EXHIBIT 2.20
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
IXL HOLDINGS, INC.,
IXL-NEW YORK, INC.,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, INC.
AND
THE W & L SHAREHOLDERS
DATED AS OF JULY 8, 1998
PAGE
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 THE MERGER.......................................................... 1
1.2 CLOSING AND CLOSING DATE............................................ 2
1.3 EFFECTIVE TIME OF THE MERGER........................................ 2
1.4 EFFECT OF THE MERGER................................................ 2
ARTICLE II
THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION........................................ 2
2.2 BYLAWS.............................................................. 2
2.3 BOARD OF DIRECTORS; OFFICERS........................................ 2
ARTICLE III
CONVERSION OF SHARES
3.1 MERGER CONSIDERATION................................................ 3
3.2 DISSENTING SHARES................................................... 4
3.3 NO FURTHER RIGHTS................................................... 4
3.4 CLOSING OF W & L'S TRANSFER BOOKS................................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 ORGANIZATION AND QUALIFICATION.. .................................. 4
4.2 AUTHORITY.......................................................... 5
4.3 CAPITALIZATION..................................................... 5
4.4 SUBSIDIARIES....................................................... 5
4.5 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS........................ 5
-i-
PAGE
4.6 FINANCIAL STATEMENTS................................................. 6
4.7 ABSENCE OF CHANGES................................................... 6
4.8 UNDISCLOSED LIABILITIES.............................................. 7
4.9 TITLE TO PROPERTIES.................................................. 7
4.10 EQUIPMENT............................................................ 7
4.11 INTELLECTUAL PROPERTY................................................ 8
4.12 REAL PROPERTY........................................................ 8
4.13 LEASES............................................................... 9
4.14 CONTRACTS............................................................ 9
4.15 DIRECTORS AND OFFICERS............................................... 9
4.16 PAYROLL INFORMATION.................................................. 9
4.17 LITIGATION........................................................... 10
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS............................... 10
4.19 ERISA................................................................ 10
4.20 TAXES................................................................ 11
4.21 COMPLIANCE WITH APPLICABLE LAWS...................................... 11
4.22 BOARD OF DIRECTOR/SHAREHOLDER CONSENT................................ 11
4.23 BROKERS.............................................................. 11
4.24 ENVIRONMENTAL MATTERS................................................ 12
4.25 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS..................... 12
4.26 ACCOUNTS RECEIVABLE.................................................. 12
4.27 ACCOUNTS PAYABLE..................................................... 13
4.28 INSURANCE............................................................ 13
4.29 BANKRUPTCY........................................................... 13
4.30 W & L DEBT........................................................... 13
4.31 INVESTMENT PURPOSE; ACCREDITED INVESTOR OR PURCHASER REPRESENTATIVE.. 13
-ii-
PAGE
4.32 RESTRICTIONS ON TRANSFER............................................. 14
4.33 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION.......... 14
4.34 DISCLOSURE........................................................... 15
4.35 NATURE OF LIABILITIES................................................ 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
5.1 ORGANIZATION AND QUALIFICATION....................................... 15
5.2 AUTHORITY............................................................ 15
5.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS.......................... 15
5.4 LITIGATION........................................................... 16
5.5 BROKERS.............................................................. 16
5.6 PARENT STOCK......................................................... 16
5.7 SUBSIDIARIES......................................................... 17
5.8 FINANCIAL STATEMENTS................................................. 17
5.9 UNDISCLOSED LIABILITIES.............................................. 17
5.10 COMPLIANCE WITH APPLICABLE LAWS...................................... 18
5.11 BOARD OF DIRECTOR/SHAREHOLDER CONSENT................................ 18
5.12 BANKRUPTCY........................................................... 18
5.13 ABSENCE OF CHANGES................................................... 18
5.14 TAXES................................................................ 18
5.15 DISCLOSURE........................................................... 19
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS BY W & L PENDING THE MERGER...................... 19
6.2 ACCESS TO INFORMATION................................................ 20
6.3 FILINGS; TAX ELECTIONS............................................... 20
-iii-
PAGE
6.4 PUBLIC ANNOUNCEMENTS................................................. 20
6.5 TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES AND EXPENSES........ 20
6.6 OPTIONS.............................................................. 20
6.7 FURTHER ASSURANCES................................................... 21
6.8 EMPLOYMENT AGREEMENT................................................. 21
6.9 PURCHASER REPRESENTATIVE............................................. 21
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF W & L AND THE W & L SHAREHOLDERS TO
EFFECT THE MERGER.................................................... 21
7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER..... 22
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT............................................ 23
8.2 INDEMNIFICATION BY THE W & L SHAREHOLDERS............................ 24
8.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND........................... 25
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION.......................................................... 26
9.2 FEES AND EXPENSES.................................................... 26
9.3 AMENDMENT............................................................ 27
9.4 WAIVER............................................................... 27
ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL; RECOURSE................................................... 27
10.2 NOTICES.............................................................. 28
-iv-
PAGE
10.3 ENTIRE AGREEMENT..................................................... 29
10.4 ASSIGNMENTS; PARTIES IN INTEREST..................................... 29
10.5 GOVERNING LAW........................................................ 29
10.6 HEADINGS............................................................. 29
10.7 COUNTERPARTS......................................................... 29
10.8 SEVERABILITY......................................................... 29
10.9 POST-CLOSING ACCESS.................................................. 30
10.10 POST-CLOSING NOTICE................................................. 30
10.11 CERTAIN DEFINITIONS................................................. 30
-v-
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 8th day of
July, 1998, by and between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, INC., a New York corporation ("W
& L"), IXL HOLDINGS, INC., a Delaware corporation ("Parent"), IXL NEW YORK,
INC., a Delaware corporation, or its successors or assigns ("Sub"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇" or, collectively with ▇▇▇▇▇▇▇,
the "W & L Shareholders").
R E C I T A L S:
- - - - - - - -
A. W & L is engaged in the business of video creation and editing, and
related services (the "W & L Business").
B. W & L and Sub each desire to merge their respective companies and
business operations, all on the terms and subject to the conditions set forth
herein (the "Merger").
C. The W & L Shareholders collectively own 100% of the issued and
outstanding capital stock of W & L (the "W & L Stock").
D. The respective Boards of Directors of Parent, Sub and W & L, and the
respective shareholders of Sub and W & L, have approved the Merger, upon the
terms and subject to the conditions set forth herein.
E. The parties hereto intend for the Merger to qualify, for federal
income tax purposes, as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants, benefits,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof, at
the Effective Time (as defined in Section 1.3 hereof), (a) W & L shall be merged
with and into Sub, (b) the separate existence of W & L shall cease, and (c) Sub
shall continue as the surviving corporation in the Merger under the laws of the
State of Delaware under the name iXL-New York, Inc. For
purposes of this Agreement, Sub shall be referred to, for the period commencing
on the Effective Time, as the "Surviving Corporation."
1.2 CLOSING AND CLOSING DATE. Unless this Merger Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 9.1 hereof, and subject to the satisfaction or
waiver of the conditions set forth in Article VII hereof, the closing of the
Merger (the "Closing") will take place as promptly as practicable (and in any
event within five business days after satisfaction of the conditions set forth
in Sections 7.1 and 7.2 hereof) (the "Closing Date") at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, A Professional Corporation, One Buckhead Plaza, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to by the
parties.
1.3 EFFECTIVE TIME OF THE MERGER. At the Closing, the parties hereto
shall cause (a) a certificate of merger (the "Delaware Certificate of Merger")
to be filed with the office of the Secretary of State of Delaware in accordance
with the provisions of the Delaware General Corporation Law, as amended (the
"DGCL"); and (b) a certificate of merger (the "New York Certificate of Merger;"
collectively with the Delaware Certificate of Merger, the "Certificate of
Merger") to be filed with the office of the Department of State of New York in
accordance with the provisions of the New York Business Corporation Law (the
"BCL"). When used herein, the term "Effective Time" shall mean the time when
the Delaware Certificate of Merger has been accepted for filing by the Secretary
of State of Delaware, or such time as otherwise specified therein.
1.4 EFFECT OF THE MERGER. The Merger shall, from and after the Effective
Time, have all the effects provided by the DGCL and the BCL. If at any time
after the Effective Time, any further action is deemed necessary or desirable to
carry out the purposes of this Agreement, the parties hereto agree that the
Surviving Corporation and its proper officers and directors shall be authorized
to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Sub, a form of which is attached hereto on Schedule 5.1, shall be the
------------
Certificate of Incorporation of the Surviving Corporation after the Effective
Time, until thereafter changed or amended as provided therein or by applicable
law.
2.2 BYLAWS. The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law. A copy
of the Bylaws of Sub is included on Schedule 5.1 hereto.
------------
2.3 BOARD OF DIRECTORS; OFFICERS. The Board of Directors and officers of
Sub immediately prior to the Effective Time shall be the Board of Directors and
officers, respectively,
-2-
of the Surviving Corporation, until the earlier of their respective resignations
or the time that their respective successors are duly elected or appointed and
qualified.
ARTICLE III.
CONVERSION OF SHARES.
