EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
SITEMAN, INC.,
a California corporation
formed by Encanto Networks, Inc.
to complete this transaction
and
iXL ENTERPRISES, INC. (F/K/A/ IXL HOLDINGS, INC.),
iXL, INC. AND
iXL-SAN DIEGO, INC.,
each a Delaware corporation,
Dated as of January 29, 1999
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is dated as of January 29, 1999 by and between
Siteman, Inc, a California corporation ("Purchaser") formed by Encanto
Networks, Inc., a California corporation ("Encanto Networks") to complete the
transaction contemplated by this Agreement, and iXL Enterprises, Inc. (f/k/a
IXL Holdings, Inc.), iXL, Inc. and iXL-San Diego, Inc., each a Delaware
corporation (collectively, "Sellers").
WHEREAS, Sellers or one or more of them own and operate e-commerce
solutions known as Siteman and MerchantWAVE that are engaged in the business
of the development and maintenance of a Web authoring and template tool for
multiple Web site management (collectively, the "Technologies"; Sellers'
existing business solely in the Technologies is referred to herein as the
"Business");
WHEREAS, Purchaser desires to acquire from Sellers and Sellers
desire to transfer to Purchaser, certain specified properties, assets, and
rights of Sellers related to the Business, and to assume certain specified
liabilities of Sellers, all upon the terms and conditions set forth in this
Agreement; and
WHEREAS, Purchaser and iXL, Inc. are executing contemporaneously
herewith separate license and services agreements (collectively "L&S
Agreements" and individually "License Agreement" and "Services Agreement,"
substantially in the form of EXHIBITS "A" AND "B," respectively), to enable
Sellers to (i) utilize the patents under the Siteman and MerchantWAVE
software, and utilize, develop, and license other technologies that involve
or relate to e-commerce solutions and the development and maintenance of a
Web authoring and template tool for multiple Web site management to the
extent set forth in the License Agreement, (ii) continue offering,
maintaining, and servicing the Technologies to and for third parties through
a license from Purchaser and (iii) provide services to Purchaser and certain
third parties (as defined in the Services Agreement, "Designees") through a
Services Agreement which shall include a guarantee that Purchaser, or Encanto
Networks or their Designee(s) will engage iXL, Inc. to perform a minimum of
one million five hundred thousand dollars ($1,500,000) of services work, to
be paid within the thirty (30) months immediately following execution of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows;
ARTICLE 1
PURCHASE AND SALE OF ASSETS
Section 1.1 DESCRIPTION OF ASSETS TO BE ACQUIRED. Upon the terms
and subject to the conditions set forth in this Agreement, at the Time of
Closing (as defined in Section 6.1), Sellers agree to convey, sell, transfer,
assign and deliver to Purchaser, and Purchaser agrees to purchase and assume
from Sellers, all right, title and interest of Sellers at the Time of Closing
in and to certain assets, properties and rights related to the Business, as
follows:
(a) The customer accounts of Sellers relating to
the Business listed in SCHEDULE 1.1(a) and all customer and mailing lists
relating to the Business, and all of the Sellers' rights to service with the
Technologies the customer accounts listed in SCHEDULE 1.1(a);
(b) All interests of Sellers in the software
(including, without limitation, underlying information, technology,
algorithms and the like) listed on SCHEDULE 1.1(b);
(c) All interests of Sellers in the equipment,
instruments, computer hardware and software (including, without limitation,
underlying information, algorithms and the like), documentation and manuals
(whether stored on a computer or in written form), software tools, tooling,
and other miscellaneous assets of the Business listed on SCHEDULE 1.1(c);
(d) All claims and rights under the agreements,
contracts, contract rights, licenses, purchase and sale orders, quotations
and other executory commitments associated with the Business (collectively,
the "Contracts"), including contracts related to the customer accounts listed
on SCHEDULE 1.1(a) and any additional Contracts listed on SCHEDULE 1.1(C),
but excluding (i) any accounts receivable of Sellers relating to the
Contracts and due and payable on or before the Time of Closing ("Sellers'
Accounts Receivable"); and (ii) any other agreements, contract rights,
licenses, purchase and sale orders and the like relating to the Business,
unless so listed, including without limitation those referred to in SCHEDULE
1.1(D) ("Retained Contracts");
(e) All rights, if any, under express or implied
warranties from suppliers and vendors of the Sellers pertaining to the
Assets, to the extent that same are assignable and such assignment does not
hamper or otherwise affect Sellers' rights, duties, and obligations under the
L&S Agreements;
(f) The names "Siteman" and "MerchantWAVE," the
domain names ▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇▇▇.▇▇▇ and the
goodwill of the Business connected therewith or symbolized thereby;
(g) All other rights, title and interest to any
patents, trademarks, patent applications, trademark rights, trade secrets,
information, proprietary rights, license rights, service marks, inventions,
tradenames, copyrights, processes, technical information, software, licenses,
designs and confidentiality agreements, logos, and customer and supplier
lists pertaining to the Business, together with the goodwill associated
therewith (collectively, the "Intellectual Property") as listed or described
in SCHEDULE 1.1(g);
(h) Copies of originals of books of account,
general ledgers, sales invoices, accounts payable and payroll records,
drawings, advertising materials, marketing and business plans, sales training
and procedures information, files, papers and all other records pertaining
solely to the Business that have been prepared at or prior to the Time of
Closing;
(i) All goodwill associated with the Business and
the Technologies; and
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(j) Any other properties or assets ("Other Assets") as are listed
on SCHEDULE 1.1(i).
The assets, properties, and rights to be conveyed, sold, transferred,
assigned, and delivered to Purchaser pursuant to this Section 1.1 are
sometimes hereinafter collectively referred to as the "Assets."
Section 1.2 SUBCONTRACT. With respect to the Retained Contracts, iXL,
Inc. and Purchaser agree, subject to any requisite consents, to enter into
an agreement ("Subcontract") for each Retained Contract, excluding iXL,
Inc.'s contract with Endeavor Technologies, Inc. d/b/a WebMD. The form of
Subcontract will be finalized within forty five (45) days after the Time of
Closing. The Subcontract will include, but not be limited to, the following
terms:
(i) iXL, Inc.'s payment of all license revenue to Purchaser with
respect to the Retained Contracts.
(ii) iXL, Inc.'s payment of all access fees to Purchaser with
respect to the Retained Contracts and the allocation of iXL, Inc.'s and
Purchaser's responsibilities relating to hosting and web development services.
(iii) Either party's right to terminate the Subcontract upon the
other party's breach of the Subcontract.
(iv) Purchaser's indemnification of iXL, Inc. and its related
parties for Purchaser's acts or omissions in connection with performing
services under the Subcontract.
(v) Purchaser obtaining insurance in types, with such
specifications, and in amounts at least equal to, the types, specifications
and amounts of insurance that iXL, Inc. is required to have under the
applicable Retained Contract.
iXL, Inc. and Purchaser covenant that, as between them, Endeavor
Technologies, Inc. doing business as WebMD shall remain solely a client of
iXL, Inc. Relating to this client, and notwithstanding anything to the
contrary herein, or in the Subcontract or L&S Agreements, no fees, including
without limitation any license or access fees, shall be payable to Purchaser
hereunder or under the Subcontract or L&S Agreements.
