or by independent
contractors of CBT or a Subsidiary who have executed agreements expressly
assigning all right, title and interest in such copyrightable materials to CBT
or a Subsidiary. No portion of such copyrightable materials was jointly
developed with any third party.
(h) The Customer Deliverables and the Internal Systems are free from
significant defects or programming errors and conform in all material respects
to the written documentation and specifications therefor.
(i) As used in this Agreement:
"CBT INTELLECTUAL PROPERTY" shall mean the Intellectual Property owned
by or licensed to CBT or a Subsidiary and covering, incorporated in, underlying
or used in connection with the Customer Deliverables or the Internal Systems.
"CUSTOMER DELIVERABLES" shall mean (a) the products that CBT or any
Subsidiary (i) currently manufactures, markets, sells or licenses, or (ii) has
manufactured, marketed, sold or licensed within the previous year, or (iii)
currently plans to manufacture, market, sell or license in the future and (b)
the services that CBT or any Subsidiary (i) currently provides, or (ii) has
provided within the previous year, or (iii) currently plans to provide in the
future.
"INTELLECTUAL PROPERTY" shall mean all:
(a) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, reexamination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations;
(b) trademarks, service marks, trade dress, Internet domain names,
logos, trade names and corporate names and registrations and applications for
registration thereof;
(c) copyrights and registrations and applications for registration
thereof;
(d) mask works and registrations and applications for registration
thereof;
(e) computer software, data and documentation;
(f) inventions, trade secrets and confidential business information,
whether patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, research and
development information, copyrightable works, financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information;
(g) other proprietary rights relating to any of the foregoing
(including remedies against infringements thereof and rights of protection of
interest therein under the laws of all jurisdictions); and
(h) copies and tangible embodiments thereof.
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"INTERNAL SYSTEMS" shall mean the internal systems of CBT or any
Subsidiary that are used in its business or operations, including computer
hardware systems, software applications and embedded systems.
"SOFTWARE" shall mean any of the software owned by CBT or a
Subsidiary.
SECTION 4.19. INVENTORY. All inventory of CBT and the Subsidiaries,
whether or not reflected on the Interim Balance Sheet, consists of a quality and
quantity usable and saleable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written-off or written-down to net realizable value on the Interim Balance
Sheet. All inventories not written-off have been priced at the lower of cost or
market. The quantities of each type of inventory, whether raw materials,
work-in-process or finished goods, are not excessive in the present
circumstances of CBT and the Subsidiaries.
SECTION 4.20. CONTRACTS.
(a) Section 4.20 of the CBT Disclosure Schedule lists the following
agreements (written or oral) to which CBT or any Subsidiary is a party as of the
date of this Agreement:
(i) any agreement (or group of related agreements) for the lease
of personal property from or to third parties providing for lease payments in
excess of $100,000 per annum or having a remaining term longer than 12 months;
(ii) any agreement (or group of related agreements) for the
purchase or sale of products or for the furnishing or receipt of services (A)
which calls for performance over a period of more than one year, (B) which
involves more than the sum of $100,000, or (C) in which CBT or any Subsidiary
has granted manufacturing rights, "most favored nation" pricing provisions or
marketing or distribution rights relating to any products or territory or has
agreed to purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;
(iii) any agreement concerning the establishment or operation of
a partnership, joint venture or limited liability company;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) involving more
than $100,000 or under which it has imposed (or may impose) an Encumbrance on
any of its assets, tangible or intangible;
(v) any agreement for the disposition of any significant portion
of the assets or business of CBT or any Subsidiary (other than sales of products
in the ordinary course of business) or any agreement for the acquisition of the
assets or business of any other entity (other than purchases of inventory or
components in the ordinary course of business);
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(vi) any agreement concerning noncompetition;
(vii) any employment or consulting agreement;
(viii) any agreement involving any current or former officer,
director or stockholder of CBT or an Affiliate (as defined in Rule 12b-2 under
the Exchange Act) thereof;
(ix) any agreement under which the consequences of a default or
termination would reasonably be expected to have a CBT Material Adverse Effect;
(x) any agreement which contains any provisions requiring CBT or
any Subsidiary to indemnify any other party (excluding indemnities contained in
agreements for the purchase, sale or license of products entered into in the
ordinary course of business); and
(xi) any other agreement (or group of related agreements) either
involving more than $100,000 or not entered into in the ordinary course of
business.
(b) CBT has provided to HPFS an opportunity to review complete and
accurate copy of each agreement listed in Section 4.17, Section 4.18 or Section
4.20 of the CBT Disclosure Schedule. With respect to each agreement so listed:
(i) the agreement is legal, valid, binding and enforceable and in full force and
effect; (ii) the agreement will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) neither CBT nor any Subsidiary nor, to the knowledge of CBT, any other
party, is in breach or violation of, or default under, any such agreement, and
no event has occurred, is pending or, to the knowledge of CBT, is threatened,
which, after the giving of notice, with lapse of time, or otherwise, would
constitute a breach or default by CBT or any Subsidiary or, to the knowledge of
CBT, any other party under such agreement.
SECTION 4.21. ACCOUNTS RECEIVABLE. All accounts receivable of CBT and
the Subsidiaries reflected on the Interim Balance Sheet (other than those paid
since such date) are valid receivables subject to no setoffs or counterclaims
and are current and collectible (within 90 days after the date on which it first
became due and payable), net of the applicable reserve for bad debts on the
Interim Balance Sheet. A complete and accurate list of the accounts receivable
reflected on the Interim Balance Sheet, showing the aging thereof, is included
in Section 4.21 of the CBT Disclosure Schedule. All accounts receivable of CBT
and the Subsidiaries that have arisen since June 30, 2002, are valid receivables
subject to no setoffs or counterclaims and are collectible (within 90 days after
the date on which it first became due and payable), net of a reserve for bad
debts in an amount proportionate to the reserve shown on the Interim Balance
Sheet. Neither CBT nor any Subsidiary has received any written notice from an
account debtor stating that any account receivable in an amount in excess of
$100,000 is subject to any contest, claim or setoff by such account debtor.
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SECTION 4.22. POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of CBT or any Subsidiary.