3.1 MERGER CONSIDERATION. As of the Effective Time:
(a) All shares of W & L Stock owned by W & L shall, by virtue of the
Merger and without any action on the part of any stockholder, officer or
director of W & L or Sub, be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(b) Subject to Schedule 3.1(b) hereto, each issued and outstanding
---------------
share of W & L Stock (other than any Dissenting Shares, as defined in Section
3.2 hereof) shall, upon surrender to Sub, at the Closing, of the underlying
share certificates, be converted into, and become exchangeable for a number of
shares of validly issued, fully paid and nonassessable Class B Common Stock of
Parent, $.01 par value ("Parent Stock") based on the following equation:
PS = 50,000 - D
-
$10
----------------
X
where:
PS = the number of shares of Parent Stock for which each share of
W & L Stock shall be exchanged pursuant to the Merger
D = the outstanding indebtedness of W & L (the "W & L Debt"),
including debt for borrowed money and accrued interest
thereon, capital leases, accounts payable and accrued
expenses, and any unpaid legal, accounting or other expenses
of W & L, all to be determined as of three business days
prior to the Closing Date and all as determined in
accordance with generally accepted accounting principles
("GAAP")
X = the number of issued and outstanding shares of W & L Stock
on the Closing Date
(c) Each issued and outstanding share of common stock of Sub shall, by
virtue of the Merger and without any action on the part of any stockholder,
officer or director of W & L or
-3-
Sub, be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
3.2 DISSENTING SHARES. Notwithstanding any provision hereof to the
contrary, any shares of W & L Stock held by a Dissenting Shareholder (as
hereinafter defined) shall not be converted as described in Section 3.1(b)
hereof, but instead shall be converted into the right to receive the
consideration due a Dissenting Shareholder pursuant to the DGCL or BCL, as
applicable; provided, however, that if a Dissenting Shareholder shall fail to
perfect his demand, withdraw his demand or otherwise lose his right for
appraisal under the terms of the DGCL or the BCL, as applicable, the W & L Stock
held by such Dissenting Shareholder (the "Dissenting Shares") shall be deemed to
be converted as of the Effective Time in accordance with the provisions of
Section 3.1 hereof. W & L shall not voluntarily make any payment with respect
to, settle, or offer to settle or otherwise negotiate, any such demands. All
amounts paid to Dissenting Shareholders shall be paid without interest thereon
(to the extent permitted by applicable law) by the Surviving Corporation. For
purposes hereof, the term "Dissenting Shareholder" shall mean a W & L
Shareholder who (a) objects to the Merger; and (b) complies with the applicable
provisions of the DGCL or BCL concerning dissenter's rights.
3.3 NO FURTHER RIGHTS. From and after the Effective Time, holders of
certificates theretofore evidencing W & L Stock shall cease to have any rights
as stockholders of W & L, except as provided herein or by applicable law.
3.4 CLOSING OF W & L'S TRANSFER BOOKS. At the Effective Time, the stock
transfer books of W & L shall be closed and no transfer of W & L Stock shall be
made thereafter. If after the Effective Time, certificates for W & L Stock are
presented to Parent or the Surviving Corporation, they shall be canceled and
exchanged for a consideration as set forth in Section 3.1 hereof, subject to
applicable law in the case of Dissenting Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF W & L
W & L and the W & L Shareholders, jointly and severally, represent and
warrant to Parent and Sub as follows, which representations and warranties shall
survive the Closing in accordance with Section 10.1 hereof.
4.1 ORGANIZATION AND QUALIFICATION. W & L is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. W & L has the requisite corporate power and authority to carry on the
W & L Business as it is now being conducted and is duly qualified or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary. Complete and correct copies of the
Certificate of Incorporation and Bylaws of W & L as in effect on the date hereof
are attached as Schedule 4.1 hereto. The minute book of W & L, a true and
------------
complete copy of which has been delivered to Parent, (a) accurately
-4-
reflects all action taken by the directors and shareholders of W & L at meetings
of W & L's Board of Directors or shareholders, as the case may be; and (b)
contains true and complete copies, or originals, of the respective minutes of
all meetings or consent actions of the directors or shareholders.
4.2 AUTHORITY. W & L has the necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery hereof and the consummation of
the transactions contemplated hereby by W & L have been duly and validly
authorized and approved by W & L's Board of Directors and the W & L
Shareholders, and no other corporate or shareholder proceedings on the part of W
& L, its Board of Directors or the W & L Shareholders is necessary to authorize
or approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by W & L and each W & L
Shareholder, and assuming the due authorization, execution and delivery by
Parent and Sub, constitutes the valid and binding obligation of W & L and each W
& L Shareholder, enforceable against W & L and each W & L Shareholder in
accordance with its terms subject, in each case, 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.
4.3 CAPITALIZATION.
(a) The authorized capital stock of W & L consists of 200 shares of
common stock, no par value, of which 20 shares are validly issued and
outstanding, fully paid and nonassessable. All outstanding capital stock of W &
L was issued in accordance with applicable federal and state securities laws.
Except as set forth on Schedule 4.3(a) hereto, there are no options, warrants,
---------------
calls, agreements, commitments or other rights presently outstanding that would
obligate W & L or any of the W & L Shareholders to issue, deliver or sell shares
of its capital stock, or to grant, extend or enter into any such option,
warrant, call, agreement, commitment or other right. In addition to the
foregoing, as of the date hereof, W & L has no bonds, debentures, notes or other
indebtedness issued or outstanding that have voting rights in W & L. Schedule
--------
4.3(a) sets forth a list of all holders of record of W & L Stock andthe number
------
of shares held by each W & L Shareholder.
(b) All of the issued and outstanding shares of capital stock of W & L
are validly issued, fully paid and nonassessable. Except as set forth on
Schedule 4.3(b) hereto, each W & L Shareholder represents and warrants that the
---------------
W & L Stock held by such W & L Shareholder is free and clear of any lien,
charge, security interest, pledge, option, right of first refusal, voting proxy
or other voting agreement, or encumbrance of any kind or nature other than
restrictions on transfer imposed by federal and state securities laws (any of
the foregoing, a "Lien").
4.4 SUBSIDIARIES. W & L has no subsidiaries and does not otherwise own
or control, directly or indirectly, any equity interest, or any security
convertible into an equity interest, in any corporation, partnership, limited
liability company, joint venture, association or other business entity (any of
the foregoing, an "Entity").
-5-
4.5 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set forth on
Schedule 4.5 hereto, none of (i) the execution and delivery of this Agreement by
------------
W & L or the W & L Shareholders, (ii) the consummation by W & L and the W & L
Shareholders of the transactions contemplated hereby or (iii) compliance by W &
L with any of the provisions hereof will:
(a) conflict with or violate the Certificate of Incorporation or
Bylaws of W & L;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to W & L or any of the W & L Shareholders,
or by which W & L or any of its properties or assets may be bound or affected;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to any other any right of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation, to which W & L is a party or by which W & L or
any of its properties or assets may be bound or affected;
(d) result in the creation of any Lien on any of the property or
assets of W & L; or
(e) require any consent, waiver, license, approval, authorization,
order, permit, registration or filing with, or notification to (any of the
foregoing being a "Consent"), (i) any government or subdivision thereof, whether
domestic or foreign, or any administrative, governmental, or regulatory
authority, agency, commission, court, tribunal or body, whether domestic,
foreign or multinational (any of the foregoing, a "Governmental Entity"), except
for the filing of the Certificate of Merger pursuant to the DGCL and the BCL; or
(ii) any other individual or Entity (collectively, a "Person").
4.6 FINANCIAL STATEMENTS. W & L has heretofore furnished Parent with a
true and complete copy of the unaudited financial statements of W & L for the
years ended December 31, 1997 and for the five month period ended May 31, 1998
(all of the foregoing collectively herein referred to as the "W & L Financial
Statements"). Except as disclosed therein, the W & L Financial Statements have
been prepared in accordance with GAAP (except for the absence of footnotes and
normal year-end adjustments) consistently followed throughout the period
indicated, and present fairly, in all material respects, the financial position
and operating results of W & L as of the dates, and during the periods,
indicated therein.
4.7 ABSENCE OF CHANGES. Except as provided in Schedule 4.7 hereto and
------------
except as contemplated hereby, since December 31, 1997 (a) W & L has not entered
into any transaction that was not in the ordinary course of business; (b) except
for sales of services and licenses of software in the ordinary course of
business, there has been no sale, assignment, transfer, mortgage, pledge,
encumbrance or lease of any material asset or property of W & L; (c) there has
been (i) no declaration or payment of a dividend, or any other declaration,
payment or distribution of any type or nature to any shareholder of W & L in
respect of its stock, whether in cash or property, and (ii)
-6-
no purchase or redemption of any share of the capital stock of W & L; (d) there
has been no declaration, payment, or commitment for the payment, by W & L, of a
bonus or other additional salary, compensation, or benefit to any employee of W
& L that was not in the ordinary course of business, except for normal year-end
bonuses paid in the ordinary course of business; (e) there has been no release,
compromise, waiver or cancellation of any debt to or claim by W & L, or waiver
of any right of W & L; (f) there have been no capital expenditures in excess of
$10,000 for any single item, or $25,000 in the aggregate; (g) there has been no
change in accounting methods or practices or revaluation of any asset of W & L
(other than W & L Accounts Receivable as defined in Section 4.26 hereof) written
down in the ordinary course of business in excess of $10,000 for any single W &
L Accounts Receivable, or $25,000 in the aggregate); (h) there has been no
material damage, or destruction to, or loss of, physical property (whether or
not covered by insurance) adversely affecting the W & L Business or the
operations of W & L; (i) there has been no loan by W & L, or guaranty by W & L
of any loan, to any employee of W & L; (j) W & L has not ceased to transact
business with any customer that, as of the date of such cessation, represented
more than 5% of the annual gross revenues of W & L; (k) there has been no
termination or resignation of any key employee or officer of W & L, and to the
knowledge of W & L, no such termination or resignation is threatened; (l) there
has been no amendment or termination of any material oral or written contract,
agreement or license related to the W & L Business, to which W & L is a party or
by which it is bound, except in the ordinary course of business, or except as
expressly contemplated hereby; (m) W & L has not failed to satisfy any of its
debts, obligations or liabilities related to the W & L Business or the assets of
W & L as the same become due and owing (except for W & L Accounts Payable (as
defined in Section 4.27 hereof) payable in accordance with past practices and in
the ordinary course of business); (n) there has been no agreement or commitment
by W & L to do any of the foregoing; and (o) there has been no other event or
condition of any character pertaining to and materially and adversely affecting
the assets, business or financial condition of W & L.