ARTICLE II
ASSUMED LIABILITIES
Section 2.1 ASSUMED LIABILITIES. Subject to Section 2.2, Purchaser
hereby agrees at the Time of Closing to assume, satisfy or perform when due
all liabilities arising out of or relating to the Business under the
Contracts, as provided in Section 5.2(b)(ii) or as set forth on SCHEDULE 2.1.
The liabilities assumed hereunder by the Purchaser are hereinafter called the
"Assumed Liabilities."
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Section 2.2 LIABILITIES NOT ASSUMED. Other than the Assumed
Liabilities, and except as hereinafter provided with respect to Sellers'
Accounts Receivable, Purchaser shall not assume, nor shall Purchaser or any
affiliate of Purchaser be deemed to have assumed or guaranteed, any other
liability or obligation of any nature of the Sellers or the Business, or
claims of such liability or obligation, whether accrued, matured or
unmatured, liquidated or unliquidated, fixed or contingent, known or unknown,
arising out of acts or occurrences prior to the Time of Closing. Any
liabilities or obligations not set forth on SCHEDULE 2.1, and therefore NOT
assumed by the Purchaser are hereafter called collectively, the "Unassumed
Liabilities."
ARTICLE III
PURCHASE PRICE
Section 3.1 CONSIDERATION. Upon the terms and subject to the
conditions contained in this Agreement, in consideration for the Assets and
in full payment therefor, Purchaser will pay, or cause to be paid, the
purchase price set forth in Section 3.2 to Sellers, and Purchaser will assume
all of the Assumed Liabilities.
Section 3.2 PAYMENT OF PURCHASE PRICE. The purchase price ("Purchase
Price") to be paid or payable by Purchaser to Sellers in connection with the
consummation of the transactions contemplated herein shall be as follows:
(a) CASH CLOSING PAYMENT. Two million dollars ($2,000,000), which
shall be paid by wire transfer of immediately available funds to the account
of Sellers or their designee (the "Cash Closing Payment") at the Time of
Closing; and in addition
(b) PROMISSORY NOTE. A Convertible Promissory Note in the amount
of five hundred thousand dollars ($500,000), substantially in the form
attached hereto as Exhibit "H" ("Convertible Promissory Note") and
(c) SERVICES AGREEMENT. An aggregate minimum of one million five
hundred thousand dollars ($1,500,000) to be paid by the Purchaser, Encanto
Networks, or any Designees of Purchaser in connection with the services,
provided by iXL, Inc. pursuant to the Services Agreement, without any
deduction or withholding whatsoever in respect of any taxes or otherwise.
Section 3.3 TAXES. In addition to amounts specified in Section 3.2,
Purchaser will pay all sales, use, transfer, privilege, excise or other taxes
and all duties, whether international, national, state or local, however
designated, which are levied or imposed by reason of the transactions
contemplated hereby excluding, however, income taxes on profits which may be
levied against Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers hereby
represent and warrant to Purchaser that:
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(a) ORGANIZATION AND STANDING. Sellers have all requisite power
and authority to conduct the Business and to own or lease, and to operate,
the Assets, as now conducted, owned, leased and operated. Sellers are duly
qualified or licensed to do business in each of the jurisdictions in which
the nature of the Business or location of the Assets owned or leased and
operated by them requires such qualification or licensing, and where the
failure to be so qualified would reasonably be expected to have a material
adverse effect on the Business or the Assets, taken as a whole ("Material
Adverse Effect").
(b) AUTHORITY OF SELLERS. Subject to Sections 4.1(f) and
(h)(iii), Sellers have the full legal right, power, capacity and authority to
enter into this Agreement and to carry out their obligations hereunder. This
Agreement has been duly executed and delivered by Sellers, and assuming the
due authorization, execution, and delivery hereof by Purchaser, this
Agreement constitutes a legal, valid and binding obligation of Sellers,
enforceable against Sellers in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting creditors' rights and to general
principles of equity, including principles of commercial reasonableness, good
faith, and fair dealing. The Sellers have taken all necessary and appropriate
corporate action, including obtaining all necessary board or shareholder
consents, with respect to the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(c) FINANCIAL STATEMENT. Sellers have delivered to Purchaser a
PRO FORMA, unaudited financial statement (the "Financial Statement") as of
October 31, 1998 pertaining to the Business. To the best of Sellers'
knowledge, the Financial Statement fairly presents the sales or revenues of
the Business as of the date thereof.
(d) ABSENCE OF CERTAIN CHANGES AND EVENTS. Since October 31,
1998, except as described in SCHEDULE 4.1(d), there has not been, to Sellers'
knowledge:
(i) Any material adverse change in the condition of the
Assets, or to Sellers' knowledge any occurrence, circumstance or combination
thereof which reasonably would be expected to result in a Material Adverse
Effect;
(ii) Any material change, other than in the ordinary course
of business, made by Sellers in their accounting practices relating to the
Assets or the Business;
(iii) Any sale, lease, or disposition of, or any agreement to
sell, lease or dispose of, any of the Assets, other than sales, leases or
dispositions in the usual and ordinary course of the Business and other than
pursuant to this Agreement;
(iv) Any waiver, amendment, release, rescission or
termination of any Contract, other than in accordance with the terms thereof,
or in the usual and ordinary course of the Business or such as would not
reasonably be expected to have a Material Adverse Effect;
(v) Any adverse relationships with vendors, suppliers or
customers that may reasonably be expected to have a Material Adverse Effect;
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(vi) Any other material event or condition
of any character that has had a Material Adverse Effect, or would reasonably
be expected to have a Material Adverse Effect; or
(vii) Any agreement by the Sellers to do,
cause or effect any of the foregoing events set forth in (i) through (vi)
above.
(e) COMPLIANCE WITH LAW. Sellers to their knowledge
have materially complied, and are in material compliance, to their knowledge,
with all applicable federal, state and local laws, statutes, licensing
requirements, rules and regulations, and judicial or administrative decisions
applicable to the Business or the Assets, except where failure to be in
compliance therewith would not have a Material Adverse Effect. Sellers have
been granted all permits from federal, state, and local government regulatory
bodies necessary to operate the Business in accordance with the usual and
ordinary course thereof, all of which are currently valid and in full force
and effect, in either case to Sellers' knowledge and except as would not
reasonably expected to have a Material Adverse Effect.
(f) REQUIRED APPROVALS, NOTICES AND CONSENTS.
Except as set forth on SCHEDULE 4.1(f), as indicated on SCHEDULE 1.1(a) OR
(c), or as would not reasonably be expected to have a Material Adverse
Effect, no consent or approval of, other action by, or notice to, any
governmental body or agency, domestic or foreign, or any third party is
required in connection with the consummation by Sellers of the transactions
contemplated by this Agreement.
(g) INTELLECTUAL PROPERTY.
(i) Sellers are licensed or are otherwise
entitled to exercise, without material restriction, all rights to all
Intellectual Property listed in SCHEDULE 1.1(g), in its present form and as
used in the Business, to Sellers' knowledge without any conflict with or
infringement of the rights of others except as disclosed in a Schedule.