SECTION 4.23. INSURANCE. Section 4.23 of the CBT Disclosure Schedule
lists each insurance policy (including fire, theft, casualty, comprehensive
general liability, workers compensation, business interruption, environmental,
product liability and automobile insurance policies and bond and surety
arrangements) to which CBT or any Subsidiary is a party, all of which are in
full force and effect. Such insurance policies are of the type and in amounts
customarily carried by organizations conducting businesses or owning assets
similar to those of CBT and the Subsidiaries. There is no material claim pending
under any such policy as to which coverage has been questioned, denied or
disputed by the underwriter of such policy. All premiums due and payable under
all such policies have been paid, neither CBT nor any Subsidiary may be liable
for retroactive premiums or similar payments, and CBT and the Subsidiaries are
otherwise in compliance in all material respects with the terms of such
policies. CBT has no knowledge of any threatened termination of, or premium
increase with respect to, any such policy. Each such policy will continue to be
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing.
SECTION 4.24. LITIGATION. Except as disclosed in Section 4.24 of the
CBT Disclosure Schedule, there is no action, suit, proceeding, claim,
arbitration or investigation before any governmental entity or before any
arbitrator (a "Legal Proceeding") which is pending or has been threatened in
writing against CBT or any Subsidiary which (a) seeks either damages in excess
of $100,000 or equitable relief or (b) in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated by this Agreement.
There are no judgments, orders or decrees outstanding against CBT or any
Subsidiary.
SECTION 4.25. WARRANTIES. No product or service manufactured, sold,
leased, licensed or delivered by CBT or any Subsidiary is subject to any
guaranty,warranty, right of return, right of credit or other indemnity other
than (i) the applicable standard terms and conditions of sale or lease of CBT or
the appropriate Subsidiary, which are set forth in Section 4.25 of the CBT
Disclosure Schedule and (ii) manufacturers' warranties for which neither CBT nor
any Subsidiary has any liability. Section 4.25 of the CBT Disclosure Schedule
sets forth the aggregate expenses incurred by CBT and the Subsidiaries in
fulfilling their obligations under their guaranty, warranty, right of return and
indemnity provisions during the fiscal year and the interim period covered by
the Financial Statements; and CBT does not know of any reason why such expenses
should significantly increase as a percentage of sales in the future.
SECTION 4.26. EMPLOYEES.
(a) Section 4.26 of the CBT Disclosure Schedule contains a list of all
employees of CBT and each Subsidiary whose annual rate of compensation exceeds
$100,000 per year, along with the position and the annual rate of compensation
of each such person. Each current or past employee of CBT or any Subsidiary has
entered into a confidentiality agreement with CBT
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or such Subsidiary, a copy or form of which HPFS has had the opportunity to
review. Section 4.26 of the CBT Disclosure Schedule contains a list of all
employees of CBT or any Subsidiary who are a party to a non-competition
agreement with CBT or any Subsidiary; and HPFS has had an opportunity to review
such agreements. All of the agreements referenced in the two preceding sentences
will continue to be legal, valid, binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect immediately prior to the Closing. Section 4.26 of the CBT Disclosure
Schedule contains a list of all employees of CBT or any Subsidiary who are not
citizens of the United States. To the knowledge of CBT, no key employee or
group of employees has any plans to terminate employment with CBT or any
Subsidiary.
(b) Neither CBT nor any Subsidiary is a party to or bound by any
collective bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. CBT has no knowledge of any organizational effort made or threatened,
either currently or within the past year, by or on behalf of any labor union
with respect to employees of CBT or any Subsidiary.
SECTION 4.27. EMPLOYEE BENEFITS.
(a) Section 4.27(a) of the CBT Disclosure Schedule contains a complete
and accurate list of all CBT Plans. HPFS has had the opportunity to review
complete and accurate copies of (i) all CBT Plans which have been reduced to
writing, (ii) written summaries of all unwritten CBT Plans, (iii) all related
trust agreements, insurance contracts and summary plan descriptions, and (iv)
all annual reports filed on IRS Form 5500, 5500C or 5500R and (for all funded
plans) all plan financial statements for the last year for each CBT Plan.
(b) Each CBT Plan has been administered in all material respects in
accordance with its terms and each of CBT, the Subsidiaries and the ERISA
Affiliates has in all material respects met its obligations with respect to each
CBT Plan and has made all required contributions thereto. CBT, each Subsidiary,
each ERISA Affiliate and each CBT Plan are in compliance in all material
respects with the currently applicable provisions of ERISA and the Code and the
regulations thereunder (including Section 4980 B of the Code, Subtitle K,
Chapter 100 of the Code and Sections 601 through 608 and Section 701 et seq. of
ERISA). All filings and reports as to each CBT Plan required to have been
submitted to the Internal Revenue Service or to the United States Department of
Labor have been duly submitted. No CBT Plan has assets that include securities
issued by CBT or any ERISA Affiliate.
(c) There are no Legal Proceedings (except claims for benefits payable
in the normal operation of the CBT Plans and proceedings with respect to
qualified domestic relations orders) against or involving any CBT Plan or
asserting any rights or claims to benefits under any CBT Plan that could give
rise to any material liability.
(d) All the CBT Plans that are intended to be qualified under Section
401(a) of the Code have received determination letters from the Internal Revenue
Service to the effect that such CBT Plans are qualified and the plans and the
trusts related thereto are exempt from federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, no such determination
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letter has been revoked and revocation has not been threatened, and no such CBT
Plan has been amended since the date of its most recent determination letter or
application therefor in any respect, and no act or omission has occurred, that
would adversely affect its qualification or materially increase its cost. Each
CBT Plan which is required to satisfy Section 401(k)(3) or Section 401(m)(2) of
the Code has been tested for compliance with, and satisfies the requirements of
Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year ending
prior to the Closing Date.
(e) Neither CBT, any Subsidiary, nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Code or Title
IV of ERISA.
(f) At no time has CBT, any Subsidiary or any ERISA Affiliate been
obligated to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(g) There are no unfunded obligations under any CBT Plan providing
benefits after termination of employment to any employee of CBT or any
Subsidiary (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code or other applicable law and insurance conversion privileges under state
law. The assets of each CBT Plan which is funded are reported at their fair
market value on the books and records of such CBT Plan.