4.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.8
------------
hereto, W & L has no debt, liability or obligation of any kind, whether accrued,
absolute or otherwise, including, without limitation, any liability or
obligation on account of taxes or any governmental charge or penalty, interest
or fine, except (a) liabilities incurred in the ordinary course of business
after December 31, 1997, that would not, whether individually or in the
aggregate, have a material adverse impact on the business or financial condition
of W & L; (b) W & L's capital lease obligation, or liabilities reflected on the
W & L Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
4.9 TITLE TO PROPERTIES. Except as set forth on Schedule 4.9 hereto, W
------------
& L has good and marketable title to all tangible property and assets used in
the W & L Business, and good and valid title to its leasehold interests, in each
case, free and clear of any and all Liens other than Permitted Liens (as defined
in Section 10.11 hereof).
4.10 EQUIPMENT. W & L has heretofore furnished Parent with a true and
correct list of all items of tangible personal property (including, without
limitation, computer hardware) necessary for or used in the operation of the W &
L Business in the manner in which it has been and is now operated by W & L ("the
W & L Equipment"), except for personal property having a net book
-7-
value of less than $1,000. Except as set forth on Schedule 4.10 hereto, each
-------------
material item of W & L Equipment is in good condition and repair, ordinary wear
and tear excepted.
4.11 INTELLECTUAL PROPERTY.
(a) W & L has heretofore furnished Parent with a true and
complete list of all material proprietary technology, patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, and copyrights (and all pending applications for any of the
foregoing) used by W & L in the conduct of the W & L Business (together with
trade secrets and know how used in the conduct of the W & L Business, the "W & L
Intellectual Property Rights"). W & L owns, or is validly licensed or otherwise
has the right to use or exploit, as currently used or exploited, all of the W &
L Intellectual Property Rights, free of any obligation to make any payment
(whether of a royalty, license fee, compensation or otherwise). No claims are
pending or, to the knowledge of W & L, threatened, that W & L is infringing or
otherwise adversely affecting the rights of any Person with regard to any W & L
Intellectual Property Right. No Person is infringing the rights of W & L with
respect to any W & L Intellectual Property Right. Neither W & L nor any
employee, agent or independent contractor of W & L, in connection with the
performance of such Person's services with W & L, has used, appropriated or
disclosed, directly or indirectly, any trade secret or other proprietary or
confidential information of any other Person, or otherwise violated any
confidential relationship with any other Person.
(b) W & L has heretofore furnished Parent with a true and complete
list of all material computer software used by W & L in the conduct of the W & L
Business (the "W & L Software"). W & L currently licenses, or otherwise has the
legal right to use, all of the W & L Software (including any upgrade, alteration
or enhancement with respect thereto), and all of the W & L Software is being
used in compliance with any applicable license or other agreement.
4.12 REAL PROPERTY. Except as set forth on Schedule 4.12 hereto:
-------------
(a) W & L has a good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon) used in
the operation of the W & L Business (the "W & L Real Property"). W & L owns no
real property. Except for Permitted Liens, and for the items set forth on
Schedule 4.12, there are no Liens on W & L's interest in any of the W & L Real
-------------
Property.
(b) There are no parties in possession of any portion of the W & L
Real Property other than W & L, whether as sublessees, subtenants at will or
trespassers.
(c) To the knowledge of W & L, there is no law, ordinance, order,
regulation or requirement now in existence or under active consideration by any
Governmental Entity, that would require, under the provisions of any of the W &
L Leases (as hereinafter defined), any material expenditure by W & L to modify
or improve any of the W & L Real Property to bring it into compliance therewith.
-8-
4.13 LEASES. Schedule 4.13 hereto sets forth a list of all leases
-------------
pursuant to which W & L leases, as lessor or lessee, real or personal property
used in operating the W & L Business or otherwise (the "W & L Leases"). Copies
of the W & L Leases, all of which have previously been provided to Parent, are
true and complete copies thereof. All of the W & L Leases are valid, binding
and enforceable against W & L and, to the knowledge of W & L, against the other
parties thereto, in accordance with their respective terms, and there is not
under any such W & L Lease any existing default by W & L, or, to the knowledge
of W & L, by any other party thereto, or any condition or event that, with
notice or lapse of time or both, would constitute a default. W & L has not
received notice that the lessor of any of the W & L Leases intends to cancel,
suspend or terminate such W & L Lease or to exercise or not exercise any option
thereunder.
4.14 CONTRACTS. Schedule 4.14 hereto sets forth a true and complete list
-------------
of all contracts, agreements and commitments (whether written or oral) to which
W & L is, directly or indirectly, a party (in its own name or as a successor in
interest), or by which it or any of its properties or assets is otherwise bound,
including, without limitation, any service agreements, customer agreements,
supplier agreements, agreements to lend or borrow money, shareholder agreements,
employment agreements, agreements relating to W & L Intellectual Property Rights
and the like (collectively, the "W & L Contracts"); excepting only those W & L
Contracts which involve less than $10,000 and are cancelable, without penalty,
on no more than 90 days' notice. The aggregate value of all payment obligations
and rights to receive payments, under agreements, contracts and commitments
(whether oral or in writing) to which W & L is a party or by which it or any of
its properties is otherwise bound, and that are not listed on Schedule 4.14, is
-------------
less than $50,000 (calculating such value by adding together the value of rights
and obligations, and not by determining the net amount thereof).
True and complete copies of all W & L Contracts (or a true and complete
narrative description of any oral W & L Contract) have previously been provided
to Parent. Neither W & L nor, to the knowledge of W & L, any other party to any
of the W & L Contracts (x) is in default under (nor does there exist any
condition that, with notice or lapse of time or both, would cause such a default
under) any of the W & L Contracts, or (y) has waived any right it may have under
any of the W & L Contracts, the waiver of which would have a material adverse
effect on the business, assets or financial condition or prospects of W & L.
All of the W & L Contracts constitute the valid and binding obligations of W &
L, enforceable in accordance with their respective terms, and, to the knowledge
of W & L, of the other parties thereto.
4.15 DIRECTORS AND OFFICERS. Schedule 4.15 hereto sets forth a list, as
-------------
of the Closing Date, of the name of each director and officer of W & L and the
position(s) held by each.
4.16 PAYROLL INFORMATION. W & L has previously provided Parent with a
true and complete copy of the payroll report of W & L dated April 30, 1998,
showing all current employees of W & L and their current levels of compensation,
other than bonuses and other extraordinary compensation. W & L has paid all
compensation required to be paid to employees of W & L on or prior to the date
hereof other than compensation accrued in the current pay period.
-9-
4.17 LITIGATION. Except as set forth on Schedule 4.17 hereto, there is
-------------
no suit, action, claim, investigation or proceeding pending or, to the knowledge
of W & L, threatened against or affecting W & L or the W & L Business, nor is
there any judgment, decree, injunction or order of any applicable Governmental
Entity or arbitrator outstanding against W & L.
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 4.18 hereto, there are no employee
-------------
benefit plans, agreements or arrangements maintained by W & L, including,
without limitation, (i) "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); (ii) current or deferred compensation, pension, profit sharing,
vacation or severance plans or programs; or (iii) medical, hospital, accident,
disability or death benefit plans (collectively, "W & L Benefit Plans"). All W
& L Benefit Plans are administered in accordance with, and are in material
compliance with, all applicable laws and regulations. No default exists with
respect to the obligations of W & L under any W & L Benefit Plan.
(b) W & L is not a party to any collective bargaining agreement; no
collective bargaining agent has been certified as a representative of any of the
employees of W & L; no representation campaign or election is now in progress
with respect to any employee of W & L; and there are no labor disputes,
grievances, controversies, strikes or requests for union representation pending,
or, to the knowledge of W & L, threatened, relating to or affecting the W & L
Business. To the knowledge of W & L, no event has occurred that could give rise
to any such dispute, controversy, strike or request for representation.
4.19 ERISA.
(a) All W & L Benefit Plans that are subject to ERISA have been
administered in accordance with, and are in material compliance with, the
applicable provisions of ERISA. Each of the W & L Benefit Plans that is
intended to meet the requirements of Section 401(a) of the Code has been
determined by the Internal Revenue Service to meet such requirements within the
meaning of such provision. No W & L Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code. W & L has not engaged in any nonexempt
"prohibited transactions," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving W & L Benefit Plans that would subject W & L
to the penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. W & L has not engaged in any transaction described in Section 4069 of
ERISA within the last five years. Except as disclosed in Schedule 4.19 hereto
-------------
or pursuant to the terms of the W & L Benefit Plans, neither the execution and
delivery hereof nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including, without limitation, severance,
unemployment compensation or golden parachute) becoming due to any director or
other employee of W & L, (ii) increase any benefit otherwise payable under any W
& L Benefit Plan or (iii) result in the acceleration of the time of payment or
vesting of any such benefit to any extent.