(ii) Listed on SCHEDULE 4.1(g)(ii) are: (A)
Sellers' rights in the Intellectual Property (the "Intellectual Property
Rights"); (B) the jurisdiction(s) in which an application for patent or
application for registration of each such Intellectual Property Right has
been made, including the respective application numbers and dates; (C) the
jurisdiction(s) in which each such Intellectual Property Right has been
patented or registered, including the respective patent or registration
numbers and dates; and (D) all licenses, sublicenses and other agreements to
which Sellers or one or more of them are parties and pursuant to which any
other party is authorized to use copies of Sellers' source code or object
code in the Technologies, whether pursuant to an escrow arrangement or
otherwise, or parties who have the right to receive such source code or
object code. To Sellers' knowledge, Sellers or one or more of them have
delivered to Purchaser or Purchaser's counsel copies of all licenses,
sublicenses and other agreements identified pursuant to clause (D) of this
subparagraph.
(iii) Sellers or one or more of them are the
owner of, with all right, title and interest in and to, free and clear of any
Liens (as hereinafter defined), except as described in SCHEDULE 4.1(g)(iii)
or as would not have a Material Adverse Effect (either of the foregoing, a
"Permitted Lien"), the Intellectual Property Rights, and have the rights to
use, sell,
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license, assign, transfer, convey or dispose thereof or the products,
processes and materials covered thereby. Sellers have taken commercially
reasonable and necessary steps, including the filing and prosecution of
patent and trademark applications to perfect and protect their interest in
the Intellectual Property Rights, and to Sellers' knowledge, Sellers have the
exclusive right to file, prosecute and maintain such applications and the
patents and registrations that issue therefrom except as disclosed therein.
(iv) To Sellers' knowledge, all applied for
patents, issued patents, unregistered and registered trademarks and service
marks assigned hereunder, and all registered and unregistered copyrights in
and to the Intellectual Property Rights, held by Seller, are valid and
enforceable, except as disclosed in SCHEDULE 4.1(g)(iv).
(v) Sellers have no knowledge of past or
present use, infringement or misappropriation of any of the Intellectual
Property Rights by any third party service provider of Sellers or, to
Sellers' knowledge, by any other third party, except as disclosed in SCHEDULE
4.1(g)(v).
(vi) To Sellers' knowledge, no person has
asserted or threatened to assert any claims with respect to the Intellectual
Property Rights (A) contesting the right of Sellers to use, exercise, sell,
license, transfer or dispose of any Intellectual Property Rights or any
products, processes or materials covered thereby; or (B) challenging the
ownership, validity or enforceability of any of the Intellectual Property
Rights. To Sellers' knowledge, no Intellectual Property Right is subject to
any outstanding order, judgment, decree, stipulation or agreement related to
or restricting in any manner the licensing, assignment, transfer or
conveyance thereof by Sellers.
(vii) Sellers to their knowledge are in
material compliance with all conditions of all such licenses, sublicenses and
other agreements, except for such noncompliance as would not reasonably be
expected to have a Material Adverse Effect. Sellers have no knowledge of any
assertion, claim or threatened claim that Sellers have breached any terms or
conditions of such licenses, sublicenses or other agreements such as would
reasonably be expected to have a Material Adverse Effect.
(viii) Sellers have the right to sell, assign,
transfer or convey the Intellectual Property Rights to Purchaser pursuant to
the terms hereof. To Sellers' knowledge, Sellers are not, nor will they, as a
result of the execution and delivery of this Agreement or the performance of
Sellers' obligations hereunder, be in violation of, nor shall they lose or in
any way impair, any material rights pursuant to any license, sublicense or
agreement pertaining to the Business, other than in accordance herewith. If
so required by the terms of any licenses, sublicenses or other agreements
with respect to the Intellectual Property Rights to be assigned to Purchaser
hereunder, Sellers have secured or will exercise commercially reasonable
efforts to secure promptly valid written consents from the licensors of such
Intellectual Property Rights to the assignment, transfer or conveyance of
such Intellectual Property Rights, and the licenses, sublicenses or other
agreements governing such Intellectual Property Rights, to Purchaser pursuant
to the terms of this Agreement and at Purchaser's sole expense.
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(ix) Except as disclosed in connection
herewith, Sellers have no knowledge of claims to the effect that the
manufacture, marketing, license, sale or use of any Intellectual Property
Right in its present form and as now used by Sellers infringes any copyright,
patent, trademark, service ▇▇▇▇, trade secret or other intellectual property
right of any third party or violates any license or agreement with any third
party. Sellers to their knowledge have not been sued or charged in writing as
a defendant in any claim, suit, action or proceeding which involves a claim
of infringement of any patents, trademarks, service marks, trade secret
rights, copyrights or other intellectual property rights in the Business and
which has not been finally terminated prior to the date hereof; there are no
such charges or claims in the Business outstanding; and Sellers do not have
any outstanding restrictions or infringement liability with respect to any
patent, trade secret, trademark, service ▇▇▇▇, copyright or other
intellectual property right of another directly involving the Business,
except as disclosed in connection herewith.
(x) To Sellers' knowledge, Sellers have
taken commercially reasonable and necessary steps to protect and preserve the
confidentiality of all inventions, algorithms, formulas, schematics, technical
drawings, ideas, know-how, all other processes not otherwise protected by
patents or patent applications, source code, object code, program listings
and trade secrets owned by Sellers and used in the Business (the
"Confidential Information"), including without limitation the marking of
Confidential Information with appropriate "Proprietary" or "Confidential"
legends, the establishment of policies for the Confidential Information, and
the issuance of nondisclosure agreements or agreements with confidentiality
provisions to parties receiving Confidential Information. To Sellers'
knowledge, all use, disclosure or appropriation of Confidential Information
owned by Sellers by or to a third party has been pursuant to the terms of a
written agreement between Sellers or one or more of them and such third
party. Sellers know of no breaches or claims relating to Sellers'
nondisclosure agreements or other agreements relating to the handling,
disclosure and use of Confidential Information.
(h) CONTRACTS AND COMMITMENTS.
(i) There is set forth on SCHEDULE 1.1(a) a
list of parties with outstanding Contracts that pertain to the Business
(excluding the Retained Contracts), to which any of Sellers is a party or to
which any of the Assets is subject.
(ii) Other than as disclosed in connection
herewith, Sellers have performed all of their obligations under the terms of
each material Contract and are not in default thereunder. No event or
omission has occurred which, but for the giving of notice or lapse of time or
both, would constitute a default by any party thereto under any such
Contract, where such default by any party would reasonably be expected to
have a Material Adverse Effect. Each such Contract is in full force and
effect and, to Sellers' knowledge, valid and binding on all parties thereto.
Sellers have received no notice of default, cancellation or termination in
connection with any such Contract, and are not aware that any such action is
threatened.
(iii) SCHEDULES 1.1(a) OR 4.1(f) indicate all
Contracts that require a novation or consent to assignment, as the case may
be, so that Purchaser may be made a party
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in place of Sellers, as the case may be, or as assignee (the "Contracts
Requiring Novation or Consent to Assignment"). To Sellers' knowledge, such
list is complete, accurate and includes every Contract of which the failure
to obtain such novation or consent to assignment would have a material
adverse effect on Purchaser's ability to operate the Business.
(i) ASSETS. The Assets (including without
limitation the Intellectual Property Rights and the Contracts) include all of
the intangible assets necessary to Sellers' operation of the Business in
substantially the same manner as the Business was operated by Sellers prior
to the Time of Closing.
(j) OPERATING CONDITION OF ASSETS. All of the
Assets to be transferred to Purchaser hereunder are in good operating
condition and repair (normal wear and tear excepted) at the time of execution
of this Agreement, with Purchaser accepting risk of loss and/or damage for
any Assets upon execution of this Agreement.