(h) No act or omission has occurred and no condition exists with
respect to any CBT Plan that would subject CBT, any Subsidiary or any ERISA
Affiliate to (i) any material fine, penalty, tax or liability of any kind
imposed under ERISA or the Code or (ii) any contractual indemnification or
contribution obligation protecting any fiduciary, insurer or service provider
with respect to any CBT Plan.
(i) No CBT Plan is funded by, associated with or related to a
"voluntary employee's beneficiary association" within the meaning of Section
501(c)(9) of the Code.
(j) Each CBT Plan is amendable and terminable unilaterally by CBT at
any time without liability or expense to CBT or such CBT Plan as a result
thereof (other than for benefits accrued through the date of termination or
amendment and reasonable administrative expenses related thereto) and no CBT
Plan, plan documentation or agreement, summary plan description or other written
communication distributed generally to employees by its terms prohibits CBT from
amending or terminating any such CBT Plan.
(k) Section 4.27(k) of the CBT Disclosure Schedule sets forth the
policy of CBT and any Subsidiary with respect to accrued vacation, accrued sick
time and earned time off and the amount of such liabilities as of June 30, 2002.
(l) As used in this Agreement:
"CBT PLAN" shall mean any Employee Benefit Plan maintained, or
contributed to, by CBT, any Subsidiary or any ERISA Affiliate.
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"EMPLOYEE BENEFIT PLAN" shall mean any "employee pension benefit plan"
(as defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any entity which is, or at any applicable
time was, a member of (1) a controlled group of corporations (as defined in
Section 414(b) of the Code), (2) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (3) an affiliated service
group (as defined under Section 414(m) of the Code or the regulations under
Section 414(o) of the Code), any of which includes or included CBT or a
Subsidiary.
SECTION 4.28. ENVIRONMENTAL MATTERS.
(a) Each of CBT and the Subsidiaries has complied with all applicable
Environmental Laws. There is no pending or, to the knowledge of CBT, threatened
civil or criminal litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving CBT or any Subsidiary.
(b) Neither CBT nor any Subsidiary has any liabilities or obligations
arising from the release of any Materials of Environmental Concern into the
environment.
(c) Neither CBT nor any Subsidiary is a party to or bound by any court
order, administrative order, consent order or other agreement between CBT and
any Governmental Entity entered into in connection with any legal obligation or
liability arising under any Environmental Law.
(d) Set forth in Section 4.28(d) of the CBT Disclosure Schedule is a
list of all documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by CBT or a Subsidiary (whether conducted by or
on behalf of CBT or a Subsidiary or a third party, and whether done at the
initiative of CBT or a Subsidiary or directed by a Governmental Entity or other
third party) which CBT has possession of or access to. HPFS has been provided an
opportunity to review a complete and accurate copy of each such document.
(e) CBT is not aware of any material environmental liability of any
solid or hazardous waste transporter or treatment, storage or disposal facility
that has been used by CBT or any Subsidiary.
(f) As used in this Agreement:
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"CERCLA" shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"GOVERNMENTAL ENTITY" shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
"ENVIRONMENTAL LAW" shall mean any federal, state or local law,
statute, rule, order, directive, judgment, Permit or regulation or the common
law relating to the environment, occupational health and safety, or exposure of
persons or property to Materials of Environmental Concern, including any
statute, regulation, administrative decision or order pertaining to: (i) the
presence of or the treatment, storage, disposal, generation, transportation,
handling, distribution, manufacture, processing, use, import, export, labeling,
recycling, registration, investigation or remediation of Materials of
Environmental Concern or documentation related to the foregoing; (ii) air, water
and noise pollution; (iii) groundwater and soil contamination; (iv) the release,
threatened release, or accidental release into the environment, the workplace or
other areas of Materials of Environmental Concern, including emissions,
discharges, injections, spills, escapes or dumping of Materials of Environmental
Concern; (v) transfer of interests in or control of real property which may be
contaminated; (vi) community or worker right-to-know disclosures with respect to
Materials of Environmental Concern; (vii) the protection of wild life, marine
life and wetlands, and endangered and threatened species; (viii) storage tanks,
vessels, containers, abandoned or discarded barrels and other closed
receptacles; and (ix) health and safety of employees and other persons. As used
above, the term "release" shall have the meaning set forth in CERCLA.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any: pollutants,
contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined
under the Resource Conservation and Recovery Act), chemicals, other hazardous,
radioactive or toxic materials, oil, petroleum and petroleum products (and
fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation, order,
Permit, or directive due to its potential, directly or indirectly, to harm the
environment or the health of humans or other living beings.
SECTION 4.29. LEGAL COMPLIANCE. Each of CBT and the Subsidiaries is
currently conducting, and have at all times since August 1, 2001 conducted,
their respective businesses in compliance with each applicable law (including
rules and regulations thereunder) of any federal, state, local or foreign
government, or any Governmental Entity, except for any violations or defaults
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a CBT Material Adverse Effect. Neither CBT nor any Subsidiary
has received any notice or communication from any Governmental Entity alleging
noncompliance with any applicable law, rule or regulation.
SECTION 4.30. CUSTOMERS AND SUPPLIERS. Section 4.30 of the CBT
Disclosure Schedule sets forth a list of (a) each customer that accounted for
more than 10% of the
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consolidated revenues of CBT during the last full fiscal year or the interim
period through June 30, 2002, and the amount of revenues accounted for by such
customer during each such period and (b) each supplier that is the sole supplier
of any significant product or service to CBT or a Subsidiary. To the knowledge
of CBT, no such customer or supplier has indicated within the past year that it
will stop, or decrease the rate of, buying products or supplying products, as
applicable, to CBT or any Subsidiary. No unfilled customer order or commitment
obligating CBT or any Subsidiary to process, manufacture or deliver products or
perform services will result in a loss to CBT or any Subsidiary upon completion
of performance. No purchase order or commitment of CBT or any Subsidiary is in
excess of normal requirements, nor are prices provided therein in excess of
current market prices for the products or services to be provided thereunder.