(b) No notice of a "reportable event," within the meaning of Section
4043 of ERISA, for which the 30-day reporting requirement has not been waived,
has been required to be
-10-
filed for any W & L Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA and that is intended to meet the
requirements of Section 401(a) of the Code, or by any entity that is considered
one employer with W & L under Section 4001 of ERISA or Section 414 of the Code,
within the 12-month period ending on the Closing Date. W & L has not incurred
any liability to the Pension Benefit Guaranty Corporation in respect of any W &
L Benefit Plan that remains unpaid.
4.20 TAXES.
(a) W & L has duly and timely filed all federal, state and local
income, franchise, excise, real and personal property and other tax returns and
reports, including extensions, required to have been filed by W & L on or prior
to the Closing Date. W & L has duly and timely paid all taxes and other
governmental charges, and all interest and penalties with respect thereto,
required to be paid by W & L (whether by way of withholding or otherwise) to any
federal, state, local or other taxing authority (except to the extent the same
are being contested in good faith, and adequate reserves therefor have been
provided in the W & L Financial Statements). As of the Closing Date, all
deficiencies proposed as a result of any audit have been paid or settled.
(b) W & L is not a party to, or bound by, or otherwise in any way
obligated under, any tax sharing or similar agreement.
(c) W & L has not consented to have the provisions of Section
341(f)(2) of the Code (or comparable state law provisions) apply to it, and W &
L has not agreed or been requested to make any adjustment under Section 481(c)
of the Code by reason of a change in accounting method or otherwise.
4.21 COMPLIANCE WITH APPLICABLE LAWS. W & L holds all material permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary to own, lease or operate all of the assets and properties of
W & L, as appropriate, and to carry on the W & L Business as now conducted (the
"W & L Permits"). To the knowledge of W & L, W & L is in material compliance
with all applicable laws, ordinances and regulations and the terms of the W & L
Permits. Except as set forth on Schedule 4.21 hereto, all of the W & L Permits
-------------
are fully assignable by W & L in connection with the Merger. Schedule 4.21 sets
-------------
forth a true and complete list of all W & L Permits, true and complete copies of
which have previously been provided to Parent.
4.22 BOARD OF DIRECTORS/SHAREHOLDER CONSENT. Both the Board of Directors
of W & L and the W & L Shareholders have adopted and approved this Agreement and
the transactions contemplated hereby (including, without limitation, the
Merger).
4.23 BROKERS. Except as set forth on Schedule 4.23 hereto, no broker or
-------------
finder is entitled to any broker's or finder's fee or other commission in
connection with the transactions contemplated hereby as a result of arrangements
made by or on behalf of W & L.
-11-
4.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of W & L, no real property currently or formerly
owned or operated by W & L is contaminated with any Hazardous Substance (as
hereinafter defined);
(b) W & L is not a party to any litigation or administrative
proceeding nor, to the knowledge of W & L, is any litigation or administrative
proceeding threatened against it, that, in either case, asserts or alleges that
W & L (i) violated any Environmental Law (as hereinafter defined); (ii) is
required to clean up, remove or take remedial or other responsive action due to
the disposal, deposit, discharge, leak or other release of any Hazardous
Substance; or (iii) is required to pay all or a portion of the cost of any past,
present or future cleanup, removal or remedial or other action that arises out
of or is related to the disposal, deposit, discharge, leak or other release of
any Hazardous Substance.
(c) To the knowledge of W & L, there are not now nor have there
previously been tanks or other facilities on, under, or at any real property
owned, leased, used or occupied by W & L containing materials that, if known to
be present in soil or ground water, would require cleanup, removal or other
remedial action under Environmental Law.
(d) To the knowledge of W & L, W & L is not subject to any judgment,
order or citation related to or arising out of any Environmental Law and has not
been named or listed as a potentially responsible party by any Governmental
Entity in a matter related to or arising out of any Environmental Law.
(e) For purposes hereof, (i) the term "Environmental Law" means any
federal, state or local law (including statutes, regulations, ordinances, codes,
rules, judicial opinions and other governmental restrictions and requirements)
relating to the discharge of air pollutants, water pollutants, noise, odors or
process waste water, or otherwise relating to the environment or hazardous or
toxic substances; and (ii) the term "Hazardous Substance" means any toxic or
hazardous substance that is regulated by or under authority of any Environmental
Law, including, without limitation, any petroleum products, asbestos or
polychlorinated biphenyls.
4.25 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as
provided in Schedule 4.25 hereto, no officer, director, shareholder or employee
-------------
of W & L and no family member (including a spouse, parent, sibling or lineal
descendent of any of the foregoing), has any direct or indirect material
interest in any material customer, supplier or competitor of W & L, or in any
Person from whom or to whom W & L leases any real or personal property, or in
any other Person with whom W & L is doing business whether directly or
indirectly (including, without limitation, as a debtor or creditor), whether in
existence as of the Closing Date or proposed, other than the ownership of stock
of publicly traded corporations.
4.26 ACCOUNTS RECEIVABLE. All accounts, notes, contracts and other
receivables of W & L (collectively, "W & L Accounts Receivable") were acquired
by W & L in the ordinary course of business arising from bona fide transactions.
To the knowledge of W & L, all W & L Accounts Receivable have been collected in
full. There are no set-offs, counterclaims or disputes asserted
-12-
with respect to any W & L Accounts Receivable that would result in claims
against amounts previously collected.
4.27 ACCOUNTS PAYABLE. All material accounts, notes, contracts and other
amounts payable of W & L (collectively, "W & L Accounts Payable") except amounts
due under lease are paid in full.
4.28 INSURANCE. W & L currently maintains, in full force and effect, all
insurance policies that are required to be maintained for the conduct of the W &
L Business or the ownership of W & L's property (both real and personal)
(collectively, the "W & L Insurance Policies"). The W & L Insurance Policies
are listed on Schedule 4.28 hereto, and true and complete copies of all W & L
-------------
Insurance Policies have previously been provided to Parent. W & L (a) is not in
default regarding the provisions of any W & L Insurance Policy; (b) has paid all
premiums due thereunder; and (c) has not failed to present any notice or
material claim thereunder in a due and timely fashion.
4.29 BANKRUPTCY. W & L has not filed a petition or request for
reorganization or protection or relief under the bankruptcy laws of the United
States or any state or territory thereof, made any general assignment for the
benefit of creditors, or consented to the appointment of a receiver or trustee,
including a custodian under the United States bankruptcy laws, whether such
receiver or trustee is appointed in a voluntary or involuntary proceeding.
4.30 W & L DEBT. As of the date hereof, the W & L Debt is not in excess
of $0, excluding capital lease obligations of approximately $210,000.
4.31 INVESTMENT PURPOSE; ACCREDITED INVESTOR OR PURCHASER REPRESENTATIVE.
(a) Each W & L Shareholder represents that he (i) is acquiring the Parent Stock
solely for his own account for investment and not with a view to, or for sale in
connection with, any distribution thereof; and (ii) will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any Parent Stock (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of any such shares) except in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
thereunder, other applicable laws, rules and regulations, and the Second Amended
and Restated Stockholders' Agreement of Parent, dated December 17, 1997 (the
"Stockholders' Agreement"); (b) ▇▇▇▇▇▇▇▇ further represents that he is an
"accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act;
and (c) ▇▇▇▇▇▇▇ further represents that (i) ▇▇▇▇ ▇▇▇▇ is his Purchaser
representative (the "Purchaser representative") as such term is defined in Rule
501 of Regulation D under the Securities Act; and (ii) the Purchaser
representative (A) is not an affiliate, director, officer or other employee of
Parent, or beneficial owner of 10% or more of any class of the equity securities
of, or 10% or more of the equity interest in, Parent; (B) has such knowledge and
experience in financial and business matters that he is capable of evaluating,
alone, or together with ▇▇▇▇▇▇▇, the merits and risks of the prospective
investment in Parent Stock; (C) has been acknowledged by ▇▇▇▇▇▇▇ in writing,
during the course of the Merger, to be his purchaser representative in
connection with evaluating the merits and risks of the prospective investment in
Parent Stock; and (D) has disclosed to ▇▇▇▇▇▇▇ in writing a reasonable time
prior to the Closing any material relationship between the Purchaser
representative or his affiliates and Parent or its affiliates that exists, is
mutually understood to be contemplated, or has existed at any time
-13-
during the previous two years, and any compensation received or to be received
as a result of such relationship.
4.32 RESTRICTIONS ON TRANSFER. Each W & L Shareholder acknowledges that
(a) the Parent Stock received by him hereunder has not been registered under the
Securities Act; (b) the Parent Stock may be required to be held indefinitely,
and he must continue to bear the economic risk of the investment in such shares
unless such shares are subsequently registered under the Securities Act or an
exemption from such registration is available; (c) there may not be any public
market for the Parent Stock in the foreseeable future; (d) Rule 144 promulgated
under the Securities Act is not presently available with respect to sales of any
securities of Parent, and such Rule is not anticipated to be available in the
foreseeable future; (e) when and if Parent Stock may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such Rule;
(f) if the exemption afforded by Rule 144 is not available, public sale without
registration will require the availability of an exemption under the Securities
Act; (g) the Parent Stock is subject to the terms and conditions of the
Stockholders' Agreement; (h) restrictive legends shall be placed on the
certificates representing Parent Stock; and (i) a notation shall be made in the
appropriate records of Parent indicating that Parent Stock is subject to
restrictions on transfer and, if Parent should in the future engage the services
of a stock transfer agent, appropriate stop-transfer instructions will be issued
to such transfer agent with respect to Parent Stock.