(k) TITLE TO THE ASSETS.
(i) Except as set forth on SCHEDULE 4.1(k),
Sellers have good and marketable title to the Assets, free and clear of any
pledges, liens, encumbrances, security interests, equities, charges and
restrictions of any nature whatsoever excluding capital leases identified on
SCHEDULE 4.1(k) (collectively, the "Liens") except for Permitted Liens.
(ii) At the Closing, Purchaser will obtain
good and marketable title to the Assets, free and clear of all Liens except
for Permitted Liens.
(l) LITIGATION. Except as set forth in Schedule
4.1(l), there is no claim, litigation, action, suit or proceeding,
administrative or judicial, pending or, to Sellers' knowledge, threatened
against Sellers pertaining to the Business or the Assets, at law or in
equity, before any federal, state, local or foreign court, regulatory agency
or other governmental authority.
(m) NO CONFLICT OR DEFAULT. Except as set forth in
Schedule 4.1(m), neither the execution and delivery of this Agreement nor
compliance with the terms and provisions hereof, including without
limitation, the consummation of the transactions contemplated hereby, will
materially conflict with or result in the material breach of any term,
condition or provision of any agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation or instrument to which Sellers or any
of them are a party or by which they or any of the Assets are or may be
bound, or constitute a material default (or an event which, with the lapse of
time or the giving of notice, or both, would constitute a material default)
thereunder or, to Sellers' knowledge, violate any statute, regulation or
ordinance of any governmental authority.
(n) BROKERS' AND FINDERS' FEES. Sellers are not
obligated to pay any fees or expenses of any broker or finder in connection
with the origin, negotiation or execution of this Agreement or in connection
with any transactions contemplated hereby.
(o) CUSTOMERS. SCHEDULE 1.1(a) AND (d) together
list all customers of Sellers with respect to the Business. Prior to the Time
of Closing, Sellers shall furnish Purchaser
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with complete and accurate copies or descriptions of all current agreements
with those of such customers under Contracts.
(p) BOOKS AND RECORDS. To Sellers' knowledge, the
books and records of Sellers to which Purchaser and its accountants and
attorneys have been given access fairly reflect the underlying facts and
transactions in all material respects.
(q) COMPLETE DISCLOSURE. No representation or
warranty by Sellers in this Agreement, and no written statement of fact
furnished to Purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein in the context
in which they were made not misleading.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. The
Purchaser hereby represents and warrants to Sellers that:
(a) ORGANIZATION AND STANDING. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. Purchaser has all requisite power and
authority to execute its duties and obligations hereunder. Purchaser is duly
qualified or licensed to do business in each of the jurisdictions where the
nature of the Business or location of the Assets would require such
qualification or licensing, and where the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect.
(b) AUTHORITY OF PURCHASER. The Purchaser has full
legal right, power, capacity, and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby, including, without limitation, the execution and
delivery of this Agreement. This Agreement has been duly executed and
delivered by Purchaser, and assuming due authorization, execution, and
delivery by Sellers, this Agreement constitutes a legal, valid, and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors'
rights and to general principles of equity, including principles of
commercial reasonableness, good faith, and fair dealing. The Purchaser has
taken all necessary and appropriate corporate action, including obtaining all
necessary board or shareholder consents, with respect to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
(c) LITIGATION. There is no claim, litigation,
action, suit or proceeding, administrative or judicial, pending or, to
Purchaser's knowledge, threatened against the Purchaser relating to this
Agreement or the transactions contemplated hereunder, at law or in equity,
before any federal, state, local or foreign court, or regulatory agency, or
other governmental authority, which could result in the institution of legal
proceedings to prohibit or restrain the consummation or performance of this
Agreement or the transactions contemplated hereby or claim damages as a
result of this Agreement or the transactions contemplated hereby.
(d) NO CONFLICT OR DEFAULT. Neither the execution
and delivery of this Agreement, nor compliance with the terms and provisions
hereof, including, without limitation,
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the consummation of the transactions contemplated hereby, will conflict with
or result in the breach of any term, condition or provision of Purchaser's
Articles of Incorporation or Bylaws, or of any material agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation or
instrument to which Purchaser is a party or by which Purchaser either is or
may be bound or constitute a default (or an event which, with the lapse of
time or the giving of notice, or both, would constitute a default)
thereunder, or to Purchaser's knowledge, violate any statute, regulation or
ordinance of any governmental authority.
(e) BROKERS' AND FINDERS' FEES. The Purchaser is
not obligated to pay any fees or expenses of any broker or finder in
connection with the origin, negotiation, or execution of this Agreement or in
connection with any transactions contemplated hereby.
(f) COMPLIANCE WITH LAW. Purchaser has materially
complied, and is in material compliance, to their knowledge, with all
applicable federal, state and local laws, statutes, licensing requirements,
rules and regulations, and judicial or administrative decisions applicable to
Purchaser's obligations and duties hereunder. Purchaser has been granted all
necessary permits from federal, state, and local government regulatory bodies
necessary to use, license and offer the Technologies, all of which are
currently valid and in full force and effect, in either case to Purchaser's
knowledge.
(g) COMPLETE DISCLOSURE. No representation or
warranty by Purchaser in this Agreement, and no written statement of fact
furnished to Sellers or any of them pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein and
therein in the context in which they were made not misleading.
(h) REQUIRED APPROVALS, NOTICES OR CONSENTS. Except
as set forth on SCHEDULE 4.2(h), no consent or approval of, other action by,
or notice to, any governmental body or agency, domestic or foreign, or any
third party is required in connection with the consummation by Purchaser of
the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS
Section 5.1 CONFIDENTIALITY. Purchaser and iXL Enterprises, Inc.
will execute a confidentiality agreement or non-disclosure agreement in the
form of EXHIBIT "C". Upon agreement of the parties, Sellers and/or Purchaser
will disseminate a mutually agreeable press release or announcement
concerning the transactions contemplated by this Agreement.
Section 5.2 PURCHASER'S COVENANTS.
(a) SELLERS' ACCOUNTS RECEIVABLE. Purchaser
acknowledges that all Sellers' Accounts Receivable arising prior to the Time
of Closing shall remain the property of Sellers, and that Purchaser shall not
acquire any beneficial right or interest therein. For a period of forty-five
(45) days from the Time of Closing ("Collection Period"), Purchaser shall use
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commercially reasonable efforts to collect the Accounts Receivable in the
normal and ordinary course of the Business and will apply all such amounts
collected to the debtor's oldest account receivable first. Purchaser's
obligation and authority shall not extend to the institution of litigation,
employment of counsel or a collection agency, or any other extraordinary
means of collection. Any amounts relating to the Accounts Receivable that are
paid directly to the Sellers shall be retained by Sellers, but Sellers shall
provide Purchaser with prompt notice of any such payment. At the end of the
45-day Collection Period, (i) Purchaser shall make a payment to Sellers equal
to the amount of all collections of Sellers' Accounts Receivable during such
period; and (ii) any remaining Sellers Accounts Receivable shall be returned
to Sellers for collection.