SECTION 4.31. PERMITS. Section 4.31 of the CBT Disclosure Schedule
sets forth a list of all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights issued by or obtained from
any Governmental Entity (including those issued or required under Environmental
Laws and those relating to the occupancy or use of owned or leased real
property) ("Permits") issued to or held by CBT or any Subsidiary. Such listed
Permits are the only Permits that are required for CBT and the Subsidiaries to
conduct their respective businesses as presently conducted or as proposed to be
conducted. Each such Permit is in full force and effect; CBT or the applicable
Subsidiary is in material compliance with the terms of each such Permit; and, to
the knowledge of CBT, no suspension or cancellation of such Permit is threatened
and there is no basis for believing that such Permit will not be renewable upon
expiration. Each such Permit will continue in full force and effect immediately
following the Closing.
SECTION 4.32. CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No
Affiliate of CBT or of any Subsidiary (a) owns any property or right, tangible
or intangible, which is used in the business of CBT or any Subsidiary, (b) has
any claim or cause of action against CBT or any Subsidiary, or (c) owes any
money to, or is owed any money by, CBT or any Subsidiary. Section 4.29 of the
CBT Disclosure Schedule describes any transactions or relationships between CBT
or a Subsidiary and any Affiliate thereof which occurred or have existed since
the beginning of the time period covered by the Financial Statements.
SECTION 4.33. BROKERS' FEES. Neither CBT nor any Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
SECTION 4.34. DISCLOSURE. No representation or warranty by CBT
contained in this Agreement, and no statement contained in the CBT Disclosure
Schedule or any other document, certificate or other instrument delivered or to
be delivered by or on behalf of CBT pursuant to the terms of this Agreement,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
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SECTION 4.35. REORGANIZATION. CBT represents that it has no present
intention to file a petition involving NaviSite for reorganization pursuant to
the Bankruptcy Code.
SECTION 4.36. NAVISITE NON-PUBLIC INFORMATION. CBT acknowledges that
HPFS may have material non-public information concerning NaviSite.
ARTICLE V
Conditions Precedent; Related Covenants
---------------------------------------
SECTION 5.1. CLOSING EFFORTS. Each of the parties hereto shall use its
commercially reasonable efforts ("Reasonable Efforts") to take all actions and
to do all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including using its Reasonable Efforts to ensure
that (i) its representations and warranties remain true and correct in all
material respects through the Closing Date and (ii) the conditions to the
obligations of the other parties to consummate the transaction are satisfied.
SECTION 5.2. GOVERNMENTAL AND THIRD-PARTY NOTICES AND CONSENTS.
(a) Each party shall use its Reasonable Efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.
(b) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign the
Note unless and until any necessary consents shall have been obtained. HPFS
shall use Reasonable Efforts to cooperate with CBT at its request in endeavoring
to obtain such consents promptly; provided, that such cooperation shall not
require HPFS to make any payment to obtain any such consent.
SECTION 5.3. ACCESS TO INFORMATION. CBT shall (and shall cause each of
its Subsidiaries to) permit representatives of HPFS to have full access (upon
reasonable notice and at a reasonable time, and in a manner so as not to
interfere with its normal business operations) to all premises, properties,
financial, tax and accounting records (including the work papers of CBT's
independent accountants), contracts, other records and documents, and personnel,
of or pertaining to such CBT and each of its Subsidiaries.
SECTION 5.4. NOTICE OF BREACHES. From the date of this Agreement until
the Closing, CBT, on the one hand, and HPFS, on the other hand, shall promptly
deliver to the other Party supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement in this Agreement or the CBT Disclosure
Schedule, as the case may be, inaccurate or incomplete at any time after the
date of this Agreement until the Closing. No such supplemental information shall
be deemed to avoid or cure any misrepresentation or breach of warranty or
constitute an amendment of any
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representation, warranty or statement in this Agreement or the CBT Disclosure
Schedule, as the case may be.
SECTION 5.5. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES. The
respective obligations of each party to this Agreement shall be subject to the
fulfillment, at or prior to the Closing Date, to the following conditions, or
waiver by such party:
(a) LEGALITY. At the time of the Closing, the transactions
contemplated by this Agreement shall be legally permitted by all applicable
Legal Requirements and Orders.
(b) ABSENCE OF PROCEEDINGS TO RESTRAIN CONSUMMATION OF THE AGREEMENT.
No judgment, injunction or order shall have been entered restraining or
prohibiting the transactions contemplated by this Agreement.
(c) REQUISITE APPROVALS. All authorizations, consents, orders or
approvals of, or declarations or filings with any governmental entity required
for the consummation of the transaction contemplated by this Agreement shall
have been filed, occurred or been obtained.
SECTION 5.6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CBT. The
obligation of CBT to purchase Shares and the Note and to assume the Security
Agreements at the Closing is subject to the fulfillment of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of HPFS set forth in this Agreement that are qualified as to materiality shall
be true and correct in all respects, and all other representations and
warranties of HPFS set forth in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing as though made as of the Closing, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties shall be true and correct as of
such date).
(b) PERFORMANCE. HPFS shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
(c) LEGAL OPINION. CBT shall have received an opinion dated as of the
Closing Date of Mr. Stuart Souther, in-house counsel to HPFS, as to the matters
substantially in the form attached hereto as Exhibit B.
(d) HPFS CERTIFICATE. HPFS shall deliver to CBT a certificate, signed
by an appropriate officer, to the effect that each of the conditions specified
in clauses (a) and (b) of this Section 5.6 is satisfied in all respects.
(e) OTHER AGREEMENT. HPFS, CBT, CMGI and ClearBlue Atlantic, LLC shall
have entered into that certain Shareholders Agreement substantially in the form
attached hereto as Exhibit A.
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(f) INTER-COMPANY SETTLEMENT. Except for the Note, HPFS and NaviSite
shall have settled all outstanding obligations to the reasonable satisfaction of
CBT one day prior to the Closing.
(g) MATERIAL ADVERSE CHANGE AT NAVISITE. There shall not have occurred
any material adverse change, event, circumstance or development with respect to,
or material adverse effect on, the business, assets, liabilities,
capitalization, prospects, condition (financial or other), or results of
operations of NaviSite and its Subsidiaries, taken as a whole (other than
changes, events, circumstances or developments that are the result of economic
factors affecting the economy as a whole or that are the result of factors
generally affecting the industry or specific markets in which NaviSite
competes), except to the extent of the transactions contemplated under this
Section 5.6 and by the CMGI Agreement.