4.33 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION. (a)
Each W & L Shareholder represents and warrants that (i) his financial situation
is such that he can afford to bear the economic risk of holding Parent Stock
acquired by him hereunder for an indefinite period; and (ii) he can afford to
suffer the complete loss of such Parent Stock; (b) ▇▇▇▇▇▇▇▇ further represents
that (i) he has been granted the opportunity to ask questions of, and receive
answers from, representatives of Parent concerning the terms and conditions of
the Parent Stock and to obtain any additional information that he deems
necessary; (ii) his knowledge and experience in financial business matters is
such that he is capable of evaluating the merits and risk of ownership of the
Parent Stock; (iii) he has carefully reviewed the terms of the Stockholders'
Agreement and has evaluated the restrictions and obligations contained therein;
and (iv) he (A) has reviewed the Private Placement Memorandum of Parent dated as
of June 26, 1998 (the "Memorandum"); (B) has carefully examined the Memorandum
and has had an opportunity to ask questions of, and receive answers from,
representatives of Parent, and to obtain additional information concerning
Parent and its Subsidiaries (as hereinafter defined); and (C) does not require
additional information regarding Parent or its Subsidiaries in connection with
the Merger; and (c) ▇▇▇▇▇▇▇ further represents that, either alone or with the
Purchaser representative, (i) he has been granted the opportunity to ask
questions of, and receive answers from, representatives of Parent concerning the
terms and conditions of the Parent Stock and to obtain any additional
information that he deems necessary; (ii) his knowledge and experience in
financial business matters is such that he is capable of evaluating the merits
and risk of ownership of the Parent Stock; (iii) he has carefully reviewed the
terms of the Stockholders' Agreement and has evaluated the restrictions and
obligations contained therein; and (iv) he (A) has reviewed the Memorandum; (B)
has carefully examined the Memorandum and has had an opportunity to ask
questions of, and receive answers from, representatives of Parent, and to obtain
additional information concerning Parent and its Subsidiaries; and (C) does not
require additional information regarding Parent or its Subsidiaries in
connection with the Merger.
-14-
4.34 DISCLOSURE. No statement of fact by W & L or any W & L Shareholder
contained herein and no written statement of fact furnished by W & L or any W &
L Shareholder to Parent or Sub in connection herewith contains any untrue
statement of any material fact or omits to state any material fact necessary in
order to make the statements herein or therein contained not misleading.
4.35 NATURE OF LIABILITIES. Any unpaid legal, accounting or other fees of
W & L are solely and directly related to the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and warrants to W &
L and the W & L Shareholders, which representations and warranties shall survive
the Closing in accordance with Section 10.1 hereof, as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of Parent and its Subsidiaries
(as defined in Section 10.11 hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Each of Parent and its Subsidiaries has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary. Complete and
correct copies of the Certificates of Incorporation and Bylaws of Parent and Sub
as in effect on the date hereof are attached as Schedule 5.1 hereto.
------------
5.2 AUTHORITY. Each of Parent and Sub has the necessary corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by each of Parent and Sub
have been duly and validly authorized and approved by their respective board of
directors and by Sub's sole shareholder, and no other corporate or shareholder
proceedings on the part of either Parent or Sub, or their respective board of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Sub, and assuming the due
authorization, execution and delivery by W & L and the W & L Shareholders,
constitutes the valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
subject, in each case, 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.
5.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set forth on
Schedule 5.3 hereto, none of the execution and delivery of this Agreement by
------------
Parent or Sub, the consummation by Parent and Sub of the transactions
contemplated hereby, or compliance by Parent and Sub with any of the provisions
hereof, will:
-15-
(a) conflict with or violate the Certificate of Incorporation or
Bylaws of Parent or Sub, or the organizational documents of any other
Subsidiaries;
(b) result in a violation of any statute, ordinance, rule, regulation,
order, judgment or decree applicable to Parent or its Subsidiaries, or by which
Parent, any of its Subsidiaries, or their respective properties or assets may be
bound or affected;
(c) result in a violation or breach of, or constitute a default (or an
event that, with notice or lapse of time or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any note, bond, mortgage, indenture, or any material contract,
agreement, arrangement, lease, license, permit, judgment, decree, franchise or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which Parent, any of its Subsidiaries or their respective properties
may be bound or affected;
(d) result in the creation of any Lien on any of the property or
assets of Parent or any of its Subsidiaries; or
(e) require any Consent of (i) any Governmental Entity (except for (x)
compliance with any applicable requirements of any applicable securities laws,
and (y) the filing of the Certificate of Merger pursuant to the DGCL and the
BCL); or (ii) any other Person.
5.4 LITIGATION. Except as set forth on Schedule 5.4 hereto, there is no
------------
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Parent, threatened against or affecting Parent or its Subsidiaries, nor is there
any judgment, decree, injunction or order of any applicable Governmental Entity
or arbitrator outstanding against Parent or its Subsidiaries that, either
individually or in the aggregate, would have a material adverse effect on the
assets, business or financial condition of Parent and its Subsidiaries, taken as
a whole.
5.5 BROKERS. Except as disclosed on Schedule 5.5 hereto, no broker or
------------
finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Sub.
5.6 PARENT STOCK.
(a) As of the date hereof the authorized capital stock of Parent
consists of (i) (A) 75,000,000 shares of Class A Common Stock, $.01 par value,
of which no shares are validly issued and outstanding, and (B) 100,000,000
shares of Class B Common Stock, $.01 par value, of which 11,197,506 shares are
validly issued and outstanding (without taking into account any shares of Parent
Stock to be issued pursuant hereto), fully paid and nonassessable; (ii) 750,000
shares of blank check preferred stock, (A) 250,000 of which have been designated
as Class A Convertible Preferred Stock, of which 174,061 shares are validly
issued and outstanding, fully paid and nonassessable, (B) 200,000 of which have
been designated as Class B Convertible Preferred Stock, of which 98,767 shares
are validly issued and outstanding, fully paid and nonassessable, and (C) 15,000
of which have been designated as Class C Convertible Preferred Stock, of which
9,232
-16-
shares are validly issued and outstanding, fully paid and nonassessable. Except
as set forth on Schedule 5.6 hereto, there are no options, warrants, calls,
------------
agreements, commitments or other rights presently outstanding that would
obligate Parent to issue, deliver or sell shares of its capital stock, or to
grant, extend or enter into any such option, warrant, call, agreement,
commitment or other right. In addition to the foregoing, as of the Closing Date,
Parent has no bonds, debentures, notes or other indebtedness issued or
outstanding that have voting rights in Parent.
(b) When delivered to the W & L Shareholders in accordance with the
terms hereof, the Parent Stock will (i) be duly authorized, fully paid and
nonassessable, and (ii) be free and clear of all Liens other than restrictions
imposed by the Stockholders' Agreement and by federal and state securities laws.
5.7 SUBSIDIARIES. Except as set forth on Schedule 5.7 hereto, Parent has
------------
no subsidiaries and does not otherwise own or control, directly or indirectly,
any equity interest in, or any security convertible into an equity interest in,
any Entity. Schedule 5.7 lists the name of each of the Subsidiaries of Parent,
------------
and indicates their respective jurisdictions of incorporation. Parent owns 100%
of each Subsidiary (including all of Sub's outstanding shares, consisting of 100
shares of common stock, $.01 par value) or other Entity listed on Schedule 5.7
------------
hereto, except as indicated on such Schedule.
5.8 FINANCIAL STATEMENTS. Parent has heretofore furnished W & L with a
true and complete copy of (a) the audited financial statements of iXL
Interactive Excellence, Inc. (n/k/a iXL, Inc.) for the years ended December 31,
1993, 1994 and 1995, and for the four-month period ended April 30, 1996; (b)
audited combined financial statements for Creative Video, Inc. (n/k/a iXL,
Inc.), Creative Video Library, Inc. and Entrepreneur Television, Inc. for the
years ended December 31, 1993, 1994 and 1995, and for the four-month period
ended April 30, 1996; (c) the audited consolidated financial statements for
Parent and its Subsidiaries for the eight months ended December 31, 1996; and
for the year ended December 31, 1997; and (d) the unaudited consolidated
financial statements for Parent and its Subsidiaries for the four month period
ended April 30, 1998 (all of the foregoing, collectively, "Parent Financial
Statements"). The Parent Financial Statements present fairly in all material
respects the consolidated financial position, results of operations,
shareholders' equity and cash flow of Parent at the respective dates or for the
respective periods to which they apply. Except as disclosed therein, such
statements and related notes have been prepared in accordance with GAAP
consistently applied throughout the periods involved (except, in the case of the
unaudited financial statements, for the exclusion of footnotes and normal year
end adjustments).
5.9 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 5.9 hereto,
------------
neither Parent nor any of its Subsidiaries has any debt, liability or obligation
of any kind, whether accrued, absolute or otherwise, including any liability or
obligation on account of taxes or any governmental charge or penalty, interest
or fine, except (a) liabilities incurred in the ordinary course of business
after December 31, 1997 that would not, whether individually or in the
aggregate, have a material adverse impact on the business or financial condition
of Parent and its Subsidiaries, taken as a whole; (b) liabilities reflected on
the Parent Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
-17-
5.10 COMPLIANCE WITH APPLICABLE LAWS. Parent or its Subsidiaries hold all
material permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary to own, lease or operate all of the assets and
properties of Parent and its Subsidiaries, as appropriate, and to carry on
Parent's business as now conducted (the "Parent Permits"). To the knowledge of
Parent, Parent and its Subsidiaries are in material compliance with all
applicable laws, ordinances and regulations and the terms of the Parent Permits.
5.11 BOARD OF DIRECTORS/SHAREHOLDER CONSENT. Both the Board of Directors
of Parent and the Board of Directors and shareholder of Sub have, by unanimous
written consent, adopted and approved this Agreement and the transactions
contemplated hereby (including, without limitation, the Merger).