(b) EMPLOYEES. Set forth on SCHEDULE 5.2(b) is a
list of employees of the Sellers to whom Purchaser may make an offer of
employment in a position comparable in substance and compensation to such
employee's current position. Purchaser will negotiate in good faith to hire
the employees on SCHEDULE 5.2(b) and will provide incentives to such
employees consistent with the policies regarding other employees of
Purchaser. Sellers have no duty or obligation in connection with Purchaser's
offer of employment to any of Sellers' employees. Purchaser shall not,
directly or indirectly (including without limitation through any of its
affiliates) solicit, attempt to solicit, or assist any third party to solicit
any employee of Sellers except those listed on SCHEDULE 5.2(b) to terminate
his or her employment with Sellers or to accept employment with Purchaser or
any of its affiliates.
Within 30 days of the Time of Closing, Purchaser
shall furnish Seller with a complete and accurate list in writing, of those
employees of Sellers who have accepted Purchaser's offer of employment in
accordance herewith ("Transferred Employees"), including their end-date in
Sellers' employ and, if different, their start date in Purchaser's employ. As
to Transferred Employees:
(i) Sellers shall be responsible for and
shall pay their salaries and other compensation for services rendered to
Sellers while in their employ. Purchaser shall be solely responsible for and
shall pay their salaries and other compensation on or after their start date
in Purchaser's employ.
(ii) The hardware listed after each
respective Transferred Employee's name on Schedule 5.2(b) will be conveyed by
Sellers to Purchaser (i) for no additional consideration; (ii) AS IS, COVERED
BY NO WARRANTIES WHATSOEVER, AND SUBJECT TO THE EXCLUSION OF WARRANTIES set
forth in Section 9.3; and (iii) subject to all existing encumbrances or other
Liens. Sellers and Purchaser will execute and deliver a ▇▇▇▇ of Sale and
Assignment, as necessary to convey such hardware.
(c) SERVICES AGREEMENT. The Purchaser, Encanto
Networks, or any Designees shall purchase from Sellers an aggregate minimum
of one million five hundred thousand dollars ($1,500,000), to be paid to
Sellers in connection with the services (as defined in the Services
Agreement) provided by Sellers to Purchaser, Encanto Networks or their
Designees pursuant to the Services Agreement within the 30-month period
commencing with the execution hereof. If at the end of such thirty (30) month
period, Sellers have not received an aggregate of at least one million five
hundred thousand dollars ($1,500,000) for services performed by or on behalf
of Sellers pursuant to the Services Agreement (without any deduction or
withholding
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whatsoever in respect of any taxes or otherwise), then Purchaser shall pay
Sellers the difference between (i) one million five hundred thousand dollars
($1,500,000), and (ii) the total aggregate fees paid by Purchaser, Encanto
Networks or their Designees to Sellers for such services during the entire
thirty (30) month period after the execution hereof, such difference to be
paid to Sellers in a lump sum payment immediately at the end of such thirty
(30) month period.
(d) LICENSE AGREEMENT. The Purchaser shall ▇▇▇▇▇
▇▇▇▇▇▇▇ a license pursuant to the terms of the License Agreement, to enable
Sellers to (i) utilize the patents under the Siteman and MerchantWAVE
software and utilize, develop, and license other technologies that involve or
relate to e-commerce solutions and the development and maintenance of a Web
authoring and template tool for multiple Web site management to the extent
set forth in the License Agreement, (ii) continue offering, maintaining, and
servicing the Technologies to and for third parties through a license from
Purchaser and (iii) provide services to Purchaser, Encanto Networks and their
Designees.
(e) CONVERTIBLE PROMISSORY NOTE. The Purchaser
shall fulfill all of its obligations under the Convertible Promissory Note.
The Purchaser shall not, prior to payment, or conversion, in full of the
Convertible Promissory Note, issue any other note nor incur any indebtedness,
in either case senior to, or on a par with, as to security or to payment of
principal or interest, the Convertible Promissory Note.
Section 5.3 SELLERS' COVENANTS.
(a) ACCESS TO INFORMATION. Upon reasonable notice,
Sellers will give Purchaser and its Representatives (as such term is defined
below) full access, during normal business hours, to all of the properties,
books, contracts, commitments and records pertaining to the Business and the
Assets, provided that such access shall not unreasonably interfere with the
normal operations of the Business, and Sellers will use commercially
reasonable efforts to furnish to Purchaser and its officers, directors,
employees, agents or representatives (collectively, "Representatives") during
such period all such information concerning the Business or the Assets as
Purchaser may reasonably request; PROVIDED, HOWEVER, that any furnishing of
such information pursuant hereto or any investigation by Purchaser shall not
affect Purchaser's right to rely on the representations, warranties,
agreements and covenants made by Sellers in this Agreement, and PROVIDED,
FURTHER, that any material assistance to Purchaser shall be provided on a
time and materials basis.
(b) POST CLOSING ASSISTANCE. For a period of
forty-five (45) days after the Time of Closing, Sellers shall use their
commercially reasonable efforts (limited to iXL's Solutions Set group) to
cooperate with Purchaser in transitioning and maintaining the operation and
conduct of the Business in the same manner as the Business was operated and
conducted prior to the Time of Closing; PROVIDED, that Purchaser is using its
best efforts to do so. Purchaser shall reimburse Sellers for their reasonable
photocopying, travel (based on coach fares when available and reasonable
meals and lodging), postage, overnight courier or other expedited delivery
costs, and other such expenses incurred. After such forth-five (45) day
period, Purchaser shall pay to Sellers, on a time and materials basis, the
cost of any additional post closing assistance.
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(c) CERTAIN HEALTH BENEFITS; COBRA. Sellers shall
be responsible for compliance with the health care continuation coverage
requirements of COBRA applicable to employees of Sellers. Sellers shall be
responsible for any associated notice requirements for employees of the
Business who are terminated on or prior to the Time of Closing.
(d) USE OF NAME. Except as provided in the License
Agreement, from and after the Time of Closing, neither Sellers nor any
person, firm or corporation affiliated with Sellers or acting pursuant to
Sellers' actual authority shall use the names "Siteman" or "MerchantWAVE", or
any name confusingly similar to such names, in any manner without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld
or delayed. Sellers shall execute and/or file any documents, certificates or
instruments reasonably necessary to authorize and permit Purchaser's use of
the names "Siteman" and "MerchantWAVE."
ARTICLE IV
CLOSING
Section 6.1 TIME OF CLOSING. The transactions contemplated by
this Agreement shall be completed on the first business day on which the last
of the conditions contained in Article VII hereof is fulfilled or waived (the
"Time of Closing"), unless otherwise agreed to by Purchaser and Sellers. The
Closing shall take place at such place as agreed to by Purchaser and Sellers.
The "Closing" shall mean the deliveries to be made by the parties hereto at
the Time of Closing in accordance with this Agreement.
Section 6.2 DELIVERIES BY SELLERS. At the Closing, Sellers shall
deliver to Purchaser the following:
(a) A good and sufficient ▇▇▇▇ of Sale and
Assignment for the Assets in substantially the form of EXHIBIT "D", duly
executed by Sellers, selling, delivering, transferring and assigning to
Purchaser all of Sellers' right, title and interest to the Assets, free and
clear of all Liens except for Permitted Liens;
(b) An Assignment and Assumption of Contracts in
the form of EXHIBIT "E", duly executed by Sellers;
(c) An Assignment and Assumption of Registered
Trademarks in the form of EXHIBIT "F", duly executed by Sellers; and
(d) The L&S Agreements, duly executed by Sellers.