(h) CONSENT OF LANDLORD. 400 Minuteman Limited Partnership shall have
consented to the satisfaction of the parties hereto to the assignment of the
Lease, dated May 14, 1999, between 400 Minuteman Limited Partnership and
NaviSite, as amended.
(i) CONSENT OF CMGI AND NAVISITE. CMGI and NaviSite shall have
consented to the satisfactionof the parties hereto the transactions contemplated
by this Agreement.
SECTION 5.7. CONDITIONS PRECEDENT TO OBLIGATIONS OF HPFS. The
obligations of HPFS to CBT shall be subject to the fulfillment, at or prior to
the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of CBT set forth in Section 4.7 and any representations and warranties of CBT
set forth in this Agreement that are qualified as to materiality shall be true
and correct in all respects, and all other representations and warranties of CBT
set forth in this Agreement shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing as though
made as of the Closing, except to the extent such representations and warranties
are specifically made as of a particular date (in which case such
representations and warranties shall be true and correct as of such date).
(b) PERFORMANCE. CBT shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing Date.
(c) LEGAL OPINION. HPFS shall have received an opinion dated as of the
Closing Date of Heller Ehrman White & McAuliffe LLP, counsel to CBT, as to the
matters substantially in the form attached hereto as Exhibit C.
(d) CBT CERTIFICATE. CBT shall deliver to HPFS a certificate, signed
by an appropriate officer, to the effect that each of the conditions specified
in clauses (a) and (b) of this Section 5.7 is satisfied in all respects.
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(e) OTHER AGREEMENT. HPFS, CBT and ClearBlue Atlantic, LLC shall have
entered into that certain Shareholders Agreement substantially in the form
attached hereto as Exhibit A.
(f) MATERIAL ADVERSE CHANGE AT CBT. There shall not have occurred any
material adverse change, event, circumstance or development with respect to, or
material adverse effect on, the business, assets, liabilities, capitalization,
prospects, condition (financial or other), or results of operations of CBT and
its subsidiaries, taken as a whole (other than changes, events, circumstances or
developments that are the result of economic factors affecting the economy as a
whole or that are the result of factors generally affecting the industry or
specific markets in which CBT competes), except to the extent of the
transactions contemplated under this Section 5.7 and by the CMGI Agreement.
(g) CONSENT. 400 Minuteman Limited Partnership shall have consented to
the satisfaction of the parties hereto to the assignment of the Lease, dated May
14, 1999, between 400 Minuteman Limited Partnership and NaviSite, as amended.
(h) CONSENT OF CMGI AND NAVISITE. CMGI and NaviSite shall have
consented to the satisfactionof the parties hereto to the transactions
contemplated by this Agreement.
SECTION 5.8. NON-SOLICITATION. From the date of this Agreement until
the earlier of (i) the Closing Date and (ii) the termination of this Agreement
in accordance with Article VI hereof, HPFS will not, directly or indirectly,
through any officer, director, agent, partner, employee or otherwise solicit,
initiate or encourage submission, or any continued or renewed interest from any
other person, of any proposal or offer from any person, group or entity relating
to any acquisition of the Shares or the Note, will not participate in any
negotiations or discussions regarding or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage any effort or attempt by any other
person to do or seek such acquisition or other transaction involving the Shares
or the Note.
ARTICLE VI
Termination
-----------
SECTION 6.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing by the written consent of each party hereto.
SECTION 6.2. TERMINATION BY EITHER HPFS OR CBT. This Agreement may be
terminated (upon written notice from the terminating party hereto to the other
party hereto) and the transactions contemplated hereby may be abandoned by
action of any party hereto, if (a) the Closing shall not have occurred on or
prior to September 16, 2002, or (b) any Federal, state or local government or
any court, administrative agency or commission or other governmental authority
or agency, domestic or foreign shall have issued a Legal Requirement or Order
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permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such Legal Requirement or Order shall have become final
and nonappealable.
SECTION 6.3. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement pursuant to this Article VI hereof, no party
hereto or, its directors or officers or other controlling persons shall have any
liability or further obligation to any other party hereto pursuant to this
Agreement, except that Article VIII hereof shall survive termination of this
Agreement and nothing herein will relieve any party hereto from liability for
any breach of this Agreement occurring prior to such termination.
ARTICLE VII
Indemnification
---------------
SECTION 7.1. INDEMNIFICATION BY CBT. CBT shall indemnify HPFS and its
representatives, stockholders, directors, officers and Affiliates in respect of,
and hold them harmless against, any and all Damages arising, directly or
indirectly, from or in connection with:
(a) any breach, as of the date of this Agreement or as of the Closing
Date, of any representation or warranty of CBT contained in this Agreement or
any other agreement or instrument furnished by CBT to HPFS pursuant to this
Agreement; and
(b) any failure to perform any covenant or agreement of CBT contained
in this Agreement or any agreement or instrument furnished by CBT to HPFS
pursuant to this Agreement.
SECTION 7.2. INDEMNIFICATION BY HPFS. HPFS shall indemnify CBT and its
representatives, stockholders, directors, officers and Affiliates in respect of,
and hold them harmless against, any and all Damages arising, directly or
indirectly, from or in connection with:
(a) any breach, as of the date of this Agreement or as of the Closing
Date, of any representation or warranty of HPFS contained in this Agreement or
any other agreement or instrument furnished by HPFS to CBT pursuant to this
Agreement;
(b) any failure to perform any covenant or agreement of HPFS in this
Agreement or any agreement or instrument furnished by HPFS to CBT pursuant to
this Agreement.
SECTION 7.3. INDEMNIFICATION CLAIMS.