5.12 BANKRUPTCY. Neither Parent nor any of its Subsidiaries has filed a
petition or request for reorganization or protection or relief under the
bankruptcy laws of the United States or any state or territory thereof, made any
general assignment for the benefit of creditors, or consented to the appointment
of a receiver or trustee, including a custodian under the United States
bankruptcy laws, whether such receiver or trustee is appointed in a voluntary or
involuntary proceeding.
5.13 ABSENCE OF CHANGES. Except as provided in Schedule 5.13 hereto, since
-------------
December 31, 1997, there has not been (a) any transaction, commitment, dispute
or other event or condition (financial or otherwise) of any character (whether
or not in the ordinary course of business) individually or in the aggregate that
has had, or would reasonably be expected to have, a material adverse effect on
the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (b) any damage, destruction or loss, whether or not covered by insurance,
which has had, or would reasonably be expected to have, a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its Subsidiaries, taken as a
whole; (c) any entry into any commitment or transaction material to Parent and
its Subsidiaries, taken as a whole (including any borrowing or sale of assets)
except in the ordinary course of business consistent with past practice; (d) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to Parent's capital stock; (e) any
material change in Parent's accounting principles, practices or methods; (f) any
split, combination or reclassification of any of Parent's capital stock, or the
issuance or authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for, shares of Parent's capital stock; or (g) any
agreement (whether or not in writing), arrangement or understanding to do any of
the foregoing.
5.14 TAXES. Parent and its Subsidiaries have duly and timely filed all
federal, state and local income, franchise, excise, real and personal property
and other tax returns and reports, including extensions, required to have been
filed by Parent and its Subsidiaries on or prior to the Closing Date. Parent
and its Subsidiaries have duly and timely paid all taxes and other governmental
charges, and all interest and penalties with respect thereto, required to be
paid by Parent and its Subsidiaries (whether by way of withholding or otherwise)
to any federal, state,
-18-
local or other taxing authority (except to the extent the same are being
contested in good faith, and adequate reserves therefor have been provided in
the applicable Parent Financial Statement). As of the Closing Date, all
deficiencies proposed as a result of any audits have been paid or settled.
5.15 DISCLOSURE. No statement of fact by Parent or Sub contained herein
and no written statement of fact furnished or to be furnished by Parent or Sub
to W & L in connection herewith contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein contained not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS BY W & L PENDING THE MERGER. From and after the
date hereof, prior to the Effective Time, except as contemplated hereby, unless
Parent shall otherwise agree in writing, W & L shall carry on its business in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, use reasonable efforts to preserve intact its present
business organization, keep available the services of its employees and preserve
its relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with W & L to the end that its goodwill and
on-going businesses shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing, and except as
contemplated hereby, unless Parent shall otherwise agree in writing, prior to
the Effective Time, W & L shall not, directly or indirectly:
(a) (i) declare, set aside, or pay any dividend on, or make any other
distribution in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock, or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) purchase, redeem or otherwise acquire, any share of
capital stock of W & L or any other equity security thereof or any right,
warrant, or option to acquire any such share or other security;
(b) issue, deliver, sell, pledge or otherwise encumber any share of
its capital stock, any other voting security issued by W & L or any security
convertible into, or any right, warrant or option to acquire any such share or
voting security;
(c) amend its Certificate of Incorporation, Bylaws or other
comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any Entity or division thereof, or (ii) any assets that are
material, individually or in the aggregate, to W & L;
-19-
(e) subject to a Lien or sell, lease or otherwise dispose of any of
its properties or assets;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person or issue or sell any debt security of W & L,
guarantee any debt security of another Person or enter into any "keep well" or
other agreement to maintain the financial condition of another Person, make any
loan, advance or capital contribution to, or investment in, any other Person, or
settle or compromise any material claim or litigation; or
(g) authorize any of, or commit or agree to take any of, the
foregoing actions.
6.2 ACCESS TO INFORMATION. From the date hereof through the Effective
Time, W & L shall afford to Parent and Parent's accountants, counsel and other
representatives reasonable access during normal business hours (and at such
other times as the parties may mutually agree) upon reasonable prior notice and
approval of W & L, which shall not be unreasonably withheld, to its properties,
books, contracts, commitments, records and personnel and, during such period,
shall furnish promptly to Parent all information concerning its business,
properties and personnel as Parent may reasonably request. Parent and its
accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 6.2, not unduly interfere with the operation of
the business of W & L.
6.3 FILINGS; TAX ELECTIONS. W & L shall promptly provide Parent with
copies of all filings made by W & L with any Governmental Entity in connection
herewith and the transactions contemplated hereby. W & L shall, before settling
or compromising any material income tax liability of W & L, consult with Parent
and its advisors as to the positions and elections that will be taken or made
with respect to such matter.
6.4 PUBLIC ANNOUNCEMENTS. The parties agree that, except as may otherwise
be required to comply with applicable laws and regulations (including applicable
securities laws) or to obtain consents required hereunder, public disclosure of
the transactions contemplated hereby shall be made only upon or after the
consummation of the Merger. Any such disclosure shall be coordinated by Parent,
and none of the W & L Shareholders shall make any such disclosure without the
prior written consent of Parent.
6.5 TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES AND EXPENSES. Parent
agrees that, to the extent it is legally able to do so, the Surviving
Corporation will pay all real property transfer, gains and other similar taxes
and all documentary stamps, filing fees, recording fees and sales and use taxes,
if any, and any penalties or interest with respect thereto, payable in
connection with consummation of the Merger.
6.6 OPTIONS. At the Effective Time, Parent shall issue options to
purchase 30,000 shares of validly issued, fully paid and nonassessable Parent
Stock, at an exercise price of $6.00 per share and subject to a five year
vesting schedule, to the W & L Shareholders, pursuant to the IXL Holdings, Inc.
1996 Stock Option Plan, as amended, in accordance with Schedule 6.6 hereto and
------------
in the form of Exhibit "C" hereto ("Option Agreement").
-----------
-20-
6.7 FURTHER ASSURANCES. From time to time after the Effective Time, upon
the reasonable request of any party hereto, the other party or parties hereto
shall execute and deliver or cause to be executed and delivered such further
instruments, and take such further action, as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions hereof.
6.8 EMPLOYMENT AGREEMENT. ▇▇▇▇▇▇▇ shall, at the Closing, enter into an
employment agreement with Sub, substantially in the form of Exhibit "I" hereto.
-----------
6.9 PURCHASER REPRESENTATIVE. The Purchaser representative shall furnish
to Parent, to Parent's satisfaction, a completed Purchaser Representative
Questionnaire, substantially in the form of Exhibit "H" hereto, and ▇▇▇▇▇▇▇
-----------
shall furnish to Parent a signed Purchaser Acknowledgement in connection
therewith.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATION OF W & L AND THE W & L SHAREHOLDERS TO EFFECT
THE MERGER. The obligation of W & L and the W & L Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) Parent and Sub shall have performed in all material respects
their respective agreements contained herein required to be performed at or
prior to the Effective Time, and the representations and warranties of Parent
and Sub contained herein shall be true when made and (except for representations
and warranties made as of a specified date, which need only be true as of such
date) at and as of the Effective Time as if made at and as of such time, except
as contemplated hereby;
(b) (i) the appropriate officers of Parent shall have executed and
delivered to W & L at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "A-1" hereto, and (ii) the
-------------
appropriate officers of Sub shall have executed and delivered to W & L at the
Closing, a closing certificate and incumbency certificate, substantially in the
form of Exhibit "A-2" hereto;
-------------
(c) Parent shall have obtained all of the Consents, if any, listed on
Schedule 7.1(c) hereto;
---------------
(d) W & L shall have received corporate certificates of good standing
for Parent and Sub, and a copy of the Certificate of Incorporation for Parent
and Sub, respectively, both as certified by the Secretary of State of Delaware;
-21-
(e) Parent shall have executed and delivered at the Closing an Option
Agreement for each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, and Sub shall have executed and
delivered at the Closing the employment agreement for ▇▇▇▇▇▇▇ referred to in
Section 6.8 hereof;
(f) W & L shall have received, at the Closing, a duly executed
opinion of counsel to Parent and Sub, substantially in the form of Exhibit "D"
-----------
hereto; and
(g) W & L shall have received from Parent and Sub such other
documents as W & L's counsel shall have reasonably requested, in form and
substance reasonably satisfactory to W & L's counsel.
7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER.
The obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment, at or prior to the Effective Time, of the following conditions:
(a) W & L and the W & L Shareholders shall have performed in all
material respects their respective agreements contained herein required to be
performed at or prior to the Effective Time, and the representations and
warranties of W & L and the W & L Shareholders contained herein shall be true
when made and (except for representations and warranties made as of a specified
date, which need only be true as of such date) at and as of the Effective Time
as if made at and as of such time, except as contemplated hereby;
(b) Parent shall have completed its due diligence review of W & L and
shall, in its sole and absolute discretion, be satisfied with the results of
such review;
(c) the appropriate officers of W & L shall have executed and
delivered to Parent at the Closing, a closing certificate and incumbency
certificate, substantially in the form of Exhibit "E" hereto.