Section 6.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser
shall deliver, or cause to be delivered, to the Sellers the following:
(a) The Closing Cash Payment, the Convertible
Promissory Note and the L&S Agreements, duly executed by the Purchaser;
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(b) The ▇▇▇▇ of Sale and Assignment, the Assignment and
Assumption of Contracts and the Assignment and Assumption of Registered
Trademarks, each as described in Section 6.2, duly executed by Purchaser; and
(c) An Assumption Agreement, in the form of EXHIBIT "G,"
duly executed by Purchaser.
Section 6.4 FURTHER ASSURANCES. At or after the Closing, each
party shall each prepare, execute and deliver, at the preparer's expense,
such further instruments of conveyance, sale, assignment or transfer and
shall take or cause to be taken such other or further action as any party
shall reasonably request of any other party at any time or from time to time
as necessary in order to perfect, confirm or evidence in the Purchaser title
to all or any part of the Assets or to consummate, in any other manner, the
terms and provisions of this Agreement.
Section 6.5 PASSAGE OF TITLE AND RISK OF LOSS. Notwithstanding
anything to the contrary herein, to the extent that Purchaser is unable to
take possession of any Assets for a reasonable period (not to exceed 45 days)
post-Closing, Sellers will use commercially reasonable efforts to continue
operating the business in the ordinary course, subject to the L&S Agreements.
As to all Assets (including those referred to in the preceding sentence),
Purchaser shall take title and assume risk of loss at Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
Section 7.1 CONDITIONS TO OBLIGATIONS OF PRCHASER. Each and
every obligation of Purchaser to be performed at the Closing shall be subject
to the satisfaction as of or before the Time of Closing of the following
conditions (unless waived in writing by Purchaser):
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Sellers set forth in Section 4.1 shall be true and correct
at and as of the Time of Closing (except for such representations and
warranties which speak as of another time).
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions
and other obligations under this Agreement which are to be performed or
complied with by Sellers at or prior to the Time of Closing shall have been
fully performed and complied with, including the delivery of the instruments
and documents in accordance with Section 6.2.
(c) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. Neither
party shall have knowledge of any pending investigation, action, suit or
proceeding challenging the transaction by any body or agency of the federal,
state or local government or by any third party, and the consummation of the
transaction shall not have been enjoined by a court of competent jurisdiction
as of the Time of Closing.
(d) APPROVAL OF DOCUMENTATION. The form and substance of
all certificates, instruments and other documents delivered or to be
delivered to Purchaser under this Agreement shall be reasonably satisfactory
to Purchaser and its counsel in all respects.
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(e) CONSENTS. Sellers shall have received all requisite
material consents and approvals of all lenders, lessors, and other third
parties whose consent or approval is required in order for Sellers to
consummate the transactions contemplated by this Agreement.
(f) RELEASE OF LIENS. Subject to Sections 4.1(f) and
(h)(iii), all material liens on and security interests in the Assets
(excluding Permitted Liens) shall have been terminated and released, and the
Sellers shall have provided Purchaser with copies of duly executed UCC-3
termination statements effecting such terminations and releases.
(g) L&S AGREEMENTS. Sellers shall have delivered to
Purchaser the executed L&S Agreements.
Section 7.2 CONDITIONS TO OBLIGATIONS OF SELLERS. Each and every
obligation of Sellers to be performed at the Time of Closing shall be subject
to the satisfaction as of or before such time of the following conditions
(unless waived in writing by Sellers):
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser set forth in Section 4.2 shall be true and
correct at and as of the Time of Closing (except for such representations and
warranties which speak as of another time).
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions
and other obligations under this Agreement which are to be performed or
complied with by Purchaser at or prior to the Time of Closing shall have been
fully performed and complied with, including the delivery of the instruments
and documents in accordance with Section 6.3.
(c) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. Neither
party shall have knowledge of any pending lawsuit challenging the transaction
by any body or agency of the federal, state or local government or by any
third party, and the consummation of the transaction shall not have been
enjoined by a court of competent jurisdiction as of the Time of Closing.
(d) APPROVAL OF DOCUMENTATION. The form and substance of
all certificates, instruments and other documents delivered or to be
delivered to Sellers under this Agreement shall be reasonably satisfactory to
the Sellers and their counsel in all respects.
(e) PURCHASE PRICE. Purchaser shall have delivered to
Sellers the Closing Cash Payment, the Convertible Promissory Note and the
executed L&S Agreements.
(f) CONSENTS. Sellers shall have received all requisite
consents and approvals of all lenders, lessors and other third parties whose
consent or approval is required in order for Sellers to consummate the
transactions contemplated by this Agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements (collectively,
"Obligations") made by any party hereto or in any Exhibit or Schedule (all of
which Exhibits and Schedules are incorporated herein by
16
reference), shall survive the execution and delivery of this Agreement and
the Closing hereunder for 18 months, except for (i) Purchaser's post-Closing
payment obligation described in Section 3.2(b), and Purchaser's obligations
under or with respect to the Convertible Promissory Note, each of which shall
survive until satisfied; and (ii) any longer period, as applicable, specified
in the License or Services Agreements. Neither the period of survival nor the
liability of any party with respect to such party's Obligations shall be
reduced by any investigation made at any time by or on behalf of any party.
If written notice of a claim made in good faith (specifying with reasonable
particularity the circumstances of such claim) has been given within such
survival period by a party in whose favor such Obligations, have been made to
the party that made such Obligations, then the relevant Obligations shall
survive as to such claim, until the claim has been finally resolved.
Section 8.2 INDEMNIFICATION BY SELLERS. Except as otherwise
limited by this Article and subject to Section 9.2, the Purchaser and its
affiliates, officers, directors, employees, agents, successors and assigns
shall be indemnified and held harmless by the Sellers for any and all
liabilities, obligations, losses, damages, claims, suits, actions, demands,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' and consultants' fees and expenses)
(hereinafter a "Purchaser's Loss") asserted against, imposed upon or
incurred or suffered by the Purchaser, arising out of or resulting from:
(a) any inaccuracy in, breach, violation, default or
nonfulfillment of any of the representations, warranties, agreements or
covenants made by the Sellers contained herein or in any document delivered
by the Sellers pursuant to this Agreement (excluding the L&S Agreements) or
the transactions contemplated hereby;
(b) any claim against the Business relating to the
Business or the Assets to the extent that such claim is based upon or arises
out of any event occurring prior to the Time of Closing, except as otherwise
provided in the L&S Agreements; and
(c) any of the Unassumed Liabilities.
Section 8.3 INDEMNIFICATION BY PURCHASER. Except as otherwise
limited by this Article and subject to Section 9.2, the Sellers and their
respective affiliates, officers, directors, employees, agents, successors and
assigns shall be indemnified and held harmless by the Purchaser for any and
all liabilities, obligations, losses, damages, claims, suits, actions,
demands, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, reasonable attorneys' and consultants' fees
and expenses) (hereinafter a "Sellers' Loss"), asserted against, imposed upon
or incurred or suffered by the Sellers or any of them, arising out of or
resulting from:
(a) any inaccuracy in, breach, violation, default or
nonfulfillment of any of the representations, warranties, agreements or
covenants made by the Purchaser contained herein (including, without
limitation, non-payment of the Purchase Price or any portion thereof) or in
any document delivered by the Purchaser pursuant to this Agreement (excluding
the L&S Agreements) or the transactions contemplated hereby; and
17
(b) any claim against the Business relating to the
Business or the Assets to the extent that such claim is based upon or arises
out of any event occurring on or after the Time of Closing, except as
otherwise provided in the L&S Agreements.