(a) An Indemnified Party shall give written notification to the
Indemnifying Party of the commencement of any third party action ("Third Party
Action"). Such notification shall be given within 20 days after receipt by the
Indemnified Party of written notice of such Third Party Action, and shall
describe in reasonable detail (to the extent known by the Indemnified Party) the
facts constituting the basis for such Third Party Action and the amount of the
claimed damages; provided, however, that no delay or failure on the part of the
Indemnified
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Party in so notifying the Indemnifying Party shall relieve the Indemnifying
Party of any liability or obligation hereunder except to the extent of any
damage or liability caused by or arising out of such failure. Within 20 days
after delivery of such notification, the Indemnifying Party may, upon written
notice thereof to the Indemnified Party, assume control of the defense of such
Third Party Action with counsel reasonably satisfactory to the Indemnified
Party; provided that (i) the Indemnifying Party may only assume control of such
defense if (A) it acknowledges in writing to the Indemnified Party that any
damages, fines, costs or other liabilities that may be assessed against the
Indemnified Party in connection with such Third Party Action constitute Damages
for which the Indemnified Party shall be indemnified pursuant to this Article
VII and (B) the ad damnum is less than or equal to the amount of Damages for
which the Indemnifying Party is liable under this Article VII and (ii) the
Indemnifying Party may not assume control of the defense of Third Party Action
involving criminal liability or in which equitable relief is sought against the
Indemnified Party. If the Indemnifying Party does not, or is not permitted under
the terms hereof to, so assume control of the defense of a Third Party Action,
the Indemnified Party shall control such defense. The non-controlling party may
participate in such defense at its own expense. The controlling party shall keep
the non-controlling party advised of the status of such Third Party Action and
the defense thereof and shall consider in good faith recommendations made by the
non-controlling party with respect thereto. The non-controlling party shall
furnish the controlling party with such information as it may have with respect
to such Third Party Action (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the controlling party in the defense of
such Third Party Action. The fees and expenses of counsel to the Indemnified
Party with respect to a Third Party Action shall be considered Damages for
purposes of this Agreement if (i) the Indemnified Party controls the defense of
such Third Party Action pursuant to the terms of this Section 7.3(a) or (ii) the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such Third
Party Action. The Indemnifying Party shall not agree to any settlement of, or
the entry of any judgment arising from, any Third Party Action without the prior
written consent of the Indemnified Party, which shall not be unreasonably
withheld, conditioned or delayed; provided that the consent of the Indemnified
Party shall not be required if the Indemnifying Party agrees in writing to pay
any amounts payable pursuant to such settlement or judgment and such settlement
or judgment includes a complete release of the Indemnified Party from further
liability and has no other adverse effect on the Indemnified Party. The
Indemnified Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such Third Party Action without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
conditioned or delayed.
(b) In order to seek indemnification under this Article VII, an
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.
(c) Within 20 days after delivery of a Claim Notice, the Indemnifying
Party shall deliver to the Indemnified Party a Response, in which the
Indemnifying Party shall: (i) agree that the Indemnified Party is entitled to
receive all of the Claimed Amount (in which case the
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Response shall be accompanied by a payment by the Indemnifying Party to the
Indemnified Party of the Claimed Amount, by check or by wire transfer, (ii)agree
that the Indemnified Party is entitled to receive the agreed amount (in which
case the Response shall be accompanied by a payment by the Indemnifying Party to
the Indemnified Party of the agreed amount, by check or by wire transfer or
(iii) dispute that the Indemnified Party is entitled to receive any of the
Claimed Amount.
(d) During the 30-day period following the delivery of a Response that
reflects a Dispute, the Indemnifying Party and the Indemnified Party shall use
good faith efforts to resolve the Dispute. If the Dispute is not resolved within
such 30-day period, the Indemnifying Party and the Indemnified Party shall
discuss in good faith the submission of the Dispute to binding arbitration, and
if the Indemnifying Party and the Indemnified Party agree in writing to submit
the Dispute to such arbitration, then the provisions of Section 7.3(e) shall
become effective with respect to such Dispute. The provisions of this Section
7.3(d) shall not obligate the Indemnifying Party and the Indemnified Party to
submit to arbitration or any other alternative dispute resolution procedure with
respect to any Dispute, and in the absence of an agreement by the Indemnifying
Party and the Indemnified Party to arbitrate a Dispute, such Dispute shall be
resolved in a state or federal court sitting in the State of New York, in
accordance with Section 8.10.
(e) If, as set forth in Section 7.3(d), the Indemnified Party and the
Indemnifying Party agree to submit any Dispute to binding arbitration, the
arbitration shall be conducted by a single arbitrator (the "Arbitrator") in
accordance with the Commercial Rules in effect from time to time and the
following provisions:
(i) In the event of any conflict between the Commercial Rules in
effect from time to time and the provisions of this Agreement, the provisions of
this Agreement shall prevail and be controlling.
(ii) The parties shall commence the arbitration by jointly filing
a written submission with the New York, New York office of the AAA in accordance
with Commercial Rule 5 (or any successor provision).
(iii) No depositions or other discovery shall be conducted in
connection with the arbitration.
(iv) Not later than 30 days after the conclusion of the
arbitration hearing, the Arbitrator shall prepare and distribute to the parties
a writing setting forth the arbitral award and the Arbitrator's reasons
therefor. Any award rendered by the Arbitrator shall be final, conclusive and
binding upon the parties, and judgment thereon may be entered and enforced in
any court of competent jurisdiction (subject to Section 8.10), provided that the
Arbitrator shall have no power or authority to grant injunctive relief, specific
performance or other equitable relief.
(v) The Arbitrator shall have no power or authority, under the
Commercial Rules or otherwise, to (x) modify or disregard any provision of this
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Agreement, including the provisions of this Section 7.3(e), or (y) address or
resolve any issue not submitted by the parties.
(vi) In connection with any arbitration proceeding pursuant to
this Agreement, each party shall bear its own costs and expenses, except that
the fees and costs of the AAA and the Arbitrator, the costs and expenses of
obtaining the facility where the arbitration hearing is held, and such other
costs and expenses as the Arbitrator may determine to be directly related to the
conduct of the arbitration and appropriately borne jointly by the parties (which
shall not include any party's attorneys' fees or costs, witness fees (if any),
costs of investigation and similar expenses) shall be shared equally by the
Indemnified Party and the Indemnifying Party.
(f) Notwithstanding the other provisions of this Section 7.3, if a
third party asserts (other than by means of a lawsuit) that an Indemnified Party
is liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VII, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for indemnification in
accordance with the provisions of this Article VII, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Article
VII, for any such Damages for which it is entitled to indemnification pursuant
to this Article VII (subject to the right of the Indemnifying Party to dispute
the Indemnified Party's entitlement to indemnification, or the amount for which
it is entitled to indemnification, under the terms of this Article VII).