-----------
(d) W & L and the W & L Shareholders shall have obtained or caused to
be obtained all of the Consents, if any, listed on Schedule 7.2(d) hereto;
---------------
(e) Parent shall have received a corporate certificate of good
standing for W & L, and a copy of the Certificate of Incorporation of W & L,
both as certified by the Secretary of State of New York;
(f) as of three business days prior to the Closing Date, the W & L
Debt shall be no greater than $0;
(g) Each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall have executed and delivered an
Option Agreement, and ▇▇▇▇▇▇▇ shall have executed and delivered his employment
agreement referred to in Section 6.8 hereof;
(h) Parent shall have received, at the Closing, a duly executed
opinion of counsel to W & L and the W & L Shareholders, substantially in the
form of Exhibit "G" hereto;
-----------
-22-
(i) Parent shall have received evidence satisfactory to it that W & L
has filed, pursuant to Section 907(e)(2)(H) of the BCL, an estimated cessation
franchise tax report through the anticipated Closing Date;
(j) there shall have been delivered to Parent, duly executed by each
of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, (i) an Agreement to be Bound to the Stockholders'
Agreement, in the form of Exhibit "F" hereto; and (ii) an Agreement to be Bound
-----------
to the Registration Rights Agreement, in the form of Exhibit "B" hereto;
-------------------
(k) W & L shall have furnished evidence to Parent's satisfaction of
performance under Section 6.9 hereof, and Parent shall have received from W & L
or the W & L Shareholders, as the case may be, such other documents as Parent's
counsel shall have reasonably requested, in form and substance reasonably
satisfactory to Parent's counsel; and
(l) Parent shall have received evidence satisfactory to it that at
the Closing the assets and properties used in the W & L Business are free and
clear of all Liens other than Permitted Liens.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PARENT.
(a) Parent shall indemnify and hold the W & L Shareholders and W &
L's directors, officers and employees (collectively, the "W & L Indemnified
Parties") harmless from and against, and agree promptly to defend each of the W
& L Indemnified Parties from and reimburse each of the W & L Indemnified Parties
for, any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including, without limitation, reasonable attorney fees and
other legal costs and expenses) (collectively, a "W & L Loss") that any of the W
& L Indemnified Parties may at any time suffer or incur, or become subject to,
as a result of or in connection with:
(i) any breach or inaccuracy of any of the representations
and warranties made by Parent or Sub in or pursuant hereto, or in any
instrument, certificate or affidavit delivered by Parent or Sub at the Closing
in accordance with the provisions hereof;
(ii) any failure by Parent or Sub to carry out, perform,
satisfy and discharge any of its respective covenants, agreements, undertakings,
liabilities or obligations hereunder or under any of the documents and materials
delivered by Parent pursuant hereto; and
(iii) any suit, action or other proceeding arising out of,
or in any way related to, any of the matters referred to in this Section 8.1(a).
-23-
(b) Notwithstanding any other provision hereof to the contrary,
Parent shall not have any liability under Section 8.1(a)(i) above (i) unless the
aggregate of all W & L Losses for which Parent would be liable but for this
sentence exceeds, on a cumulative basis, an amount equal to $25,000, and then
only to the extent of such excess, (ii) for amounts in excess of $500,000 in the
aggregate, and (iii) unless the W & L Shareholders have asserted a claim with
respect to the matters set forth in Section 8.1(a)(i), or 8.1(a)(iii) to the
extent applicable to Section 8.1(a)(i), within two years of the Effective Time.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of Parent Stock would not, by
itself, constitute a W & L Loss, unless and to the extent a decrease in the
value of Parent Stock has been demonstrated to be as a result of any event
described in Sections 8.1(a)(i), (ii) or (iii) above.
8.2 INDEMNIFICATION BY THE W & L SHAREHOLDERS.
(a) The W & L Shareholders shall, jointly and severally, indemnify
and hold Parent, Sub, Surviving Corporation and their respective shareholders,
directors, officers and employees (collectively, the "Parent Indemnified
Parties") harmless from and against, and agree to defend promptly each of the
Parent Indemnified Parties from and reimburse each of the Parent Indemnified
Parties for, any and all losses, damages, costs, expenses, liabilities,
obligations and claims of any kind (including, without limitation, reasonable
attorneys' fees and other legal costs and expenses (collectively, a "Parent
Loss") that any of the Parent Indemnified Parties may at any time suffer or
incur, or become subject to, as a result of or in connection with:
(i) any breach or inaccuracy of any of the representations
and warranties made by W & L or the W & L Shareholders in or pursuant hereto, or
in any instrument, certificate or affidavit delivered by any of the same at the
Closing in accordance with the provisions hereof;
(ii) any failure by W & L or any of the W & L Shareholders
to carry out, perform, satisfy and discharge any of their respective covenants,
agreements, undertakings, liabilities or obligations hereunder or under any of
the documents and materials delivered by W & L pursuant hereto; and
(iii) any suit, action or other proceeding arising out of,
or in any way related to, any of the matters referred to in this Section 8.2.
(b) Notwithstanding the above, none of the W & L Shareholders shall
have any liability under Section 8.2(a)(i) above (i) unless the aggregate of all
Parent Losses for which the W & L Shareholders would be liable but for this
sentence exceeds, on a cumulative basis, an amount equal to $25,000, and then
only to the extent of such excess, (ii) for amounts in excess of $500,000 in the
aggregate, and (iii) unless Parent has asserted a claim with respect to the
matters set forth in Sections 8.2(a)(i) or 8.2(a)(ii), or 8.2(a)(iii) (to the
extent applicable to Section 8.2(a)(i) or 8.2(a)(ii) within two years of the
Effective Time, except with respect to the matters arising under Sections 4.18,
4.19, 4.20 or 4.24 hereof, in which event Parent must have asserted a claim
within the
-24-
applicable statute of limitations. Notwithstanding any implication to the
contrary contained herein, the parties acknowledge and agree that a decrease in
the value of Parent Stock would not, by itself, constitute a Parent Loss, unless
and to the extent a decrease in the value of Parent Stock has been demonstrated
to be as a result of any event described in Sections 8.2(a)(i), (ii) or (iii)
above.
8.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND
(a) A party entitled to be indemnified pursuant to Section 8.1 or 8.2
hereof, as the case may be (the "Indemnified Party"), shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of any
claim or demand (a "Claim") that the Indemnified Party has determined has given
or could give rise to a right of indemnification hereunder. Subject to the
Indemnifying Party's right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VIII within 30 days after the receipt of written notice thereof
from the Indemnified Party. Any amounts paid thereafter shall include interest
thereon for the period commencing at the end of such 30-day period and ending on
the actual date of payment, at a rate of 15% per annum, or, if lower, at the
highest rate of interest permitted by applicable law at the time of such
payment.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any Claim pursuant to Section 8.3(a) hereof, and if such Claim relates to a
Claim asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or hold
harmless the Indemnified Party under Section 8.1 or 8.2 hereof, as the case may
be, the Indemnifying Party shall have the right, at its sole cost and expense,
to employ counsel of its own choosing to defend any such Claim asserted against
the Indemnified Party. Notwithstanding anything to the contrary in the
preceding sentence, if the Indemnified Party (i) reasonably believes that its
interests with respect to a Claim (or any material portion thereof) are in
conflict with the interests of the Indemnifying Party with respect to such Claim
(or portion thereof), and (ii) promptly notifies the Indemnifying Party, in
writing, of the nature of such conflict, then the Indemnified Party shall be
entitled to choose, at the sole cost and expense of the Indemnifying Party,
independent counsel to defend such Claim (or the conflicting portion thereof).
The Indemnified Party shall have the right to participate in the defense of any
Claim at its own expense (except to the extent provided in the preceding
sentence), but the Indemnifying Party shall retain control over such litigation
(except as provided in the preceding sentence). The Indemnifying Party shall
notify the Indemnified Party in writing, as promptly as possible (but in any
case before the due date for the answer or response to a Claim) after receipt of
the notice of Claim given by the Indemnified Party to the Indemnifying Party
under Section 8.3(a) hereof, of its election to defend in good faith any such
third party Claim. For so long as the Indemnifying Party is defending in good
faith any such Claim asserted by a third party against the Indemnified Party,
the Indemnified Party shall not settle or compromise such Claim without the
prior written consent of the Indemnifying Party. The Indemnified Party shall
cooperate with the Indemnifying Party in connection with any such defense and
shall make available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably required by it
for its use in contesting any third party Claim; provided, however, that the
Indemnifying Party shall have agreed, in writing, to keep such records and other
materials confidential except (i) to the extent required for defense of
-25-
the relevant Claim, or (ii) as required by law or court order. Whether or not
the Indemnifying Party elects to defend any such Claim, the Indemnified Party
shall have no obligations to do so. Within 30 days after a final determination
(including a settlement) has been reached with respect to any Claim contested
pursuant to this Section 8.3(b), the Indemnifying Party shall satisfy its
obligations hereunder with respect thereto. Any amount paid thereafter shall
include interest thereon for the period commencing at the end of such 30-day
period and ending on the actual date of payment, at a rate of 15% per annum, or,
if lower, at the highest rate of interest permitted by applicable law at the
time of such payment.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Merger Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of Parent and W & L;
(b) by W & L, upon a material breach hereof on the part of Parent or
Sub which has not been cured and which would cause any condition set forth in
Section 7.1 hereof to be incapable of being satisfied by July 31, 1998;
(c) by Parent, upon a material breach hereof on the part of W & L or
any of the W & L Shareholders which has not been cured and which would cause any
condition set forth in Section 7.2 hereof to be incapable of being satisfied by
July 31, 1998;
(d) by Parent, if the condition set forth in Section 7.2(b) hereof
shall not have been satisfied in Parent's sole and absolute discretion;
(e) by Parent or W & L if any court of competent jurisdiction shall
have issued, enacted, entered, promulgated or enforced any order, judgment,
decree, injunction or ruling which restrains, enjoins or otherwise prohibits the
Merger and such order, judgment, decree, injunction or ruling shall have become
final and nonappealable; or
(f) by either Parent or W & L if the Merger shall not have been
consummated on or before July 31, 1998 (provided the terminating party is not
otherwise in material breach of its representations, warranties or obligations
hereunder).