Section 8.4 GENERAL INDEMNIFICATION PROVISIONS.
(a) For the purposes of this Agreement, the term
"Indemnitee" shall refer to the Person or Persons indemnified, or entitled,
or claiming to be entitled, to be indemnified, pursuant to the provisions of
Sections 8.2 or 8.3, as the case may be, the term "Indemnitor" shall refer to
the Person or Persons having the obligation to indemnify pursuant to such
provisions and "Losses" shall refer to the Sellers' Losses or the Purchaser's
Losses, as the case may be. Nothing in this Section or in this Agreement
shall make either party liable for indemnification for amounts of Loss that,
with reasonable commercial efforts, the Indemnitee could satisfy through
applicable insurance and/or insurance proceeds.
(b) An Indemnitee shall give, within thirty (30) calendar
days, the Indemnitor notice of any matter which an Indemnitee has determined
has given or could give rise to a right of indemnification under this
Agreement, stating the amount of the Loss, if known, and method of
computation thereof, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises. The obligations and liabilities of
the Indemnitor under this Article with respect to Losses arising from claims
of any third party that are subject to the indemnification provided for in
this Article ("Third Party Claims") shall be governed by and contingent upon
the following additional terms and conditions: if an Indemnitee shall receive
notice of any Third Party Claim, the Indemnitee shall give the Indemnitor
notice of such Third Party Claim within thirty (30) calendar days (PROVIDED,
HOWEVER, that failure to give such notice shall not preclude indemnification
under this Article VIII unless there is actual prejudice to the rights of the
Indemnitor) and shall permit the Indemnitor, at its option, to participate in
the defense of such Third Party Claim by counsel of its own choice and at its
expense. If, however, the Indemnitor acknowledges in writing its obligation
to indemnify the Indemnitee hereunder against any Losses that may result from
such Third Party Claims (subject to the limitations set forth herein), then
the Indemnitor shall be entitled, at its option, to assume and control the
defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnitee within
five calendar days; PROVIDED, HOWEVER, that if the Indemnitee shall determine
that its interests conflict with those of the Indemnitor, the Indemnitee
shall be entitled to be represented at the Indemnitee's expense by separate
counsel of its choice and to participate in the defense of any such Third
Party Claim. In the event the Indemnitor exercises the right to undertake any
such defense against any such Third Party Claim as provided above, the
Indemnitee shall cooperate with the Indemnitor in such defense and make
available to the Indemnitor, at the Indemnitor's expense, all witnesses,
pertinent records, materials and information in the Indemnitee's possession
or under the Indemnitee's control relating thereto as is reasonably required
by the Indemnitor. Similarly, in the event the Indemnitee is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnitor shall cooperate with the Indemnitee in such defense and make
available to the Indemnitee, at the Indemnitor's expense, all such witnesses,
records, materials and information in the Indemnitor's possession or under
the Indemnitor's control relating thereto as is reasonably required by the
Indemnitee. No such Third Party Claim, except the settlement thereof that
involves the payment
18
of money only and for which the Indemnitee is released by the third party
claimant and is totally indemnified by the Indemnitor, may be settled by the
Indemnitor without the written consent of the Indemnitee, which consent shall
not be unreasonably withheld; PROVIDED, HOWEVER, that if a Third Party Claim
is brought that relates in part to matters for which indemnification pursuant
to this Agreement may be available and in part to matters for which such
indemnification may not be available, a party may settle any segregable
portion of such Third Party Claim as to which such indemnification may not be
available. Similarly, no Third Party Claims that is being defended in good
faith by the Indemnitor shall be settled by the Indemnitee without the
written consent of the Indemnitor; PROVIDED, HOWEVER, that, if a Third Party
Claim is brought that relates in part to matters for which indemnification
pursuant to this Agreement may be available and in part to matters for which
such indemnification may not be available, a party may settle any segregable
portion of such Third Party Claims to which such indemnification may not be
available.
ARTICLE IX
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES
Section 9.1 LIABILITY LIMIT. NOTWITHSTANDING ANYTHING ELSE IN
THIS AGREEMENT OR OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY (I) FOR ANY INDIRECT, SPECIAL,
INCIDENTAL CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST DATA, BUSINESS, OR
PROFITS, OR (II) FOR COST OF PROCUREMENT OF SUBSITITUTE GOODS, BUSINESS OR
SERVICES, EVEN IF THE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR
ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OR PROBABILITY OF SUCH DAMAGES.
Section 9.2 DOLLAR LIMIT. EXCEPT FOR PURCHASER'S OBLIGATIONS TO
PAY SELLERS THE PURCHASE PRICE UNDER ARTICLE III OF THIS AGREEMENT (INCLUDING
THE CASH CLOSING PAYMENT, THE $500,000 CONVERTIBLE PROMISSORY NOTE AND THE
ADDITIONAL $1.5 MILLION PAYMENT), NOTWITHSTANDING ANYTHING ELSE IN THIS
AGREEMENT OR OTHERWISE, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ARTICLE
VIII) UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY AMOUNTS (A) IN EXCESS OF AN AMOUNT EQUAL TO A
MAXIMUM OF TWO MILLION DOLLARS ($2,000,000) IN THE AGGREGATE, PROVIDED,
HOWEVER, THAT AS TO SELLERS' LIABILITY, NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN OR IN THE SERVICES AGREEMENT, SELLERS SHALL BE ENTITLED TO
OFFSET AGAINST THAT MAXIMUM THE AGGREGATE VALUE OF ANY SERVICES THAT THEY
HAVE PERFORMED IN CONNECTION WITH THE SERVICES AGREEMENT FOR WHICH THEY HAVE
NOT RECEIVED PAYMENT THEREUNDER; OR (B) UNLESS THE AGGREGATE OF ALL
PURCHASER'S LOSSES OR SELLERS' LOSSES, AS THE CASE MAY BE, FOR WHICH SELLERS
OR PURCHASER, RESPECTIVELY, WOULD BE LIABLE BUT FOR THIS
19
CLAUSE EXCEEDS, ON A CUMULATIVE BASIS, AN AMOUNT EQUAL TO TWENTY-FIVE
THOUSAND DOLLARS ($25,000).