SECTION 7.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties that are covered by the indemnification
agreements in Section 7.1(a) and Section 7.2(a) shall (a) survive the Closing
and (b) shall expire on the date two years following the Closing Date, except
that (i) the representations and warranties set forth in Sections 3.1, 3.2, 4.1,
4.2, 4.7 and 4.8 shall survive the Closing without limitation and (ii) the
representations and warranties set forth in Sections 4.14 and 4.25 shall survive
until 30 days following expiration of all statutes of limitation applicable to
the matters referred to therein. If an Indemnified Party delivers to an
Indemnifying Party, before expiration of a representation or warranty, either a
Claim Notice based upon a breach of such representation or warranty, or an
Expected Claim Notice based upon a breach of such representation or warranty,
then the applicable representation or warranty shall survive until, but only for
purposes of, the resolution of the matter covered by such notice. If the legal
proceeding or written claim with respect to which an Expected Claim Notice has
been given is definitively withdrawn or resolved in favor of the Indemnified
Party, the Indemnified Party shall promptly so notify the Indemnifying Party.
The rights to indemnification set forth in this Article VII shall not be
affected by (i) any investigation conducted by or on behalf of an Indemnified
Party or any knowledge acquired (or capable of being acquired) by an Indemnified
Party, whether before or after the date of this Agreement or the Closing Date,
with respect to the inaccuracy or noncompliance with any representation,
warranty, covenant or obligation which is the subject of indemnification
hereunder or (ii) any waiver by an Indemnified
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Party of any closing condition relating to the accuracy of representations and
warranties or the performance of or compliance with agreements and covenants.
SECTION 7.5. LIMITATIONS.
(a) Notwithstanding anything to the contrary herein, (i) the aggregate
liability of the Indemnifying Parties for Damages under Section 7.1(a) and
7.2(a) shall not exceed $10,000,000, and (ii) the Indemnifying Parties shall be
liable for only that portion of the aggregate Damages under Section 7.1(a) or
7.2(a) for which they would otherwise be liable which exceeds $250,000.
(b) Except with respect to claims based on fraud, after the Closing,
the rights of the Indemnified Parties under this Article VII shall be the
exclusive remedy of the Indemnified Parties with respect to claims resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement contained in this Agreement.
(c) As used in this Agreement:
"CLAIM NOTICE" shall mean written notification which contains (i) a
description of the Damages incurred or reasonably expected to be incurred by the
Indemnified Party and the Claimed Amount of such Damages, to the extent then
known, (ii) a statement that the Indemnified Party is entitled to
indemnification under Article VII for such Damages and a reasonable explanation
of the basis therefor, and (iii) a demand for payment in the amount of such
Damages.
"CLAIMED AMOUNT" shall mean the amount of any Damages incurred or
reasonably expected to be incurred by the Indemnified Party.
"DAMAGES" shall mean any and all debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), diminution in
value, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including amounts paid in settlement,
interest, court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation), other than those costs and expenses of arbitration of a Dispute
which are to be shared equally by the Indemnified Party and the Indemnifying
Party as set forth in Section 7.3(e)(vi).
"DISPUTE" shall mean the dispute resulting if the Indemnifying Party
in a Response disputes its liability for all or part of the Claimed Amount.
"EXPECTED CLAIM NOTICE" shall mean a notice that, as a result of a
legal proceeding instituted by or written claim made by a third party, an
Indemnified Party reasonably expects to incur Damages for which it is entitled
to indemnification under Article VII.
"INDEMNIFIED PARTY" shall mean a party entitled, or seeking to assert
rights, to indemnification under Article VII.
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"INDEMNIFYING PARTY" shall mean the party from whom indemnification is
sought by the Indemnified Party.
"RESPONSE" shall mean a written response containing the information
provided for in Section 7.3(c).
ARTICLE VIII
General Provisions; Other Agreements
------------------------------------
SECTION 8.1. PRESS RELEASES. Other than any required filings under the
Exchange Act, none of the parties hereto will, without first obtaining the
approval of the other, make any public announcement, directly or indirectly,
regarding this Agreement, nor the nature of the transaction contemplated by this
Agreement, to any person except as required by law or regulatory bodies and
other than to the respective principals or other representatives of the Parties,
each of whom shall be similarly bound by such confidentiality obligations. If
any such press release or public announcement is so required by either party
(except in the case of any disclosure required under the Federal securities laws
to be made in a filing with the Securities and Exchange Commission), the
disclosing party shall consult with the other parties prior to making such
disclosure, and the parties shall use all reasonable efforts, acting in good
faith, to agree upon a text for such disclosure which is satisfactory to each of
the parties.
SECTION 8.2. EXPENSES. Regardless of whether the transactions
contemplated hereby are consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party hereto incurring such costs and expenses.
SECTION 8.3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflicts of laws provisions thereof.
SECTION 8.4. HEADINGS. Article and Section headings used in this
Agreement are for convenience only and shall not affect the meaning or
construction of this Agreement.
SECTION 8.5. NOTICES. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party hereto when
delivered by hand, by messenger or by a nationally recognized overnight delivery
company, when delivered by facsimile and confirmed by return facsimile, in each
case to the applicable addresses set forth below:
(a) if to CBT to:
ClearBlue Technologies, Inc.
100 First Street
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Suite 2000
San Francisco, CA 94105; and
with a copy to:
Guy N. Molinari, Esq.
Heller Ehrman White & McAuliffe LLP
120 West 45th Street
New York, NY 10036
Facsimile: (212) 763-7600
(b) if to HPFS to:
Hewlett-Packard Financial Services Company
420 Mountain Avenue
Murray Hill, NJ 07974
Attn: General Counsel
Facsimile: (908) 898-4117
with a copy to:
Hewlett-Packard Company
Attn: General Counsel
3000 Hanover Street
Palo Alto, CA 94304-1185
and
Sidley Austin Brown & Wood
787 Seventh Avenue
New York, NY 10019
Attn: James Johnson
Facsimile: (212) 839-5599
SECTION 8.6. PARTIES IN INTEREST. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding sentence, all the
terms and provisions of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
permitted assigns.
SECTION 8.7. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, both written and oral, with respect to the subject matter
hereof.