9.2 FEES AND EXPENSES.
(a) If the Merger is consummated, all costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the Surviving Corporation; provided, however, that the W & L Shareholders shall
pay all fees and expenses (including agents,
-26-
counsel and other advisors) of W & L and themselves that are not solely and
directly related to the Merger.
(b) If the Merger is not consummated for a reason other than the
willful and material breach hereof by a party, all fees and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses.
(c) If the Merger is not consummated because of a willful and
material breach hereof by any party, the nonbreaching party or parties shall be
entitled to pursue all legal and equitable remedies against the breaching party
for such breach including specific performance and all fees and expenses
incurred by the nonbreaching party or parties in connection with enforcing its
or their rights hereunder with respect to such breach shall be paid by the
breaching party.
9.3 AMENDMENT. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the W & L Shareholders, but,
after such approval, no amendment shall be made which (i) changes the form or
decreases the amount of the consideration to be received in the Merger, (ii) in
any way materially adversely affects the rights of the W & L Shareholders, or
(iii) under applicable law would require approval of the W & L Shareholders, in
any such case referred to in clauses (i), (ii) and (iii), without the further
approval of the W & L Shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of the parties hereto, provided that
after the Effective Time, any such amendment must be signed by the former
holders of a majority of the W & L Stock.
9.4 WAIVER. At any time prior to the Effective Time, the parties hereto
may, to the extent permitted by applicable law, (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties by any other
party contained herein or in any documents delivered by any other party pursuant
hereto and (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 SURVIVAL; RECOURSE. None of the agreements contained herein shall
survive the Merger, except that (i) the agreements contained in Article III
hereof, the covenants contained in Article VI hereof, the obligations to
indemnify contained in Article VIII hereof and the agreements of the Surviving
Corporation referred to in Sections 10.9 and 10.10 hereof, shall survive the
Merger (except to the extent a shorter period of time is explicitly specified
therein) and (ii) the representations and warranties made in Articles IV and V
hereof shall survive the Merger, and shall survive any independent investigation
by the parties, and any dissolution, merger or consolidation of W & L or Parent,
and shall bind the legal representatives, assigns and successors of W & L, the
-27-
W & L Shareholders and Parent, for a period of two years after the Effective
Time (other than the representations and warranties contained in Sections 4.18,
4.19, 4.20 and 4.24 hereof, which shall survive for the applicable statute of
limitations).
10.2 NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in Person, by telecopy (with confirmation of
receipt), by courier service, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to W & L : ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: 212/▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: 212/▇▇▇-▇▇▇▇
Telecopy: 212/983-0472
If to the W & L To the address listed under the signature
Shareholders: line of the applicable W & L Shareholder
If to Parent or Sub: IXL Holdings, Inc.
Two Park Place
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: 404/267-3801
Telephone: 404/▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation
One Buckhead Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: 404/233-5824
Telephone: 404/▇▇▇-▇▇▇▇
-28-
and to: ▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, Esq.
Telecopy: 212/223-2379
Telephone: 212/▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
10.3 ENTIRE AGREEMENT. The exhibits and schedules hereto are incorporated
herein. This Agreement and the documents, schedules and instruments referred to
herein and to be delivered pursuant hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof, and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof, except for
the non-disclosure letter agreement, dated as of June 1, 1998, between Parent
and W & L. There are no other representations or warranties, whether written or
oral, between the parties in connection the subject matter hereof, except as
expressly set forth herein.
10.4 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the rights, interests, and
obligations of Sub hereunder may be assigned to any direct wholly owned Delaware
subsidiary of Parent without such prior consent. Subject to the preceding
sentence, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing herein, express or implied, is intended to or
shall confer upon any Person not a party hereto any right, benefit or remedy of
any nature whatsoever under or by reason hereof, except as otherwise provided
herein.
10.5 GOVERNING LAW. This Agreement, except to the extent that the BCL or
the DGCL is mandatorily applicable to the Merger or the rights of the W & L
Shareholders or the other parties hereto with respect to the Merger, shall be
governed in all respects by the laws of the State of Georgia (without giving
effect to the provisions thereof relating to conflicts of law).
10.6 HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation hereof.
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single agreement.
10.8 SEVERABILITY. If any term or other provision hereof is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions hereof shall nevertheless remain in full force
and effect so long as the economics or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party.
-29-
Upon determination that any term or other provision hereof is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
10.9 POST-CLOSING ACCESS. For a period of three years after the Closing
Date, the W & L Shareholders and their agents and representatives shall have
reasonable access to the books and records of the W & L Business.
10.10 POST-CLOSING NOTICE. To the extent the Surviving Corporation
receives written notice of any event or circumstance that materially affects any
of the W & L Shareholders, the Surviving Corporation shall promptly notify the
affected W & L Shareholder of such matter, information, or event and shall
provide them with copies of all relevant documentation or correspondence in
connection thereto.
10.11 CERTAIN DEFINITIONS. As used herein:
(a) the term "Permitted Liens" shall mean (a) Liens for taxes,
assessments or other governmental charges or levies not yet due; (b) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law created in the ordinary course of business for
amounts not yet due; (c) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security; (d)
minor defects of title, easements, rights-of-way, restrictions and other similar
charges or encumbrances not materially detracting from the value of the W & L
Real Property or interfering with the ordinary conduct of any of the W & L
Business; and (e) those Liens listed on Schedule 10.11 hereto;
--------------
(b) (i) any representation or warranty stated to be made "to the
knowledge" of a party shall refer to such party's knowledge following reasonable
inquiry as to the matter in question; and (ii) any representation or warranty
stated to be made "to the knowledge of W & L" shall refer to the knowledge,
subject to clause (i) above, of any of the W & L Shareholders; and
(c) the term "Subsidiary" or "Subsidiaries" means any Entity of
which Parent (either alone or through or together with any other Subsidiary)
owns, directly or indirectly, stock or other equity interests the holders of
which are entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such Entity (including, without limitation,
Sub); provided, however, that with respect to the Parent, the terms "Subsidiary"
and "Subsidiaries" shall not include University Netcasting, Inc. or W & L.
- SIGNATURES ON THE FOLLOWING PAGE -
-30-
IN WITNESS WHEREOF, Parent, Sub and W & L have caused this Agreement to be
signed and delivered by their respective officers duly authorized, and each W &
L Shareholder has signed and delivered this Agreement, all as of the date first
written above.
"W & L"
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, INC., a New York corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Title: President
----------------------------------------
"PARENT"
IXL HOLDINGS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-------------------------------------------
Title:________________________________________
"SUB"
iXL-NEW YORK, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-------------------------------------------
Title:________________________________________
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
-31-
"W & L SHAREHOLDERS"
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
-32-
EXHIBITS
--------
Parent's Closing Certificate..................................... Exhibit A-1
Sub's Closing Certificate........................................ Exhibit A-2
Agreement to be Bound to Registration Rights Agreement........... Exhibit B
Option Agreement................................................. Exhibit C
Opinion of Counsel to Parent and Sub............................. Exhibit D
W&L's Closing Certificate........................................ Exhibit E
Agreement to be Bound to Stockholders' Agreement................. Exhibit F
Opinion of Counsel to W&L........................................ Exhibit G
Purchaser Representative Questionnaire and Acknowledgement....... Exhibit H
Employment Agreement............................................. Exhibit I
List of Schedules
-----------------
Schedule 3.1(b) Merger Consideration (see attached)
Schedule 4.1 Certificate of Incorporation & Bylaws of W&L
Schedule 4.3(a) Capitalization of W&L
Schedule 4.5 Conflicts, Required Filings & Consents of W&L
Schedule 4.7 Exceptions to Absence of Changes
Schedule 4.8 Undisclosed Liabilities of W&L
Schedule 4.9 Exceptions to Title to Properties
Schedule 4.10 Bad Equipment of W&L
Schedule 4.12 Liens on Real Property of W&L
Schedule 4.13 Leases of W&L
Schedule 4.14 Contracts of W&L
Schedule 4.15 Directors & Officers of W&L
Schedule 4.17 Litigation of W&L
Schedule 4.18 Employee Benefit Plans/Labor Relations
Schedule 4.19 ERISA Issues of W&L
Schedule 4.21 W&L Permits
Schedule 4.23 W&L Brokers
Schedule 4.25 Interest in Customers, Suppliers, Competitors
Schedule 4.28 W&L Insurance
Schedule 5.1 Certificates of Incorporation and Bylaws of Parent and
Sub
Schedule 5.3 Conflicts, Required Filings & Consents of Parent
Schedule 5.4 Parent Litigation
Schedule 5.5 Parent or Sub Brokers
Schedule 5.6 Outstanding Obligations to Issue Options, Warrants or
Other Parent Stock Rights
Schedule 5.7 Parent Subsidiaries
SCHEDULE 3.1(b)
---------------
PARENT STOCK TO BE ISSUED
HOLDER: NUMBER OF SHARES:
------ ----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇: 25,834
▇▇▇▇ ▇▇▇▇▇▇▇▇: 24,166
Schedule 5.9......................... Parent Undisclosed Liabilities
Schedule 5.13........................ Exceptions to Absence of Changes
Schedule 6.6......................... Parent Options to W&L Shareholders
Schedule 7.1(c)...................... Parent Consents
Schedule 7.2(d)...................... W&L Consents
Schedule 10.11....................... Permitted Liens