Section 9.3 EXCLUSION OF WARRANTIES. APART FROM THE SPECIFIC
WARRANTIES SET OUT HEREIN, ALL SERVICES AND PRODUCTS, INCLUDING BUT NOT
LIMITED TO THE ASSETS AND THE INTELLECTUAL PROPERTY OR ANY PORTION THEREOF,
PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS. NEITHER
SELLERS NOR ANY OF THEIR AFFILIATES, EMPLOYEES, OFFICERS, DIRECTORS, AGENTS
OR LICENSORS WARRANTS THAT THE SERVICES OR PRODUCTS, INCLUDING BUT NOT
LIMITED TO THE ASSETS AND THE INTELLECTUAL PROPERTY OR ANY PORTION THEREOF,
PROVIDED PURSUANT TO THIS AGREEMENT WILL BE UNINTERRUPTED OR FREE FROM
ERRORS, DEFECTS, AND PROBLEMS, NOR DOES SELLERS WARRANT THAT CERTAIN RESULTS
MAY BE OBTAINED BY PURCHASER IN CONNECTION WITH THE SERVICES OR PRODUCTS
INCLUDING BUT NOT LIMITED TO THE ASSETS AND THE INTELLECTUAL PROPERTY OR ANY
PORTION THEREOF. SELLERS AND THEIR AFFILIATES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS AND LICENSORS MAKE NO WARRANTY, GUARANTEE OR REPRESENTATION
EITHER EXPRESS OR IMPLIED REGARDING THE MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY SERVICES OR PRODUCTS, INCLUDING BUT NOT LIMITED TO
THE ASSETS AND THE INTELLECTUAL PROPERTY OR ANY PORTION THEREOF, PROVIDED
UNDER THIS AGREEMENT. WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY
STATED HEREIN, SELLERS DO NOT MAKE ANY WARRANTY OR GUARANTEE FOR ANY THIRD
PARTY PRODUCTS OR SERVICE.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 NOTICE. All notices and other communications required
or permitted under this Agreement shall be delivered to the parties at the
address set forth below their respective signature blocks, or at such other
address that they designate by notice to all other parties in accordance with
this Section 10.1. Any party delivering notice to Sellers shall deliver a
copy to T. ▇▇▇▇▇▇▇ ▇▇▇▇▇, III, Esq., Assistant General Counsel, iXL, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, with an additional copy to ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ Esq., ▇▇▇▇▇▇ & ▇▇▇▇▇▇, One Buckhead Plaza, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Any party delivering notice to Purchaser
shall deliver a copy to ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, Two Embarcadero
Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
All notices and communications shall be deemed to have been received unless
otherwise set forth herein: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of facsimile transmission, on the date on
which the sender receives confirmation by facsimile transmission that such
notice was received by the addressee, provided that a copy of such
transmission is additionally sent by mail as set forth in (iv) below; (iii)
in the case of overnight air courier, on the second business day following
the day sent, with receipt confirmed by the courier; and (iv) in the case of
mailing by first class certified or registered mail, postage prepaid, return
receipt requested, on the fifth business day following such mailing.
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Section 10.2 ENTIRE AGREEMENT. This Agreement, the exhibits and
schedules hereto, the documents referred to herein, and the documents
executed contemporaneously hereto at the Time of Closing, including but not
limited to the Convertible Promissory Note, the L&S Agreements between the
parties, and the Confidentiality Agreement, embody the entire agreement and
understanding of the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to such subject matter.
Section 10.3 BINDING EFFECT; ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit
of and be binding upon Sellers and Partner and their respective successors
and permitted assigns.
(a) Neither party may assign any right under this
Agreement, and any purported assignment will be null and void and a breach
of this Agreement, except for the following:
(i) Either party may assign some or all of its
rights and/or delegate some or all of its obligations under this Agreement
with the express prior written consent of the other party, which may be
granted or withheld in the other party's sole discretion.
(ii) Either party may assign all of its rights
indivisibly to an affiliate. The affiliate in question must agree in writing
to comply with the assigning party's obligations under, and to be bound by,
this Agreement and the other agreements contemplated herein.
(iii) Either party may assign all of its rights
indivisibly in connection with a sale or other disposition of substantially
all the assets of the assigning party's business relating to the Licensed
Software to a single acquiring person or entity. The acquiring person or
entity must agree in writing to comply with the assigning party's obligations
under, and to be bound by, this Agreement and the other agreements
contemplated herein.
(b) Notwithstanding the foregoing, any of the following
occurrences shall not be deemed an assignment or otherwise in violation of
this Section 10.3 or this Agreement:
(i) an occurrence which involves a reorganization
or restructuring of either party or a conversion by either party into another
form of legal entity (such as to or from a limited liability company) if
following such occurrence more than fifty percent (50%) of the then
outstanding shares or membership interests of such party are owned directly
or indirectly by all or substantially all of the individuals or entities who
were beneficial owners of such party immediately prior to such occurrence;
(ii) there is a transfer of shares or securities
pursuant to a contractual obligation with an investor, as a result of the
exercise of rights by such investor pursuant to any agreement valid and
existing as of the Time of Closing; or
(iii) any transactions in the ordinary course of
business resulting from or related to an initial public offering, or the free
trade of shares on any public market.
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Section 10.4 EXPENSES OF TRANSACTION; TAXES. Purchaser and Sellers
shall each bear and pay all costs and expenses respectively incurred by each
of them on their behalf in connection with this Agreement, including, without
limitation, fees and expenses of their own financial consultants, accountants
and counsel. Purchaser shall pay all applicable sales, use, excise, transfer,
documentary and any other similar taxes arising out of the purchase and sale
of the Assets.
Section 10.5 WAIVER; CONSENT. This Agreement may not be changed,
amended, terminated, augmented, rescinded, or discharged (other than by
performance), in whole or in part, except by a writing executed by the
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or
binding unless such waiver shall be in writing and signed by the party
claimed to have given or consented thereto. Except to the extent that a party
hereto may have otherwise agreed in writing, no waiver by that party of any
condition of this Agreement or breach by the other party of any of its
obligations or representations hereunder or thereunder shall be deemed to be
a waiver of any other condition or subsequent or prior breach of the same or
any other obligation or representation by the other party, nor shall any
forbearance by the first party to seek a remedy for any noncompliance or
breach by the other party be deemed to be a waiver by the first party of its
rights and remedies with respect to such noncompliance or breach.
Section 10.6 COUNTERPARTS. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 10.7 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 enforceable
in accordance with its terms.
Section 10.8 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No
provisions of this Agreement are intended, nor will be interpreted, to
provide or create any third party beneficiary rights or any other rights of
any kind in any client, customer, affiliate, stockholder, partner or employee
of any party hereto or any other person or entity unless specifically
provided otherwise herein, and, except as so provided, all provisions hereof
will be personal solely between the parties to this Agreement.
Section 10.9 ARBITRATION; ATTORNEYS' FEES. Any dispute arising out
of this Agreement shall be finally settled by arbitration in Santa Clara,
California, in accordance with the then current Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"), and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Such arbitration shall be conducted by three (3)
arbitrators chosen by mutual agreement of the Purchaser and the Sellers.
There shall be limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence and
documents related to or arising out of the issues to be arbitrated, (b)
depositions of all party witnesses, and (c) such other depositions as may be
allowed by the arbitrators upon a showing of good cause. Depositions shall be
conducted in accordance with the California Code of Civil Procedure, and a
court reporter shall record all hearings, with such record constituting
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the official transcript of such proceedings. If any arbitration or action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement or to protect the rights obtained under this Agreement, the
prevailing party shall be entitled to its reasonable attorneys' fees, costs
and disbursements in addition to any other relief to which it may be entitled.
Section 10.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
Section 10.11 SELLERS' KNOWLEDGE. Notwithstanding anything to the
contrary herein, any reference to knowledge of Sellers, including without
limitation in connection with any representation or warranty so qualified,
shall be understood to mean the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and the management of the Siteman business.
Section 10.12 CHOICE OF LAWS. This agreement shall be governed,
construed, and interpreted in accordance with the laws of the State of
California excluding its conflicts of law principles.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
SITEMAN, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
Address:
c/o Encanto Networks, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
iXL ENTERPRISES, INC.
By:/s/ U ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
------------------------
U. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Chairman and CEO
Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
iXL, INC.
By: /s/ U ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
------------------------
Name: U. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Title: Director
Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
iXL, SAN DIEGO, INC.
By: /s/ U ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
------------------------
Name: U. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Title:
Address:
Fax:
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