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SECTION 8.8. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Signatures on this
Agreement may be communicated by facsimile transmission and shall be binding
upon the parties hereto so transmitting their signatures. Counterparts with
original signatures shall be provided to the other parties hereto following the
applicable facsimile transmission; provided that the failure to provide the
original counterpart shall have no effect on the validity or the binding nature
of this Agreement.
SECTION 8.9. AMENDMENT. Any term of this Agreement may be modified or
amended only by an instrument in writing signed by each of the parties hereto.
SECTION 8.10. SUBMISSION TO JURISDICTION. Each Party (a) submits to
the jurisdiction of any state or federal court sitting in the State of New York
in any action or proceeding arising out of or relating to this Agreement
(including any action or proceeding for the enforcement of any arbitral award
made in connection with any arbitration of a Dispute hereunder), (b) agrees that
all claims in respect of such action or proceeding may be heard and determined
in any such court, (c) waives any claim of inconvenient forum or other challenge
to venue in such court, (d) agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court and (e) waives any right
it may have to a trial by jury with respect to any action or proceeding arising
out of or relating to this Agreement; provided in each case that, solely with
respect to any arbitration of a Dispute, the Arbitrator shall resolve all
threshold issues relating to the validity and applicability of the arbitration
provisions of this Agreement, contract validity, applicability of statutes of
limitations and issue preclusion, and such threshold issues shall not be heard
or determined by such court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 8.5, provided that nothing in this Section 8.10 shall
affect the right of any Party to serve such summons, complaint or other initial
pleading in any other manner permitted by law.
SECTION 8.11. SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in
accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have caused this Note and Stock
Purchase Agreement to be duly executed and delivered as of the date set forth
above.
HEWLETT-PACKARD FINANCIAL SERVICES COMPANY
By:____________________________
Name:
Title:
CLEARBLUE TECHNOLOGIES, INC.
By:____________________________
Name:
Title:
Page 45 of 50 Pages
EXHIBIT A
FORM OF SHAREHOLDERS AGREEMENT
------------------------------
Page 46 of 50 Pages
EXHIBIT B
FORM OF OPINION OF COUNSEL TO HPFS*
-----------------------------------
1. Hewlett-Packard Financial Services Company ("HPFS") is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. HPFS has full corporate power and authority to
enter into the Note and Stock Purchase Agreement (the "Agreement"), dated as of
September 11, 2002, by and between HPFS and ClearBlue Technologies, Inc.
("CBT"), a Delaware corporation, and to sell, transfer and deliver the NaviSite,
Inc. 12% Convertible, Senior, Secured Note Due December 31, 2007 (the "Note")
and all of the shares of stock of NaviSite, Inc. (the "Shares," and together
with the Note, the "Securities") being sold by HPFS to CBT in accordance with
the terms of the Agreement. All actions of HPFS necessary to effect the transfer
of title to the Securities, free and clear of all claims, encumbrances and
defects in title, other than any requirement that NaviSite and CMGI consent to
the transfer of the Note, in accordance with the Agreement, have been duly
completed.
2. The Agreement has been duly authorized, executed and delivered by
HPFS and, upon execution by CBT, will constitute a valid and binding obligation
of HPFS enforceable against HPFS in accordance with its terms, subject only to
(i) limitations imposed by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of creditors
generally, and (ii) general principles of equity, whether such enforcement is
considered in a proceeding in equity or at law.
----------------------------
* Opinion to be delivered by in house counsel.
Page 47 of 50 Pages
EXHIBIT C
FORM OF OPINION OF COUNSEL TO CBT
---------------------------------
1. ClearBlue Technologies, Inc. ("CBT"), is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. CBT has full corporate power and authority to enter into the Note
and Stock Purchase Agreement (the "Agreement"), dated as of September 11, 2002,
by and between HPFS and CBT.
2. The Agreement has been duly authorized, executed and delivered by
CBT, and constitutes a valid and binding obligation of CBT, enforceable against
CBT in accordance with its terms, subject only to (i) limitations imposed by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other laws
relating to or affecting the rights of creditors generally, and (ii) general
principles of equity, whether such enforcement is considered in a proceeding in
equity or at law.
Page 48 of 50 Pages
EXHIBIT D
UCC-1 FINANCING STATEMENT
------------------------
Page 49 of 50 Pages
EXHIBIT 2
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment") is entered into as
of this 11th day of September, 2002 by and between Hewlett-Packard Financial
Services Company, formerly known as Compaq Financial Services Corporation
("Assignor") and ClearBlue Finance, Inc. ("Assignee"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them under that
certain Guarantee and Security Agreement dated as of November 8, 2002 by and
among NaviSite, Inc., the Guarantors party thereto and Assignor, as Collateral
Representative and/or all other agreements related thereto (including the Note
Puirchase Agreement among Navisite, Inc., Assignor and CMGI, Inc. (collectively,
the "Security Agreements").
RECITALS
WHEREAS, pursuant to the Note and Stock Purchase Agreement dated as of
September 11, 2002 by and between Assignor and Assignee, Assignor has agreed to,
among other things, assign the Security Agreements to Assignee and Assignee has
agreed to assume the Security Agreements from Assignor.
NOW, THEREFORE, for good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, Assignor and Assignee agree as
follows:
1. Assignor hereby irrevocably and unconditionally sells, conveys, transfers
and assigns to Assignee any and all of its rights, title, benefits and
interests, whether arising from its capacity as Collateral Representative,
Purchaser or otherwise, under the Security Agreements.
2. Assignee hereby assumes any and all duties, obligations and liabilities of
Assignor, whether arising from its capacity as Collateral Representative,
Purchaser or otherwise, under the Security Agreements, except for any
obligation or liability arising out of a breach or a default by Assignor
under any Security Agreement that arose prior to the date hereof.
3. This Assignment may be executed in one or more counterparts, including by
facsimile, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
4. This Assignment shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
5. This Assignment shall be governed and construed in accordance with the laws
of the State of New York without regard to conflicts of law.
Page 50 of 50 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be executed as of the date first written above.
HEWLETT-PACKARD FINANCIAL
SERVICES COMPANY
By: _________________________
Name:
Title:
CLEARBLUE FINANCE, INC.
By:___________________________
Name:
Title:
2